Ryanair is hopeful but not certain of returning to pre-COVID profit levels of over 1 billion euros ($1 billion) this year as travelers trade down to low-cost services, Chief Executive Michael O'Leary told Reuters on Tuesday.

Last month the Irish airline, Europe's largest by passenger numbers, said it was too soon to provide meaningful profit guidance for its financial year, which ends on March 31, 2023.

"Hopefully we'll get back to profitability of over a billion but (it's) not certain. Put it this way: we are doing our best," O'Leary told Reuters in an interview.

"I'm hopeful. But again there is too much uncertainty this winter over Ukraine, and also the recession," he added.

It is already certain that Ryanair will beat its pre-COVID peak of flying 149 million passengers in a year, with a forecast of 166.5 million for the current financial year.

But O'Leary said high fuel prices, economic turmoil and staffing pressures meant that the wider European short-haul market would not return to pre-COVID traffic levels in 2023 or 2024.

"In a very dark deep recession as we've had in the past, the total market may level out or decline slightly but more and more people will trade down to lower cost airlines like Ryanair," he said.

"There's every risk the economic situation this winter will cause people to fly less, but they won't cut flying altogether," he added.

O'Leary said Ryanair was seeing stronger bookings going into the winter period - particularly at Christmas and in October for Britain's mid-term school break and Ireland's bank holiday weekend - than it had pre-pandemic.

"We're seeing much stronger advance bookings at higher prices," he said.

Average fares are likely to rise by 3-4% this year and 3-5% next year, O'Leary told a news conference ahead of the interview. The airline will have just 4% of seats empty on average in August, matching July's post-COVID record.

Ryanair may continue to suffer minor industrial action, but will "work around this," O'Leary said.

($1 = 0.9977 euros)