EasyJet shares crash

The ferocious air-ticket price war claimed its biggest victim today when shares in no-frills giant easyJet plummeted on a shock profits warning.

The Luton-based carrier, one of the pioneers of the budget airline revolution, admitted it had been hurt by "unrealistic and unprofitable" ticket pricing by its competitors.

The airline, founded by Greek tycoon Stelios Haji-Ioannou, said it had filled fewer seats than it had hoped over Easter, with bookings for May also "lower than our expectations". The easyJet warning - just as the key summer booking season gets into full swing - shocked the City.

Shares in easyJet plummeted 20 per cent on the stock market, wiping £235million off the value of the company.

Travel experts said the warning was likely to be good news for passengers in the short term as airlines would have to drop their fares even more to fill empty seats and hold on to their market share. However, in the longer term the failure of a major carrier could mark the end of the era of near "giveaway" tickets that passengers have enjoyed over the past five years.

In its statement, easyJet said: "We are currently seeing unprofitable and unrealistic pricing by airlines, across all sectors of of the European industry seeking to grow their market share."

It said it was "cautious" about its financial performance-for the full year. Airline-expert Chris Tarry said easyJet was being hit by an aggressive response from socalled "full service" airlines such as British Airways, which have slashed their own fares in Europe.

He said it was "inevitable" that more European airlines would go under as carriers fought to the death for bookings.

Over the weekend Duo became the first UK no-frills airline to go bust since the beginning of the budget flights boom, though Buzz, which was losing heavily, was only saved by a takeover by Ryanair. Over the last few months, Irish budget airline Jet Magic and Scandinavian operator Flying Finn have also gone down.

Meanwhile, in Italy, trading in the shares and bonds of national flag carrier Alitalia were suspended after a 15 per cent fall in dealing yesterday - and before a board meeting tomorrow of the airline, which is 62 per cent governmentowned.

The suspension came after an admission from government officials that if Alitalia does not receive a capital injection it will fall into insolvency.