Britain's easyJet said it expects higher profits than last year but failed to soothe investors worried about declining fare prices and high fuel prices.
EasyJet said the number of seats filled on its planes and average fares fell in the three months to June 2004, but passenger numbers continued to climb year-on-year despite tough competition.
Shares in easyJet fell 1.8 per cent to 139 1/2 pence in a lower broader market. The stock has more than halved in value so far this year.
Analysts said the airline's average fares were declining faster than its main competitor, Ryanair, and there were concerns about its exposure to record high oil prices.
"They are less well hedged than Ryanair so they are also exposed to cost pressures . . . but they are looking considerably cheaper than any other airline at the moment," BNP Paribas analyst Mr Nick van den Brul said.
The airline said it carried 2.41 million passengers in July compared with 1.89 million in July of last year, up 28 per cent. Its load factor - an indication of how many seats it has filled on flights-- was 88.1 per cent for the month, up from 85.6 per cent a year ago.
However, its load factor fell 1.9 per cent for the three months to June 2004 and its average fare declined 6.7 per cent to £42.97 sterling.
EasyJet said its outlook for the business year to end-September remained unchanged since its shares dived in June when it said annual earnings would be below market consensus forecasts. It still expects profits to "at least exceed" last year's £52 million.