Ryanair chief executive Mr Michael O'Leary is hopeful that the new Dublin Airport Authority might act as a catalyst in bringing a second terminal to fruition.

Mr O'Leary was cautious yesterday however, acknowledging that politics will ultimately dictate the terminal decision. Ryanair remains interested in designing the terminal, he said.

"I'm never optimistic when you're talking about this Government making decisions," he said.

Mr O'Leary welcomed the arrival of the new airport authority, which met for the first time yesterday.

"It can only be better than the existing puddings," he said, accusing the previous administration of being "a complete and abject failure".

Mr O'Leary was speaking after addressing a UBS transport conference in London. He told delegates that the airline was still expecting a 20 per cent rise in after-tax profits for this year.

This will come even though fares in the second half of the year to March will fall by between 10 and 20 per cent, he said. The six months to March will be a "bloodbath", he added.

"It is going to be awful out there. There are going to be continuing fare wars in 2005," he told the conference.

Mr O'Leary also told delegates that the firm had no intention of hedging its oil exposure at current levels. He indicated however that hedging would again be considered if oil prices fall closer to $30 a barrel.

"If spot prices are at $40, there's no point in hedging.Towards $30, we will certainly go back in and hedge at the mid to low 30s," he said.

Mr O'Leary is expecting oil prices to moderate by next summer as greater Iraqi production comes on stream and the Yukos affair in Russia is settled.

- (Additional reporting, Reuters)