Full third-quarter data from Airline Business’s benchmark airlines in Asia-Pacific shows improvement in all operating indicators except for net profitability, which dipped slightly year on year.
Aggregate data for the 11 airlines and groups included in the benchmark metrics shows operating profit increased by more than 30% to around $2.5 billion, on the back of a 3.7% rise in revenue to $39.8 billion. Net profit, which stood at $2.49 billion, is around $500 million lower than the year-ago period.
Traffic – measured in RPKs – and capacity were also up during the quarter, though the former outpacing the latter is reflective of the ongoing supply chain crunch that means the region’s operators are having to manage aircraft groundings and delivery delays.
The initial relief over the lower-than-expected impact from the US’ tariff policies gave way to other wider concerns during the seasonally weaker quarter.
For India’s IndiGo, one such challenge was the sharp increase in foreign exchange costs from the depreciation of the Indian rupee against the US dollar. This was due mainly to US-imposed tariffs on India, as well as an outflow of foreign portfolio investments
IndiGo widened its net and operating losses during the quarter, despite seeing a 10% increase in operating revenue as the Indian carrier flew more passengers on an expanded network.
Also impacted by seasonality was fellow low-cost operator Cebu Pacific, which plunged to a quarterly loss as cost increases outpaced a rise in revenue.
A change in academic calendar timing “dampened” domestic travel demand during the quarter. Also impacting operations were weather-related disruptions: in September the Philippines was hit twice by typhoons, including the super typhoon Ragasa.
Both IndiGo and Cebu Pacific were also affected by ongoing supply chain challenges, with the number of aircraft grounded due to engine reliability issues continuing to remain higher than expected.
Singapore Airlines Group, meanwhile, saw its quarterly net profit fall significantly, as it took a hit from the financial and operating challenges of associate carrier Air India, in which it owns a 25.1% stake.
Despite the financial impact, SIA Group says it “remains committed” to Air India and the India market, noting that its investment in Air India was part of an important multi-hub strategy.
Over in Japan, the country’s two largest operators ANA Holdings and Japan Airlines Group continued their profitability streak, as international travel demand held up during the quarter.
For ANA Holdings, its earnings also came as it begins restructuring its operations: it announced the closure of the AirJapan brand by March, amid challenges such as aircraft shortages and “intensifying” competition.
In a slightly more positive development, China’s three largest carriers Air China, China Eastern Airlines and China Southern Airlines all turned net profits for the quarter, ending a period of losses that reflected their slower recovery than the rest of the region.
Elsewhere, Korean Air reported a 5.5% decline in revenues to W4 trillion ($2.79 billion), with passenger revenue down 7.5% despite seeing an increase in traffic on international and domestic networks.
Korean Air saw the sharpest yield decline in international operations, down 8.2% year on year amid weakness on North American routes in particular, while domestic yields were down 5.7%.
In Taiwan, China Airlines saw its profitability weaken slightly year on year on revenue growth of around 5%.
And Thai Airways International also saw some yield weakness as it boosted its operating profit despite small declines in revenue and passenger numbers year on year.
The 11 benchmark airlines and groups included in Airline Business’s quarterly aggregate data for the Asia-Pacific region are: Air China Group, ANA, Cebu Pacific, China Airlines, China Eastern Airlines, China Southern Airlines, IndiGo, Japan Airlines, Korean Airlines, Singapore Airlines Group and Thai Airways International
Additional reporting by Lewis Harper