Supplementary Material for Financial Results Q2 FY2025 (FY2026 3)（1MB）

*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

implemented to ensure sustainable pricing that reflects rising costs

1

• 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,

  and income before income taxes increased year on year

  2

• 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

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

  3

• 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'

40.5

20.1

(JPY Bn) 60.0

40.0

20.0

Broke the record

52.0 54.4 54.8

0.0

3.1

1.6

2.3

1.2

(JPY Bn) 5.0

0.0

Q1-Q2 FY2021

Q1-Q2 FY2022

Q1-Q2 FY2023

Q1-Q2 FY2024

Q1-Q2 FY2025

Note:

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

▲5.0

▲10.0

▲15.0

▲ 10.1

Q1-Q2 FY2021

Q1-Q2 FY2022

Q1-Q2 FY2023

Q1-Q2 FY2024

Q1-Q2 FY2025

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

Passenger Demand

Revenue passengers (in thousands),

(Reference) Monthly Trends

Revenue passengers

Number of seats (in thousands)

3,000

(in thousands)

98.6%

102.9%

100.9%

100.0%

2,500

1,000

97.3%

94.9%

93.4%

92.0%92.4%

97.5%

702

692

643

624 634

608

682

675

624

574

640 641

707

660

697

740

2,000

733 715

90.0%

2,435

2,441

2,453

2,418

2,503

2,523

2,514

2,463

2,510

2,536

2,082

2,156

2,024

2,099

1,993

2,045

1,890

1,951

1,945

1,856

1,500

500

1,000

80.0%

500

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

0

1月

Jan

2月

Feb

3月

4月

5月

6月

7月

Mar Apr May Jun Jul

8月

9月

Aug Sep

70.0%

FY2023

FY2024

Revenue passengers

前年同 月比

2025年

2024年

2024

2025

YoY change

FY2025

Efforts to improve average price per passenger resulted in a decline in load factor1, while yield2 increased s ignificantly To address an environment of intensifying price competition in non-business demand, we implemented dynamic

pricing based on specific routes and times

Load Factor Yield

(Unit: JPY)

100%

90%

80%

70%

60%

50%

40%

85% 85% 84%

43%

COVID-19

47%

69%

83% 84%

79%

13.5

13.0

12.5

12.0

11.5

11.0

10.5

10.0

10.7

11.4

11.2

11.1

COVID-19

10.3

11.6

12.1

12.1

12.9

30%

0%

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

Q1-Q2

0

9.5

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

   Changes in Operating Income (vs. Q1-Q2 FY2024)

   Despite increased revenue and lower costs driven by reduced crude oil prices, operating profit declined.

   after hedging	Q1-Q2 FY2024	Q1-Q2 FY2025
   Crude oil price	77.7US$/BBL	71.0US$/BBL
   FX rate	140.3JPY/US$	140.1JPY/US$

   This was due to an increase in operating expenses, including fuel costs and taxes, airport usage fees, and personnel expenses, resulting from reduced government support and strengthened investments in human resources

   (Unit: JPY Bn)

   2.3

   Q1-Q2 FY2024

   fluctuations 1

   +1.57

   and tax

   ▲1.24

   1.2

   Market

   Fuel costs

   ▲1.1

   + : Profit increase (revenue increase, cost decrease)

   ▲: Profit decrease (revenue decrease, cost increase)

   Q1-Q2 FY2025

   Revenue increase

   +0.39

   ▲1.17

   Reduction in government support

   Airport Usage Fees

   ▲0.73

   ▲0.66

   Termination of government support

   Aircraft lease payment

   +0.19

   Maintenance

   expenses

   ▲0.21

   Personnel expenses

   ▲0.61

   Bonuses

   +0.01

   Depreciation and Amortization

   ▲0.08

   Other expenses 2

   ▲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

   Details of Operating Expenses for Q2 FY2025

   Unit: JPY MM

   Q1-Q2

   FY2024

   Q1-Q2

   FY2025

   vs. Q1-Q2

   FY2024

   Change From Market From Other (JPY) Fluctuations Factors

   Number of Aircraft

   (Average for each fiscal year)

   Available Seat-km (ASK)

   (MM seats km)

   Fuel Cost and Tax Airport Usage Fees Aircraft Lease Payment

   Maintenance Expenses

   Personnel Expenses

   (Excluding Bonuses) Bonuses

   Depreciation and Amortization

   Others

   Total Operating Expenses

   Dubai Crude Oil Price

   (After Hedging)(US$/Barrel)

   Exchange Rate Used for Fuel Cost (After Hedging)(JPY/US$)

   Exchange Rate Used for Foreign Currency Transactions

   (After Hedging)(JPY/US$)

   Major Changes from Previous Period (Q1-Q2 FY2024)

   (Unit: JPY MM)

   29.0	29.0	-	-	-
   5,237	5,228	▲8	-	-
   16,128	15,819	▲308	▲1,555	+1,247
   3,858	4,595	+737	-	+737
   5,755	5,550	▲205	▲5	▲199
   7,391	7,587	+196	▲13	+210
   8,799	9,415	+616	-	+616
   976	961	▲15	-	▲15
   1,438	1,519	+80	-	+80
   7,815	8,219	+403	+4	+399
   52,163	53,669	+1,505	▲1,570	+3,076
   77.7	71.0	▲6.7	-	-
   155.2	146.2	▲8.9	-	-
   140.3	140.1	▲0.2	-	-

   • Increase due to reduced government support

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

   • Impact of termination of government

     support

   • Increase in heavy maintenance expenses

     due to inflation

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

   • Recording of expenses related to restricted stock compensation

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

▲308

+737

+196

+616

+403

In addition to the foreign exchange losses recorded on the revaluation of foreign currency-denominated assets and liabilities as of the end of Q1-Q2, non-operating commissions related to the introduction of new aircraft were incurred as advance investments for sustainable growth

Change in Respective Profit

1.2

0.4

0.4

0.4

0.3

No change

Operating

Income

Ordinary

Income

Income before

Income Taxes

Net Income

Adjusted Net

Income1

(Unit: JPY Bn)

＜参考＞為替差 損益について

Reference: Foreign exchange gains/losses

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$

JPY140

JPY120

Q1FY2025

Foreign exchange loss

Q2FY2025

Foreign exchange gain

Note: 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%

Changes from the initial forecast and details:

Dubai crude oil (US$75/BBL) and exchange rate (JPY150/US$) assumptions

remain unchanged (for unhedged portions)

Operating revenues: Reflecting severe price competition in non-

business demand

• 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

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

• 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

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

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

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

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

For the next 12 months, currency risk and fluctuation risk of fuel price are hedged for 90% and 60% of assumed consumption amount, respectively

40%

90%

relation to non-hedged) of fuel cost and tax

Impact on Q3-Q4 FY2025 Operating Profit (6 months) from market fluctuations (change in rate in

Next 1-12 Months

Next 13-24 Months

Next 1-12 Months

Next 13-24 Months

(JPY 100 MM)

75

150

Sensitivity to Foreign Exchange and Fuel Price Fluctuations Updated

50%

60%

30%