Ryanair said it expects air fares will be slashed this summer after it admitted passengers are resisting paying higher prices and its profits have dived by almost 50 per cent.

The Irish budget carrier said cost-conscious passengers had cut back to the extent that lower prices over spring pushed profits down 46 per cent to €360m (£303m) for the three months to 30 June.

Average fares fell 15 per cent to €42 year-on-year, while passenger numbers rose 10 per cent to 55.5 million.

Europe’s largest airline by passenger numbers said it is experiencing weaker-than-anticipated consumer spending, with pricing in the second quarter now expected to be “materially lower” than last summer, adding to weak fares in the prior quarter.

Michael O’Leary, Ryanair chief executive, warned the carriers pricing development “continues to deteriorate”. “We have tried over weeks and weekends to close off some cheap seats and price passengers up, but meeting resistance, and we’re opening up lower cost seats again.”

In May, Ryanair warned that first-quarter fares required more price cuts than the prior year, and reported that average fares fell 15 per cent in the three months to the end of June, while revenue per passenger fell 10 per cent.

Looking ahead, it said first-half results would be “dependent on close-in bookings and yields in August and September”.

Neil Sorahan, the airline’s finance chief, said demand remains strong but seasonal factors impacted pricing over the period while consumers pared back spending. After two years of growth in travel demand, “there’s a bit of pushback” he said.

“We had anticipated that April would be a hard sell,” he said, because part of the Easter break fell into March. “I think consumers, while they still want to travel and to get out and see Europe, they’re just a little bit more frugal in how they’re doing that and so this is going to be a good summer for the consumer.”

He thought consumers were simply being “a little bit more frugal, a bit more cautious” with their money.

The company maintained its fiscal-year guidance for passenger traffic growth of 8 per cent or 198 million to 200 million passengers, assuming no worsening of further Boeing delivery delays. The plane maker is behind in deliveries of 737 MAX 8 aircraft which will allow the airline to improve its efficiency.

Ryanair, which is running a record summer programme of flights, said it expected to be 20 short of contracted deliveries by Boeing at the end of this month but added that Boeing, limited in production volumes due to safety and quality concerns, had improved its standards.

Mr O’Leary warned prices were continuing to decline, saying that cuts of up to 10 per cent over the June-August period was possible but unlikely. The summer months are where most airlines traditionally make the lion’s share of their money for the year.

The Ryanair warning that holidaymakers are no longer willing to travel at any cost and will go elsewhere or stay at home if ticket prices are too high sent a chill wind through the aviation sector with Ryanair shares down as much as 13 per cent at one point and low-cost rivals easyJet, Wizz Air and Jet2 also suffering share turbulence.

Analysts at JPMorgan said the result missed profit expectation. “The softer pricing outlook for Ryanair will likely lead to the whole sector being weak, and call into question where the ‘bottom’ is in terms of demand/consumer weakness, lower pricing and ultimately estimate downgrades,” JPMorgan analysts Harry J Gowers and Shikha Khurana said.

Adam Vettese, of investment platform eToro, says: “Fare weakness continues to plague Europe’s largest low-cost airline. It seems the demand is still there but consumers are being a little more price conscious and are now pushing back against higher fares, forcing Ryanair to drop prices to maintain their targeted 95 per cent load factor.

“This isn’t the only factor which has put shares under pressure since their April all-time high. Delayed deliveries of Boeing aircraft, air traffic control strikes as well as most recently a global IT outage have all contributed to disruption and in turn additional cost.

“Whilst many of these issues are either isolated or short-term, if there is a more permanent shift in price trends, then it would be difficult to see Ryanair’s full-year outlook remain unaffected and the firm will need to rethink its forecasts.”