Shares in Easyjet have dived by almost a quarter after the no-frills airline cut its profit outlook for the year.
Easyjet's first half results are usually weaker
Europe's second-biggest budget carrier said cut-throat competition was keeping its fares under pressure.
Chief executive Ray Webster said pricing by budget and full-service airlines continued to be "unprofitable and unrealistic".
His comments came as Easyjet reported interim pre-tax losses of £27.3m ($48.3m), down from a £48.1m loss last year.
Pre-tax losses before goodwill and one-off items, including the costs of integrating Easyjet's recently-acquired budget airline Go into the business, came in at £18.5m - compared with £24.4m in the previous year.
However, the results were still worse than expected, and added to the downward pressure on Easyjet's shares.
Easyjet shares ended the day down 73p at 219p.
Easyjet said its results "reflected the seasonality of the business and the exclusion of Easter".
The company usually has a weak first half because of reduced demand in autumn and winter ahead of the key summer holiday season.
Passenger numbers rose 15.9% to 10.8 million, while the average fare during the period was £38.06, up 1.6%.
Chief executive Ray Webster said: "Given the increasingly competitive marketplace it is appropriate now to be cautious about the performance for the
full financial year."
Nick van den Bruel, an analyst with French bank BNP Paribas, said Europe's airline sector was facing overcapacity.
"We clearly see in Europe intensified competition from charter operators," he said. "Suddenly we are getting a very aggressive pricing situation, where the market has not really settled down."
Separately, Easyjet said it had secured a financing agreement for 82 of the 120 Airbus jets it ordered in 2002.
The company added that it planned to introduce a further 38 routes to five new destinations, including Berlin and Budapest.
Easyjet currently operates 115 routes to 39 airports in 13 countries.