(Adds analyst comments paragraph 6, details on Budget acquisition 11-12, updates shares 2)
By Daniel Morrissey
LONDON, April 17 (Reuters) - Shares in Avis Europe Plc crumbled on Thursday after Europe's biggest car rental firm warned revenues would fall five to 10 percent in 2003 as weak European economies dent demand and competition pressures prices.
Investors wiped out nearly a quarter of its value, spooked also by the firm's warning of limited visibility, and by 0911 GMT, the share price was down 21 percent, just above an historic low of 75-1/2 pence.
Avis' majority owner, Belgian car retailer D'Ieteren , tumbled more than nine percent in Brussels.
Avis Europe also said its first quarter revenues were affected by the weaker European economic conditions and the build-up to war in Iraq, which began on March 20.
The company said these factors were hitting its corporate market and increasingly long-haul business where air passengers, particularly on transatlantic flights, rent cars at airports.
"We have limited visibility under current trading conditions, however our internal planning assumption at this stage is for a reduction in the range of 5-10 percent of full year revenues," Chairman Bob Reid said in a statement. A transport analyst, who asked not to be named, said: "The market has savaged the stock and I think it's not only because of the revenue outlook -- the statement also talks about limited visibility and markets hate uncertainty."
STRUCTURAL CHANGE
Avis Europe, whose major markets of France, Spain, Italy, Britain and Germany generate more than 80 percent of its revenues, said in late February sluggish European economies would constrain any real recovery in the corporate sector.
Reid also said the company had "maintained very tight control" on operational costs and fleet utilisation and staff productivity were running "slightly ahead" of last year.
Reid said the company had embarked on a structural change programme aimed at improving operating margins. The efficiency drive will cost 70 million euros ($75.94 million) over the two years, "with a payback of four years," Reid added.
The corporate market counts for just under a fifth of its sales. Another concern for investors has been the slump in demand for air travel, particularly transatlantic flights. Car rentals at airports generate half of Avis Europe's business.
The company last month completed its acquisition of rival Budget licence agreements and royalties as well as the right to use the Budget trademark in Europe, the Middle East and Africa.
Reid said the Budget takeover would reduce group profits by four to six million euros this year, in line with previous guidance issued to the market.