Ryanair Chief Executive Michael O'Leary tried to play down the airline's warning on annual profits after its shares
plunged in response.
Europe's biggest low-cost air carrier said in a trading update it expected full-year net profit to be near the bottom of its earlier guidance of €570-600m and that it could miss the range altogether.
Ryanair blamed competition, economic gloom in Europe and the weaker pound against the euro for lower prices and yields - fare per passenger - for September, October and November.
Its shares were down 13.2% at €5.89 by late morning. Ryanair often beats its own targets and the company said it was confident about its profit guidance as recently as late July.
O'Leary told analysts there was "general weakness" in the market for European air travel and that Ryanair was getting the bad news out first. He said the company would respond by cutting fares and reducing capacity.
"It's at the margins. We're not talking about some kind of collapse or catastrophe. Could we go below 570 [million euros]? Yes we could. On balance at this stage I suspect it's unlikely but it might be six-to-four against. Something is going on and we want to tell the market."
Ryanair had already admitted to a weak July because the heatwave in Northern Europe deterred sunseekers from flying. Yields picked up in August but are now looking thinner.
O'Leary said rivals had been cutting fares since mid-August, which took Ryanair by surprise because little capacity had been added to the market.
Ryanair's unexpected weakness appears to contrast with rival budget carrier EasyJet, which reported sales up 10.5% for the three months to June 30th and passenger numbers up by 2.0% in August. However, Ryanair has guided the market on more recent trends.
EasyJet was the biggest faller in the FTSE 100 index, down 7.2% in mid-morning trading. British Airways owner International Consolidate Airlines and TUI Travel both fell 3.6%.
O'Leary said Ryanair would respond to weaker yields by cutting winter capacity by about quarter of a million seats and offering "lower fares and aggressive seat sales" for the UK, Scandinavia, Spain and Ireland. He said competitors would have to respond.
UBS cut its recommendation on Ryanair to neutral from buy and said it was now concerned about extra capacity in the airline's important markets such as Germany, the UK and Ireland.
Ryanair highlighted what it described as the rude health of its balance sheet and cash flows. O'Leary said he did not expect the lower profit guidance to affect Ryanair's plan buy back at least €400m shares in the year ending March 2014 or a further return of cash to shareholders of up to €600m in dividends and/or buybacks the year after.