Financial Results for Second Quarter of the Fiscal Year Ended March 2026 (FY2025)
Respondents:
November 13, 2025(Tue)
17:30－18:10
Representative Director, President and Executive Officer: Manabu Motohashi Managing Director and Executive Officer: Takeshi Kiriyama
Executive Officer, Finance & Accounting / IR: Kaoru Tagami
Please be advised that the following text has been edited/modified from the original Q&A conversations for clarity.
A. We will refrain from disclosing specific figures regarding the revised assumptions for the number of passengers and the average price per passenger. However, the effects of
strategic pricing implemented from Q2 onward are gradually becoming apparent, and we will continue our efforts to achieve the revised forecast.
Q2. What are the factors behind the current performance exceeding the revised forecast?A. Various measures implemented since Q2 have been effective, allowing us to attract a certain number of customers even while increasing the average price per passenger. As a result, the top line has exceeded expectations. On the cost side, we have adopted conservative view, considering the weaker-than-expected yen exchange rate and the potential for unexpected engine maintenance or other unforeseen events.
Q3. What are the details of the effects of the Expo on Kobe routes?A. Of the Haneda, Kobe, and other route categories, routes to and from Kobe showed the largest year-on-year growth, and we recognize that the Expo had an effect in this increase. Specifically, passenger revenues on routes to and from Kobe recorded an increase between 5% and 10% over the previous year. As a result, there were concerns that the effects of the Expo would wear off in 2H, but routes to and from Kobe have remained strong.
Q4. Could you please elaborate on your decision to "execute borrowings not planned at the beginning of the fiscal year?"A. These borrowings are related to financing from Atlantis Aviation for the procurement of new aircraft (Boeing 737-10), which was announced through a timely disclosure in June 2025.
After conducting a comprehensive review in light of the global shortage of aircraft, we strategically decided to proceed with and execute the procurement during the fiscal period as a step to "plant the seeds" for future growth. The primary reason for the revision in
performance was the commissions and fees paid related to this financing during the period.
Q5. How do you view the outlook for the next fiscal year regarding the severe price competition environment for non-business demand?A. The sluggish recovery of business demand following the COVID-19 pandemic has been a factor contributing to intensified price competition in non-business demand. Unless there is a significant change in this structural situation, we anticipate that a certain level of price competition will persist in the next fiscal year. Meanwhile, as we expect costs to continue rising, our policy is to focus on maximizing revenue through strategic revenue management.
Q6. In your earnings forecast for the next fiscal year, how do you plan to achieve an increase in profit given the expected continued rise in unit costs?A. The focus for the next fiscal year will be on improving unit revenue. In addition to the various measures implemented since Q2, which have started to show effects in 2H and beyond, we will continue to evaluate and implement additional initiatives to increase revenues in response to rising costs. Our policy is to steadily execute each measure to achieve revenue growth.
Q7. What are you expecting most from the MLIT Expert Committee?A. What we expect most is to establish a framework or guidelines for setting fares in a way that appropriately reflects costs and personnel investments.
The reality for Skymark is that from FY2018 to FY2024, though our net sales increased by JPY20 billion, costs (excluding government support) increased by JPY30 billion, resulting in a JPY10 billion deterioration with respect to profit and loss. This is due to foreign exchange factors as well as rising aircraft prices and maintenance expenses.
Under the current system, as a result of a 2000 amendment to the Civil Aeronautics Act, any airfares are in essence acceptable as long as they do not fall below variable costs. Only when they fall substantially below variable costs can the Ministry of Land, Infrastructure, Transport and Tourism conduct an investigation or order a price change. However, costs other than variable costs, such as personnel costs for flight crew and cabin crew, maintenance expenses, and aircraft expenses, which are in a sense fixed flight operation costs, are not included in this, and these costs have risen significantly. Therefore, while we recognize the importance of competition itself, we request that the new guidelines take into account these fixed flight operation cost factors in addition to the existing variable costs.
The situation is such that Skymark has suffered a deterioration in profit on the scale of JPY10 billion. For the sustainable development of the airline industry as a whole, we believe that while cooperation and collaboration are important, the most important thing is to raise the average price per passenger to an appropriate level.
Q8. What is your view on the feasibility of code-sharing flights on domestic routes as discussed at the MLIT Expert Committee, and what would be the positive impact on your business if it were to be realized?A. The forms of coordination being discussed at the expert committee range widely, from time slot adjustments to code-sharing.
Code-sharing is a matter that needs to be coordinated with bodies such as the Japan Fair Trade Commission due to its relationship with the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade. If code-sharing were to be realized and result in a significant change in supply volume, we recognize that this could have a certain positive impact on Skymark.
Q9. Regarding the introduction of a fuel surcharge as described in the MLIT Expert Committee presentation, what is the feasibility of this and, if introduced, how much preparation time would be required?A. A fuel surcharge on domestic flights is currently feasible under existing systems and has already been introduced by Fuji Dream Airlines on domestic routes. Our intent in including this in our proposal is to establish it as a general mechanism that can be adopted by all companies. Regarding the lead time required to introduce the system, we acknowledge that a certain amount of time would be necessary to make changes to our internal web-based reservation and sales system, as well as to implement system modifications for agents.