Revenue increased, but the first quarter posted an operating loss, making a sharp recovery in the second half necessary to meet the full-year forecast.

Operating revenue in the first quarter of FY2027 ending March 2027 was ¥11,033 million, up 6.2% from ¥10,391 million in the same quarter of the previous year. However, the operating loss deteriorated by ¥1,080 million, from ¥40 million in the same quarter of the previous year to ¥1,120 million. The company also posted an ordinary loss of ¥1,123 million and a quarterly net loss of ¥810 million, turning from quarterly net income of ¥98 million in the same quarter of the previous year to a loss. Revenue growth did not translate into earnings, and the deterioration in profitability exceeded the benefit from the larger revenue base.

The company’s full-year forecasts are operating revenue of ¥47,860 million, operating profit of ¥660 million, ordinary profit of ¥610 million and net profit of ¥600 million. They remained unchanged as of the first quarter. Operating revenue alone was tracking at 23.1% of the full-year forecast, broadly in line with a simple one-quarter benchmark. However, because the company recorded an operating loss of ¥1,120 million in the first quarter, it will need cumulative operating profit of ¥1,780 million over the remaining 3 quarters to achieve the full-year operating profit forecast of ¥660 million. At the next results announcement, it will be necessary to check how far cumulative first-half operating earnings have recovered from the first-quarter loss.

First-quarter operating expenses were ¥12,154 million, ¥1,121 million above operating revenue. According to the company, revenue increased on rising air travel demand and the operation of extra flights, but the yen was substantially weaker year on year and the provision for scheduled aircraft maintenance costs denominated in foreign currencies increased, which was the main cause of the deterioration in earnings. However, the first-quarter disclosure did not separately quantify the increase in provisions attributable to yen depreciation, fuel costs, personnel expenses or aircraft-related costs. In addition, because the company has a single business segment, profitability cannot be assessed by route or segment operating profit.

At the next FY2027-H1 results announcement, attention should be paid not only to cumulative operating revenue but also to cumulative operating expenses, the degree of recovery in operating earnings and the additional impact of yen depreciation on maintenance-related costs. If losses continue despite revenue growth, as in the first quarter, the likelihood of achieving full-year operating profit of ¥660 million will decline substantially. Conversely, if the cumulative first-half operating loss narrows and the company explains that it is maintaining its full-year forecast based on the peak demand season in the second half, the gap with the company’s plan will narrow. In addition to whether the forecast is revised, it will be important to verify whether the full-year assumptions for revenue and operating profit remain unchanged.