Ryanair warns it may miss profit target The prospect of a costly price-war weighed on European airlines" shares after Ryanair warned it could miss its full year profit target as it cut fares in response to increasing competition and weakening demand for air travel. Ryanair's shares closed down 11 per cent at €6 after the low-cost airline said it expected its net profit for 2013-14 to come in at the lower end of its previous guidance of between €570m and €600m, partly because it was responding to rivals" ticket discounting. IN Airlines Europe's largest budget airline by revenue warned there was a possibility it could generate "slightly" less than €570m if yields - a measure of average fares paid - continued to weaken over the winter. Airlines" shares were hit - including those of Aer Lingus, Norwegian Air Shuttle, easyJet, Lufthansa, International Airlines Group and Air France-KLM - as investors weighed the possibility of a profit-sapping price war. One reason why certain analysts believe there is a significant risk of a price war on routes within Europe is that some smaller carriers - such as Norwegian Air Shuttle and IAG's Vueling - have been increasing aircraft capacity significantly. Ryanair and easyJet have also placed large aircraft orders this year. Michael O'Leary, Ryanair's chief executive, said he did not see a lot of capacity growth at the moment, adding he was surprised by how flight bookings had been "weak" during September and October. He claimed several rivals had been lowering fares, adding: "We are going to respond aggressively with pricing and promotions in the next number of months . . . If that doesn't affect our competitors, then good for them. But I suspect, as has happened in the past, they will all be following us. Analysts had been expecting Ryanair to generate net profit of just under €650m in the year to March 2014, and one said the company's trading statement was disappointing partly because it had a history of outperforming its earnings guidance. The company is responding to weaker yields partly by cutting aircraft capacity on certain routes during the winter, and expects to carry just under 81m passengers in 2013-14, compared with a previous target of more than 81.5m. Capacity reductions can give airlines the opportunity to raise fares. Ryanair indicated late flight bookings in July had been at weaker than expected yields partly because the heatwave in northern Europe had prompted some people to stay at home rather than fly south. While the situation improved in August, Mr O'Leary said the company had noticed a "perceptible dip in forward fares and yields into September, October and November" because of several factors. These were increased price competition and some capacity increases in the UK, Scandinavian, Spanish and Irish markets; the continuing effect of austerity and weak economic conditions across Europe; and the negative impact of exchange rates involving sterling and the euro. About a quarter of Ryanair's sales originate in sterling. Damian Brewer, analyst at RBC Capital Markets, said of Ryanair's trading update: "Ryanair has historically delivered results well ahead of its own guidance so this is disappointing news."