Supplementary Material for Financial Results Q2 FY2025 (FY2026 3) with explanation（2MB）

Skymark Airlines Inc.

Supplementary Material for Financial Results Q2 FY2025 (FY2026/3)

November 13, 2025

*In this material, definitions are, FY: fiscal year (from April 1 to March 31 of the next year), Q1: from April to June, Q2: from July to September, Q3: from October to December, Q4: from January to March

Operating revenue reached a record high, driven by effective fare increases

1. implemented to ensure sustainable pricing that reflects rising costs

   • Amid continued cost increases, strategic fare increase measures resulted in an average price per passenger of 13,498 yen, up 5.7% year-on-year

   • The number of revenue passengers decreased by 4.7% year-on-year to 3.955 million, due to intensified price competition for non-business demand driven by competitors' sales campaigns

     Operating income decreased year on year; however, it exceeded the Q2 assumptions,

2. and income before income taxes increased year on year

   • Operating income decreased year-on-year, impacted by cost pressures from inflation; however, it surpassed the Q2 target through further strengthening of cost management, excluding safety investments

   • Income before income taxes, which serves as the basis for dividends, increased year-on-year due to factors such as a reduction in foreign exchange losses

     Although we have revised our earnings forecast downward, taking a conservative view of intensifying competition, the effects of initiatives such as more flexible

3. pricing tailored to specific routes and time slots are beginning to materialize

   • The combined effects of flexible pricing and strengthened cost management have enabled current performance to exceed the revised forecast

Note:

1. Hereafter, 'Q2 assumptions' will be referred to as 'Q2 target'

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This slide outlines our highlights for Q2 FY2025.

Operating revenue reached a record high. This was achieved by implementing strategic fare increases intended to reflect rising costs, even as we faced severe price competition from competitors' ongoing sales campaigns. As a result, the average per passenger increased by 5.7% year-on-year to JPY 13,498. On the other hand, the number of revenue passengers decreased by 4.7% year-on-year to 3.955 million. Consequently, operating revenue increased by 0.7% year-on-year to JPY 54.8 billion, marking a record high.

The next point is about the state of our profit indicators.

Regarding operating income, in an environment of increasing cost pressures from inflation, we worked to further strengthen our cost management in areas other than safety investments. As a result, although operating income decreased year-on-year, it surpassed the Q2 target.

Income before income taxes, which serves as the basis for dividends, increased year-on-year due to factors such as a reduction in foreign exchange losses.

The third point is about the current situation. Although we have revised our earnings forecast downward, taking a conservative view of intensifying competition from the third quarter onward, the combined effects of dynamic pricing tailored to specific routes and time slots and continuing to strengthen cost management have enabled our current performance to exceed the revised forecast.

Our detailed financial results briefing begins on the next page.

Operating revenues reached a record high. While operating expenses increased due to the reduction in government support and increased personnel investments, operating profit declined

(JPY Bn)

60.0

52.0

Broke the record

54.4 54.8

40.5

40.0

20.1

20.0

0.0

Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2

FY2021 FY2022 FY2023 FY2024 FY2025

(JPY Bn)

5.0

3.1

1.6

2.3

1.2

0.0

▲5.0

▲10.0

▲ 10.1

▲15.0

Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2

FY2021 FY2022 FY2023 FY2024 FY2025

Note:

1. Income before income taxes ×(1－effective tax rate 34.59%)

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This is an overview of our financial results for Q2 FY2025.

Operating revenues totaled JPY54.8 billion, a record high for the period up to second quarter.

Operating expenses increased year-on-year due to the reduction government support and increased personnel investments, resulting in an operating income of JPY1.2 billion.

Ordinary income, income before income taxes and net income were approximately JPY0.4 billion. This was mainly due to a significant reduction in foreign exchange losses compared to the same period last fiscal year, as well as the incurrence of non-operating commissions paid related to the introduction of new aircraft.

1月

3月

4月

5月

6月

7月

2月

8月

9月

前年同 月比

2025年

2024年

The number of passengers declined year on year following a strategic increase in average price per passenger We are enhancing our revenue management efforts while seeking the optimal balance between load factor and average price per passenger

Revenue passengers (in thousands), Revenue passengers

Number of seats (in thousands)

Q2 FY2025

Revenue passengers: 97％ YoY

(in thousands)

3,000

100.0%

2,418

1,856

697

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Next, we will talk about the quarterly trend in travel demand.

The number of passengers declined as a result of strategically increasing average price per passenger, and in Q2, it reached 97% compared with the same period last fiscal year. We are enhancing our revenue management efforts while seeking the optimal balance between load factor and average price per passenger.

100%

(Unit: JPY)

13.5

COVID-19

COVID-19

12.9

90%

13.0

85% 85% 84%

83%

84%

79%

12.5

80%

12.1 12.1

12.0

70%

11.4

11.6

69%

11.5

11.2

60%

11.1

11.0 10.7

50%

10.5

Q1-Q2 FY2025

Average Price

per Passenger : JPY13,498vs. Q1-Q2 FY2024: +JPY723

vs. Q1-Q2 Target: ▲JPY354

47%

40%

43%

10.0

10.3

0% 0

Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025

Notes:

1. Load Factor is calculated as follows: RPK (revenue passenger kilometers) / ASK (available seat kilometers)

2. Yield is calculated as follows: Passenger Revenue / RPK

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9.5

30%

The next slide shows the load factor and yield.

While load factor decreased by 4.7 percentage points year-on-year to 79.0%, yield increased by 6.9% to JPY12.9 and the average price per passenger increased by JPY723 to JPY13,498. To address an environment of intensifying price competition in non-business demand, we will strengthen our response with dynamic pricing based on specific routes and times.

+ : Profit increase (revenue increase, cost decrease)

▲: Profit decrease (revenue

(Unit: JPY Bn)

2.3

Q1-Q2 FY2024

Market

Fuel costs

▲1.1

fluctuations1 and tax

+1.57

▲1.24

decrease, cost increase)

1.2

Q1-Q2 FY2025

Revenue

increase

+0.39

Airport Usage

Fees

▲0.73

▲0.66

Termination of government support

Aircraft

lease payment

+0.19

Maintenance

expenses Personnel

▲0.21

expenses

▲0.61

Bonuses Amortization Other

Depreciation

and

expenses2

+0.01 ▲0.08 ▲0.39

※1 Details of changes in market fluctuations

Cost incurred from changes in difference between exchange rate after hedging and oil price after hedging

+1.55： Fuel cost

+0.00： Aircraft lease payment

+0.01： Maintenance expense

▲0.00： Other expense

※2 Details of changes in other expenses

▲0.12： Increase in system-related expenses

▲0.06： Increase in airport-related outsourcing expenses

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▲1.17

Reduction in government support

This slide shows the detailed changes in operating income by factor.

In Q1-Q2, despite higher revenue due to higher average prices per passenger and a turn toward favorable market conditions due to lower crude oil prices and an appreciating yen, operating income declined by JPY1.1 billion year-on-year due to higher fuel costs, fuel taxes, airport usage fees, and personnel expenses due to reduced government support and strengthened personnel investment.

Major Changes from Previous Period (Q1-Q2 FY2024)

(Unit: JPY MM)

Number of Aircraft

(Average for each fiscal year)

29.0

29.0

-

-

-

Decrease in Fuel Cost and Tax ▲308

• Increase due to reduced government support

• Decrease due to market factors (low crude oil prices and strong yen)

  +737

• Impact of termination of government support

  +196

• Increase in heavy maintenance expenses due to inflation

  +616

• Increase in number of personnel, salary increases, etc.

• Recording of expenses related to restricted stock compensation

  +403

• Increase in various expenses such as system-related expenses, airport-related outsourcing expenses, and crew hotel

costs

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This slide shows a detailed breakdown of operating expenses.

Total operating expenses for Q1-Q2 increased by approximately JPY1.5 billion compared to the same period last year. This change can be broken down into a decrease of JPY1.5 billion due to market factors resulting from lower crude oil prices and an appreciating yen, and an increase of JPY3.0 billion due to other factors.

The main components of the JPY3 billion increase in expenses were fuel costs and fuel taxes due to reduced government support, airport usage fees due to the termination of government support, personnel expenses due to strengthened personnel investment, and system-related expenses and airport-related outsourcing expenses due to inflation.

Inspite of this environment of increasing costs, we succeeded in reducing costs compared to our initial forecast as a result of thorough control of manageable expenses. We will continue our efforts in this area going forward.

0.4 0.4 0.4

(Unit: JPY Bn)

1.2

FX loss, non-operating commissions paid (borrowing fees related to introduction of new aircraft), etc.

0.3

Operating Income

Ordinary Income

Income before Income Taxes

Net Income

Adjusted Net Income1

Assets and liabilities denominated in foreign currencies are converted at the exchange rate as of the end of each quarter. If the yen appreciates compared to the exchange rate at the end of the previous quarter, a foreign exchange loss will be recorded in the accounts, while if the yen depreciates, a foreign exchange gain will be recorded.

Foreign exchange gains in Q2: JPY0.75 billion (Quarterly exchange rates)

＜Major Assets and Liabilities Denominated in Foreign Currencies＞ Skymark has more assets denominated in foreign currencies than liabilities

＜Exchange Rates at the End of Each Quarter＞

JPY160

・As of the end of Q4 FY2024: 149.5 JPY/US$

・As of the end of Q1 FY2025: 144.8 JPY/US$

・As of the end of Q2 FY2025: 148.8 JPY/US$

Note:

JPY140

JPY120

Q1FY2025 Q2FY2025

Foreign Foreign exchange loss exchange gain

2023/9 2023/12 2024/3 2024/6 2024/9 2024/12 2025/3 2025/6 2025/9

1. Dividends are based on adjusted net income. Adjusted net income = Income before income taxes × (1－effective tax rate 34.59%)、Annual dividend payout = Adjusted net income × Payout ratio of 35%

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This slide shows details for each profit indicator.

Due to the foreign exchange losses recorded on the revaluation of foreign currency-denominated assets and liabilities as of the end of Q1-Q2, combined with non-operating commissions paid, ordinary income was approximately JPY0.4 billion. In addition, there were no special gains or losses incurred, and therefore income before income taxes was also approximately JPY0.4 billion, and adjusted net income, which is the basis for our dividends, was approximately JPY0.3 billion.

Net income also did not vary significantly from income before income taxes, at approximately JPY0.4 billion.

Changes from the initial forecast and details:

Dubai crude oil (US$75/BBL) and exchange rate (JPY150/US$) assumptions remain unchanged (for unhedged portions)

• Decrease of JPY3.7 billion (▲6.4% vs. initial forecast) in 1H and JPY2.6 billion (▲4.3% vs. initial forecast) in 2H

Over time, the effects of dynamic pricing based on demand are gradually becoming apparent

• A decrease of JPY3.8 billion in 1H and JPY2.1 billion in 2H compared to the initial forecast

• Fuel costs: Reflects cost reduction effects from extended government support (assuming from late May to end of March)

• Other expenses: Cost control focused on outsourcing expenses (JPY▲1.9 billion)

*Incurring JPY0.5 billion (maintenance expense: JPY0.3 billion; other: JPY0.2 billion) deferred to 2H → Increase factor for 2H expenses

*Although progress exceeded the initial Q2 target, the actual performance remains below the target level due to expenses being deferred to Q2 and beyond

Note:

1. Income before income taxes × (1 - effective tax rate 34.59%)

• Strategically executed borrowings not included in the initial fiscal year plan to address commissions and fees. This decision factored in interest rates and other conditions, assuming continued inflation

• Given the significant fluctuations in exchange rates and the difficulty of forecasting, it is assumed that no foreign exchange gains or losses will occur

• The adjustment amount for corporate taxes, etc., remains unchanged from the initial plan as it may fluctuate depending on future plans

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Ordinary income: In addition to the decrease in operating income, advance investments, including commissions and fees related to the introduction of new aircraft, were incurred in anticipation of sustainable growth

Operating income: Decreased due to the underachievement of operating revenues (particularly in Q1), despite certain benefits from cost control and reduction efforts

Operating expenses: Reflecting cost control/reductions and the effect of extended government support for fuel costs

Operating revenues: Reflecting severe price competition in non-business demand

Next, we discuss our revised earnings forecast. We have revised our earnings forecast downward based on our results through Q2 and our future outlook.

Revised operating revenues are expected to be JPY111.0 billion, JPY6.3 billion less than the initial forecast. Operating expenses are expected to be JPY109.4 billion, JPY5.9 billion less than the initial forecast, and as a result, operating income is expected to be JPY1.6 billion, JPY0.4 billion less than the initial forecast. Ordinary income is expected to be JPY1.0 billion, representing a JPY1.1 billion decrease from the initial forecast, and net income is expected to be JPY0.1 billion, JPY1.1 billion below the initial forecast.

The following is an explanation of the changes from the initial forecast and details. There is no change in the assumptions of 75US$ per barrel for Dubai crude oil and the exchange rate of 150JPY/US$ for the unhedged portion.

Next, I explain the details. Operating revenues are expected to be JPY6.3 billion lower than the initial forecast, reflecting the severity of intensified price competition in non-business demand. This forecast includes an expected JPY3.7 billion decrease in 1H and a JPY2.6 billion decrease in 2H. We expect a reduced rate of decline in 2H versus 1H, as the effects of dynamic pricing in response to demand gradually become apparent.

Operating expenses reflect the effects of cost control and reduction as well as the extension of government support for fuel costs. Broken down, this represents an expected decrease of JPY3.8 billion in 1H and JPY2.1 billion in 2H. The decrease is expected to be larger in 1H than in 2H. This is because market conditions from April to September were more favorable than our assumptions, with lower crude oil prices and a stronger Yen. Government support for fuel is assumed to last until the end of March. In addition, other expenses now reflect the effect of cost containment/reduction of JPY1.9 billion in the fiscal year to date. Furthermore, JPY0.5 billion in expenses from Q2 has been deferred to 2H, and this will be a factor in the increase of expenses in 2H.

As a result, operating income is expected to decline since the shortfall in operating revenues cannot be compensated for by controlling expenses. Although operating income has exceeded the Q2 target in the initial forecast, it falls below the target level when taking into account the aforementioned timing difference.

For ordinary income and items below, in addition to the decrease in operating income, the revised forecast reflects advance investment in the form of commissions and fees related to the introduction of new aircraft in anticipation of sustainable growth. Regarding these commissions and fees, we made a strategic decision to execute borrowings not planned at the beginning of the fiscal year, taking into account interest rates and other terms and conditions given the assumption that inflation will continue. Note that we are assuming no FX gain or loss since exchange rates are significantly fluctuating and difficult to forecast. As the amount of income tax adjustments is subject to change depending on future plans, it remains unchanged from the plan at the beginning of the fiscal year.