European airlines are bracing themselves for tough times ahead, against a backdrop of declining fares, labor actions and the impact of terrorist attacks.

The March 22, 2016, Brussels bombings sent another tragic ripple through Europe, causing 6% growth in March to slim to just 1.8% in April. While this was partly because of the 12-day closure of Brussels Airport, the attacks also triggered a downturn in demand.

“It tends to hit pricing for the next three to five months,” Ryanair CEO Michael O’Leary said, referring to the Brussels and Paris bombings and the EgyptAir crash. “Airlines have to respond with lower prices to keep people flying.”

Irish low-cost carrier (LCC) Ryanair is also deliberately dropping its fares to keep up pressure on its rivals and achieve 13% net profit growth for 2016-17. “We expect average fares to fall approximately 7% this year,” O’Leary said, adding that he anticipates a 5%-7% drop in the first half, deepening to 10%-12% in the second. This is the steepest price drop O’Leary has forecast over the last five years.

Even UK LCC easyJet felt the pinch in the first half, swinging from a £5 million ($7.3 million) net profit to a £20 million loss, despite carrying 7.4% more passengers. EasyJet CEO Carolyn McCall said fares fell 6%, marking a second year of decline; however, she is confident full-year passenger, revenue and profit growth.

On the plus side, European airlines will benefit as their unfavorable fuel hedges come to an end, but these gains will be lost as competition heats up.

“The intensity of the competition and the resulting pricing pressures will not ease—not [the] least because of the low fuel costs,” Lufthansa CFO Simone Menne said, announcing a swing from a €425 million ($474 million) first-quarter net profit to an €8 million loss. South American route yields are under pressure and Lufthansa has seen fewer bookings from Chinese and Japanese travel groups, but its core European and North American traffic are showing “more stable trends,” Menne noted.    

Lufthansa Group’s LCC unit, Eurowings, is also “off to a successful start,” Menne said. “The seat load factor on its new long-haul services stood at a very encouraging 94.2% in the first three months. Its first-quarter result is a decline on last year’s, but this partly reflects the company’s start-up costs.”          

In keeping with O’Leary’s comments and wider European trends, Lufthansa Group carried “significantly higher passenger volumes” for 3.9% less revenue in the first quarter. But Lufthansa is working to rein in its costs and is still anticipating a slight increase to its full-year adjusted EBIT. “This forecast does not, however, include the negative result impacts of possible strike actions,” it said.

Air France-KLM slimmed its first-quarter net loss from €560 million to €152 million, but it still has work to do. Budget arm Transavia lost another €63 million at operating level in the first quarter.

Like the other European giants, Air France-KLM flagged a “high level of uncertainty” over fare prices, excess capacity and uncontrollable events. It agreed that any fuel savings over the coming quarters will be “significantly offset” by lower fares.

Meanwhile, International Airlines Group, parent of British Airways, Iberia, Vueling and Aer Lingus, is benefitting from getting ahead of the European restructuring wave. IAG swung from a €26 million first-quarter net loss to a €104 million net profit, with revenues up 7.9%. IAG CEO Willie Walsh said second-quarter revenues would be dampened by the Brussels attacks and he added that there was “some softness” in premium demand. IAG has moderated its short-term capacity growth, but is still expecting operating profit growth in 2016.