Sir Alex Ferguson has warned Manchester United must "waken up" from their European malaise at Old Trafford or risk a second early exit of the season when they face Athletic Bilbao in the Europa League on Thursday night.

United have toiled at home in European competition all season and almost compounded their failure in the Champions League group phase by falling to Ajax on their debut in the Europa League. The Amsterdam club's 2-1 win in the last-32 second-leg ended an 11-game undefeated home run for Ferguson's team in Europe and the Dutch side needed only one more goal to progress at United's expense despite trailing 3-0 on aggregate after six minutes at Old Trafford. The result also left United with only one win from four home European matches this term, and Ferguson admits a vast improvement is required against Marcelo Bielsa's impressive side.

The United manager said: "It's a very difficult tie. From what we've seen, Bilbao are a very progressive team in Spain at the moment and it's going to be a difficult game for us. It's a game in which we need to waken up, there's no question about that. Some of our European form this season has been disappointing but it's an opportunity to progress and we have to take that opportunity. But it will need a very good performance."

Ferguson cited complacency as a factor in United's Champions League demise and took the blame for the Ajax defeat himself, having fielded a young defence. He claimed that lesson, at least, has been learned and an experienced United team is expected to start the last-16 first leg.

"I don't know if we're making too many changes in these games," he added. "Certainly in the second leg against Ajax we did that, and in the Champions League group stage we made some changes. But we made mistakes in the group stage too, so it's our own fault. But we'll play a strong side against Bilbao and hopefully that makes a difference."

Bilbao are fifth in La Liga and have secured a place in the final of the Copa del Rey against Barcelona, with their coveted centre-forward Fernando Llorente – scorer of 13 goals in 22 league games this season – highlighted as an obvious threat by Ferguson. He said: "Unlike [most] centre-forwards from Spain, he's tall and a great header of the ball. His scoring record is very good this year.

"They've got different qualities from a lot of Spanish teams. They press the ball very well and they're not afraid to flood players forward in attack. They're very positive and have no hesitation in committing themselves to attack at any point, with a number of players. It's the best Athletic Bilbao team I've seen for some years."

Ferguson is confident, however, that the recent improvement in his goalkeeper David de Gea, plus the central-defensive partnership of Rio Ferdinand and Jonny Evans, gives United a platform to stifle the threat from the Basque club.

"Ferdinand's form in particular over the last couple of months has been outstanding," he said. "It does tell you that when you play two partners together for longer periods rather than chop and change it makes a difference. Jonny Evans has emerged through having the experience of playing with Rio, so that's been a plus for us. I'll accept 1-0 against Bilbao rather than 2-1 or 3-2 without question."

De Gea produced a vital late save against Ajax at Old Trafford, as he has done against Chelsea, Liverpool, Norwich and others, to claim the United supporters' player of the month award for February. And Ferguson admits the decision to take the young Spaniard out of the team following the FA Cup defeat at Liverpool has paid dividends.

The United manager said: "He had a bad game against Liverpool and I felt he was better than that. He had to get his confidence back in terms of handling that particular defeat because if you lose to Liverpool it's a big defeat. Since then he's been outstanding. He's grasped the nettle, his training performances have been fantastic and he's transferred that into the game situation very well."

De Gea concurred: "The time I spent on the bench when I was out of the team I could reflect, think hard and regroup. I started working harder to come out of that spell. It made me more determined so when I did get that opportunity to get back in the side I grabbed it with both hands. The thing now is to keep this good form because you know that one slight slip-up and you've got quality players waiting in the wings to grab their opportunity as well."