Ryanair raised its 2011 profit forecast by 10 percent on Monday, saying a focus on more lucrative routes was pushing up revenue per passenger and offsetting stubbornly high fuel prices.

Europe's largest budget airline said it had seen virtually no impact from the global downturn in consumer confidence, but warned traffic would fall in the coming months as it grounded 80 aircraft because fuel prices made routes unprofitable.

In the markets with austerity, we are growing, Chief Executive Officer Michael O'Leary told a meeting with analysts after releasing results for the first half of the 2011 financial year.

The more price sensitive people are getting... the more they switch to Ryanair, he said.

The airline, which flew over 70 million passengers last year, said it expected to make a profit of 440 million euros (378 million pounds) for its 2011 financial year, up from its previous forecast of 400 million.

Yields -- the keenly watched measure showing average revenue gained per mile per passenger -- will grow at 14 percent in the six months to March, up from 12 percent previously forecast.

The surprise is that the yield is so strong, said Gerard Moore, analyst at Merrion Stockbrokers in Dublin. They often increase their guidance at this time of year, but given the weak consumer environment there had been doubts they could pull it off.

Ryanair has cut poorly performing routes and focussed on more profitable destinations while a new reserved seating product helped push up revenue from optional extras by 15 percent, O'Leary said.

The airline earned 543.5 million euros in the six months to September, up 20 percent, on revenues of 2.71 billion.

To stand still in the current crisis, we will have to increase revenue by 3 euros per passenger, or 7-8 percent next year, Chief Operating Officer Michael Cawley told journalists in Dublin.

Ryanair plans a substantial dividend in 2013, which will hopefully be close to 500 million euros, Cawley said.

Net profit before tax for the three months to September was 404 million euros, beating the average forecast of six analysts polled by Reuters of 393 million.

Ryanair was up 4.2 percent at 3.48 euros at 13:18 GMT (1:18 p.m. British time). It has slipped 6 percent since the beginning of the year, compared with a fall of 22 percent at rival low-cost carrier EasyJet .

Industry body IATA has said it expects airlines to suffer a weak end to the year due to waning consumer confidence, sluggish international trade and high fuel prices.

Lufthansa last week reported results battered by high fuel costs, while International Airline Group on reported a 31 percent fall in third-quarter profit.

NO AER LINGUS SALE SOON

The sale of Ryanair's 29 percent stake in rival Irish airline Aer Lingus is off the agenda for some time after potential buyer British Airways purchased BMI, Chief Financial Officer Howard Millar told Reuters in a phone interview.

Ryanair has not spoken to anyone about a possible sale and is waiting for the Irish government to find a buyer for its 25 percent stake before selling. So far no one has any interest in buying the government stake, Millar said.

Millar said Ryanair remained in talks with Boeing about a large aircraft order and described the U.S. manufacturer as the logical choice source of new planes despite the break-down of 2009 talks to buy 200 planes.

O'Leary later said that Chinese manufacturer COMAC had been hugely impressive in talks over a rival plane.

(In ninth paragraph, corrects first-half profit to 543.5 million euros, from 452 million. Also corrects revenue to 2.71 billion euros, from 2.18 billion.)

($1 = 0.727 Euros)

(Reporting by Conor Humphries; Editing by Jon Loades-Carter and Sophie Walker)