Japanese Airline Sector "Jun-Q FY3/27 preview: Trough earnings" Yeung

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Japanese Airline Sector "Jun-Q FY3/27 preview: Trough earnings" Yeung

Global Research

2 July 2026ab

Japanese Airline Sector Equities

JapanJun-Q FY3/27 preview: Trough earnings

Airlines

Perry Yeung

Jun-Q likely mark the trough of Japanese airlines sector's earnings Analyst

ANA and JAL are due to report Jun-Q FY 3/27 result on 29 Jul and 3 Aug, respectively. perry.yeung@ubs.com

Although the sharp increase in jet fuel price during Jun-Q will inevitably weigh on +852-2971 6349

Japanese airline sector's profitability, fuel price has likely peaked out following the de- Angus Chan

escalation of geopolitical tensions amid the Iran-Israel-US ceasefire. International traffic Analyst

holds up better than expected during the quarter despite weaker JPY and significantly angus.chan@ubs.com

higher airfare environment, reflecting relatively inelastic demand. Cargo revenue is likely +852-2971 7530

to fare better than expected in Jun-Q thanks to the AI boom which lifts shipment Ryan Lau

demands for servers and chips. While Jun-Q will likely remain a loss-making quarter, we Analyst

project narrower operating losses. Specifically, we expect ANA and JAL to report ¥14bn ryan-za.lau@ubs.com

operating losses (implying -2.0% margin) and ¥10bn LBIT (implying -1.9% margin) +852-2971 7954

respectively. As fuel price trends meaningfully lower, we expect sector earnings to Samuel Yip

rapidly recover heading into Sep-Q which is a traditionally peak season for Japanese Associate Analyst

airlines sector. samuel.yip@ubs.com

+852-3712 2727

Resilient demand despite significantly higher fuel

In response to higher fuel price which was up 125% YoY (1-month lag average), ANA

and JAL have raised the airfare for international routes primarily through higher fuel

surcharge.