June 19 (Bloomberg) -- Ryanair Holdings Plc Chief Executive Officer Michael O'Leary said the low-cost carrier's average ticket prices will be lower this year and predicted a ``big downturn'' for the industry.

The stock fell 3.7 percent, its biggest decline since June 5, when the airline said profit would grow at the slowest rate in four years. Ryanair cut prices on 3 million seats at a cost of as much as 45 million pounds ($89.4 million) over three months, O'Leary said today at a press conference in London.

``We expect a big downturn in the next 12 months, we just don't know what's going to cause it,'' said O'Leary, noting the cyclical nature of the industry. ``We must be due one.''

The airline, Europe's largest discount carrier, wants to take market share from EasyJet Plc and meet targets for passenger growth by forcing prices lower. Ryanair wants to boost customer numbers by 22 percent this year even as it pays more for fuel. The Dublin-based company reiterated today that profit will climb about 5 percent in fiscal 2008 as it slashes prices.

Ryanair will ride out an industry slowdown by cutting fares and offering seat sales, said O'Leary, who maintained guidance for the current fiscal year. Yields, or average ticket prices, will be lower than last year, the CEO said as he announced today's sale, the carrier's third in two months.

The airline is offering 3 million seats for 10 pounds each, including taxes and charges, for travel in July to September, O'Leary said. The sale will cost the company 20 million pounds to 45 million pounds, he said.

Wal-Mart Model

``It's a bit like Wal-Mart or Ikea,'' said O'Leary, because businesses with low prices ``do better in downturns.'' During a slowdown, Ryanair will buy cheaper aircraft and expand, he added.

Shares of the company fell 19 cents to 4.98 euros in Dublin. The stock has declined 4.6 percent this year.

``There is understandably an element of weakness, like Ryanair themselves have admitted,'' said Gert Zonneveld, an analyst at Panmure Gordon in London with a ``buy'' rating on the shares. ``But it's very difficult to see whether that's because they're lowering fares and others are following. It's a bit of a chicken and egg situation.''

``If these soft market conditions continue, it could be a very difficult winter,'' O'Leary said. ``There's going to be blood on the walls.''

EasyJet shares declined 14.5 pence, or 2.7 percent, to 533.5 pence in London. Shares of Air Berlin Plc, the third-biggest discount airline in Europe, dropped 2.8 percent to 16.13 euros in Frankfurt.

Strong Summer

Though the market is soft, Ryanair's July and August bookings are surpassing company expectations, O'Leary said. Ticket sales are ``going very strongly'' and Ryanair's load factor, a measure of seats filled, is ``very strong,'' he said.

Airline profits are under pressure as the price of oil rises. New York-traded crude has advanced 12 percent this year. A U.K. tax increase on air travel introduced in February and higher passenger charges at airports also are crimping demand, O'Leary said.

The carrier may pull out of London's Stansted airport because the charges are too high, O'Leary said.

``We're already talking to Stansted,'' he said. ``We may start taking flights and aircraft out of Stansted this winter unless they reduce the charges.''

Ryanair has about 40 planes at Stansted, its largest U.K. base, and could reduce that by about 10 percent depending on discussions with operator BAA Plc, the CEO said.

EasyJet Complaint

EasyJet, Ryanair's biggest competitor, has introduced a ``lowest price guarantee'' in which it promises to refund passengers the difference between fares on routes between the same airports. Ryanair says its guarantee is more complete because it offers the same deal on fares between cities, regardless of airport.

``Ryanair has written to the Advertising Standards Authority to request that EasyJet stop claiming to guarantee the lowest fares when it is clear that they don't,'' O'Leary said today in a statement.

``It's just another Ryanair PR stunt,'' said EasyJet spokeswoman Samantha Day. EasyJet flies to more central airports than Ryanair, she said.

Ryanair still plans to double profit and the number of passengers it flies annually to 87 million by 2012. The airline operates almost 500 routes from 20 European bases and plans to increase its network with 50 routes and three new bases in the coming year.

To contact the reporter on this story: Tracy Alloway in London at talloway@bloomberg.net

Last Updated: June 19, 2007 12:31 EDT