Europe's biggest budget airline beat expectations for the first half of the year thanks to higher fares, lower than expected fuel costs and a surge in demand after the London Olympics, pushing its shares almost six percent higher.

It said on Monday that it had "at least two up-front buyer(s)" for routes that could be sold to ease competition fears over its 700 million euro Aer Lingus offer.

That was, however, unlikely to be enough to win over EU antitrust regulators. A person familiar with the matter told Reuters that Ryanair had not offered sufficient concessions and that "a statement of objections is likely."

The person said the objections were likely to be sent to Ryanair in the coming week or two.

Under standard EU procedures it will still have the opportunity to make more concessions and push through the deal, but the process is now well advanced and it may have to give substantial ground to do so.

The Ireland-based airline, which believes consolidation in the EU market favours this, its third bid for its local rival, also said on Monday it was benefiting from the demise of European rivals such as Spanair and Hungarian firm Malev.

Many airlines have been hit hard by Europe's struggling economy and high fuel costs. Ryanair has fared better than most, thanks to its size and focus on low costs and low prices.

"It was a strong performance after the Olympic Games, we certainly saw an upward rise in average fares. Many people who appeared to stay at home ... came back in force post the Olympic Games," Chief Financial Officer Howard Millar told Reuters.

Ryanair said its fares rose 6 percent in the six months ended September, while passenger numbers surged 7 percent.

As a result, it lifted its profit forecast for the year ending March 2013 to 490-520 million euros from its previous guidance of 400-440 million euros.

Ryanair closed up 5.8 percent at 4.81 euros.

Shares in European airlines Air France-KLM (AIRF.PA) and Lufthansa (LHAG.DE) both rose towards the end of last week after posting reassuring results on Thursday.

FUEL SAVINGS

Ryanair said its first-half net profit rose to 596 million euros from 544 million a year ago and above analyst expectations at 564 million. Revenue jumped 15 percent to 3.1 billion euros.

Ryanair makes most of its money from leisure travellers and normally records a loss in its seasonally quieter second half.

The airline, with an average fare of 53 euros, said it was cautious on winter trading due to low visibility on fourth-quarter bookings, but expected the positive trends to continue, with good forward bookings into the third quarter.

"We expect fares will rise for the full-year by about 4 percent ... about 1 percent higher than we expected, and our fuel bill will be down a bit more than we had previously guided," said Millar.

Chief Executive Michael O'Leary told Reuters Digital Video that Spanish and Italian taxes had contributed to higher fares.

Ryanair's fuel bill was lower than expected due to a fuel saving programme which manages the way pilots fly aircraft and where they buy fuel, said Millar. The airline now expects its fuel bill to rise 260 million euros this financial year, 40 million euros less than previously assumed, he added.

Oil prices will fall however over the medium-term, said O'Leary, who called on oil futures to be investigated for market manipulation in the wake of the rigging of the benchmark interest rate Libor.

"I still do not understand why, for example, oil futures are so high ... we are still waiting for some regulator to investigate them," said O'Leary.

Ryanair, which carried 48 million passengers in the first half, said it was on target to grow its full-year traffic by 4 percent. Over the next decade, it aims to grab an 18 percent share of the European short-haul air travel market from its current 12 percent.

(Reporting by Lorraine Turner, additional reporting by Stephen Mangan in London; Editing by Richard Pullin and Mark Potter)

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