Whether revenue growth leads to a recovery in profit is the key issue for the first half of the fiscal year ending March 2027

Operating revenue in the first quarter of the fiscal year ending March 2027 was ¥24,996 million, an increase of ¥1,417 million, or 6.0%, from ¥23,579 million in the same period of the previous year. Meanwhile, operating results deteriorated from an operating loss of ¥1,630 million in the same period of the previous year to an operating loss of ¥3,329 million, widening the deficit by ¥1,699 million. Although passenger demand and revenue management drove higher revenue, the benefit of increased revenue was insufficient to absorb higher costs at the operating level.

The full-year forecast is ¥120,800 million for operating revenue and ¥1,500 million for operating profit. Operating revenue in the first quarter represented approximately 20.7% of the full-year forecast, about 4.3 percentage points below the simple quarterly elapsed rate of 25.0%. However, airline earnings are seasonal, so the mechanical half-year benchmark of ¥60,400 million should be treated as a reference point for measuring progress, not as the company's stated first-half forecast. For operating profit, achieving full-year operating profit of ¥1,500 million from the first-quarter operating loss of ¥3,329 million requires total operating profit of ¥4,829 million over the remaining 3 quarters.

Net loss for the quarter narrowed by ¥142 million, from ¥2,774 million in the same period of the previous year to ¥2,632 million, but this does not indicate an improvement in operating performance. The ordinary loss was ¥3,093 million, with foreign exchange gains and a ¥462 million gain on the sale of fixed assets associated with the sale-and-leaseback of spare aircraft engines supporting the result. Accordingly, the first-half results need to distinguish between an improvement in operating profit and a profit recovery that does not depend on foreign exchange gains or extraordinary income.

The company operates a single aviation business segment, and this disclosure does not provide segment revenue, segment profit or loss, or regional revenue. The operating margin for the first quarter has also not been disclosed. In the first-half results, it will be necessary to assess year-on-year growth in operating revenue, revenue passengers, changes in operating expenses, operating margin and whether the full-year forecast is revised, in order to evaluate the achievability of the ¥1,500 million operating profit forecast rather than simply the progress of revenue.