The low-cost carrier blames higher taxes and airport charges, rising interest rates and passenger frustration with security delays for a drop in traffic since the Spring of this year.

The gloomy forecast was made against the backdrop of announcing their results for 2006, which showed an increase in net profits of 33% to €401 million on sales of €2.2 billion.

Whilst average fares at Ryanair did rise last year, a great deal of the increase in revenues was due to new charges for baggage and travel insurance.

Passenger numbers also increased 22% to 42 million, making Ryanair the largest international airline in Europe.

Lufthansa still carries more total traffic, but this is due to passenger numbers on internal flights within Germany.

Michael Leary, the chief executive of Ryanair, has set himself the target over the next few years of overtaking Lufthansa in total numbers of 51 million passengers, before he then retires.

If he succeeds in his battle with the Irish government and the European Union to take over Air Lingus, he will have achieved that goal.

In recent weeks, Ryanair has announced a serious of aggressive price promotions, following on announcements by Easyjet and British Airways of price cuts to Europe.