Goodbody Stockbrokers has downgraded its earnings growth forecasts for Ryanair, predicting that it will have to cut fares even further to stimulate traffic.

In a report, the broker lowers its earnings forecast for the year to the end of March 2004 from an increase of 29.4 per cent to 21.5 per cent. It says this stems from a projection that average fares will fall by a further 5.4 per cent in addition to the estimated 7.3 per cent decline in the past year.

It expects passenger numbers to rise by another 46 per cent to more than 23 million this year.

Most airlines are struggling, given the economic uncertainty and the impact of SARS. So far this has affected Ryanair's summer bookings.

Of the low-fares European airlines, Goodbody suggests that Ryanair is best positioned to weather the current storm.