TIDMAIRC
RNS Number : 1371M
Air China Ld
17 September 2021
(short name: ) (English name: Air China Limited, short name: Air
China) is the only national flag carrier of China.
As the old saying goes, " Phoenix, a bird symbolizing
benevolence " and " The whole world will be at peace once a phoenix
reveals itself " . The corporate logo of Air China is composed of
an artistic phoenix figure, the Chinese characters of " " in
calligraphy written by Deng Xiaoping, by whom the China ' s reform
and opening-up blueprint was designed, and the characters of " AIR
CHINA " in English. Signifying good auspices in the ancient Chinese
legends, phoenix is the king of all birds. It " flies from the
eastern Happy Land and travels over mountains and seas and bestows
luck and happiness upon all parts of the world " . Air China
advocates the core spirit of phoenix which is to " serve the world,
to lead and move forward to higher goals " . By virtue of the
immense historical heritage, Air China strives to create perfect
travel experience and keep passengers safe by upholding the spirit
of phoenix of being a practitioner, promoter and leader for the
development of the Chinese civil aviation industry. The Company is
also committed to leading the industrial development by
establishing itself as a " National Brand " , at the same time
pursuing outstanding performance through innovative and excelling
efforts.
Air China was listed on The Stock Exchange of Hong Kong Limited
(stock code: 00753) and the London Stock Exchange (stock code:
AIRC) on 15 December 2004, and was listed on the Shanghai Stock
Exchange (stock code: 601111) on 18 August 2006.
Headquartered in Beijing, Air China has set up branches in
Southwest China, Zhejiang, Chongqing, Tianjin, Shanghai, Hubei,
Guizhou, Tibet, Wenzhou, Xinjiang and Guangzhou. As at the end of
the Reporting Period, the major subsidiaries of Air China are
Shenzhen Airlines Company Limited (including Kunming Airlines
Company Limited), Air Macau Company Limited, Beijing Airlines
Company Limited, Dalian Airlines Company Limited, Air China Inner
Mongolia Co., Ltd., Aircraft Maintenance and Engineering
Corporation, Air China Import and Export Co., Ltd., Chengdu Falcon
Aircraft Engineering Service Co., Ltd., Air China Shantou
Industrial Development Company; and its joint ventures mainly
include GA Innovation China Co., Ltd. and Sichuan Services
Aero-Engine Maintenance Co., Ltd. Moreover, the associates of Air
China are Cathay Pacific Airways Limited, Shandong Airlines Co.,
Ltd. and Tibet Airlines Co., Ltd.. Air China is also the largest
shareholder of Shandong Aviation Group Co., Ltd.
With the goal of becoming " the world ' s leading airline " ,
Air China is actively implementing the strategic objectives of "
globally leading competitive advantages, constantly enhanced
development capability, excellent and unique customer experience,
and steadily improved interests and benefits " . Air China is
dedicated to serving passengers with credibility, convenience,
comfort and choice. " Air China Miles " is the oldest frequent
flier programme in China, under which all members of the frequent
flier programmes under various brands of its subsidiaries and
associates have been consolidated into the brand of " Phoenix Miles
" . As at the end of the Reporting Period, the total number of "
Phoenix Miles " members amounted to 70.306 million.
As of the end of the Reporting Period, the Group operated a
fleet of 729 aircraft with an average age of 7.97 years, of which
the Company operated a fleet of 453 aircraft with an average age of
8.18 years.
TABLE OF CONTENTS
Corporate Information 2
Summary of Financial Information 3
Summary of Operating Data 4
Development of Fleet 6
Business Overview 7
Management Discussion and Analysis 13
Changes in the Information of Directors, Supervisors and Senior Management of the Company 20
Shareholdings of Directors, Supervisors and Chief Executive and Substantial Shareholders of
the Company 21
Corporate Governance 24
Miscellaneous 25
Report on Review of Condensed Consolidated Financial Statements 30
Condensed Consolidated Financial Statements
* Condensed Consolidated Statement of Profit or Loss 31
* Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income 32
* Condensed Consolidated Statement of Financial
Position 33
* Condensed Consolidated Statement of Changes in Equity 35
* Condensed Consolidated Statement of Cash Flows 36
* Notes to the Condensed Consolidated Financial
Statements 37
Report on Review of Condensed Consolidated Financial Statements (Issued by a Third Country
Auditor registered with The UK Financial Reporting Council) 67
Glossary of Technical Terms 68
Definitions 69
CORPORATE INFORMATION
REGISTERED CHINESE NAME: SUPERVISORS:
Mr. Zhao Xiaohang
Mr. He Chaofan
ENGLISH NAME: Mr. Wang Jie
Air China Limited Mr. Qin Hao
Ms. Lyu Yanfang
REGISTERED OFFICE:
Blue Sky Mansion LEGAL REPRESENTATIVE OF THE COMPANY:
28 Tianzhu Road Mr. Song Zhiyong
Airport Industrial Zone
Shunyi District COMPANY SECRETARY:
Beijing Mr. Zhou Feng
China
AUTHORISED REPRESENTATIVES:
PRINCIPAL PLACE OF BUSINESS IN Mr. Song Zhiyong
HONG KONG: Mr. Zhou Feng
5th Floor
CNAC House LEGAL ADVISERS TO THE COMPANY:
12 Tung Fai Road DeHeng Law Offices (as to PRC
Hong Kong International Airport Law)
Hong Kong DLA Piper Hong Kong (as to Hong
Kong and English Law)
WEBSITE:
www.airchina.com.cn INTERNATIONAL AUDITOR:
Deloitte Touche Tohmatsu
DIRECTORS(1) : Registered Public Interest Entity
Mr. Song Zhiyong Auditors
Mr. Ma Chongxian
Mr. Feng Gang H SHARE REGISTRAR AND TRANSFER
Mr. Patrick Healy OFFICE:
Mr. Xue Yasong Computershare Hong Kong Investor
Mr. Duan Hongyi Services Limited
Mr. Stanley Hui Hon-chung Rooms 1712-1716, 17th Floor, Hopewell
Mr. Li Dajin Centre
183 Queen's Road East
Wanchai
Hong Kong
LISTING VENUES:
Hong Kong, London and Shanghai
1. Effective from 9 February 2021,
Mr. Wang Xiaokang resigned from
his position as an independent
non-executive Director of the
Company due to his age. At the
2021 first extraordinary general
meeting of the Company, Mr. Ma
Chongxian was appointed as an
executive Director of the Company.
SUMMARY OF FINANCIAL INFORMATION
Six months Six months
ended 30 June ended 30 June
(RMB'000) 2021 2020 Change
Revenue 37,663,803 29,645,766 27.05%
-------------- -------------- ---------
Loss from operations (6,042,612) (6,682,049) (9.57%)
-------------- -------------- ---------
Loss before taxation (9,404,949) (13,096,926) (28.19%)
-------------- -------------- ---------
Loss after taxation (7,670,665) (10,860,406) (29.37%)
-------------- -------------- ---------
Loss attributable to non-controlling
interests (889,236) (1,420,607) (37.40%)
-------------- -------------- ---------
Loss attributable to equity
shareholders
of the Company (6,781,429) (9,439,799) (28.16%)
-------------- -------------- ---------
EBITDA(1) 4,289,009 3,282,775 30.65%
-------------- -------------- ---------
EBITDAR(2) 4,844,258 3,650,317 32.71%
-------------- -------------- ---------
Loss per share attributable
to equity shareholders of the
Company (RMB) (0.4937) (0.6873) (28.17%)
-------------- -------------- ---------
Return on equity attributable
to
equity shareholders (%) (9.10) (10.69) 1.59 ppt
-------------- -------------- ---------
(1) EBITDA represents earnings before finance income and finance
costs, net exchange gain/loss, income tax expense, share of results
of associates and joint ventures, depreciation and amortisation as
computed under IFRSs.
(2) EBITDAR represents EBITDA before deducting lease expenses on
aircraft and engines as well as other lease expenses.
At 30 June At 31 December
(RMB'000) 2021 2020 Change
Total assets 287,991,744 284,029,616 1.39%
------------ -------------- --------
Total liabilities 210,765,081 200,256,580 5.25%
------------ -------------- --------
Non-controlling interests 5,792,148 6,231,709 (7.05%)
------------ -------------- --------
Equity attributable to equity
shareholders
of the Company 71,434,515 77,541,327 (7.88%)
------------ -------------- --------
Equity attributable to equity
shareholders
of the Company per share (RMB) 4.92 5.34 (7.87%)
------------ -------------- --------
SUMMARY OF OPERATING DATA
The following is the operating data summary of the Company,
Shenzhen Airlines (including Kunming Airlines), Air Macau, Beijing
Airlines, Dalian Airlines and Air China Inner Mongolia.
January to January to Increase/
June 2021 June 2020 (decrease)
Capacity
----------- ----------- -----------
ASK (million) 82,499.92 65,565.98 25.83%
----------- ----------- -----------
International 2,115.00 15,533.42 (86.38%)
----------- ----------- -----------
Mainland China 79,091.22 48,858.88 61.88%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 1,293.70 1,173.68 10.23%
----------- ----------- -----------
AFTK (million) 5,494.08 4,035.20 36.15%
----------- ----------- -----------
International 3,251.70 2,895.20 12.31%
----------- ----------- -----------
Mainland China 2,183.95 1,088.57 100.63%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 58.43 51.43 13.61%
----------- ----------- -----------
ATK (million) 12,928.38 9,943.04 30.02%
----------- ----------- -----------
Traffic
----------- ----------- -----------
RPK (million) 58,252.60 44,222.02 31.73%
----------- ----------- -----------
International 894.83 10,299.97 (91.31%)
----------- ----------- -----------
Mainland China 56,630.89 33,247.90 70.33%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 726.89 674.16 7.82%
----------- ----------- -----------
RFTK (million) 2,067.48 1,459.02 41.70%
----------- ----------- -----------
International 1,402.29 957.24 46.49%
----------- ----------- -----------
Mainland China 646.52 489.26 32.14%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 18.67 12.52 49.10%
----------- ----------- -----------
Passengers carried (thousand) 38,610.67 24,905.77 55.03%
----------- ----------- -----------
International 145.81 2,003.89 (92.72%)
----------- ----------- -----------
Mainland China 38,023.37 22,468.64 69.23%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 441.49 433.25 1.90%
----------- ----------- -----------
Cargo and mail carried (tonnes) 600,504.45 450,950.73 33.16%
----------- ----------- -----------
Kilometres flown (million) 532.23 394.60 34.88%
----------- ----------- -----------
Block hours (thousand) 860.26 617.01 39.43%
----------- ----------- -----------
Number of flights 310,257 212,595 45.94%
----------- ----------- -----------
International 9,490 18,691 (49.23%)
----------- ----------- -----------
Mainland China 295,927 189,047 56.54%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 4,840 4,857 (0.35%)
----------- ----------- -----------
RTK (million) 7,264.73 5,354.92 35.66%
----------- ----------- -----------
Load factor
----------- ----------- -----------
Passenger load factor (RPK/ASK) 70.61% 67.45% 3.16ppt
----------- ----------- -----------
International 42.31% 66.31% (24.00ppt)
----------- ----------- -----------
Mainland China 71.60% 68.05% 3.55ppt
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 56.19% 57.44% (1.25ppt)
----------- ----------- -----------
Cargo and mail load factor (RFTK/AFTK) 37.63% 36.16% 1.47ppt
----------- ----------- -----------
International 43.12% 33.06% 10.06ppt
----------- ----------- -----------
Mainland China 29.60% 44.95% (15.35ppt)
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 31.95% 24.35% 7.60ppt
----------- ----------- -----------
Overall load factor (RTK/ATK) 56.19% 53.86% 2.33ppt
----------- ----------- -----------
Daily utilisation of aircraft
(block hours per day per aircraft) 7.05 5.08 1.97 hours
----------- ----------- -----------
Yield
----------- ----------- -----------
Yield per RPK (RMB) 0.5304 0.5189 2.22%
----------- ----------- -----------
International 1.6561 0.6136 169.90%
----------- ----------- -----------
Mainland China 0.5108 0.4828 5.80%
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 0.6652 0.8524 (21.96%)
----------- ----------- -----------
Yield per RFTK (RMB) 2.2130 2.8721 (22.95%)
----------- ----------- -----------
International 2.5858 3.5569 (27.30%)
----------- ----------- -----------
Mainland China 1.2510 1.2795 (2.23%)
----------- ----------- -----------
Hong Kong SAR, Macau SAR and Taiwan,
China 7.5265 12.7560 (41.00%)
----------- ----------- -----------
Unit cost
----------- ----------- -----------
Operating cost per ASK (RMB) 0.5575 0.5826 (4.31%)
----------- ----------- -----------
Operating cost per ATK (RMB) 3.5577 3.8414 (7.39%)
----------- ----------- -----------
DEVELOPMENT OF FLEET
During the Reporting Period, the Group introduced 23 aircraft
including three A350 aircraft, 14 A320NEO aircraft, four A321NEO
aircraft and two ARJ21-700 aircraft, and phased out one A321
aircraft. As at the end of the Reporting Period, the Group operated
a fleet of 729 aircraft with an average age of 7.97 years, of which
the Company operated a total of 453 aircraft with an average age of
8.18 years. During the first half of the year, the Company
introduced 22 aircraft, including five aircraft under the wet lease
agreement with Air Macau.
Details of the fleet of the Group are set out in the table
below:
30 June 2021
Finance Operating Average
Sub-total Self-owned leases leases age (year)
---------- ----------- -------- ---------- ------------
Airbus 393 148 130 115 7.81
---------- ----------- -------- ---------- ------------
A319 41 32 6 3 13.68
---------- ----------- -------- ---------- ------------
A320/A321 272 88 101 83 6.94
---------- ----------- -------- ---------- ------------
A330 65 28 8 29 9.15
---------- ----------- -------- ---------- ------------
A350 15 0 15 0 1.81
---------- ----------- -------- ---------- ------------
Boeing 326 143 95 88 8.25
---------- ----------- -------- ---------- ------------
B737 274 119 75 80 8.42
---------- ----------- -------- ---------- ------------
B747 10 8 2 0 11.97
---------- ----------- -------- ---------- ------------
B777 28 4 18 6 7.21
---------- ----------- -------- ---------- ------------
B787 14 12 0 2 4.36
---------- ----------- -------- ---------- ------------
COMAC 5 1 4 0 0.55
---------- ----------- -------- ---------- ------------
ARJ21 5 1 4 0 0.55
---------- ----------- -------- ---------- ------------
Business jets 5 1 0 4 8.90
---------- ----------- -------- ---------- ------------
Total 729 293 229 207 7.97
---------- ----------- -------- ---------- ------------
Introduction Plan Phase-out Plan
2021 2022 2023 2021 2022 2023
------ ------ ------ ----- ----- -----
Airbus 49 26 5 5 12 10
------ ------ ------ ----- ----- -----
A319 - - - - 6 4
------ ------ ------ ----- ----- -----
A320/A321 44 18 - 2 - 3
------ ------ ------ ----- ----- -----
A330 - - - 3 6 3
------ ------ ------ ----- ----- -----
A350 5 8 5 - - -
------ ------ ------ ----- ----- -----
Boeing - - - 3 10 7
------ ------ ------ ----- ----- -----
B737 - - - 3 10 7
------ ------ ------ ----- ----- -----
COMAC 6 8 9 - - -
------ ------ ------ ----- ----- -----
ARJ21 6 8 9 - - -
------ ------ ------ ----- ----- -----
Total 55 34 14 8 22 17
------ ------ ------ ----- ----- -----
Note: Please refer to the actual operation for the introduction
and phase-out of the Group's fleet in the future.
BUSINESS OVERVIEW
Containing the Pandemic
The Group insisted to give pandemic control top priority, stayed
committed to "preventing the coronavirus from entering the country,
stemming its domestic resurgence and implementing joint pandemic
containment measures for individuals and goods" and actively
responded to coronavirus resurgence in certain areas in China and
the overseas imported cases. The Group timely adjusted and
optimized the mechanism for leading pandemic prevention and control
practices, timely deploying phased prevention and control work,
updating the prevention and control operating procedures, following
up and implementing prevention and control measures to ensure
coordinated operation of such mechanism. With the thorough
application of the pandemic data sharing platform, the Group
improved the production planning and management efficiency of the
flight attendant team. In response to the sudden outbreak in
Beijing at the beginning of the year, the Group quickly organized
full staff examination and implemented nucleic acid tests for all
employees to ensure the responsibilities of joint pandemic
prevention and control were in place. Specific inspection was
conducted to remove loopholes, optimize management and undertake
the responsibility in relation to pandemic prevention and control.
The Group upheld that "all people eligible for vaccination have
access to it", and the vaccination rate for key frontline staff
reached 100%. The Group swiftly responded to the sudden outbreaks
in various areas, coordinated the pandemic prevention and control,
production planning and passenger service and prevented the
domestic resurgence in an effective and orderly manner. The Group
enhanced the identification and control of passengers on transit
flights from third countries and implemented remote prevention and
information control mechanism of "zero reporting". The Group also
strictly implemented pandemic prevention measures for international
flights and ensured effective disinfection management of flights,
sites and incoming goods. Besides, the Group set high management
standards for international flight attendants by selecting and
assigning fully vaccinated personnel and carrying out medical
examination as well as quarantine inspections for inbound flights
stringently. Meanwhile, the Group expressed in-depth care for its
employees by allocating pandemic prevention materials, improving
security conditions and offering counseling service, thereby timely
solved the employees' difficulties and maintained a stable
workforce.
Safe Operation
The Group is well aware that safety responsibility is a kind of
political responsibility and the guarantee for safe flight
underlies the foundation of the Group's original aspiration and
mission. The Group has firmly established the concept of safety
development, under which the Group recognized and grasped the
extreme importance of safety from an overall perspective, continued
to implement 30 measures for safety development, completed
operational organization for ongoing pandemic management and firmly
promoted the construction of four operational safety systems
including safety management, flight training, aircraft maintenance
and operation management. The Group carried out in-depth safety
hazard investigation work and carried out supervision and
inspection on 10 key aspects including the specific three-year
safety rectification action, safety hazard investigation and
centralized rectification, style development and air crew
rectification, safety and security and pandemic prevention and
control. To ensure smooth and safe operation, the Group actively
conducted specific risk assessment and effectively implemented
various risk control measures for special operation conditions,
such as seasonal changes, flying in extreme weather and the "one
city, two airports" pattern in
Beijing and Chengdu. The Group constantly pushed forward the
style development work and the reform of the flight attendant team
by enhancing cautionary education and the building of a better
style for the professional team. During the Reporting Period, the
Group recorded 0.86 million safe flight hours while transporting
38.61 million passengers safely. The Group maintained stable and
safe operation in general and successfully safeguarded the
provision of important transportation services for various events,
such as the 100th anniversary of the founding of the Communist
Party of China.
Maximising Operating Performance
During the Reporting Period, the Company adhered to the general
principle of pursuing progress while ensuring stability, for which
the Company improved production and operation and strived to reduce
costs, improve efficiency, cut losses and control risks. Based on
the new development pattern of domestic economic circle playing a
leading role, the Company has been optimizing the structure of
transport capacity allocation in accordance with the principle of
maximizing profit margins and closely monitoring the market trends
to adjust the allocation swiftly. The Company took advantage of
opportunities arising from market recovery, and maintained the
capacity input of wide-body aircraft through operating in popular
routes and converting passenger aircraft for cargo operations. As a
result, the domestic transport capacity of wide-body aircraft
increased by 69% year-on-year. In terms of the international
market, the Company continued to promote the conversion of
passenger aircraft for cargo operations. During the Reporting
Period, the Company operated 7,935 cargo flights by passenger
aircraft, which enabled the sharing of fixed costs of passenger
aircraft while maintaining its industry-leading position in terms
of business scale. The Company strengthened marketing control and
continued dynamic monitoring and control, seized he opportunity of
domestic market recovery in the second quarter, made full use of
the network, built a high-quality and prosperous system and took
various measures to maintain the stability and improve yield level
of the main base and major routes. Taking the commencement of
operation of Chengdu Tianfu International Airport as an
opportunity, the Company strived to help develop Chengdu into an
international aviation hub, where the Company would develop a core
route network covering domestic and major markets such as Southeast
Asia, Europe and North America, and established the aviation
business presence of Air China at Tianfu base. The Company aimed to
build the "Air China Express" brand and focused its strengths and
resources to establish 10 boutique routes and express flights with
excellent service quality providing "fast ground door-to-door
services, frequent flights, outstanding onboard services, punctual
flights and smooth ticket change" in order to achieve growth in
both the number of flights and passenger load factor. The Company
also actively tapped the growth points in the market and supported
the integrated innovation and development of civil aviation and red
tourism. During the Reporting Period, the Company provided red
tourism routes to more than 73,710 travelers. By promoting mileage
products, business charter cooperation products, elderly Rights
Cards and interline products with targeted positioning, the Company
boosted revenue growth and garnered a good reputation among
customers. Furthermore, the Company exercised strict cost control
and closely monitored major expenses, enhanced the cost management
on comprehensive security, and defined the responsibilities for all
segments of the aircraft cost management chain for facilitating
effective cost control. Apart from that, the Company strengthened
capital management and control as well as the internal and external
financing mechanism, and rationalized the debt structure so as to
offer protection for capital safety.
Enhancing Services
The Company was dedicated to the provision of "people-oriented"
services as its core philosophy, focusing on all areas in the whole
service process, continuing to enhance service quality, improving
service and product quality, and giving play to the leading role of
digitalization and intelligence development on an ongoing basis.
During the Reporting Period, the overall traveler satisfaction of
the Company increased steadily, as the service quality and traveler
experience further improved. Pursuing the "user-oriented" design
approach, the Company renovated and built nine self-operated
lounges to create "oriental culture and arts" rest area of Air
China. In order to create an exclusive cabin environment, the
Company developed new aircraft seat products and launched the new
interior design products under the "Dancing Phoenix" ( ) series.
The Group has installed in-cabin WiFi system on a total of 359
aircraft, and such system commenced full operation. The Company
also improved the overall quality of services, hardware and
products, which highlighted the core competitiveness of its
services and brand. For the purpose of further strengthening the
soft power of services and products, the Company stood on the
passengers' shoes and updated the service standards, passenger
rules, ticketing rules and luggage transportation rules. The
Company optimized the regular pandemic prevention and control
mechanism by formulating and implementing 26 special ticketing
measures. Based on the analysis of passenger travel behavior and
operating data, the Company formulated a development plan to
improve inflight entertainment and adjust the allocation of media
resources. In order to provide more inflight meal options, the
Company introduced new menus of "Henishuo" ( ) food box for
different seasons and festivals, thereby offering diversified,
targeted and customized services for passengers who wanted to
choose and tailor-made their own meals in advance. In addition, the
Company empowered "intelligent civil aviation" service and drove
digitalization with innovation. The Company developed paperless and
contactless service applications and optimized the functions and
service experience of self-service channels. During the Reporting
Period, the self-service check-in rate of passengers reached 79.27%
and the online check-in rate of passengers reached 65.27%. The
Company fully adopted RFID luggage tags with China-developed chips
and promoted the luggage tracking service for the whole process.
Nine routes had provided the whole-journey baggage tracking and
passenger baggage status query service. Besides, the Company
developed and upgraded several system platforms including the
service quality management system and the passenger services
payment system, which as a result, improved the service
digitalization and innovation capability.
MAJOR SUBSIDIARIES AND ASSOCIATES AND THEIR OPERATING
RESULTS
Notes: 1. CNACG is a wholly-owned subsidiary of CNAHC.
Accordingly, CNAHC is directly and indirectly interested in 51.70%
of the shares of the Company.
2. Shandong Aviation Group Corporation is owned as to 49.4% by the Company, while Shandong Airlines is owned as to 42% by Shandong Aviation Group Corporation. Accordingly, Shandong Airlines is directly and indirectly owned as to 43.548% by the Company.
During the Reporting Period, the operating results of the major
subsidiaries and associates of the Company were as follows:
Air China
Shenzhen Air Beijing Dalian Inner Cathay Shandong
Airlines Macau Airlines Airlines Mongolia AMECO CNAF Pacific Airlines
Year of
establishment 1992 1994 2011 2011 2013 1989 1994 1946 1999
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Place of Shenzhen Macau Beijing Dalian Inner Beijing Beijing Hong Shandong
domicile Mongolia Kong
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Principal Air passenger Air passenger Business Air passenger Air passenger Repair Provision Air passenger Air passenger
business and air and air charter and air and air and overhaul of financial and air and air
cargo cargo and public cargo cargo of aircraft, services cargo cargo
services services air passenger services services engines to services services
and air and components CNAHC
cargo Group
services and the
Group
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Registered RMB5,360,000,000 MOP2,242,042,000 RMB1,000,000,000 RMB3,000,000,000 RMB1,000,000,000 USD300,052,800 RMB1,127,961,864 6,437,200,203 RMB400,000,000
capital shares
in issue
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Percentage of
shareholding
by the
Company 51% 66.9178% 51% 80% 80% 75% 51% 29.99% 22.8%
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Revenue (RMB
million) 9,681 513 204 611 631 3,616 97 13,268 6,636
(on a (on a (on a
consolidated consolidated consolidated
basis) basis) basis)
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Year-on-year
changes (%) 45.77 12.25 55.24 51.08 98.94 (0.69) (17.09) (46.99) 58.34
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Air traffic
revenue
(RMB million) 9,390 448 204 588 624 N/A N/A 11,256 6,281
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
Year-on-year
changes (%) 47.16 0.22 55.39 51.48 101.02 N/A N/A (47.61) 61.88
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
(Loss)/profit
after
taxation
(RMB million) (1,433) (336) (39) (54) (37) (75) 22 (6,330) (795)
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
(Loss)/profit
after
taxation
in the
corresponding
period of
last
year (RMB
million) (2,310) (464) (35) (125) (66) (210) 39 (8,923) (1,296)
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
(Loss)/profit
attributable
to parent
company
(RMB million) (1,365) (336) (39) (54) (37) (75) 22 (6,331) (795)
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
(Loss)/profit
attributable
to parent
company
in the
corresponding
period of
last
year (RMB
million) (2,227) (464) (35) (125) (66) (210) 39 (8,924) (1,296)
---------------- ---------------- ---------------- ---------------- ---------------- -------------- ---------------- -------------- --------------
The fleet information and operating data of the major
subsidiaries and associates of the Company were as follows:
As at the end
of the Reporting
Period/ Air China
During the Reporting Shenzhen Beijing Dalian Inner Shandong
Period Airlines Air Macau Airlines* Airlines Mongolia Cathay Pacific Airlines
Fleet size (unit) 226
(on a
consolidated 238
(on a consolidated
basis) 17 3 13 12 basis) 131
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Average age (year) 7.64 5.90 11.58 7.73 9.11 10.3 7.34
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Aircraft introduced
(unit) 4 2 0 0 0 7 0
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Aircraft phased
out (unit) 0 1 0 0 0 8 0
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
ASK (100 million) 270.88 11.42 3.00 15.37 15.94 41.67 188.47
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 37.51 8.39 71.45 25.75 89.55 (85.0) 38.92
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
RPK (100 million) 192.75 7.03 2.11 10.71 11.20 7.88 149.49
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 42.94 10.78 95.21 40.13 114.43 (95.8) 54.15
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Passengers carried
(thousand) 13,189.8 423.5 237.6 915 996 157 10,480.8
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 42.85 13.59 108.05 54.44 106.31 (96.4) 59.61
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Average passenger
load factor (%) 71.16 61.58 70.55 69.70 70.25 18.9 79.32
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(ppt) 2.70 1.33 8.59 7.15 8.15 (48.4) 7.84
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
AFTK (million) 603 18.1469 4.2514 14.3317 17.1164 4,058 303
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 39.85 9.89 132.71 36.74 134.40 (31.9) 31.77
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
RFTK (million) 254 0.5004 1.3179 6.7156 5.6260 3,301 132
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 12.29 (87.96) 39.91 (12.59) 13.66 (20.1) 9.58
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Volume of cargo
and mail carried
(tonnes) 161,100 358.07 1,505.06 5,257.27 4,469.17 549,000 79,200
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(%) 13.69 (86.15) 38.09 (0.90) 12.10 (17.7) 13.44
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Cargo and mail
load factor (%) 42.14 2.76 31.00 46.86 32.87 81.4 43.49
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
Year-on-year
changes
(ppt) (10.34) (22.41) (20.56) (26.44) (34.92) 12.1 (8.80)
------------------------ -------------- --------- ---------- --------- --------- -------------------- ---------
*Note: As at the end of the Reporting Period, Beijing Airlines
operated a fleet of four entrusted business jets and one self-owned
business jet with an average age of 8.9 years. During the Reporting
Period, in terms of business charter service, Beijing Airlines
completed 154 flights, representing a year-on-year decrease of
0.65%; it completed 471.4 flying hours, representing a year-on-year
decrease of 4.77%; it carried a total of 1,090 passengers,
representing a year-on-year increase of 41.01%.
PARTICULARS OF EMPLOYEES
As at the end of the Reporting Period, the Company had a total
of 46,457 employees, and the subsidiaries of the Company had a
total of 42,024 employees.
REMUNERATION POLICY
Upholding the concept of "paying salary with reference to the
value of job, personal ability as well as performance appraisal"
and focusing on the enhancement of enterprises vitality and
improving benefit and efficiency, the Company has continually
established and improved a linkage mechanism combining salary
distribution with performance, and implemented differentiated
management on gross payroll and budget. During the Reporting
Period, the Company continued to deepen the reform of its
remuneration and welfare system. It pushed forward the
market-oriented remuneration benchmarking and optimised the sound
and scientific mechanism on wage decision and growth that reflects
the labour market standards. In addition, it implemented
differentiated salary adjustment to offer more incentives to
employees with continuous outstanding performance.
Management Discussion and Analysis
The following discussion and analysis are based on the Group's
interim condensed consolidated financial statements and notes
thereto which were prepared in accordance with the International
Accounting Standard 34 "Interim Financial Reporting" as well as the
applicable disclosure requirements under Appendix 16 to the Listing
Rules and are designed to assist the readers in further
understanding the information provided in this report so as to
better understand the financial conditions and results of
operations of the Group as a whole.
OPERATION ANALYSIS
During the first half of 2021, the Group's available seat
kilometres for air passenger amounted to 82,500 million,
representing a year-on-year increase of 25.83%; the total air
passenger traffic amounted to 58,253 million, representing a
year-on-year increase of 31.73%; passenger load factor was 70.61%,
representing a year-on-year increase of 3.16 percentage points. The
available freight tonne kilometres for freight amounted to 5,494
million, representing a year-on-year increase of 36.15%; the total
cargo and mail traffic amounted to 2,067 million tonne kilometres,
representing a year-on-year increase of 41.70%; cargo and mail load
factor was 37.63%, representing a year-on-year increase of 1.47
percentage points. During the Reporting Period, the Group recorded
a loss attributable to equity shareholders of the Company of
RMB6,781 million, representing a year-on-year decrease in loss of
RMB2,658 million.
Revenue
During the Reporting Period, the Group's revenue was RMB37,664
million, representing a year-on-year increase of RMB8,018 million
or 27.05%. Among the revenues, air traffic revenue was RMB35,470
million, representing a year-on-year increase of RMB8,331 million
or 30.70%. Other operating revenue was RMB2,194 million,
representing a year-on-year decrease of RMB313 million or
12.49%.
Revenue Contributed by Geographical Segments
For the six months ended 30 June
2021 2020
------------------------ ------------------------ ---------
(in RMB'000) Amount Percentage Amount Percentage Change
----------- ----------- ----------- ----------- ---------
International 5,107,946 13.56% 9,725,366 32.81% (47.48%)
----------- ----------- ----------- ----------- ---------
Mainland China 31,931,808 84.78% 19,186,009 64.72% 66.43%
----------- ----------- ----------- ----------- ---------
Hong Kong SAR, Macau SAR and
Taiwan, China 624,049 1.66% 734,391 2.47% (15.02%)
----------- ----------- ----------- ----------- ---------
Total 37,663,803 100.00% 29,645,766 100.00% 27.05%
----------- ----------- ----------- ----------- ---------
Air Passenger Revenue
During the Reporting Period, the Group recorded an air passenger
revenue of RMB30,895 million, representing an increase of RMB7,947
million or 34.63% from that of the same period in 2020. Among the
air passenger revenue, the increase of capacity resulted in an
increase in revenue of RMB5,927 million, the increase of passenger
load factor resulted in an increase in revenue of RMB1,353 million,
while the increase of passenger yield resulted in an increase in
revenue of RMB667 million. The capacity, passenger load factor and
yield per RPK of air passenger business during the Reporting Period
are as follows:
For the six months ended 30
June
2021 2020 Change
-------------- -------------- ---------
Available seat kilometres (million) 82,499.92 65,565.98 25.83%
-------------- -------------- ---------
Passenger load factor (%) 70.61 67.45 3.16 ppt
-------------- -------------- ---------
Yield per RPK (RMB) 0.5304 0.5189 2.22%
-------------- -------------- ---------
Air Passenger Revenue Contributed by Geographical Segments
For the six months ended 30 June
2021 2020
------------------------ ------------------------ ---------
(in RMB'000) Amount Percentage Amount Percentage Change
----------- ----------- ----------- ----------- ---------
International 1,481,942 4.80% 6,320,556 27.54% (76.55%)
----------- ----------- ----------- ----------- ---------
Mainland China 28,929,694 93.64% 16,053,091 69.95% 80.21%
----------- ----------- ----------- ----------- ---------
Hong Kong SAR, Macau SAR and
Taiwan, China 483,530 1.56% 574,667 2.51% (15.86%)
----------- ----------- ----------- ----------- ---------
Total 30,895,166 100.00% 22,948,314 100.00% 34.63%
----------- ----------- ----------- ----------- ---------
Air Cargo and Mail Revenue
During the Reporting Period, the Group's air cargo and mail
revenue was RMB4,575 million, representing an increase of RMB384
million as compared with that of the same period in 2020. Among the
air cargo and mail revenue, the increase of capacity resulted in an
increase in revenue of RMB1,515 million, while the increase of
cargo and mail load factor resulted in an increase in revenue of
RMB232 million, and the decrease of yield of cargo and mail
contributed to a decrease in revenue of RMB1,363 million. The
capacity, cargo and mail load factor and yield per RFTK of air
cargo and mail business during the Reporting Period are as
follows:
For the six months ended 30
June
2021 2020 Change
-------------- -------------- ---------
Available freight tonne kilometres
(million) 5,494.08 4,035.20 36.15%
-------------- -------------- ---------
Cargo and mail load factor (%) 37.63 36.16 1.47 ppt
-------------- -------------- ---------
Yield per RFTK (RMB) 2.2130 2.8721 (22.95%)
-------------- -------------- ---------
Air Cargo and Mail Revenue Contributed by Geographical
Segments
For the six months ended 30 June
2021 2020
----------------------- ----------------------- ---------
(in RMB'000) Amount Percentage Amount Percentage Change
---------- ----------- ---------- ----------- ---------
International 3,626,004 79.25% 3,404,810 81.25% 6.50%
---------- ----------- ---------- ----------- ---------
Mainland China 808,780 17.68% 625,984 14.94% 29.20%
---------- ----------- ---------- ----------- ---------
Hong Kong SAR, Macau SAR and
Taiwan, China 140,519 3.07% 159,724 3.81% (12.02%)
---------- ----------- ---------- ----------- ---------
Total 4,575,303 100.00% 4,190,518 100.00% 9.18%
---------- ----------- ---------- ----------- ---------
Operating Expenses
During the Reporting Period, the Group's operating expenses were
RMB45,996 million, representing an increase of 20.42% from
RMB38,196 million for the same period of the previous year. The
breakdown of the operating expenses is set out below:
For the six months ended 30 June
2021 2020
------------------------ ------------------------ --------
(in RMB'000) Amount Percentage Amount Percentage Change
----------- ----------- ----------- ----------- --------
Jet fuel costs 9,914,804 21.56% 6,811,760 17.83% 45.55%
----------- ----------- ----------- ----------- --------
Take-off, landing and depot
charges 5,020,224 10.91% 3,893,701 10.19% 28.93%
----------- ----------- ----------- ----------- --------
Depreciation and amortisation 10,331,621 22.46% 9,964,824 26.09% 3.68%
----------- ----------- ----------- ----------- --------
Aircraft maintenance, repair
and overhaul costs 3,586,761 7.80% 2,874,176 7.52% 24.79%
----------- ----------- ----------- ----------- --------
Employee compensation costs 11,301,581 24.57% 10,091,701 26.42% 11.99%
----------- ----------- ----------- ----------- --------
Air catering charges 912,392 1.98% 625,766 1.64% 45.80%
----------- ----------- ----------- ----------- --------
Selling and marketing expenses 1,140,228 2.48% 1,082,586 2.83% 5.32%
----------- ----------- ----------- ----------- --------
General and administrative
expenses 469,485 1.02% 511,959 1.34% (8.30%)
----------- ----------- ----------- ----------- --------
Others 3,318,460 7.22% 2,339,027 6.14% 41.87%
----------- ----------- ----------- ----------- --------
Total 45,995,556 100.00% 38,195,500 100.00% 20.42%
----------- ----------- ----------- ----------- --------
-- Jet fuel costs increased by RMB3,103 million on a
year-on-year basis, mainly due to the combined effect of the
increase in the consumption and prices of jet fuel.
-- Take-off, landing and depot charges increased by RMB1,127
million on a year-on-year basis, mainly due to an increase in the
number of take-offs and landings.
-- Depreciation and amortisation increased by RMB367 million on
a year-on-year basis, mainly due to the increase in the fleet
size.
-- Aircraft maintenance, repair and overhaul costs increased by
RMB713 million on a year-on-year basis, mainly due to the increase
in the fleet size and the increase in the investment in production
and operation.
-- Employee compensation costs increased by RMB1,210 million on
a year-on-year basis, mainly due to the increase in investment in
production and operation and the effect of 50% reduction in social
insurance contribution in the same period of the previous year.
-- Air catering charges increased by RMB287 million on a
year-on-year basis, mainly due to the increase in the number of
passengers.
-- Other operating expenses mainly included operating lease
expenses on aircraft and engines, civil aviation development fund
and non-above-mentioned ordinary expenses arising from the core air
traffic business, which increased by 41.87% on a year-on-year
basis, mainly due to the increase in transport and the resumption
on the levy of civil aviation development fund during the Reporting
Period.
Net Exchange Gain (Loss) and Finance Costs
During the Reporting Period, the Group recorded a net exchange
gain of RMB563 million, as compared to a net exchange loss of
RMB1,019 million for the same period of the previous year. The
Group incurred finance costs of RMB2,658 million (excluding those
capitalised) during the Reporting Period, representing a
year-on-year increase of RMB110 million.
Share of Results of Associates and Joint Ventures
During the Reporting Period, the Group's share of losses of its
associates was RMB1,419 million, representing a year-on-year
decrease of RMB1,592 million. The Group recorded a loss on
investment of Cathay Pacific of RMB1,364 million during the
Reporting Period, representing a year-on-year decrease of RMB1,009
million; and recorded a loss on investment of Shandong Aviation
Group Corporation and Shandong Airlines of RMB91 million,
representing a year-on-year decrease of RMB410 million.
During the Reporting Period, the Group's share of profits of its
joint ventures was RMB110 million, representing a year-on-year
increase of RMB3 million.
Assets Structure Analysis
As at the end of the Reporting Period, the total assets of the
Group were RMB287,992 million, representing an increase of 1.39%
from that as at 31 December 2020. Among them, the current assets
accounted for RMB23,498 million or 8.16% of the total assets, while
the non-current assets accounted for RMB264,494 million or 91.84%
of the total assets.
Among the current assets, cash and cash equivalents were
RMB8,452 million, representing an increase of 44.78% from that as
at 31 December 2020, which was mainly due to the flexible
adjustment of available liquidity in line with the capital
arrangement of the Group.
Among the non-current assets, the aggregate carrying amount of
property, plant and equipment and right-of-use assets as at the end
of the Reporting Period was RMB218,494 million, representing an
increase of 1.21% from that as at 31 December 2020.
Asset Mortgage/Pledge
As at the end of the Reporting Period, the Group, pursuant to
certain bank loans and finance leasing agreements, had mortgaged
certain aircraft and flight equipment, buildings and machinery with
an aggregated net book value of approximately RMB85,687 million (31
December 2020: RMB79,981 million) and land use rights with net book
value of approximately RMB26 million (31 December 2020: RMB27
million). In addition, the Group had restricted bank deposits of
approximately RMB643 million (31 December 2020: approximately
RMB737 million), which were mainly reserves deposited in the
People's Bank of China.
Capital Expenditure
During the Reporting Period, the Group's capital expenditure
amounted to a total of RMB6,501 million, of which the total
investment in aircraft and engines was RMB4,620 million. Other
capital expenditure investment amounted to RMB1,881 million, mainly
including investment in rotables, flight simulators, infrastructure
construction, IT system construction, ground equipment procurement
and cash component of the long-term investments.
Equity Investment
As at the end of the Reporting Period, the Group's equity
investment in its associates amounted to RMB10,234 million,
representing a decrease of 6.44% from that as at 31 December 2020,
among which, the balance of the equity investment of the Group in
Cathay Pacific and Shandong Aviation Group Corporation amounted to
RMB9,115 million and RMB634 million, respectively.
As at the end of the Reporting Period, the Group's equity
investment in its joint ventures was RMB1,667 million, representing
an increase of 5.44% from that as at 31 December 2020.
Debt Structure Analysis
As at the end of the Reporting Period, the total liabilities of
the Group amounted to RMB210,765 million, representing an increase
of 5.25% from those as at 31 December 2020, among which current
liabilities were RMB85,860 million and non-current liabilities were
RMB124,905 million, accounting for 40.74% and 59.26% of the total
liabilities, respectively.
Among the current liabilities, interest-bearing debts (including
bank loans and other borrowings, corporate bonds and short-term
commercial papers, bills payable and lease liabilities) amounted to
RMB53,254 million, remaining relatively stable as compared with
that as at 31 December 2020.
Among the non-current liabilities, interest-bearing debts
(including bank loans and other borrowings, corporate bonds and
lease liabilities) amounted to RMB113,590 million, representing an
increase of 5.43% from that as at 31 December 2020.
Details of interest-bearing liabilities of the Group by currency
are set out below:
30 June 2021 31 December 2020
(in RMB'000) Amount Percentage Amount Percentage Change
------------ ----------- ------------ ----------- ---------
RMB 117,043,872 70.15% 109,420,080 67.97% 6.97%
------------ ----------- ------------ ----------- ---------
US dollars 48,839,674 29.27% 49,669,410 30.85% (1.67%)
------------ ----------- ------------ ----------- ---------
Others 961,119 0.58% 1,902,082 1.18% (49.47%)
------------ ----------- ------------ ----------- ---------
Total 166,844,665 100.00% 160,991,572 100.00% 3.64%
------------ ----------- ------------ ----------- ---------
Commitments AND CONTINGENT LIABILITIES
The Group's capital commitments, which mainly consisted of the
payables in the next few years for purchasing certain aircraft and
related equipment, increased by 6.59% from RMB41,020 million as at
31 December 2020 to RMB43,722 million as at the end of the
Reporting Period. The Group's investment commitments, which was
mainly used for the investment agreements entered into, amounted to
RMB23 million as at the end of the Reporting Period, remaining
stable as compared with that as at 31 December 2020, which was
mainly attributable to the investment in GA Innovation China Co.,
Ltd.
Details of the Group's contingent liabilities are set out in
note 20 of the condensed consolidated financial statements included
in this interim report.
Gearing Ratio
As at the end of the Reporting Period, the Group's gearing ratio
(total liabilities divided by total assets) was 73.18%,
representing an increase of 2.67 percentage points from that as at
31 December 2020. High gearing ratio is common among aviation
enterprises, and the current gearing ratio of the Group is at a
reasonable level. Its long-term insolvency risk is within
controllable range.
Working Capital and its Sources
As at the end of the Reporting Period, the Group's net current
liabilities (current liabilities minus current assets) were
RMB62,361 million, representing an increase of RMB1,499 million
from that as at 31 December 2020. The Group's current ratio
(current assets divided by current liabilities) was 0.27,
representing an increase of 0.03 as compared to that as at 31
December 2020.
The Group meets its working capital needs mainly through its
operating activities and external financing activities. During the
Reporting Period, the Group's net cash inflow from operating
activities was RMB4,432 million, as compared to the net cash
outflow of RMB10,256 million for the corresponding period in 2020,
which was mainly because the sales revenue increased and the number
of ticket refunds declined on a year-on-year basis. Net cash inflow
from investing activities was RMB846 million, as compared with the
net cash outflow of RMB7,397 million for the corresponding period
in 2020, mainly due to the year-on-year decrease in the cash
payment for the acquisition of fixed assets and other long-term
assets during the Reporting Period. Net cash outflow from financing
activities amounted to RMB2,638 million, as compared with the net
cash inflow from financing activities of RMB22,148 million for the
same period of 2020, mainly due to the increase of its financing
scale to cope with the impact of COVID-19 pandemic and ensure the
liquidity safety during the corresponding period of the previous
year.
The Company has obtained bank facilities of up to RMB179,347
million granted by several banks in the PRC, among which
approximately RMB55,215 million has been utilised. The remaining
amount is sufficient to meet our demands on working capital and
future capital commitments.
POTENTIAL RISKS
Risks of External Environment
Market Fluctuation
With ongoing pandemic prevention and control measures, China
upheld the underlying principle of pursuing progress while ensuring
stability in the first half of 2021. Adopting the new development
concept, China promoted high-quality development and devoted
strenuous efforts on ensuring stability on the six fronts. This led
to steady economic recovery, overall positive market expectation,
as well as orderly planning and commencement of various tasks for
the "14th Five-Year Plan". However, the recovery and growth of the
international aviation market is still subject to great
uncertainties due to the ongoing spread and resurgence of pandemic
worldwide and certain outbreak of the pandemic in China.
Oil Price Fluctuation
During the Reporting Period, the global oil price was on the
rise. Jet fuel constitutes one of the major components of the
Group's operating costs, for which the Group's performance is
substantially subject to the fluctuation of jet fuel price. During
the Reporting Period, with other variables remaining unchanged, if
the average price of the jet fuel rises or falls by 5%, the Group's
jet fuel costs will rise or fall by approximately RMB496
million.
Exchange Rate Fluctuation
The Group's certain lease liabilities, bank loans and other
loans are mainly denominated in US dollar. Certain international
income and expenses of the Group are denominated in currencies
other than RMB. Assuming that the risk variables other than the
exchange rate stay unchanged, the appreciation or depreciation of
RMB against US dollar by 1% due to the changes in the exchange rate
will result in an increase or decrease in the Group's net profit
and shareholders' equity as at 30 June 2021 by RMB354 million.
Risks of Competition
Industry competition
As the COVID-19 pandemic weakened the global market demand,
domestic aviation companies increased their investments in the
domestic market, which might escalate the competition in the
domestic market. In addition, global airlines grounded a large
number of planes and faced a cash flow crisis, while many aviation
companies around the world entered bankruptcy or restructuring.
Such integration is expected to alleviate excess capacity and
facilitate the integration of civil aviation resources and
subsequent development.
Alternative competition
China has built the world's largest high-speed railway network.
It is extending its reach towards central and western China and
accelerating development through long-term planning. In the long
run, the high-speed railway will change China's geographic pattern
of the economy and, as a result of its cooperation and competition
with civil aviation, the air-rail interlink operation will provide
strong support to the development of international hubs. Regarding
the domestic routes, as the Company's medium- and short-haul routes
account for a relatively low proportion in the industry, the
Company may suffer from the competition of high-speed railway
transportation to a limited extent overall.
CHANGES IN THE INFORMATION OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT OF THE COMPANY
1. On 9 February 2021, Mr. Wang Xiaokang ceased to serve as an
independent non-executive Director and a member of the nomination
and remuneration committee of the Board of the Company due to his
age.
2. On 30 March 2021, Mr. Duan Hongyi was elected as a member of
the nomination and remuneration committee of the Board.
3. On 31 May 2021, the Board appointed Mr. Ma Chongxian as the
president of the Company with effect from the same day. On 20 July
2021, the 2021 first extraordinary general meeting of the Company
considered and approved the resolution in relation to the
appointment of Mr. Ma Chongxian as an executive Director of the
Company. Effective from 20 July 2021, Mr. Ma Chongxian served as
the vice chairman of the Company.
SHAREHOLDINGS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE
AND
SUBSTANTIAL SHAREHOLDERS OF THE COMPANY
DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND CHIEF
EXECUTIVE
As at the end of the Reporting Period, none of the Directors,
Supervisors or chief executive of the Company had interests or
short positions in shares, underlying shares and/or debentures (as
the case may be) of the Company or its associated corporations
(within the meaning of Part XV of the SFO) which were required to
be recorded in the register kept by the Company pursuant to section
352 of the SFO, or otherwise notified to the Company and the Hong
Kong Stock Exchange pursuant to the Model Code.
Mr. Patrick Healy is a non-executive Director of the Company and
is concurrently the chairman and executive director of Cathay
Pacific. Cathay Pacific is a substantial shareholder of the
Company, holding 2,633,725,455 H Shares of the Company as at the
end of the Reporting Period, which shall be disclosed to the
Company under the provisions of Divisions 2 and 3 of Part XV of the
SFO. Mr. Song Zhiyong, the Chairman and an executive Director of
the Company, and Mr. Ma Chongxian, an executive Director, are
concurrently non-executive directors of Cathay Pacific. Cathay
Pacific competes or is likely to compete either directly or
indirectly with some aspects of the business of the Company as it
operates airline services to certain destinations which are also
served by the Company. In addition, Mr. Song Zhiyong (the Chairman
and an executive Director of the Company) also served as a director
of Air China Cargo. Air China Cargo competes or is likely to
compete either directly or indirectly with some aspects of the
business of the Company as it operates cargo airline services by
cargo aircraft to certain destinations, which are also served by
the bellyhold cargo of the Company.
Save as disclosed above, none of the Directors or Supervisors of
the Company and their respective associates (as defined in the
Listing Rules) has any competing interests which shall be disclosed
under Rule 8.10 of the Listing Rules.
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN THE COMPANY
As at the end of the Reporting Period, to the knowledge of the
Directors, Supervisors and chief executive of the Company, the
following persons (other than the Directors, Supervisors or chief
executive of the Company) had interests or short positions in the
shares or underlying shares of the Company as recorded in the
register required to be kept under section 336 of the SFO:
Percentage
of the Percentage Percentage
Type and total of the of the
number issued total issued total issued
of shares shares A Shares H Shares
held of the of the of the
Name Type of interests by the Company Company Company Company Short position
Beneficial 5,952,236,697
CNAHC owner A Shares 40.98% 59.75% - -
-------------------- ---------------- ---------- ------------- ------------- --------------
Equity 1,332,482,920
CNAHC (1) attributable A Shares 9.17% 13.38% - -
-------------------- ---------------- ---------- ------------- ------------- --------------
Equity 223,852,000
CNAHC (1) attributable H Shares 1.54% - 4.91% -
-------------------- ---------------- ---------- ------------- ------------- --------------
Beneficial 1,332,482,920
CNACG owner A Shares 9.17% 13.38% - -
-------------------- ---------------- ---------- ------------- ------------- --------------
Beneficial 223,852,000
CNACG owner H Shares 1.54% - 4.91% -
-------------------- ---------------- ---------- ------------- ------------- --------------
Beneficial 2,633,725,455
Cathay Pacific owner H Shares 18.13% - 57.72% -
-------------------- ---------------- ---------- ------------- ------------- --------------
Swire Pacific Equity 2,633,725,455
Limited (2) attributable H Shares 18.13% - 57.72% -
-------------------- ---------------- ---------- ------------- ------------- --------------
John Swire & Sons
(H.K.) Limited 2,633,725,455
(2) Equity attributable H Shares 18.13% - 57.72% -
-------------------- ---------------- ---------- ------------- ------------- --------------
John Swire & Sons Equity 2,633,725,455
Limited (2) attributable H Shares 18.13% - 57.72% -
-------------------- ---------------- ---------- ------------- ------------- --------------
Notes:
Based on the information available to the Directors, Supervisors
and chief executive (including such information available on the
website of the Hong Kong Stock Exchange) and so far as the
Directors, Supervisors and chief executive are aware, as at the end
of the Reporting Period:
1. By virtue of CNAHC's 100% interest in CNACG, CNAHC was deemed
to be interested in the 1,332,482,920 A Shares and 223,852,000 H
Shares directly held by CNACG.
2. By virtue of John Swire & Sons Limited's 100% interest in
John Swire & Sons (H.K.) Limited and their approximately 57.89%
equity interest and 66.24% voting rights in Swire Pacific Limited,
and Swire Pacific Limited's approximately 45.00% equity interest in
Cathay Pacific as at the end of the Reporting Period, John Swire
& Sons Limited, John Swire & Sons (H.K.) Limited and Swire
Pacific Limited were deemed to be interested in the 2,633,725,455 H
Shares of the Company directly held by Cathay Pacific.
Save as disclosed above, as of the end of the Reporting Period,
to the knowledge of the Directors, Supervisors and chief executive
of the Company, no other person had any interest or short position
in the shares or underlying shares of the Company as recorded in
the register required to be kept under section 336 of the SFO.
TOTAL NUMBER OF SHAREHOLDERS
Total number of holders of ordinary 150,734 accounts, of which 3,078
shares as at the end of the Reporting accounts are registered holders
Period (account) of H Shares
----------------------------------
INFORMATION OF SHAREHOLDERS
Unit: Share
Shareholdings of the top 10 shareholders
Shares pledged,
marked or frozen
-------------- -------------- ------------ ------------- -------------------- ----------------
Number
of shares
held as Number
Change(s) at the of shares
Name of during end of Shareholding held subject
shareholder the Reporting the Reporting percentage to selling Nature of
(full name) Period Period (%) restrictions Status Number shareholder
-------------- -------------- ------------ ------------- ------- ----------- ----------------
China National
Aviation
Holding
Corporation State-owned
Limited 0 5,952,236,697 40.98 0 Frozen 127,445,536 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
Cathay Pacific
Airways Foreign legal
Limited 0 2,633,725,455 18.13 0 Nil 0 person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
HKSCC NOMINEES Foreign legal
LIMITED 286,000 1,688,020,388 11.62 0 Nil 0 person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
China National
Aviation
Corporation
(Group) Foreign legal
Limited 0 1,556,334,920 10.72 0 Frozen 36,454,464 person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
China National
Aviation
Fuel
Group State-owned
Corporation -4,000,000 462,583,102 3.18 0 Nil 0 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
China
Securities
Finance
Corporation State-owned
Limited 0 311,302,365 2.14 0 Nil 0 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
Hong Kong
Securities
Clearing
Company Foreign legal
Limited -45,880,981 108,675,892 0.75 0 Nil 0 person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
Agricultural
Bank
of China
Limited
- GF Balanced
Preferred
Hybrid
Securities Domestic
Investment non-state-owned
Fund 70,423,446 70,423,446 0.48 0 Nil 0 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
Industrial Bank
Co.,
Ltd. - GF
Stable
Preferred
Six-month
Hybrid
Securities Domestic
Investment non-state-owned
Fund 36,560,030 36,560,030 0.25 0 Nil 0 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
China
Construction
Bank
Corporation
- GF Value
Leading
Hybrid
Securities Domestic
Investment non-state-owned
Fund 33,059,964 33,059,964 0.23 0 Nil 0 legal person
-------------- -------------- ------------ ------------- ------- ----------- ----------------
Unit: Share
Shareholdings of the top 10 shareholders not subject to selling
restrictions
Class and number of shares
------------------ --------------------------------
Number of tradable
shares held
not subject
to selling
Name of shareholder restrictions Class Number
------------------ ----------------- -------------
China National Aviation Holding RMB ordinary
Corporation Limited 5,952,236,697 shares 5,952,236,697
------------------ ----------------- -------------
Overseas listed
Cathay Pacific Airways Limited 2,633,725,455 foreign shares 2,633,725,455
------------------ ----------------- -------------
Overseas listed
HKSCC NOMINEES LIMITED 1,688,020,388 foreign shares 1,688,020,388
------------------ ----------------- -------------
China National Aviation Corporation RMB ordinary
(Group) Limited 1,556,334,920 shares 1,332,482,920
------------------ ----------------- -------------
Overseas listed
foreign shares 223,852,000
------------------ ----------------- -------------
China National Aviation Fuel RMB ordinary
Group Corporation 462,583,102 shares 462,583,102
------------------ ----------------- -------------
China Securities Finance Corporation RMB ordinary
Limited 311,302,365 shares 311,302,365
------------------ ----------------- -------------
Hong Kong Securities Clearing RMB ordinary
Company Ltd. 108,675,892 shares 108,675,892
------------------ ----------------- -------------
Agricultural Bank of China Limited
- GF Balanced Preferred Hybrid RMB ordinary
Securities Investment Fund 70,423,446 shares 70,423,446
------------------ ----------------- -------------
Industrial Bank Co., Ltd. -
GF Stable Preferred Six-month
Hybrid Securities Investment RMB ordinary
Fund 36,560,030 shares 36,560,030
------------------ ----------------- -------------
China Construction Bank Corporation
- GF Value Leading Hybrid Securities RMB ordinary
Investment Fund 33,059,964 shares 33,059,964
------------------ ----------------- -------------
Explanation on repurchase accounts Nil
among the top ten shareholders
------------------ ----------------- -------------
Explanation on entrusting voting Nil
right, entrusted voting right
and waiver of voting right of
the Shareholders above
------------------ ----------------- -------------
Explanation on the related parties CNACG is a wholly-owned subsidiary
or concerted parties' relations of CNAHC. Accordingly, CNAHC is directly
of the Shareholders above and indirectly interested in 51.70%
of the shares of the Company.
----------------------------------------------------
Explanation on the preferred Nil
shareholders with voting rights
restored and number of shares
held
------------------ ----------------- -------------
1. HKSCC NOMINEES LIMITED is a subsidiary of The Stock Exchange
of Hong Kong Limited and its principal business is acting as
nominee for and on behalf of other corporate shareholders or
individual shareholders. The 1,688,020,388 H Shares held by it in
the Company do not include the 166,852,000 shares held by it as
nominee of CNACG.
2. According to the "Implementation Measures on Partial Transfer
of State-owned Shares to the National Social Security Fund in the
Domestic Securities Market" (Cai Qi [2009] No. 94) ( ( [2009]94 ))
and the Notice ([2009] No. 63) jointly issued by the Ministry of
Finance, the State-owned Assets Supervision and Administration
Commission of the State Council, China Securities Regulatory
Commission and the National Council for Social Security Fund,
127,445,536 shares and 36,454,464 shares held by CNAHC, the
controlling shareholder of the Company, and CNACG respectively are
frozen at present.
CORPORATE GOVERNANCE
Compliance with the Corporate Governance Code
The Company has complied with the code provisions of the
Corporate Governance Code as set out in Appendix 14 to the Listing
Rules throughout the Reporting Period, except for code provision
A.4.2 and code provision A.5.1.
Code provision A.4.2 stipulates that, among others, every
Director, including those appointed for a specific term, should be
subject to retirement by rotation at least once every three years.
As disclosed in the announcement of the Company dated 23 October
2020, the terms of the fifth session of the Board and the
Supervisory Committee expired on 26 October 2020. As the nomination
process of candidates for Directors and Supervisors of the new
session of the Board and the Supervisory Committee has not been
completed, the re-election and appointment of members of the Board
and the Supervisory Committee was postponed. The terms of the
special committees of the fifth session of the Board are also
extended accordingly. The Company will endeavour to complete the
re-election and appointment of members of the Board and the
Supervisory Committee as soon as possible and fulfill relevant
information disclosure obligations in a timely manner. All members
of the fifth session of the Board and the Supervisory Committee of
the Company will continue to fulfill their respective duties and
responsibilities of Directors and Supervisors in accordance with
the requirements of the laws, administrative rules and the Articles
of Association until the re-election work is completed. The
postponed re-election of the members of the Board and the
Supervisory Committee will not affect the normal operation of the
Company.
Code provision A.5.1 requires that the nomination committee
shall comprise a majority of independent non-executive Directors.
Effective from 9 February 2021, Mr. Wang Xiaokang resigned from his
position as an independent non-executive Director of the Company
due to his age. Following the resignation of Mr. Wang Xiaokang, the
Company failed to meet the composition requirements of code
provision A.5.1 which requires that the nomination committee shall
comprise a majority of independent non-executive Directors. On 30
March 2021, Mr. Duan Hongyi, an independent non-executive Director,
was elected as a member of the nomination and remuneration
committee of the Board. Since then, the Company has complied with
all requirements of code provision A.5.1.
Compliance with the Model Code
The Company has adopted and formulated a code of conduct on
terms no less stringent than the required standards of the Model
Code as set out in Appendix 10 to the Listing Rules. After making
specific enquiries, the Company confirmed that each Director and
each Supervisor have complied with the required standards of the
Model Code and the Company's code of conduct throughout the
Reporting Period.
MISCELLANEOUS
Other Material Contract
On 18 March 2021, the 26th meeting of the fifth session of the
Board of the Company approved the execution of the agreement among
the Company, Air China Import and Export Co., Ltd. (a wholly-owned
subsidiary of the Company) and AFS Investments I, Inc. (a
wholly-owned subsidiary of GE Capital Aviation Services Limited),
for the purchase of 18 Airbus A320NEO aircraft from AFS Investments
I, Inc. at a total list price of USD2,236.5 million (including the
airframe price, engine price and optional features price). For
details, please refer to the announcement of the Company dated 18
March 2021.
AMMENTS TO THE ARTICLES OF ASSOCIATION
On 18 March 2021, the Board proposed to amend the provisions
relating to the Company's address and the business name of the
promotor of the Company in the Articles of Association. At the
annual general meeting of the Company convened on 25 May 2021, the
shareholders of the Company approved the proposed amendments by way
of a special resolution. For details, please refer to the
announcements of the Company dated 18 March 2021 and 25 May
2021.
ENVIRONMENTAL PROTECTION INFORMATION
During the Reporting Period, the Group stayed committed to the
major deployments of the Central Committee of the Party on
ecological civilization establishment by implementing various
energy saving and environmental protection initiatives. Apart from
continuing to optimise the management system for better management
capability, the Group enhanced energy management for the aviation
business to achieve steady low-carbon development. It also
strengthened pollution prevention and risk control for ground
support services. The Group complied with the civil aviation
requirements for the battle against air pollution and promoted the
transition from fuel to electricity. In order to enhance carbon
assets management capability, it adopted a scientific approach in
managing carbon emission. The Group actively participated in
environmental and public welfare campaigns to fulfil its social
responsibility. For instance, it rolled out the carbon emission
calculator for passengers to help them know more about carbon
emission during their flights. Through the steady introduction of
public welfare activities for passengers, the Group worked closely
with travelers to preserve the beauty of China.
CORPORATE BONDS
The Group's corporate bonds are summarised as the
followings:
Unit: billion Currency: RMB
Payment of Arrangements
Name of Balance Interest principal for
Corporate Issue Date Expiry of the Rate and investors' Transaction
Bond Abbreviation Code Date of Value Date Bond (%) interest suitability Mechanism
Listed and
traded on
the auction
trading
system
Interest and the
to be paid fixed
annually income
Air China and For public platform
Limited 2012 principal investors of the
Corporate 18 18 18 to be paid and Shanghai
Bond (First January January January upon institutional Stock
Tranche) 12AC01 122218 2013 2013 2023 5.115 5.10 expiration investors Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Listed and
traded on
the auction
trading
system
Interest and the
to be paid fixed
annually income
Air China and For public platform
Limited 2012 principal investors of the
Corporate to be paid and Shanghai
Bond (Second 16 August 16 August 16 August upon institutional Stock
Tranche) 12AC03 122269 2013 2013 2023 1.569 5.30 expiration investors Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Listed and
traded on
the auction
trading
system
Interest and the
to be paid fixed
annually income
Air China and platform
Limited 2016 principal of the
Corporate 20 20 20 to be paid For qualified Shanghai
Bond (Second October October October upon investors Stock
Tranche) 16AC02 136776 2016 2016 2021 4.086 3.08 expiration only Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Listed and
traded on
the auction
trading
system
Interest and the
to be paid fixed
Shenzhen annually income
Airlines and platform
Company Limited principal of the
2018 Corporate 6 7 7 to be paid For qualified Shanghai
Bond (Third September September September upon investors Stock
Tranche) 18SA06 143793 2018 2018 2021 0.621 4.35 expiration only Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Listed and
traded on
the auction
trading
system
Interest and the
to be paid fixed
Shenzhen annually income
Airlines and platform
Company Limited principal of the
2019 Corporate to be paid For qualified Shanghai
Bond (First 25 April 26 April 26 April upon investors Stock
Tranche) 19SA01 155388 2019 2019 2022 1.007 4.00 expiration only Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Dual listed
and traded
on the
centralized
Shenzhen auction
Airlines trading
Company Limited system and
2021 Public the
Issue For integrated
Short-term professional negotiated
Corporate Interest investors trading
Bond and who are platform
for principal also of the
Professional 4 5 5 to be paid institutional Shenzhen
Investors February February February upon investors Stock
(First Tranche) 21SAD1 149379 2021 2021 2022 0.506 3.09 expiration only Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
Listed and
For not traded on
Shenzhen more than the
Airlines 200 integrated
Company Limited professional negotiated
2021 Non-public Interest investors trading
Issue and who are platform
Short-term principal also of the
Corporate to be paid institutional Shenzhen
Bond (First 3 June 4 June 4 June upon investors Stock
Tranche) 21SAD2 133010 2021 2021 2022 2.005 3.10 expiration only Exchange
------------- ------ --------- --------- --------- ------- -------- ---------- ------------- -----------
The corporate bonds "12AC01", "12AC03", "16AC02", "18SA06" and
"19SA01" are traded on the Shanghai Stock Exchange, and the
corporate bonds "21SAD1" and "21SAD2" are traded on the Shenzhen
Stock Exchange. The bonds as shown in the table are not exposed to
the risk of termination of listing.
The Company and Shenzhen Airlines fulfilled the obligations of
payment of principal and/or interest for "12AC01", "12AC03",
"16AC02", "18SA06", "19SA01", "21SAD1" and "21SAD2" corporate bonds
on time. The interests of the above"12AC01", "12AC03", "16AC02",
"18SA06" and "19SA01" bonds were paid from the date of value on an
annual basis and the principal amount will be paid in full upon
expiration. The interests and principal of the "21SAD1" and
"21SAD2" bonds will be paid upon expiration. Details of principal
and interests payment will be disclosed by the Company in the
relevant announcements published on media designated by the CSRC in
compliance with the relevant state regulations.
Non-financial corporate debt financing instruments
The Group's debt financing instruments are summarised as the
followings:
Unit: billion Currency: RMB
Balance
of the Payment of
Name of the Debt Date Debt Interest principal Arrangements
Financing Issue of Expiry Financing Rate and for investors'
Instruments Abbreviation Code Date Value Date Instruments (%) interest suitability
Interest
to be paid
annually
Shenzhen Airlines and
Company Limited principal
2019 Medium-Term 14 18 to be paid Qualified
Notes (First March March 18 March upon institutional
Tranche) 19SA MTN001 101900344 2019 2019 2022 1.010 3.73 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Interest
to be paid
annually
Shenzhen Airlines and
Company Limited principal
2019 Medium-Term 21 23 to be paid Qualified
Notes (Second May May 23 May upon institutional
Tranche) 19SA MTN002 101900725 2019 2019 2022 1.004 3.79 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Interest
Shenzhen Airlines to be paid
Company Limited 20SA annually
2020 Medium-Term (Pandemic and
Notes (Pandemic Prevention principal
Prevention and and Control 3 5 to be paid Qualified
Control Debt) Debt) March March 5 March upon institutional
(First Tranche) MTN001 102000224 2020 2020 2023 1.009 3.00 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Shenzhen Airlines
Company Limited Interest
2021 and
Ultra-short-term principal
Commercial 26 29 to be paid Qualified
Papers March March 9 July upon institutional
(First Tranche) 21SA SCP001 012101258 2021 2021 2021 0.201 2.50 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Shenzhen Airlines
Company Limited Interest
2021 and
Ultra-short-term principal
Commercial 28 28 to be paid Qualified
Papers May May 26 August upon institutional
(Second Tranche) 21SA SCP002 012102016 2021 2021 2021 0.501 2.36 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Shenzhen Airlines
Company Limited Interest
2021 and
Ultra-short-term principal
Commercial 28 31 to be paid Qualified
Papers May May 31 August upon institutional
(Third Tranche) 21SA SCP003 012102018 2021 2021 2021 0.601 2.35 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
Shenzhen Airlines
Company Limited Interest
2021 and
Ultra-short-term principal
Commercial 2 3 1 to be paid Qualified
Papers June June September upon institutional
(Fourth Tranche) 21SA SCP004 012102048 2021 2021 2021 0.501 2.33 expiration investors
-------------- ---------- ------- ------- ----------- ----------- -------- ------------ ---------------
All the non-financial corporate debt financing instruments
listed in the above table are traded on the Shanghai Clearing
House, the trading mechanism of which enables all instruments to be
traded and transferred among the National Interbank Bond Market.
All of these non-financial corporate debt financing instruments are
not exposed to the risk of termination of listing.
Shenzhen Airlines fulfilled the obligations of payment of
principal and/or interest for "19SA MTN001", "19SA MTN002", "20SA
(Pandemic Prevention and Control Debt) MTN001", "21SA SCP001",
"21SA SCP002", "21SA SCP003" and "21SA SCP004" on time. The
interests of the "19SA MTN001", "19SA MTN002" and "20SA (Pandemic
Prevention and Control Debt) MTN001" bonds were paid from the date
of value on an annual basis and the principal amount will be paid
in full upon expiration. The last instalment of interest will be
paid together with the principal. The interests and principal of
the "21SA SCP001", "21SA SCP002", "21SA SCP003" and "21SA SCP004"
bonds shall be paid upon expiration. Details of principal and
interests payment will be disclosed by the Company in the relevant
announcements published on the designated media in compliance with
the relevant regulations.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
During the Reporting Period, neither the Company nor any of its
subsidiaries has purchased, sold or redeemed any listed securities
of the Company (the term "securities" has the meaning ascribed to
it under paragraph 1 of Appendix 16 to the Listing Rules).
INTERIM DIVID
No interim dividend will be paid by the Company for the six
months ended 30 June 2021.
REVIEW BY THE AUDIT AND RISK CONTROL COMMITTEE
The audit and risk control committee of the Company has reviewed
the Company's interim report for the six months ended 30 June 2021,
the Company's unaudited interim condensed consolidated financial
statements and the accounting policies and practices adopted by the
Group.
OTHER INFORMATION
According to paragraph 40 of Appendix 16 to the Listing Rules,
save as disclosed herein, the Company confirms that the information
of the Company in relation to those matters set out in paragraph 32
of Appendix 16 has not changed materially from the information
disclosed in the Company's 2020 annual report.
SUBSEQUENT EVENTS
On 20 July 2021, Mr. Ma Chongxian was elected as an executive
Director. The appointment of Mr. Ma as vice chairman of the Company
took effect on 20 July 2021. For details, please refer to the
announcements of the Company dated 31 May 2021 and 20 July 2021 and
the notice of extraordinary general meeting of the Company dated 3
June 2021.
REPORT ON REVIEW OF CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF AIR CHINA LIMITED
( )
(Incorporated in the People's Republic of China with limited
liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements
of Air China Limited (the "Company") and its subsidiaries
(collectively referred to as the "Group") set out on pages 3 1 to
66, which comprise the condensed consolidated statement of
financial position as of 30 June 2021 and the related condensed
consolidated statement of profit or loss, statement of profit or
loss and other comprehensive income, statement of changes in equity
and statement of cash flows for the six-month period then ended,
and certain explanatory notes. The Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited require the
preparation of a report on interim financial information to be in
compliance with the relevant provisions thereof and International
Accounting Standard 34 "Interim Financial Reporting" ("IAS 34")
issued by the International Accounting Standards Board. The
directors of the Company are responsible for the preparation and
presentation of these condensed consolidated financial statements
in accordance with IAS 34. Our responsibility is to express a
conclusion on these condensed consolidated financial statements
based on our review, and to report our conclusion solely to you, as
a body, in accordance with our agreed terms of engagement, and for
no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on
Review Engagements 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Hong Kong Institute of Certified Public Accountants. A review of
these condensed consolidated financial statements consists of
making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Hong Kong Standards on Auditing and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated financial
statements are not prepared, in all material respects, in
accordance with IAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 August 2021
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHSED 30 JUNE 2021
Six months ended 30 June
----------------------------------------------- ----- ------------------------------
2021 2020
----------------------------------------------- ----- ---------------- ------------
NOTES RMB'000 RMB'000
----------------------------------------------- ----- ---------------- ------------
(Unaudited) (Unaudited)
----------------------------------------------- ----- ---------------- ------------
Revenue 4A 37,663,803 29,645,766
----- ---------------- ------------
Other income and gains 5 2,289,141 1,867,685
----- ---------------- ------------
39,952,944 31,513,451
----- ---------------- ------------
Operating expenses
----- ---------------- ------------
Jet fuel costs (9,914,804) (6,811,760)
----- ---------------- ------------
Employee compensation costs (11,301,581) (10,091,701)
----- ---------------- ------------
Depreciation and amortisation (10,331,621) (9,964,824)
----- ---------------- ------------
Take-off, landing and depot charges (5,020,224) (3,893,701)
----- ---------------- ------------
Aircraft maintenance, repair and overhaul
costs (3,586,761) (2,874,176)
----- ---------------- ------------
Air catering charges (912,392) (625,766)
----- ---------------- ------------
Aircraft and engine lease expenses (214,147) (121,882)
----- ---------------- ------------
Other lease expenses (341,102) (245,660)
----- ---------------- ------------
Other flight operation expenses (2,753,906) (2,055,640)
----- ---------------- ------------
Selling and marketing expenses (1,140,228) (1,082,586)
----- ---------------- ------------
General and administrative expenses (469,485) (511,959)
----- ---------------- ------------
Net impairment loss (recognised)/reversed
under expected credit loss model (9,305) 84,155
----- ---------------- ------------
(45,995,556) (38,195,500)
----- ---------------- ------------
Loss from operations 6 (6,042,612) (6,682,049)
----- ---------------- ------------
Finance income 41,215 56,102
----- ---------------- ------------
Finance costs 7 (2,658,298) (2,548,296)
----- ---------------- ------------
Share of results of associates (1,418,976) (3,010,754)
----- ---------------- ------------
Share of results of joint ventures 110,282 106,840
----- ---------------- ------------
Exchange gain/(loss), net 563,440 (1,018,769)
----- ---------------- ------------
Loss before taxation (9,404,949) (13,096,926)
----- ---------------- ------------
Income tax credit 8 1,734,284 2,236,520
----- ---------------- ------------
Loss for the period (7,670,665) (10,860,406)
----- ---------------- ------------
Attributable to:
----- ---------------- ------------
* Equity shareholders of the Company (6,781,429) (9,439,799)
----- ---------------- ------------
* Non-controlling interests (889,236) (1,420,607)
----- ---------------- ------------
(7,670,665) (10,860,406)
----- ---------------- ------------
Loss per share
----- ---------------- ------------
RMB(68.73)
* Basic and diluted 10 RMB(49.37) cents cents
----- ---------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2021
Six months ended 30 June
------------------------------------------------------------------ --------------------------
2021 2020
------------------------------------------------------------------ ------------ ------------
RMB'000 RMB'000
------------------------------------------------------------------ ------------ ------------
(Unaudited) (Unaudited)
------------------------------------------------------------------ ------------ ------------
Loss for the period (7,670,665) (10,860,406)
------------ ------------
Other comprehensive income/(expense) for
the period
------------ ------------
Items that will not be reclassified to
profit or loss:
------------ ------------
* Fair value loss on investments in equity instruments
at fair value through other comprehensive income (18,915) (69,638)
------------ ------------
* Income tax relating to items that will not be
reclassified to profit or loss 4,729 17,409
------------ ------------
* Remeasurement of net defined benefit liability (2,125) (4,432)
------------ ------------
* Share of other comprehensive expense of associates
and joint ventures (3,858) (103,423)
------------ ------------
Items that may be reclassified subsequently
to profit or loss:
------------ ------------
* Fair value loss on investments in debt instruments
measured at fair value through other comprehensive
income (5,169) (5,918)
------------ ------------
* Impairment loss (reversed)/recognised on investments
in debt instruments measured at fair value through
other comprehensive income (15,277) 11,083
------------ ------------
* Income tax relating to items that may be reclassified
subsequently to profit or loss 5,111 (1,291)
------------ ------------
* Share of other comprehensive income/(expense) of
associates and joint ventures 878,718 (902,862)
------------ ------------
* Exchange differences on translation of foreign
operations (194,718) 436,992
------------ ------------
Other comprehensive income/(expense)
for the period (net of tax) 648,496 (622,080)
------------ ------------
Total comprehensive expense for the period (7,022,169) (11,482,486)
------------ ------------
Attributable to:
------------ ------------
* Equity shareholders of the Company (6,106,812) (10,046,662)
------------ ------------
* Non-controlling interests (915,357) (1,435,824)
------------ ------------
(7,022,169) (11,482,486)
------------ ------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2021
At At
30 June 31 December
2021 2020
----- ------------- -------------
NOTES RMB'000 RMB'000
---------------------------------------------- ----- ------------- -------------
(Unaudited) (Audited)
---------------------------------------------- ----- ------------- -------------
Non-current assets
----- ------------- -------------
Property, plant and equipment 11 99,841,057 101,346,490
----- ------------- -------------
Right-of-use assets 11 118,652,505 114,539,680
----- ------------- -------------
Investment properties 584,378 600,329
----- ------------- -------------
Intangible assets 36,559 36,580
----- ------------- -------------
Goodwill 1,099,975 1,099,975
----- ------------- -------------
Interests in associates 12 10,233,582 10,938,428
----- ------------- -------------
Interests in joint ventures 1,667,387 1,581,105
----- ------------- -------------
Advance payments for aircraft and
flight equipment 21,497,690 24,907,862
----- ------------- -------------
Deposits for aircraft under leases 571,075 615,537
----- ------------- -------------
Equity instruments at fair value through
other comprehensive income 214,265 233,180
----- ------------- -------------
Debt instruments at fair value through
other comprehensive income 1,313,267 1,344,829
----- ------------- -------------
Deferred tax assets 8,505,139 6,750,883
----- ------------- -------------
Other non-current assets 276,453 298,836
----- ------------- -------------
264,493,332 264,293,714
----- ------------- -------------
Current assets
----- ------------- -------------
Inventories 2,325,036 1,853,990
----- ------------- -------------
Accounts receivable 13 3,738,511 2,942,799
----- ------------- -------------
Bills receivable 8,922 6,593
----- ------------- -------------
Prepayments, deposits and other receivables 14 3,949,155 3,912,471
----- ------------- -------------
Restricted bank deposits 642,782 737,245
----- ------------- -------------
Cash and cash equivalents 8,451,613 5,837,998
----- ------------- -------------
Other current assets 4,382,393 4,444,806
----- ------------- -------------
23,498,412 19,735,902
----- ------------- -------------
Total assets 287,991,744 284,029,616
----- ------------- -------------
Current liabilities
----- ------------- -------------
Air traffic liabilities (2,433,265) (2,002,649)
----- ------------- -------------
Accounts payable 15 (14,757,240) (12,510,582)
----- ------------- -------------
Bills payable (73,659) (62,570)
----- ------------- -------------
Dividends payable (98,000) (98,000)
----- ------------- -------------
Other payables and accruals 16 (12,951,404) (11,177,928)
----- ------------- -------------
Current taxation (41,382) (45,614)
----- ------------- -------------
Lease liabilities 17 (14,039,145) (13,560,862)
----- ------------- -------------
Interest-bearing borrowings 18 (39,141,554) (39,630,365)
----- ------------- -------------
Provision for return condition checks (1,073,858) (229,514)
----- ------------- -------------
Contract liabilities (1,250,375) (1,280,102)
----- ------------- -------------
(85,859,882) (80,598,186)
----- ------------- -------------
Net current liabilities (62,361,470) (60,862,284)
----- ------------- -------------
Total assets less current liabilities 202,131,862 203,431,430
----- ------------- -------------
Non-current liabilities
----- ------------- -------------
Lease liabilities 17 (76,997,169) (76,098,678)
----- ------------- -------------
Interest-bearing borrowings 18 (36,593,137) (31,639,097)
----- ------------- -------------
Provision for return condition checks (8,219,318) (8,580,560)
----- ------------- -------------
Provision for early retirement benefit
obligations (1,161) (1,351)
----- ------------- -------------
Long-term payables (11,086) (21,022)
----- ------------- -------------
Contract liabilities (2,051,050) (2,264,843)
----- ------------- -------------
Defined benefit obligations (222,944) (229,332)
----- ------------- -------------
Deferred income (478,610) (488,791)
----- ------------- -------------
Deferred tax liabilities (330,724) (334,720)
----- ------------- -------------
(124,905,199) (119,658,394)
----- ------------- -------------
NET ASSETS 77,226,663 83,773,036
----- ------------- -------------
CAPITAL AND RESERVES
----- ------------- -------------
Issued capital 19 14,524,815 14,524,815
----- ------------- -------------
Treasury shares (3,047,564) (3,047,564)
----- ------------- -------------
Reserves 59,957,264 66,064,076
----- ------------- -------------
Total equity attributable to equity
shareholders of the Company 71,434,515 77,541,327
----- ------------- -------------
Non-controlling interests 5,792,148 6,231,709
----- ------------- -------------
TOTAL EQUITY 77,226,663 83,773,036
----- ------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2021
Attributable to equity shareholders
of the Company
Foreign
exchange
Issued Treasury Capital Reserve General translation Retained Non-controlling Total
Note capital shares reserve funds reserve reserve earnings Total interests equity
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
As at 1 January
2021
(Audited) 14,524,815 (3,047,564) 30,146,498 11,564,287 110,628 (2,311,036) 26,553,699 77,541,327 6,231,709 83,773,036
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Changes in equity
for
the six months
ended
30 June 2021
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Loss for the
period - - - - - - (6,781,429) (6,781,429) (889,236) (7,670,665)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Other
comprehensive
income/(expense) - - 858,210 - - (183,593) - 674,617 (26,121) 648,496
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Total
comprehensive
income/(expense) - - 858,210 - - (183,593) (6,781,429) (6,106,812) (915,357) (7,022,169)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Capital
contribution
from
non-controlling
shareholder of a
subsidiary - - - - - - - - 490,148 490,148
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Dividends paid to
non-controlling
shareholders - - - - - - - - (14,352) (14,352)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Others - - 3,637 - - - (3,637) - - -
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
As at 30 June
2021 (Unaudited) 14,524,815 (3,047,564) 31,008,345 11,564,287 110,628 (2,494,629) 19,768,633 71,434,515 5,792,148 77,226,663
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
As at 1 January
2020
(Audited) 14,524,815 (3,047,564) 29,916,386 11,026,605 110,628 (1,223,899) 42,151,706 93,458,677 7,870,786 101,329,463
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Changes in equity
for
the six months
ended
30 June 2020
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Loss for the
period - - - - - - (9,439,799) (9,439,799) (1,420,607) (10,860,406)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Other
comprehensive
(expense)/income - - (1,034,270) - - 427,407 - (606,863) (15,217) (622,080)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Total
comprehensive
(expense)/income - - (1,034,270) - - 427,407 (9,439,799) (10,046,662) (1,435,824) (11,482,486)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Appropriation of
discretionary
reserve funds - - - 537,682 - - (537,682) - - -
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Dividends
paid/payable
to
non-controlling
shareholders - - - - - - - - (112,787) (112,787)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
Dividends
declared in
respect of the
previous
year 9 - - - - - - (645,192) (645,192) - (645,192)
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
As at 30 June
2020 (Unaudited) 14,524,815 (3,047,564) 28,882,116 11,564,287 110,628 (796,492) 31,529,033 82,766,823 6,322,175 89,088,998
---- ---------- ----------- ----------- ---------- ------- ----------- ----------- ------------ --------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2021
Six months ended 30 June
------------------------------------------------ --------------------------
2021 2020
------------------------------------------------ ------------ ------------
RMB'000 RMB'000
------------------------------------------------ ------------ ------------
(Unaudited) (Unaudited)
------------------------------------------------ ------------ ------------
Operating activities
------------ ------------
Cash generated from (used in) operations 7,350,249 (6,727,707)
------------ ------------
Income tax paid (18,532) (906,008)
------------ ------------
Interest paid (2,899,468) (2,622,740)
------------ ------------
Net cash generated from (used in) operating
activities 4,432,249 (10,256,455)
------------ ------------
Investing activities
------------ ------------
Payments for the purchase of property,
plant and equipment (1,355,134) (4,892,688)
------------ ------------
Refund (advance) payments for aircraft
and flight equipment 756,263 (2,498,324)
------------ ------------
Proceeds from disposal of property, plant
and equipment 84,728 61,742
------------ ------------
Purchases of debt instruments at fair value
through other comprehensive income (99,514) (607,678)
------------ ------------
Proceeds from disposal of debt instruments
at fair value through other comprehensive
income 1,399,866 467,167
------------ ------------
Dividends received from joint ventures
and associates 2,631 11,559
------------ ------------
Cash flows arising from other investing
activities 57,421 61,263
------------ ------------
Net cash generated from (used in) investing
activities 846,261 (7,396,959)
------------ ------------
Financing activities
------------ ------------
Capital contribution from a non-controlling
shareholder of a subsidiary 490,148 -
------------ ------------
New bank loans and other loans 28,111,014 25,639,476
------------ ------------
Proceeds from issuance of corporate bonds 4,300,000 24,500,000
------------ ------------
Repayment of bank loans and other loans (24,473,165) (12,453,290)
------------ ------------
Repayment of corporate bonds (3,300,000) (9,100,000)
------------ ------------
Repayment of leases liabilities (7,752,136) (6,423,623)
------------ ------------
Dividends paid to non-controlling shareholder
of a subsidiary (14,352) (14,787)
------------ ------------
Net cash (used in) generated from financing
activities (2,638,491) 22,147,776
------------ ------------
Net increase in cash and cash equivalents 2,640,019 4,494,362
------------ ------------
Cash and cash equivalents at 1 January 5,837,998 8,935,282
------------ ------------
Effect of foreign exchanges rates changes (26,404) 12,973
------------ ------------
Cash and cash equivalents at 30 June 8,451,613 13,442,617
------------ ------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2021
1. CORPORATE INFORMATION
Air China Limited (the "Company") was established as a joint
stock limited company in Beijing, the People's Republic of China
(the "PRC"), on 30 September 2004. The Company's H shares are
listed on The Stock Exchange of Hong Kong Limited (the "HKSE") and
the London Stock Exchange (the "LSE") while the Company's A shares
are listed on the Shanghai Stock Exchange. In the opinion of the
directors of the Company (the "Directors"), the Company's parent
and ultimate holding company is China National Aviation Holding
Corporation Limited ("CNAHC"), a state-owned enterprise established
in the PRC under the supervision of the State Council.
The principal activities of the Company and its subsidiaries
(together referred to as the "Group") are provision of airline and
airline-related services, including aircraft engineering services
and airport ground handling services.
The registered office of the Company is located at Blue Sky
Mansion, 28 Tianzhu Road, Airport Industrial Zone, Shunyi District,
Beijing 101312, the PRC.
The condensed consolidated financial statements are presented in
Renminbi ("RMB"), the currency of the primary economic environment
in which most of the group entities operate (the functional
currency of the Company and most of the entities comprising the
Group), and all values are rounded to the nearest thousand ('000)
unless otherwise indicated.
2. BASIS OF PREPARATION
The condensed consolidated financial statements for the six
months ended 30 June 2021 have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting"
("IAS 34") issued by the International Accounting Standards Board
(the "IASB") as well as with the applicable disclosure requirements
of Appendix 16 to the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (the "Listing Rules"). The
condensed consolidated financial statements do not include all the
information and disclosures required in the annual consolidated
financial statements, and should be read in conjunction with the
Group's consolidated financial statements for the year ended 31
December 2020.
As at 30 June 2021, the Group's current liabilities exceeded its
current assets by approximately RMB62,361 million. The liquidity of
the Group is primarily dependent on its ability to maintain cash
inflows from operations and sufficient financing to meet its
financial obligations as and when they fall due. Considering the
Company's sources of liquidity and the unutilised bank facilities
of RMB124,132 million as at 30 June 2021, the Directors believe
that adequate funding is available to fulfil the Group's debt
obligations and capital expenditure requirements when preparing
these condensed consolidated financial statements for the six
months ended 30 June 2021. Accordingly, these condensed
consolidated financial statements have been prepared on a basis
that the Group will be able to continue as a going concern.
3. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been
prepared on the historical cost basis except for certain financial
instruments, which are measured at fair values.
Other than application of amendments to International Financial
Reporting Standards ("IFRSs"), the accounting policies and methods
of computation used in the condensed consolidated financial
statements for the six months ended 30 June 2021 are the same as
those presented in the Group's annual consolidated financial
statements for the year ended 31 December 2020.
Application of amendments to IFRSs
In the current interim period, the Group has applied the
following amendments to IFRSs issued by the IASB, for the first
time, which are mandatorily effective for the annual period
beginning on or after 1 January 2021 for the preparation of the
Group's condensed consolidated financial statements.
Amendments to IFRS 9, IAS 39, IFRS Interest Rate Benchmark
7, Reform-Phase 2
IFRS 4 and IFRS 16
In addition, the Group has early applied the Amendment to IFRS
16 "Covid-19-Related Rent Concessions beyond 30 June 2021".
Except as described below, the application of the amendments to
IFRSs in the current interim period has had no material impact on
the Group's financial positions and performance for the current and
prior periods and/or on the disclosures set out in these condensed
consolidated financial statements.
3.1 Impacts on early application of Amendment to IFRS 16
"Covid-19-Related Rent Concessions beyond 30 June 2021"
The Group has early applied the amendment in the current interim
period. The application of this amendment has had no material
impact on the Group's financial positions and performance for the
current and prior periods.
3.2 Impacts and accounting policies on application of Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate
Benchmark Reform - Phase 2"
As at 1 January 2021, the Group has certain lease liabilities
denominated in United States Dollar ("USD") based on London
Interbank Offered Rate ("LIBOR"). The accounting policies and the
potential impact from the amendment that are relevant to the Group
are described below.
3. PRINCIPAL ACCOUNTING POLICIES (Continued)
3.2 Impacts and accounting policies on application of Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate
Benchmark Reform - Phase 2" (Continued)
3.2.1 Accounting policies
Leases
The Group as a lessee
Changes in the basis for determining the future lease payments
as a result of interest rate benchmark reform
For changes in the basis for determining the future lease
payments as a result of interest rate benchmark reform, the Group
applies the practical expedient to remeasure the lease liabilities
by discounting the revised lease payments using the unchanged
discount rate, unless the change in lease payments results from a
change in floating interest rates. In that case, the Group uses the
revised discount rate that reflects change in the interest rate and
makes a corresponding adjustment to the related right-of-use
assets.
A lease modification is required by interest rate benchmark
reform if, and only if, both of these conditions are met:
-- the modification is necessary as a direct consequence of
interest rate benchmark reform; and
-- the new basis for determining the lease payments is
economically equivalent to the previous basis (i.e. the basis
immediately preceding the modification).
3.2.2 Transition and summary of effects
The amendments have had no impact on the condensed consolidated
financial statements as none of the above contracts has been
transitioned to the relevant replacement rates during the interim
period.
4A. REVENUE
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Revenue from contracts with customers 37,568,479 29,487,931
------------ ------------
Rental income (included in revenue of
airline operations segment) 95,324 157,835
------------ ------------
Total revenue 37,663,803 29,645,766
------------ ------------
Disaggregation of revenue from contracts with customers
Six months ended 30 June Six months ended 30
2021 June 2020
Other Airline Other
Segments Airline operations operations operations operations
------------------ ----------- ----------- -----------
RMB'000 RMB'000 RMB'000 RMB'000
------------------ ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------ ----------- ----------- -----------
Type of goods or services
------------------ ----------- ----------- -----------
Airline operations
------------------ ----------- ----------- -----------
Passenger 30,895,166 - 22,948,314 -
------------------ ----------- ----------- -----------
Cargo and mail 4,575,303 - 4,190,518 -
------------------ ----------- ----------- -----------
Ground service income 107,195 - 162,179 -
------------------ ----------- ----------- -----------
Others 580,640 - 755,956 -
------------------ ----------- ----------- -----------
36,158,304 - 28,056,967 -
------------------ ----------- ----------- -----------
Other operations
------------------ ----------- ----------- -----------
Aircraft engineering
income - 1,271,234 - 1,270,971
------------------ ----------- ----------- -----------
Others - 138,941 - 159,993
------------------ ----------- ----------- -----------
- 1,410,175 - 1,430,964
------------------ ----------- ----------- -----------
Total 36,158,304 1,410,175 28,056,967 1,430,964
------------------ ----------- ----------- -----------
Geographical markets
------------------ ----------- ----------- -----------
Mainland China 30,426,309 1,410,175 17,597,210 1,430,964
------------------ ----------- ----------- -----------
Hong Kong Special Administrative
Region ("SAR"), Macau
SAR and Taiwan, China 624,049 - 734,391 -
------------------ ----------- ----------- -----------
International 5,107,946 - 9,725,366 -
------------------ ----------- ----------- -----------
Total 36,158,304 1,410,175 28,056,967 1,430,964
------------------ ----------- ----------- -----------
4B. SEGMENT INFORMATION
The Group's operating businesses are structured and managed
separately, according to the nature of their operations and the
services they provide. The Group has the following reportable
operating segments:
(a) the "airline operations" segment which mainly comprises the
provision of air passenger and air cargo services; and
(b) the "other operations" segment which comprises the provision
of aircraft engineering and other airline-related services.
Intersegment sales and transfers are transacted with reference
to the selling prices used for sales made to third parties at the
then prevailing market prices.
Operating segments
The following tables present the Group's consolidated revenue
and loss before taxation regarding the Group's operating segments
in accordance with the Accounting Standards for Business
Enterprises of the PRC ("CASs") for the six months ended 30 June
2021 and 2020 and the reconciliations of reportable segment revenue
and loss before taxation to the Group's consolidated amounts under
IFRSs:
For the six months ended 30 June 2021
Airline
operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
----------- ---------------- ----------- -----------
Revenue
----------- ---------------- ----------- -----------
Sales to external customers 36,253,628 1,410,175 - 37,663,803
----------- ---------------- ----------- -----------
Intersegment sales 74,687 2,682,677 (2,757,364) -
----------- ---------------- ----------- -----------
Revenue for reportable segments
under CASs and IFRSs 36,328,315 4,092,852 (2,757,364) 37,663,803
----------- ---------------- ----------- -----------
Segment loss before taxation
----------- ---------------- ----------- -----------
Loss before taxation for reportable
segments under CASs (9,366,578) (33,554) (10,666) (9,410,798)
----------- ---------------- ----------- -----------
Effect of differences between
IFRSs and CASs 5,849
----------- ---------------- ----------- -----------
Loss before taxation for the
period under IFRSs (9,404,949)
----------- ---------------- ----------- -----------
4B. SEGMENT INFORMATION (Continued)
Operating segments (Continued)
For the six months ended 30 June 2020
Airline
operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
------------ ---------------- ----------- ------------
Revenue
------------ ---------------- ----------- ------------
Sales to external customers 28,214,802 1,430,964 - 29,645,766
------------ ---------------- ----------- ------------
Intersegment sales 52,006 2,686,484 (2,738,490) -
------------ ---------------- ----------- ------------
Revenue for reportable segments
under CASs and IFRSs 28,266,808 4,117,448 (2,738,490) 29,645,766
------------ ---------------- ----------- ------------
Segment loss before taxation
------------ ---------------- ----------- ------------
Loss before taxation for reportable
segments under CASs (12,898,404) (158,866) (41,428) (13,098,698)
------------ ---------------- ----------- ------------
Effect of differences between
IFRSs and CASs 1,772
------------ ---------------- ----------- ------------
Loss before taxation for the
period under IFRSs (13,096,926)
------------ ---------------- ----------- ------------
The following table presents the segment assets of the Group's
operating segments under CASs as at 30 June 2021 and 31 December
2020 and the reconciliations of reportable segment assets to the
Group's consolidated amounts under IFRSs:
Airline
operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
----------- ---------------- ------------ -----------
Segment assets
----------- ---------------- ------------ -----------
Total assets for reportable
segments as at 30 June 2021
under CASs (unaudited) 278,033,335 22,059,855 (12,064,739) 288,028,451
----------- ---------------- ------------ -----------
Effect of differences between
IFRSs and CASs (36,707)
----------- ---------------- ------------ -----------
Total assets as at 30 June
2021 under IFRSs (unaudited) 287,991,744
----------- ---------------- ------------ -----------
Total assets for reportable
segments as at 31 December
2020 under CASs (audited) 276,189,234 21,125,795 (13,244,319) 284,070,710
----------- ---------------- ------------ -----------
Effect of differences between
IFRSs and CASs (41,094)
----------- ---------------- ------------ -----------
Total assets as at 31 December
2020 under IFRSs (audited) 284,029,616
----------- ---------------- ------------ -----------
4B. SEGMENT INFORMATION (Continued)
Geographical information
The following tables present the Group's consolidated revenue
under IFRSs by geographical location for the six months ended 30
June 2021 and 2020, respectively:
For the six months ended 30 June 2021
Hong Kong
SAR, Macau
SAR and
Mainland Taiwan,
China China International Total
RMB'000 RMB'000 RMB'000 RMB'000
---------- ----------- ------------- ----------
Sales to external customers
and total revenue 31,931,808 624,049 5,107,946 37,663,803
---------- ----------- ------------- ----------
For the six months ended 30 June 2020
Hong Kong
SAR, Macau
SAR and
Mainland Taiwan,
China China International Total
RMB'000 RMB'000 RMB'000 RMB'000
---------- ----------- ------------- ----------
Sales to external customers
and total revenue 19,186,009 734,391 9,725,366 29,645,766
---------- ----------- ------------- ----------
In determining the Group's geographical information, revenue is
attributed to the segments based on the origin or destination of
each flight. Assets, which consist principally of aircraft and
ground equipment, supporting the Group's worldwide transportation
network, are mainly registered/located in Mainland China. According
to the business demand, the Group needs to flexibly allocate
different aircraft to match the need of the route network. An
analysis of the assets of the Group by geographical distribution
has therefore not been included.
5. OTHER INCOME AND GAINS
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Co-operation routes income and subsidy
income 2,192,115 1,726,210
------------ ------------
Dividend income 2,631 5,410
------------ ------------
Gain on disposal of property, plant
and equipment 5,598 22,749
------------ ------------
Others 88,797 113,316
------------ ------------
2,289,141 1,867,685
------------ ------------
6. LOSS FROM OPERATIONS
The Group's loss from operations is arrived at after
charging:
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Depreciation of property, plant and
equipment 4,596,415 4,431,039
------------ ------------
Depreciation of right-of-use assets 5,722,680 5,521,043
------------ ------------
Depreciation of investment properties 12,505 12,742
------------ ------------
Amortisation of intangible assets 21 -
------------ ------------
Impairment losses recognised on inventories - 137
------------ ------------
Research and development costs recognised
as an expense 60,826 164,604
------------ ------------
7. FINANCE COSTS
An analysis of the Group's finance costs during the period is as
follows:
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Interest on interest-bearing borrowings 1,205,093 902,463
------------ ------------
Interest on lease liabilities 1,596,943 1,900,472
------------ ------------
Imputed interest expenses on defined
benefit obligations 3,976 4,183
------------ ------------
2,806,012 2,807,118
------------ ------------
Less: Interest capitalised (147,714) (258,822)
------------ ------------
2,658,298 2,548,296
------------ ------------
The interest capitalisation rates during the period ranged from
1.75% to 4.41% per annum (six months ended 30 June 2020: 1.90% to
4.75% per annum).
8. INCOME TAX CREDIT
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Current income tax:
------------ ------------
* Mainland China 15,048 68,822
------------ ------------
* Hong Kong SAR and Macau SAR, China 827 2,655
------------ ------------
Over-provision in respect of prior years (1,575) (37,316)
------------ ------------
Deferred tax (1,748,584) (2,270,681)
------------ ------------
(1,734,284) (2,236,520)
------------ ------------
Under the relevant Corporate Income Tax Law and regulations in
the PRC, except for two branches and three subsidiaries of the
Company, and some branches of a subsidiary of the Company which are
taxed at a preferential rate of 15% (six months ended 30 June 2020:
15%) during the current period, all group companies located in
Mainland China are subject to a corporate income tax rate of 25%
(six months ended 30 June 2020: 25%) during the current period.
Subsidiaries in Hong Kong SAR, China are taxed at corporate income
tax rates of 16.5% (six months ended 30 June 2020: 8.25% and
16.5%), and subsidiaries in Macau SAR, China are taxed at corporate
income tax rate of 12% (six months ended 30 June 2020: 12%).
In respect of majority of the Group's overseas airline
activities, the Group has either obtained exemptions from overseas
taxation pursuant to the bilateral aviation agreements between the
overseas governments and the PRC government, or has sustained tax
losses in these overseas jurisdictions. Accordingly, no provision
for overseas tax has been made for overseas airlines activities in
the current and prior periods.
9. DIVIDS
(a) Dividends payable to equity shareholders attributable to the interim period
In accordance with the Company's articles of association, the
profit after tax of the Company for the purpose of dividend
distribution is based on the lesser of (i) the profit determined in
accordance with CASs; and (ii) the profit determined in accordance
with IFRSs.
No interim dividend has been declared by the Directors for the
six months ended 30 June 2021 (six months ended 30 June 2020:
Nil).
(b) Dividends payable to equity shareholders attributable to the
previous financial year, approved during the current interim
period
No dividend has been declared by the Directors for the financial
year 2020 during the current interim period (six months ended 30
June 2020: RMB0.4442 per ten shares (including tax) for the
financial year 2019, amounting to RMB645,192,000).
10. LOSS PER SHARE
The calculation of basic loss per share was based on the loss
attributable to ordinary equity shareholders of the Company of
RMB6,781 million (six months ended 30 June 2020 (unaudited): loss
of RMB9,440 million) and the number of 13,734,960,921 ordinary
shares (six months ended 30 June 2020: 13,734,960,921 shares) in
issue during the period, as adjusted to reflect the number of
treasury shares held by Cathay Pacific Airways Limited ("Cathay
Pacific") through reciprocal shareholding (Note 12).
The Group had no potential ordinary shares in issue during both
periods.
11. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
During the six months ended 30 June 2021, additions to property,
plant and equipment were RMB8,835 million (six months ended 30 June
2020: RMB3,791 million). Property, plant and equipment with
carrying amount of RMB84 million were disposed of during the six
months ended 30 June 2021 (six months ended 30 June 2020: RMB70
million), resulting in a gain on disposal of RMB6 million (six
months ended 30 June 2020: RMB23 million).
As at 30 June 2021, the Group's aircraft and flight equipment,
buildings and machinery with an aggregate net book value of
approximately RMB2,319 million (31 December 2020: RMB1,593 million)
were pledged to secure certain bank loans of the Group (Note
18).
As at 30 June 2021, the Group was in the process of applying for
the title certificates of certain buildings with an aggregate net
book value of approximately RMB4,710 million (31 December 2020:
RMB3,478 million). The Directors are of the opinion that the Group
is entitled to lawfully and validly occupy and use the
above-mentioned buildings, and therefore the aforesaid matter did
not have any significant impact on the Group's financial position
as at 30 June 2021.
During the current interim period, the Group entered into
several new lease agreements for the use of aircraft and engines,
land, buildings and others. At the commencement date, the Group
recognised right-of-use assets of RMB4,221 million (six months
ended 30 June 2020: RMB1,014 million).
As at 30 June 2021, the Group had future undiscounted lease
payments under non-cancellable leases of RMB691 million (31
December 2020: RMB1,386 million), which was not recognised as lease
liabilities since leases have yet to be commenced.
As at 30 June 2021, the Group's land use rights, which are
recorded as part of right-of-use assets and all located in Mainland
China, with an aggregate net book value of approximately RMB26
million (31 December 2020: RMB27 million) were pledged to secure
certain bank loans of the Group (Note 18).
12. INTERESTS IN ASSOCIATES
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Share of net assets
----------- ------------
* Listed shares in the PRC - -
----------- ------------
* Listed shares in Hong Kong SAR, China 6,754,044 7,372,164
----------- ------------
* Unlisted investments 972,649 976,857
----------- ------------
Goodwill 2,506,889 2,589,407
----------- ------------
10,233,582 10,938,428
----------- ------------
Market value of listed shares 10,939,809 12,207,958
----------- ------------
Summarised financial information in respect of Cathay Pacific,
the only individually material associate of the Group, and a
reconciliation to the carrying amount in the condensed consolidated
financial statements, are set out below. The summarised financial
information below represents amounts shown in the associate's
condensed consolidated financial statements.
Cathay Pacific
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
------------ ------------
Gross amounts of the associate's
------------ ------------
Current assets 27,468,625 23,201,490
------------ ------------
Non-current assets 143,663,604 148,976,171
------------ ------------
Current liabilities (39,229,244) (39,324,787)
------------ ------------
Non-current liabilities (73,751,411) (71,193,486)
------------ ------------
Equity 58,151,574 61,659,388
------------ ------------
* Equity attributable to equity shareholders of the
associate 41,678,888 45,244,041
------------ ------------
* Equity contributed to preferred shareholders of the
associate 16,468,527 16,411,980
------------ ------------
* Equity attributable to non-controlling interests of
the associate 4,159 3,367
------------ ------------
12. INTERESTS IN ASSOCIATES (Continued)
Cathay Pacific (Continued)
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
Revenue 13,267,578 25,029,654
------------ ------------
Loss for the period (6,330,009) (8,923,073)
------------ ------------
Other comprehensive income/(expense) 3,066,255 (3,199,606)
------------ ------------
Total comprehensive expense (3,263,754) (12,122,679)
------------ ------------
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
Reconciled to the Group's interests
in the associate
----------- ------------
Gross amounts of net assets of the associate 41,678,888 45,244,041
----------- ------------
Group's effective interest 29.99% 29.99%
----------- ------------
Group's share of net assets of the associate 12,499,499 13,568,688
----------- ------------
Elimination of reciprocal shareholding (5,745,455) (6,196,524)
----------- ------------
Goodwill 2,361,418 2,388,549
----------- ------------
Carrying amount 9,115,462 9,760,713
----------- ------------
Based on the unaudited results of Cathay Pacific for the six
months ended 30 June 2021, it incurred a loss for the first half of
2021 due to the continued impact of the Covid-19 pandemic.
The Group performed impairment testing on investments in Cathay
Pacific due to the impact of the Covid-19 pandemic on Cathay
Pacific's market value and cash flow projections. No significant
impairment loss was considered necessary.
Aggregate information of associates that are not individually
material:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
--------- ------------
Aggregate carrying amounts of individually
immaterial associates in the condensed
consolidated financial statements 1,118,120 1,177,715
--------- ------------
12. INTERESTS IN ASSOCIATES (Continued)
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
Aggregate amounts of the Group's share
of those associates'
------------ ------------
* Loss for the period 55,327 637,447
------------ ------------
* Other comprehensive expense for the period 4,268 102,432
------------ ------------
Total comprehensive expense for the
period 59,595 739,879
------------ ------------
13. ACCOUNTS RECEIVABLE
The ageing analysis of the accounts receivable as at the end of
the reporting period, based on the transaction date, net of
allowance for expected credit losses, was as follows:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Within 30 days 1,492,624 1,270,198
----------- ------------
31 to 60 days 831,147 488,965
----------- ------------
61 to 90 days 662,551 259,396
----------- ------------
Over 90 days 752,189 924,240
----------- ------------
3,738,511 2,942,799
----------- ------------
14. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
An analysis of prepayments, deposits and other receivables as at
the end of the reporting period, net of allowance for expected
credit losses, was as follows:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Manufacturers' credits 959,643 1,036,936
----------- ------------
Prepayments of jet fuel 80,437 61,520
----------- ------------
Other prepayments 462,164 359,717
----------- ------------
Others 4,689 15,604
----------- ------------
1,506,933 1,473,777
----------- ------------
Deposits and other receivables 2,442,222 2,438,694
----------- ------------
3,949,155 3,912,471
----------- ------------
As at 30 June 2021, the allowance for expected credit losses
mainly consisted of the full provision for the amount due from
Shenzhen Airlines Property Development Co., Ltd. of RMB468,796,000
(31 December 2020: RMB468,796,000).
15. ACCOUNTS PAYABLE
The ageing analysis of the accounts payable, based on the
transaction date, as at the end of the reporting period was as
follows:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Within 30 days 5,042,845 4,674,784
----------- ------------
31 to 60 days 1,716,307 1,394,258
----------- ------------
61 to 90 days 1,786,927 1,385,660
----------- ------------
Over 90 days 6,211,161 5,055,880
----------- ------------
14,757,240 12,510,582
----------- ------------
16. OTHER PAYABLES AND ACCRUALS
An analysis of other payables and accruals as at the end of the
reporting period was as follows:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Accrued salaries, wages and benefits 2,174,318 2,717,751
----------- ------------
Accrued operating expenses 215,078 172,655
----------- ------------
Other tax payable 154,547 160,933
----------- ------------
Deposits received from sales agents 476,455 564,275
----------- ------------
Current portion of long-term payables 20,766 28,449
----------- ------------
Deposits received by China National
Aviation
----------- ------------
Finance Co., Ltd. ("CNAF"), a subsidiary
of the Company,
from related parties 6,437,744 4,460,614
----------- ------------
Others 3,472,496 3,073,251
----------- ------------
12,951,404 11,177,928
----------- ------------
17. LEASE LIABILITIES
The Group has obligations under lease agreements expiring from
the second half of 2021 to 2033 (31 December 2020: 2021 to 2033).
An analysis of the lease payments as at the end of the reporting
period, together with the present values of the lease payments
which are principally denominated in foreign currencies, is as
follows:
At 30 June 2021 At 31 December 2020
Present Present
values of values of
Lease payments lease payments Lease payments lease payments
-------------- --------------- -------------- ---------------
RMB'000 RMB'000 RMB'000 RMB'000
-------------- --------------- -------------- ---------------
(Unaudited) (Unaudited) (Audited) (Audited)
-------------- --------------- -------------- ---------------
Amounts repayable
-------------- --------------- -------------- ---------------
* Within 1 year 17,090,704 14,039,145 16,632,893 13,560,862
-------------- --------------- -------------- ---------------
* After 1 year but within 2 years 16,061,606 13,500,047 15,824,712 13,160,310
-------------- --------------- -------------- ---------------
* After 2 years but within 5 years 41,759,641 36,897,485 41,987,455 36,749,314
-------------- --------------- -------------- ---------------
* After 5 years 28,488,422 26,599,637 27,801,689 26,189,054
-------------- --------------- -------------- ---------------
Total 103,400,373 91,036,314 102,246,749 89,659,540
-------------- --------------- -------------- ---------------
Less: Amounts representing
future finance costs (12,364,059) (12,587,209)
-------------- --------------- -------------- ---------------
Present values of lease payments 91,036,314 89,659,540
-------------- --------------- -------------- ---------------
Less: Portion classified as
current liabilities (14,039,145) (13,560,862)
-------------- --------------- -------------- ---------------
Non-current portion 76,997,169 76,098,678
-------------- --------------- -------------- ---------------
18. INTEREST-BEARING BORROWINGS
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
------------ ------------
(Unaudited) (Audited)
------------ ------------
Bank loans and other borrowings:
------------ ------------
* Secured 1,825,360 2,023,792
------------ ------------
* Unsecured 54,172,620 50,359,853
------------ ------------
55,997,980 52,383,645
------------ ------------
Corporate bonds and short-term commercial
papers:
------------ ------------
* Secured 6,684,056 6,773,214
------------ ------------
* Unsecured 13,052,655 12,112,603
------------ ------------
19,736,711 18,885,817
------------ ------------
75,734,691 71,269,462
------------ ------------
Bank loans and other borrowings repayable:
------------ ------------
* Within 1 year or payable on demand 26,903,727 31,242,946
------------ ------------
* After 1 year but within 2 years 1,491,604 733,833
------------ ------------
* After 2 years but within 5 years 27,442,464 20,175,216
------------ ------------
* After 5 years 160,185 231,650
------------ ------------
55,997,980 52,383,645
------------ ------------
Corporate bonds and short-term commercial
papers repayable:
------------ ------------
* Within 1 year 12,237,827 8,387,419
------------ ------------
* After 1 year but within 2 years 5,998,884 2,999,157
------------ ------------
* After 2 years but within 5 years 1,500,000 7,499,241
------------ ------------
19,736,711 18,885,817
------------ ------------
Total interest-bearing borrowings 75,734,691 71,269,462
------------ ------------
Less: Portion classified as current
liabilities (39,141,554) (39,630,365)
------------ ------------
Non-current portion 36,593,137 31,639,097
------------ ------------
As at 30 June 2021, the interest rates of the Group's bank loans
and other borrowings ranged from 1.35% to 4.50% (31 December 2020:
1.5% to 4.75%) per annum.
As at 30 June 2021, the interest rates of the Group's corporate
bonds and short-term commercial papers ranged from 2.33% to 5.30%
(31 December 2020: 1.95% to 5.30%) per annum.
18. INTEREST-BEARING BORROWINGS (Continued)
The nominal amount of the Group's bank loans and corporate bonds
of approximately RMB8,509 million as at 30 June 2021 (31 December
2020: RMB8,797 million) were secured by:
(a) Mortgages over certain of the Group's aircraft and flight
equipment, buildings and machinery with an aggregate net book value
of approximately RMB2,319 million as at 30 June 2021 (31 December
2020: RMB1,593 million) (Note 11); and land use rights with an
aggregate net book value of approximately RMB26 million as at 30
June 2021 (31 December 2020: RMB27 million) (Note 11);
(b) As at 30 June 2021, the Group pledged its rights to collect
cash flows in relation to Billing and Settlement Plan ("BSP") to
secure bank loans of RMB150 million (31 December 2020: RMB150
million);
(c) As at 30 June 2021, corporate bonds issued by the Group with
a face value of RMB6,500 million (31 December 2020: RMB6,500
million) were guaranteed by CNAHC.
As at 30 June 2021, corporate bonds and short-term commercial
papers with carrying amount of RMB8,967 million (31 December 2020:
RMB6,568 million) were issued by Shenzhen Airlines Company Limited
("Shenzhen Airlines"), a subsidiary of the Company.
19. ISSUED CAPITAL
The numbers of shares of the Company and their nominal values as
at 30 June 2021 and 31 December 2020 are as follows:
30 June 2021 31 December 2020
Number of Nominal Number of Nominal
shares value shares value
-------------- ----------- -------------- ----------
RMB'000 RMB'000
-------------- ----------- -------------- ----------
(Unaudited) (Audited)
-------------- ----------- -------------- ----------
Registered, issued and fully
paid:
-------------- ----------- -------------- ----------
* H shares of RMB1.00 each:
-------------- ----------- -------------- ----------
Tradable 4,562,683,364 4,562,683 4,562,683,364 4,562,683
-------------- ----------- -------------- ----------
* A shares of RMB1.00 each:
-------------- ----------- -------------- ----------
Tradable 9,962,131,821 9,962,132 9,962,131,821 9,962,132
-------------- ----------- -------------- ----------
14,524,815,185 14,524,815 14,524,815,185 14,524,815
-------------- ----------- -------------- ----------
20. CONTINGENT LIABILITIES
As at 30 June 2021, the Group had the following contingent
liabilities:
Pursuant to the restructuring of CNAHC in preparation for the
listing of the Company's H shares on the HKSE and the LSE, the
Company entered into a restructuring agreement (the "Restructuring
Agreement") with CNAHC and China National Aviation Corporation
(Group) Limited ("CNACG", a wholly-owned subsidiary of CNAHC) on 20
November 2004. According to the Restructuring Agreement, except for
liabilities constituting or arising out of or relating to business
undertaken by the Company after the restructuring, no liabilities
would be assumed by the Company and the Company would not be
liable, whether severally, or jointly and severally, for debts and
obligations incurred prior to the restructuring by CNAHC and CNACG.
The Company has also undertaken to indemnify CNAHC and CNACG
against any damage suffered or incurred by CNAHC and CNACG as a
result of any breach by the Company of any provision of the
Restructuring Agreement.
21. FINANCIAL INSTRUMENTS
(a) Financial assets measured at fair value
(i) Fair value hierarchy
The following table presents the fair value of the Group's
financial instruments measured at the end of the reporting period
on a recurring basis, categorised into the three-level fair value
hierarchy as defined in IFRS 13 Fair value measurement. The level
into which a fair value measurement is classified is determined
with reference to the observability and significance of the inputs
used in the valuation technique as follows:
-- Level 1 valuations: Fair value measured using only Level 1
inputs i.e. unadjusted quoted prices in active markets for
identical assets or liabilities at the measurement date.
-- Level 2 valuations: Fair value measured using Level 2 inputs
i.e. observable inputs which fail to meet Level 1, and not using
significant unobservable inputs. Unobservable inputs are inputs for
which market data are not available.
-- Level 3 valuations: Fair value measured using significant unobservable inputs.
Fair value measurements as
at
30 June 2021 categorised
into
Fair value
at 30 June
2021 Level 1 Level 2 Level 3
----------- ----------- -----------
RMB'000 RMB'000 RMB'000 RMB'000
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Equity instruments at
fair value through other
comprehensive income ("FVTOCI") 214,265 - - 214,265
----------- ----------- ----------- -----------
Debt instruments at FVTOCI 1,313,267 - 1,313,267 -
----------- ----------- ----------- -----------
Debt instruments at FVTOCI
included in other current
assets 391,942 - 391,942 -
----------- ----------- ----------- -----------
Total financial assets
at fair value 1,919,474 - 1,705,209 214,265
----------- ----------- ----------- -----------
21. FINANCIAL INSTRUMENTS (Continued)
(a) Financial assets measured at fair value (Continued)
(i) Fair value hierarchy (Continued)
Fair value measurements as
at
31 December 2020 categorised
into
Fair value
at 31 December
2020 Level 1 Level 2 Level 3
---------- ---------- ---------
RMB'000 RMB'000 RMB'000 RMB'000
--------------- ---------- ---------- ---------
(Audited) (Audited) (Audited) (Audited)
--------------- ---------- ---------- ---------
Equity instruments at
FVTOCI 233,180 - - 233,180
--------------- ---------- ---------- ---------
Debt instruments at FVTOCI 1,344,829 - 1,344,829 -
--------------- ---------- ---------- ---------
Debt instruments at FVTOCI
included in other current
assets 1,686,930 - 1,686,930 -
--------------- ---------- ---------- ---------
Total financial assets
at fair value 3,264,939 - 3,031,759 233,180
--------------- ---------- ---------- ---------
During the six months ended 30 June 2021 and 2020, there were no
transfers between Level 1 and Level 2, or transfers into or out of
Level 3. The Group's policy is to recognise transfers between
levels of fair value hierarchy as at the end of the reporting
period in which they occur.
(ii) Valuation techniques and inputs used in Level 2 fair value measurements
All financial instruments classified within Level 2 of the fair
value hierarchy are debt investments, the fair value of which were
determined based upon the valuation conducted by the China Central
Depository & Clearing Co., Ltd..
(iii) Valuation techniques and inputs used in Level 3 fair value measurements
The fair value of equity instruments at FVTOCI was mainly
estimated by reference to the quoted prices in an active market
with an adjustment of discount for lack of marketability.
(b) Fair values of financial assets and liabilities carried at
other than fair value
Except as detailed in the following table, the Directors
consider that the carrying amounts of financial assets and
financial liabilities recognised in these condensed consolidated
financial statements approximate their fair values.
21. FINANCIAL INSTRUMENTS (Continued)
(b) Fair values of financial assets and liabilities carried at
other than fair value (Continued)
Carrying amounts Fair values
As at As at 31 As at As at 31
30 June December 30 June December
2021 2020 2021 2020
----------- ---------- ---------- ----------
RMB'000 RMB'000 RMB'000 RMB'000
----------- ---------- ---------- ----------
(Unaudited) (Audited)
----------- ---------- ---------- ----------
Financial liabilities
----------- ---------- ---------- ----------
* Corporate bonds (fixed rate) 15,421,773 18,375,007 15,335,400 18,123,860
----------- ---------- ---------- ----------
Fair value hierarchy as at 30 June 2021
Level 1 Level 2 Level 3 Total
RMB'000 RMB'000 RMB'000 RMB'000
------- ---------- ------- ----------
Financial liabilities
------- ---------- ------- ----------
* Corporate bonds (fixed rate) - 15,335,400 - 15,335,400
------- ---------- ------- ----------
Fair value hierarchy as at 31 December 2020
Level 1 Level 2 Level 3 Total
RMB'000 RMB'000 RMB'000 RMB'000
------- ---------- ------- ----------
Financial liabilities
------- ---------- ------- ----------
* Corporate bonds (fixed rate) - 18,123,860 - 18,123,860
------- ---------- ------- ----------
22. COMMITMENTS
(a) Capital commitments
The Group had the following amounts of contractual commitments
for the acquisition and construction of property, plant and
equipment as at the end of the reporting period:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Contracted, but not provided for:
----------- ------------
* Aircraft and flight equipment 41,227,815 38,456,252
----------- ------------
* Buildings and others 2,494,266 2,564,193
----------- ------------
Total capital commitments 43,722,081 41,020,445
----------- ------------
(b) Investment commitments
The Group had the following amounts of investment commitments as
at the end of the reporting period:
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Contracted, but not provided for:
----------- ------------
* investment commitment to a joint venture 22,610 22,837
----------- ------------
23. RELATED PARTY TRANSACTIONS
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the
Group), joint ventures and associates (collectively, the "CNAHC
Group"); (ii) its joint ventures and its associates:
(i) Transactions with related parties
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Service provided to the CNAHC Group
------------ ------------
Sales commission income 626 7,392
------------ ------------
Sale of cargo space 4,225,056 3,839,744
------------ ------------
Government charter flights - 28,087
------------ ------------
Air catering income 15,954 24,812
------------ ------------
Ground services income 43,020 47,392
------------ ------------
Income from advertising media business 6,553 6,553
------------ ------------
Aircraft maintenance income 93,969 147,612
------------ ------------
Aviation communication income 1,185 1,185
------------ ------------
Aircraft and flight equipment rental
income 7,460 12,622
------------ ------------
Land and buildings rental income 66,797 76,959
------------ ------------
Others 52,927 40,176
------------ ------------
4,513,547 4,232,534
------------ ------------
Service provided by the CNAHC Group
------------ ------------
Sales commission expenses 260,718 161,877
------------ ------------
Air catering charges 425,734 231,850
------------ ------------
Airport ground services, take-off,
landing and depot expenses 584,866 482,319
------------ ------------
Management fees 112,644 62,216
------------ ------------
Repair and maintenance costs 7,952 8,534
------------ ------------
Short-term leases and leases of low-value
assets 48,622 57,279
------------ ------------
Other procurement and maintenance 78,357 64,068
------------ ------------
Aviation communication expenses 252,480 155,473
------------ ------------
Interest expenses 21,109 14,206
------------ ------------
Media advertisement expenses 76,917 48,338
------------ ------------
Others 20,340 26,662
------------ ------------
1,889,739 1,312,822
------------ ------------
Loans to the CNAHC Group by CNAF
------------ ------------
Advances/(repayments) of loans 30,000 (530,000)
------------ ------------
Interest income 407 3,232
------------ ------------
23. RELATED PARTY TRANSACTIONS (Continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the
Group), joint ventures and associates (collectively, the "CNAHC
Group"); (ii) its joint ventures and its associates:
(Continued)
(i) Transactions with related parties (Continued)
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Deposits from the CNAHC Group received
by CNAF
------------ ------------
Increase/(decrease) in deposits received 1,845,111 (109,543)
------------ ------------
Interest expenses 24,160 18,130
------------ ------------
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
As a lessee with CNAHC Group
------------ ------------
Addition in right-of-use assets on
new leases 1,941,169 34,262
------------ ------------
Addition in lease liabilities on new
leases 1,941,169 34,262
------------ ------------
Lease payments paid 897,597 772,818
------------ ------------
Interest on lease liabilities 187,038 179,093
------------ ------------
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Service provided to joint ventures
and associates
------------ ------------
Sales commission income 239 575
------------ ------------
Aircraft maintenance income 61,877 66,402
------------ ------------
Air catering income 1,992 396
------------ ------------
Ground services income 44,926 47,822
------------ ------------
Frequent-flyer programme income 13,206 9,449
------------ ------------
Land and buildings rental income 1,155 1,885
------------ ------------
Others 603 2,805
------------ ------------
123,998 129,334
------------ ------------
23. RELATED PARTY TRANSACTIONS (Continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the
Group), joint ventures and associates (collectively, the "CNAHC
Group"); (ii) its joint ventures and its associates:
(Continued)
(i) Transactions with related parties (Continued)
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Service provided by joint ventures
and associates
------------ ------------
Sales commission expenses 482 404
------------ ------------
Air catering charges 9 1,432
------------ ------------
Airport ground services, take-off,
landing and depot expenses 129,234 95,074
------------ ------------
Repair and maintenance costs 248,114 938,132
------------ ------------
Short-term leases and leases of low-value
assets 15,917 443
------------ ------------
Other procurement and maintenance 7,271 9,994
------------ ------------
Aviation communication expenses 2,871 2,704
------------ ------------
Airline joint operation expenses - 10,630
------------ ------------
Frequent-flyer programme expenses 189 488
------------ ------------
404,087 1,059,301
------------ ------------
Loans to joint ventures and associates
by CNAF
------------ ------------
Net repayment of loans - 14,800
------------ ------------
Interest income - 3,672
------------ ------------
Deposits from joint ventures and associates
received by CNAF
------------ ------------
Increase in deposits received 125,586 183,840
------------ ------------
Interest expenses 1,302 1,403
------------ ------------
The Directors are of the opinion that the above transactions
were conducted in the ordinary course of business of the Group.
Part of the related transactions above also constitute connected
transactions or continuing connected transactions as defined in
Chapter 14A of the Listing Rules.
23. RELATED PARTY TRANSACTIONS (Continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the
Group), joint ventures and associates (collectively, the "CNAHC
Group"); (ii) its joint ventures and its associates:
(Continued)
(ii) Balances with related parties
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Outstanding balances with related
parties*
----------- ------------
Amount due from the ultimate holding
company 200,740 591,909
----------- ------------
Amounts due from associates 187,749 209,549
----------- ------------
Amounts due from joint ventures 2,656 486
----------- ------------
Amounts due from other related companies 1,944,635 1,895,852
----------- ------------
Amount due to the ultimate holding
company 47,772 43,703
----------- ------------
Amounts due to associates 96,772 87,810
----------- ------------
Amounts due to joint ventures 159,395 432,560
----------- ------------
Amounts due to other related companies 14,170,689 12,985,411
----------- ------------
* Outstanding balances with related parties exclude borrowing
balances with related parties and outstanding balances between CNAF
and related parties.
Except for lease liabilities, the above outstanding balances
with related parties are unsecured, interest-free and repayable
within one year or have no fixed terms of repayment.
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Outstanding borrowing balances with
related parties
----------- ------------
Interest-bearing borrowings
----------- ------------
* Due to the ultimate holding company 600,442 -
----------- ------------
* Due to other related companies 1,367,540 1,361,244
----------- ------------
23. RELATED PARTY TRANSACTIONS (Continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the
Group), joint ventures and associates (collectively, the "CNAHC
Group"); (ii) its joint ventures and its associates:
(Continued)
(ii) Balances with related parties (Continued)
At At
30 June 31 December
2021 2020
RMB'000 RMB'000
----------- ------------
(Unaudited) (Audited)
----------- ------------
Outstanding balances between CNAF
and related parties
----------- ------------
(1) Outstanding balances between CNAF
and CNAHC Group
----------- ------------
Loans granted 50,000 20,000
----------- ------------
Deposits received 6,204,580 4,359,469
----------- ------------
Interest payable to related parties 18,060 11,488
----------- ------------
Interest receivable from related parties 48 20
----------- ------------
(2) Ou
tstanding balances between CNAF and
joint ventures and associates of the
Group
----------- ------------
Deposits received 215,084 89,498
----------- ------------
Interest payable to related parties 20 158
----------- ------------
The outstanding balances between CNAF and related parties
represent loans to related parties or deposits received by CNAF
from related parties. The applicable interest rates are determined
in accordance with the prevailing borrowing rates/deposit saving
rates published by the People's Bank of China.
23. RELATED PARTY TRANSACTIONS (Continued)
(b) An analysis of the compensation of key management personnel
of the Group is as follows:
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Short term employee benefits 6,250 6,089
------------ ------------
Retirement scheme contributions 322 398
------------ ------------
6,572 6,487
------------ ------------
The breakdown of emoluments for key management personal are as
follows:
Six months ended 30 June
2021 2020
------------ ------------
RMB'000 RMB'000
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Directors and supervisors 1,130 422
------------ ------------
Senior management 5,442 6,065
------------ ------------
6,572 6,487
------------ ------------
23. RELATED PARTY TRANSACTIONS (Continued)
(c) Guarantee with related parties:
At 30 June 2021:
Amount of
guaranty
at Inception Maturity
30 June date of date of
Name of guarantor Name of guarantee 2021 guaranty guaranty
RMB'000
------------------ ----------- ---------- ----------
(Unaudited)
------------------ ----------- ---------- ----------
Corporate bonds:
------------------ ----------- ---------- ----------
CNAHC Air China Limited 5,000,000 18/01/2013 18/07/2023
------------------ ----------- ---------- ----------
CNAHC Air China Limited 1,500,000 16/08/2013 16/02/2024
------------------ ----------- ---------- ----------
At 31 December 2020:
Amount of
guaranty
at Inception Maturity
31 December date of date of
Name of guarantor Name of guarantee 2020 guaranty guaranty
RMB'000
------------------ ------------ ---------- ----------
(Audited)
------------------ ------------ ---------- ----------
Corporate bonds:
------------------ ------------ ---------- ----------
CNAHC Air China Limited 5,000,000 18/01/2013 18/07/2023
------------------ ------------ ---------- ----------
CNAHC Air China Limited 1,500,000 16/08/2013 16/02/2024
------------------ ------------ ---------- ----------
23. RELATED PARTY TRANSACTIONS (Continued)
(d) Transactions with other government-related entities in the
PRC
The Company is ultimately controlled by the PRC government and
the Group operates in an economic environment currently
predominated by entities controlled, jointly controlled or
significantly influenced by the PRC government ("government-related
entities").
Apart from above transactions with CNAHC Group, the Group has
collectively, but not individually significant transactions with
other government-related entities, which include but are not
limited to the following:
-- Rendering and receiving services
-- Sales and purchases of goods, properties and other assets
-- Lease of assets
-- Depositing and borrowing money
-- Use of public utilities
The transactions between the Group and other government-related
entities are conducted in the ordinary course of the Group's
business within normal business operations. The Group has
established its approval process for providing of services,
purchase of products, properties and services, purchase of lease
service and its financing policy for borrowing. Such approval
processes and financing policy do not depend on whether the
counterparties are government-related entities or not.
- REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
TO THE BOARD OF DIRECTORS OF AIR CHINA LIMITED
( )
(Incorporated in the People's Republic of China with limited
liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements
of Air China Limited (the "Company") and its subsidiaries
(collectively referred to as the "Group") set out on pages 31 to
66, which comprise the condensed consolidated statement of
financial position as of 30 June 2021 and the related condensed
consolidated statement of profit or loss, statement of profit or
loss and other comprehensive income, statement of changes in equity
and statement of cash flows for the six-month period then ended,
and certain explanatory notes. The Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited require the
preparation of a report on interim financial information to be in
compliance with the relevant provisions thereof and International
Accounting Standard 34 "Interim Financial Reporting" ("IAS 34")
issued by the International Accounting Standards Board. The
directors of the Company are responsible for the preparation and
presentation of these condensed consolidated financial statements
in accordance with IAS 34. Our responsibility is to express a
conclusion on these condensed consolidated financial statements
based on our review, and to report our conclusion solely to you, as
a body, in accordance with our agreed terms of engagement, and for
no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with International
Standard on Review Engagements 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
issued by the International Auditing and Assurance Standards Board.
A review of these condensed consolidated financial statements
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
CONCLUSION
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated financial
statements are not prepared, in all material respects, in
accordance with IAS 34.
Deloitte Touche Tohmatsu Certified Public Accountants LLP
Certified Public Accountants
(Registered as a Third Country Auditor with the UK Financial
Reporting Council)
Shanghai, China
27 August 2021
GLOSSARY OF TECHNICAL TERMS
Capacity Measurements
"available tonne kilometres" the number of tonnes of capacity available
or "ATK(s)" for transportation multiplied by the
kilometres flown
"available seat kilometres" the number of seats available for
or "ASK(s)" sale multiplied by the kilometres
flown
"available freight tonne kilometres" the number of tonnes of capacity available
or "AFTK(s)" for the carriage of cargo and mail
multiplied by the kilometres flown
Traffic Measurements
"passenger traffic" measured in RPK, unless otherwise
specified
"revenue passenger kilometres" the number of revenue passengers carried
or "RPK(s)" multiplied by the kilometres flown
"cargo and mail traffic" measured in RFTK, unless otherwise
specified
"revenue freight tonne kilometres" the revenue cargo and mail load in
or "RFTK(s)" tonnes multiplied by the kilometres
flown
"revenue tonne kilometres" or the revenue load (passenger and cargo)
"RTK(s)" in tonnes multiplied by the kilometres
flown
Efficiency Measurements
"passenger load factor" RPK expressed as a percentage of ASK
"cargo and mail load factor" RFTK expressed as a percentage of
AFTK
"overall load factor" RTK expressed as a percentage of ATK
"block hour" whole and/or partial hour elapsing
from the moment the chocks are removed
from the wheels of the aircraft for
flights until the chocks are next
again returned to the wheels of the
aircraft
Yield Measurements
"passenger yield"/"yield per revenues from passenger operations
RPK" divided by RPKs
"cargo yield"/"yield per RFTK" revenues from cargo operations divided
by RFTKs
DEFINITIONS
In this interim report, the following expressions shall have the
following meanings unless the context requires:
"Airbus" Airbus S.A.S., a company established in
Toulouse, France
"Air China Cargo" Air China Cargo Co., Ltd., a subsidiary
of CNAHC
"Air China Inner Mongolia" Air China Inner Mongolia Co., Ltd., a subsidiary
of the Company
"Air Macau" Air Macau Company Limited, a subsidiary
of the Company
"AMECO" Aircraft Maintenance and Engineering Corporation,
a subsidiary of the Company
"Articles of Association" the articles of association of the Company,
as amended from time to time
"A Share(s)" ordinary share(s) in the share capital
of the Company, with a nominal value of
RMB1.00 each, which are subscribed for
and traded in Renminbi and listed on the
Shanghai Stock Exchange
"Beijing Airlines" Beijing Airlines Company Limited, a subsidiary
of the Company
"Board" the board of directors of the Company
"CASs" China Accounting Standards for Business
Enterprises
"Cathay Pacific" Cathay Pacific Airways Limited, an associate
of the Company
"CNACG" China National Aviation Corporation (Group)
Limited
"CNAF" China National Aviation Finance Co., Ltd,
a subsidiary of the Company
"CNACG Group" CNACG and its subsidiaries
"CNAHC" China National Aviation Holding Corporation
Limited
"CNAHC Group" CNAHC and its subsidiaries
"COMAC" Commercial Aircraft Corporation of China,
Ltd.
"Company" or "Air China" Air China Limited, a company incorporated
in the PRC, whose H Shares are listed on
the Hong Kong Stock Exchange as its primary
listing venue and on the Official List
of the UK Listing Authority as its secondary
listing venue, and whose A Shares are listed
on the Shanghai Stock Exchange
"CSRC" China Securities Regulatory Commission
"Dalian Airlines" Dalian Airlines Company Limited, a subsidiary
of the Company
"Director(s)" the director(s) of the Company
"Group" the Company and its subsidiaries
"Hong Kong" the Hong Kong Special Administrative Region
of the People's Republic of China
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"H Share(s)" overseas-listed foreign invested share(s)
in the share capital of the Company, with
a nominal value of RMB1.00 each, which
are listed on the Hong Kong Stock Exchange
(as primary listing venue) and have been
admitted into the Official List of the
UK Listing Authority (as secondary listing
venue)
"International Financial Reporting International Financial Reporting Standards
Standards" or "IFRSs"
"Kunming Airlines" Kunming Airlines Company Limited, a subsidiary
of Shenzhen Airlines
"Listing Rules" The Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited
"Model Code" The Model Code for Securities Transactions
by Directors of Listed Issuers
"Reporting Period" the period from 1 January 2021 to 30 June
2021
"RMB" Renminbi, the lawful currency of the PRC
"SAR" Special Administrative Region of the People's
Republic of China
"SFO" the Securities and Futures Ordinance (Chapter
571 of the Laws of Hong Kong)
"Shandong Airlines" Shandong Airlines Co., Ltd., a subsidiary
of Shandong Aviation Group Corporation
"Shandong Aviation Group Corporation" Shandong Aviation Group Company Limited,
an associate of the Company
"Shareholder(s)" the shareholder(s) of the Company
"Shenzhen Airlines" Shenzhen Airlines Company Limited, a subsidiary
of the Company
"Supervisor(s)" the supervisor(s) of the Company
"Supervisory Committee" the supervisory committee of the Company
"US dollars" United States dollars, the lawful currency
of the United States
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END
IR DKOBDOBKKBCD
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