Ryanair launches price war

By Pete Harrison

LONDON (Reuters) - Irish low-cost airline Ryanair said on Wednesday it was launching a price war against other European airlines, giving away 10 million seats virtually free in its biggest ever promotion.

The 5-week promotion came after four days of weakening shares in the sector and as its closest rival, easyJet, said passenger numbers were being hit by higher taxes, rising interest rates and environmental concerns.

"I'd expect this to put further downward pressure on prices, put further pressure on Ryanair's yields, and on everyone else's yields, not just in the UK, but all across Europe," Chief Executive Michael O'Leary told reporters. "We're launching a price war in Europe."

Ryanair normally offers a fraction of its seats at discount prices, but Wednesday's promotion represents close to half its capacity.

"The rest of the competition are suffering," O'Leary added. "Their load factors are down, and their yields are down. Let's go in and kick them all while we can."

EasyJet's shares, which were already 2.5 percent below their opening price, fell a further 3.5 percent by 2:57 p.m. (British Time) to 594 pence.

The airline had already promised to cut prices to lure in more passengers.

EasyJet's shares have lost 19 percent since both Ryanair and British Airways noted a weakening in April trading last Thursday. British Airways shares were down 1.4 percent by 2:57 p.m., in its fourth day of losses, while Ryanair shares were down 0.7 percent.