Low-cost airline Ryanair is on the verge of issuing a profit warning for the year to March 2009. It said that a 'perfect storm' of higher oil prices and weaker consumer demand could damage the business.

Ryanair said there was a 'significant chance' its profits could fall next year as a weaker pound and higher airport charges added to the operating pressures.

Chief executive Michael O'Leary said: 'The European airline sector is presently facing one of these cyclical downturns, with the possibility of a perfect storm.'

The airline has seen third quarter profit fall 27% to €35 million. It is considering fare cuts if markets conditions worsen.

Plans to expand capacity by around 20% will generate significantly higher fuel costs for the airline, in light of rising oil costs.

Passenger numbers increased 21% to 12.4 million on the past year with revenues up 16% to €569 million.

Ryanair last week raised the cost of putting bags into the hold from £5 to £6 per item. It wants passengers to only have hand luggage.

Travellers who do not check in online face a £12 charge – up £2 - for using airport facilities.

Revenue from such 'ancillary charges' have grown by 30% to €111 million over the quarter. Ryanair believes it can generate 20% of group revenue from such charges within three years.

Irish stockbroker Davy believes profit for the current year will be 'more evenly spread' between Q3 and Q4. Commenting on the warning over future profit, analyst Stephen Furlong said: 'We think this is excessively bearish given a market so supply-constrained into next summer and with Ryanair indicating that competitors are withdrawing capacity.'

Shares in the airline's London listing had fallen 12.3% to 3.175p by midday on Monday.