Ryanair plans to cut fares by up to 12 per cent this year to boost market share as Europe’s airline competition increases.

Chief executive Michael O’Leary warned rival carriers that “if there is a price war in Europe, then Ryanair will be the winner”.

The planned cuts in ticket prices come after the airline reported a 43 per cent increase on full-year profits, compared to 2015.

Revenue jumped 18 per cent and passenger numbers rose 18 per cent to 106.4 million.

Europe’s largest airline said it will cut prices by an average of 7 per cent in its current financial year, which ends in March 2017. It predicts prices will drop by 5 per cent to 7 per cent during the summer and as much as 12 per cent in the winter.

Ryanair added that its first quarter results - the three months to the end of June - would be hit by recent strikes by airport staff in Italy, Greece, Belgium and France, as well as by the absence of any Easter holiday in April this year and weakness in the pound ahead of the Brexit referendum in June.

O’Leary said: “FY16 was a year in which we delivered significant traffic and profit growth in all 4 quarters as our AGB service programme is attracting millions of new customers to our lowest fare/lowest cost model.”