An Air Busan A321neo aircraft. [Air Busan]
An Air Busan A321neo aircraft. [Air Busan]

Air Busan grew its top line in the second quarter but deepened its losses. The carrier expanded capacity on short-haul routes to Japan, China and other nearby destinations, boosting revenue, but high fuel costs and a weak won dragged on profitability.

Air Busan disclosed Monday that its second-quarter sales came in at a preliminary 235.3 billion won ($160 million), up 37.3 percent from 171.4 billion won in the same period last year.

Its operating loss widened to 35.5 billion won from 11.1 billion won a year earlier. The net loss reached 61.8 billion won, reversing a net profit of 27.7 billion won in the year-ago quarter.

Profitability also deteriorated from the previous quarter. Air Busan posted an operating profit of 30.4 billion won in the first quarter, only to swing to an operating loss in the second. Its net loss expanded from 16.1 billion won in the first quarter to 61.8 billion won in the second.

For the first half of the year, cumulative sales reached 493 billion won, up 17.1 percent from 420.9 billion won a year earlier. Operating profit swung to a loss of 5.1 billion won from a gain of 29 billion won in the first half of last year. The net position also reversed, from a profit of 59.9 billion won to a loss of 77.9 billion won.

The revenue growth was largely driven by capacity expansion. Air Busan said increased charter flights on new routes to Japan and China, along with the normalization of aircraft operations, pushed sales higher year on year.

Costs, however, rose even faster. Sustained high oil prices inflated fuel expenses, while the won's depreciation against the dollar amplified foreign-currency translation losses. Airlines are particularly sensitive to exchange rate movements because a large share of their costs — including aircraft lease payments, maintenance fees and fuel — are settled in dollars.

The broader aviation industry is grappling with the same dual pressures. Overseas travel demand remains solid, but overlapping cost variables — fuel prices, exchange rates and airport fees — are making profitability management increasingly critical for low-cost carriers.

In a separate disclosure the same day, Air Busan said it set a short-term borrowing limit of 40 billion won to secure operating funds and liquidity. The facility takes the form of a credit line agreement with financial institutions and represents a borrowing ceiling, not an actual drawdown.

Air Busan said it expects financial stability to improve after the conversion of perpetual convertible bonds into shares reduced its fixed interest burden. The second-quarter net loss, however, shrank total equity.

In the third quarter, the carrier plans to manage capacity flexibly on key routes to capture peak summer travel demand. It also intends to expand charter operations on short-haul routes to Japan and China to drive a profitability recovery.

Air Busan is also preparing to launch its Busan–Guangzhou route, for which it has secured traffic rights, before the end of the year. The new service is intended to improve travel convenience for local residents and broaden the carrier's route portfolio.

With uncertainty persisting around external variables such as high oil prices and a weak won, Air Busan said it will maintain cost discipline and focus on improving profitability in the second half of the year.


kwater@heraldcorp.com