Ryanair shares fell 6.5 per cent in Dublin and 7.3 per cent in London as the airline produced lower passenger load figures for June.

The market reacted negatively to the figures, which showed that Ryanair only managed to fill 79 per cent of seats in June, compared to 88 per cent for the same period in 2002. The shares fell to €5.81 in Dublin and £4.00 sterling in London as the market absorbed the news.

Analysts said that, while they only represented a snapshot, the market would be concerned if they were repeated throughout the summer.

Shares in rival easyJet were also down as sentiment turned away from low-cost operators towards traditional full-service airlines.

Mr John Mattimoe of Merrion Stockbrokers said the market was probably reacting to two developments, the lower load figures and cuts in fares by the company. He said this meant profit margins were coming down at a time when loads were also dropping.

"The latest figures certainly make things more challenging for the company. The market will want to see a moderation in the trends announced today," he said.

However, he added that the Ryanair share price was traditionally highly volatile. He said the market would be interested in how the airline fared in the key period between mid-July and September.

While the load figures depressed the stock, Ryanair's passenger numbers grew by 47 per cent to 1.83 million for June.

Analysts said the rest of the summer would probably be better for budget airlines as tourists moved away from package holidays towards self-booking options.

Ryanair said it never commented on passenger load figures. However, analysts said the airline was trying to bed down a number of new routes and this might have been a factor behind the lower load figures.

Mr Nick van den Brul, of BNP Paribas, said that, while the lower load figures were notable, their effect would be partially offset by cost savings from new aircraft.

In contrast to Ryanair's poor day, shares in full-service carriers like KLM and British Airways rallied for most of the day, although KLM closed down marginally.

British Airways said it was luring back passengers with cheap fares. This message appeared to boost its shares with hopes rising that the airline industry is set to recover from war in Iraq and a deadly virus outbreak in Asia.

British Airways, which is Europe's biggest airline, said passenger traffic rose 5.8 per cent in June from a year ago.

But it also said it was cutting fares and that first-quarter revenues would be well down on the year before as a result. Its shares closed up 5.5 per cent at 163p sterling.