Europe's biggest budget airline said today it could miss its full-year profit forecast following a dip in bookings, blaming growing competition and a drop in the value of the British pound.
Shares in the Irish group, which has routinely beaten profit forecasts in recent years, dropped as much as 15 percent to a five-month low, dragging down other airline stocks.
"This is a surprise statement from Ryanair and comes contrary to some of the commentary from the peer group and indeed Ryanair's own commentary at its June investor days," said Goodbody analyst Donal O'Neill.
Airlines across Europe have been struggling with weak economies, high fuel prices and costly fleet upgrades.
While Ryanair has fared better than most thanks to its focus on low prices, it faces competition from other airlines looking to win business in the budget segment of the market.
Goodbody analysts said Norwegian, Aer Lingus and IAG subsidiaries Iberia and Vueling had all stepped up competition to Ryanair.
The Irish airline said it had noticed a "perceptible dip" in yields - average revenue per mile per passenger - for September, October and November, and cited increased competition in Britain, Scandinavia, Spain and Ireland.
It also said an austerity drive across Europe and a weaker British currency were hurting demand. Ryanair makes about a quarter of its revenue in Britain.
As a result, the group said net profit for the year ending March 2014 was likely to be at the bottom end of its previously guided range of 570-600 million euros.
Most analysts had expected the airline to comfortably beat that forecast range, with a company poll in July forecasting a full-year net profit of 643 million euros.
"If fares and yields continue to weaken over the coming winter there can be no guarantee that the full year outturn may not finish at or slightly below the lower end of this range," Ryanair said.
The last time Ryanair warned profits would be at the bottom of a previously guided range was 2009, while it last issued a full profit warning in 2004.
Chief executive Michael O'Leary said Ryanair would respond to weak bookings by cutting capacity for the year to 81 million seats from 81.5 and by introducing "aggressive seat sales" particularly in the UK, Scandinavia, Spain and Ireland.
At 0815 GMT, Ryanair shares were down 13.7 percent at 5.847 euros, the biggest decline by a European blue-chip stock. British rival easyJet was down 7.5 percent.
Ryanair's statement made no reference to recent media reports questioning the airline's safety record.