In the second quarter of 2026, Air Busan recorded sales of 235.3 billion won with high growth of 37% year-over-year through expansion of routes to Japan and China, but faced a paradoxical earnings report as operating losses surged 219% to 35.5 billion won amid the massive waves of high oil prices and rising exchange rates.

Air Busan announced its second quarter 2026 results through a disclosure on the 27th, presenting a report with sharply contrasting fortunes. During this period, sales increased 37% year-over-year to 235.3 billion won, continuing its growth trajectory. However, profitability indicators deteriorated sharply, with operating losses reaching 35.5 billion won, showing a shocking 219% increase compared to the same period last year. In particular, net losses for the period reached 61.8 billion won, raising concerns about financial soundness.

This sales growth resulted from actively expanding new charter flights on key routes such as Japan and China. Additionally, as fleet operations gradually normalized following the COVID-19 pandemic, available seat capacity expanded, and the company was able to flexibly respond to increased passenger demand, driving sales. The strategy of proactively restructuring routes and increasing operations in line with the recovery of international flights is analyzed to have led to external growth.

However, the sustained high oil price trend throughout the second quarter increased fuel cost burdens, which became the largest factor eroding operating profits. The soaring aviation fuel prices significantly increased direct operating costs for airlines. Adding to the problem, the rising exchange rate also expanded foreign currency translation losses on foreign currency debt, dealing a fatal blow to profitability. Despite the positive factor of increased sales, unavoidable external variables consumed profits and expanded net losses to 61.8 billion won. This clearly demonstrates the external environment sensitivity of the aviation industry.

[Photo=Yonhapnews]

The large net loss directly resulted in a decrease in Air Busan's total capital scale, imposing considerable burdens on its financial structure. In response, Air Busan is actively pursuing the exercise of stock conversion rights on perpetual convertible bonds (CB) to improve financial stability. When the perpetual convertible bonds are converted to stocks, existing fixed interest expense burdens will be eliminated, and capital will be strengthened, which is expected to greatly help secure financial soundness such as improving the debt ratio. This is interpreted as an effort to prepare for future uncertainties through preemptive financial structure improvement amid a crisis situation.

An Air Busan official stated, "We will do our utmost in the second half of operations amid the grave situation of continued uncertainty in external business environment such as high oil prices and high exchange rates." The official further emphasized, "We will maintain a nimble cost management approach and concentrate all management capabilities to do our utmost in improving profitability." This statement demonstrates a firm determination to strengthen internal capabilities such as maximizing flight efficiency and reducing non-core expenses to improve financial conditions and secure profitability amid uncertain market conditions.

Amid the uncertainty of external variables such as high oil prices and high exchange rates, Air Busan's announcement of total commitment to financial structure improvement through perpetual convertible bond (CB) conversion and "nimble cost management" and "profitability improvement" in the second half presents important implications for the survival and growth strategies of airlines amid harsh external environments.