SHARES in easyJet fell to a record low after the airline said that fares would remain under pressure next year.

The warning drove shares down by almost 8 per cent to 128p yesterday, 75 per cent below their 2002 high of 504p.

Yesterday’s gloomy trading update follows two profit warnings this year at the budget airline, which is reviewing its routes against the backdrop of a price war and high fuel costs.

The grim forecasts came despite improved trading in the final quarter of 2004, which includes the summer holiday peak. EasyJet claimed it had benefited from its decision not to impose a fuel levy on passengers, as many other airlines did.

The better fourth quarter allowed the company to predict at least £60 million of pre-tax profits in the full year, a 16 per cent increase on last year and a rise on the £52 million it predicted in June.

The company also announced that it was going head to head with Ryanair by launching flights to Ireland from Gatwick for the first time.

Ray Webster, chief executive, said: “These are our first services to the Republic of Ireland, where fares have remained stubbornly high and have generated consistengly strong year-round returns for the incumbent operator.”

However, he denied that he was starting a price war with Ryanair, saying that Stansted and Gatwick served different markets. “We have applied the same route evaluation we would apply to any route. These routes offer year-round traffic and South London has been poorly served for flights to Ireland,” Mr Webster said.

EasyJet said that yields — the average revenue per passenger — would remain under pressure in 2005.

Plans to increase the size of its fleet have been scaled back in a bid to maintain yields and easyJet said that next year it would take six 737s out of service early.

Analysts said that the airline faced a tough winter and raised concerns that plans to slow the rapid growth rate of its fleet would have a delayed effect on profits growth.

Mike Powell, an analyst at Dresdner Kleinwort Wasserstein, said: “People are still going to be very worried about this winter. Yield weakness and high fuel costs — they have very little hedged — point to lower earnings next year.”

The airline has been reviewing operations and is cutting flights to high-cost airports. The full conclusions of the review will be announced at the end of the year.

EasyJet’s first Irish destinations are Cork, Knock and Shannon. The airline also announced daily services to Almeria and Valencia in Spain.

British Airways will hire 200 staff at Heathrow in an admission that last year’s layoffs had put the airline under strain.

The extra check-in staff and baggage handlers are being recruited on top of 216 terminal workers already being trained. BA will also scale back flights for the next three months.

Rod Eddington, chief executive, said: “Our customers rightly expect first-class customer service staff, and last month we fell short of the standards we set ourselves.”

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