SHARES in budget airline easyJet lost a quarter of their value yesterday after a warning that tough competition could affect its traditionally strong summer and autumn season.

The group's stock sank 73p to 219p, after it said it was adopting a cautious approach to its expected performance for the year.

The comments represent a change from easyJet's stance in February, when it said it was cautiously optimistic about 2003/2004.

Announcing interim results to March 31, easyJet said it faced an increasingly competitive market, with unprofitable and unrealistic pricing by airlines.

It said demand in the first half of last month met expectations, but had softened in the second half due to continued pressure from rivals and a weaker than expected Easter. Passenger numbers increased 14 per cent to 1,947,675 last month against the previous year.

Passenger numbers so far this month are slightly lower than expected.

Chief executive Ray Webster said the carrier, which has a hub at Newcastle International Airport, was positioned to benefit from the growing demand for low-cost flights in Europe.

"EasyJet continues to strengthen its leading position and we expect to make continued and sustainable progress," he said.

Losses before tax in the first six months fell to £27.3m from £48.1m the year before.