EasyJet launches low fares battle in Ryanair's back yard

Easyjet took the budget airline battle into Ryanair's back yard yesterday by announcing the launch of its first three routes to Ireland.

Easyjet took the budget airline battle into Ryanair's back yard yesterday by announcing the launch of its first three routes to Ireland.

The move came as easyJet shares fell to an all-time low after the no-frills carrier warned of continuing pressure on profits and said it would throttle back planned capacity growth next year by a third.

EasyJet is launching services from Gatwick to Cork, Shannon and Knock in January and also starting to serve Almeria and Valencia in Spain from the airport. This will bring easyJet's route network from Gatwick to 29, making it a bigger hub than either Stansted or Luton.

Ray Webster, the chief executive of easyJet, said it had decided to launch the three Irish services because fares on the routes had remained "stubbornly high" - a direct reference to the prices Ryanair charges to fly from Stansted to Cork, Shannon and Knock. EasyJet claimed they were twice Ryanair's average fare, enabling the airline to make profits of 50 per cent on the three routes.

The slots at Gatwick which easyJet is using to launch the new services to Ireland are ones that belonged to Ryanair until it gave them back last week.

In a trading update before the close of its financial year in a week's time, easyJet said it expected pre-tax profits to exceed £60m compared with the £52m it made in the previous year. It also gave some details of its planned capacity for the next financial year, saying it now expected to increase its fleet size by 16 per cent compared with the 24 per cent it originally planned. This will mean the fleet rising from 93 aircraft now to 108 next year rather than the anticipated 115 aircraft.

This will be achieved by retiring easyJet's Boeing 737-300 jets more quickly than planned rather than slowing down deliveries of its new Airbus A319 aircraft.

The market reacted negatively, however, to easyJet's references to volatile fuel prices and pressure on yields and the shares fell 8 per cent to 128p.