Air China Regulatory News (AIRC)

25 Apr 2008 07:00

Air China Ld25 April 2008 The Stock Exchange of Hong Kong Limited takes no responsibility for the contentsof this announcement, makes no representation as to its accuracy or completenessand expressly disclaims any liability whatsoever for any loss whatsoever arisingfrom or in reliance upon the whole or any part of the contents of thisannouncement. (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 753) (1) FIRST QUARTERLY REPORT 2008 (OVERSEAS REGULATORY ANNOUNCEMENT) (2) APPOINTMENT OF CHAIRMAN OF THE SECOND SESSION OF THE BOARD (OVERSEAS REGULATORY ANNOUNCEMENT) (3) SALE OF CERTAIN EQUITY INTEREST HELD BY CHINA NATIONAL AVIATION COMPANY LIMITED (OVERSEAS REGULATORY ANNOUNCEMENT) (4) AMENDMENT OF THE ARTICLES OF ASSOCIATION OF THE COMPANY The board of directors (the "Board") of Air China Limited (the "Company") herebyannounces that a meeting of the Board (the "Board Meeting") was held on 24 April2008 and passed resolutions relating to: 1. the results for the first quarter ended 31 March 2008; 2. the appointment of Mr. Kong Dong as Chairman of the second session of the Board; 3. the sale of equity interest held by China National Aviation CompanyLimited ("CNAC") in Fly Top Limited, China National Aviation Logistics CompanyLimited and Jardine Airport Services Limited to China National AviationCorporation (Group) Limited ("CNACG"); and 4. the amendment of Article 20 of the articles of association of theCompany (the "Articles of Association") in respect of the Company's sharecapital structure. The announcement as set out in section I, II, and III below is made pursuant toRule 13.09 of the Rules Governing the Listing of Securities on the StockExchange of Hong Kong Limited (the "Hong Kong Listing Rules"). The Board of the Company hereby announces that the Board Meeting was held on 24April 2008 and passed resolutions on the following subjects. I. FIRST QUARTERLY REPORT 2008 1. IMPORTANT NOTICE 1.1 The board of directors, the Supervisory Committee, as well as thedirectors, supervisors and senior management of the Company hereby warrant thatthere are no false representations, misleading statements or material omissionsin this report, and the Directors, Supervisors and the senior managementindividually and jointly accept full responsibility for the truthfulness,accuracy and completeness of the contents of this report. 1.2 Director Mr. Wang Shixiang was unable to attend the Board meeting due tobusiness engagement, and appointed Mr. Kong Dong to attend and vote on hisbehalf. Director Mr. Yao Weiting was unable to attend the Board meeting due to businessengagement, and appointed Mr. Ma Xulun to attend and vote on his behalf. Independent Director Mr. Jia Kang was unable to attend the Board meeting due tobusiness engagement, and appointed Mr. Wu Zhipan to attend and vote on hisbehalf. 1.3 The First Quarterly Report of the Company was unaudited. 1.4 The Chairman of the Company Kong Dong, Chief Financial Officer Fan Cheng(Person in charge of accounting function), and the General Manager of FinanceDepartment Li Youqiang hereby jointly declare that the financial statements setout in this quarterly report is true and complete. 2. BASIC INFORMATION OF THE COMPANY 2.1 Major accounting data and financial ratios In RMB At the end of the At the end of Increase/ reporting period previous year (decrease) at the end of the reporting period as compared to the end of the pervious year (%) Total assets (RMB'000) 93,179,455 88,295,239 5.53Owner's equity 31,288,095 2.16 (or shareholders' equity) attributable to 31,964,545 shareholders of the listed company (RMB'000)Net asset per share 2.69 2.64 1.89 attributable to shareholders of the Company (RMB) From the Increase/(decrease) beginning of the year over the corresponding to the end of the period of previous year reporting period (%) Net cash flows from 2,086,620 33.09 operating activities (RMB'000)Net cash flows from 0.18 38.46 operating activities per share (RMB) Reporting From the Increase/ period beginning of (decrease) of the year to this reporting the end of period as the reporting compared to the period corresponding period of previous year (%) Net profit attributable 1,044,014 1,044,014.00 147 to shareholders of the Company (RMB'000)Basic earnings per share 0.09 0.09 147 (RMB)Basic earnings per share 0.09 0.09 143 after exceptional gains and losses (RMB)Diluted earnings per share n/a n/a n/a (RMB)Fully diluted return 3.27 3.27 Increase by on net assets (%) 2 percentage pointsFully diluted return on net 3.29 3.29 Increase by assets after exceptional 2 percentage gains and losses (%) points Exceptional gain and loss items From the beginning of the year to the end of the reporting period (RMB'000)Gains and losses from disposal of -9,419 non-current assetsGovernment grants (except for the grants 34,623 which are closely related to the Company's business and have the standard amount and quantities in accordance with the national standard) attributable to gains and losses for the periodOther non-operating net income and expenses -33,810 apart from those stated aboveEffect of income tax 2,151 Total -6,454 2.2 Total number of shareholders and top 10 holders of listed shares notsubject to trading moratorium as at the end of the reporting period Unit: Share Total number of shareholders at the end of the 543,656 reporting period Particulars of the top 10 holders of listed shares not subject to tradingmoratorium Name of shareholder Number of listed Class of Shares(full name) shares not subject to trading moratorium held as at period end CATHAY PACIFIC AIRWAYS 2,217,617,455 Overseas listed LIMITED foreign shares HKSCC NOMINEES LIMITED 2,160,199,899 Overseas listed foreign shares China National Aviation 122,870,578 RMB ordinary shares Holding Company Sinotrans Air Transportation 80,000,000 RMB ordinary shares Development Co., Ltd. China Shipbuilding Industry 50,000,000 RMB ordinary shares Corporation Rongtong New Blue Chip 35,581,473 RMB ordinary shares Securities Investment Fund Three Gorges Finance Co., Ltd. 35,000,000 RMB ordinary shares China Yangtze Power Co., Ltd. 35,000,000 RMB ordinary shares China General Technology 32,800,000 RMB ordinary shares (Group) Holding Limited China Power Finance Co., Ltd. 32,080,472 RMB ordinary shares 3. SIGNIFICANT EVENTS 3.1 Significant changes of the principal accounting statements and financialindicators and reasons thereof (X) applicable ( ) not applicable 1. Net profit attributable to the Company During the reporting period, net profit attributable to the Companyincreased by 147% as compared with the same period of last year. The reason forthe increase was mainly attributable to the stable growth of the aviationmarket, increase of passenger yield per kilometer and exchange gains fromappreciation of Renminbi. 2. Net cash flow generated from operating activities During the reporting period, net cash flow generated from the operatingactivities of the Company increased by 33% as compared with the same period oflast year. The main reasons was the increase in sales revenue and the merger ofaccounts of Air China Cargo following acquisition of its equity interests thusleading to the increase in net cash flow generated from operating activities. 3. Goodwill During the reporting period, the Company's goodwill increased RMB267.83million or 278.78% because of the accounting of Air China Cargo as a subsidiaryfollowing acquisition of its equity interests. The acquisition premium wasaccounted for as goodwill. 4. Minority interests During the reporting period, the minority interests of the Companyincreased RMB417.535 million or 277.96%. The main reason was the accounting ofAir China Cargo as subsidiary following acquisition of its equity interests andinclusion of its minority interests under minority interests of the Company. 5. Exchange differences arising from conversion of foreign currencyfinancial statement During the reporting period, the exchange deficit arising fromconverting the Company's foreign currency statement increased RMB397.564 millionor 39.1%, mainly due to a greater fluctuation in exchange rate during theperiod. 3.2 Analysis and explanation on the progress of significant events and theirimpact and resolutions (X) applicable ( ) not applicable (1) On 26 February 2007, the Eastern District Court of New York of theFederal Judiciary of the United States filed a civil summon against the Companyand Air China Cargo,claiming that they, together with a number of otherairlines, have violated certain antitrust regulations in respect of their aircargo operations in the United States by acting in concert in imposing excessivesurcharges to impede the offering of discounts and allocating revenue andcustomers so as to achieve increasing, maintaining and stabilizing air cargoprices. As the status of the proceedings is still in the preliminary stage, theDirectors of the Company are of the view that it is not possible to estimate theeventual outcome of the claim with reasonable certainty and therefore noprovision for this claim has been made at this stage. (2) The 2007 second extraordinary general meeting of the Company has approvedthe additional offer of not more than 400 million shares of A shares to thepublic by the Company. The matter is being considered and reviewed by ChinaSecurities Regulatory Commission. 3.3 Performance of undertakings given by the Company, the shareholders andthe effective controlling person (X) applicable ( ) not applicable China National Aviation Holding Company and China National Aviation Corporation(Group) Limited made an undertaking that it would not transfer, or nominateother persons to manage, the shares of the Company held by it, and none of theseshares would be acquired by the Company, during the period of 36 months from thelisting date of the A shares of the Company. 3.4 Warning in respect of forecast of possible net loss from the beginningof the year to the end of the next Reporting Period or warning in respect of anysignificant changes in net profit as compared with that of the correspondingperiod of previous year and the reasons therefore ( ) applicable (X) not applicable 3.5 Particulars of the Securities Investment ( ) applicable (X) not applicable Air China Limited Chairman: Kong Dong 24 April 2008 4. APPENDIX 4.1 Consolidated Balance Sheet 31 March 2008 Prepared by Air China Limited Unit: RMB'000 (Unaudited) Items Balance at Balance at the end the beginning of the period of the year CURRENT ASSETS: Cash and bank balances 4,493,080 3,787,152Provisions on payables - -Contributions received - -Trading financial assets 46,207 6,493Bills receivable 4,571 1,599Accounts receivable 3,029,666 2,812,327Prepayments 356,973 311,784Premium receivable - -Receivables on reinsurance - -Provisions for reinsurance contracts - -Interests receivable - -Dividend receivable - -Other receivables 907,630 997,205Purchase of financial assets resold - -Inventories 792,424 755,340Non-current assets due within a year - -Other current assets - -Total current assets 9,630,551 8,671,900 NON-CURRENT ASSETS:Loans and advances - -Available-for-sale financial assets - -Held-to-maturity investment - -Long-term receivables 314,922 255,340Long-term equity investment 10,290,604 11,404,643Investment property - -Fixed assets 59,483,204 55,000,376Construction in progress 10,864,504 10,967,888Construction materials - -Disposal of fixed assets - -Biological assets for production - -Oil and gas assets - -Intangible assets 1,581,235 1,396,620Development expenses - -Goodwill 499,775 131,945Long-term deferred expenses 83,840 80,684Deferred income tax assets 430,820 385,843Other non-current assets - -Total non-current assets 83,548,904 79,623,339Total assets 93,179,455 88,295,239 CURRENT LIABILITIES: Short-term borrowings 6,810,312 6,546,088Borrowings from central bank - -Deposits from clients and placements from - - other banksContributions made - -Trading financial liabilities 35,173 14,826Bills payable - -Accounts payable 6,787,788 6,338,341Receipts in advance 62,033 53,778International air traffic liabilities 1,559,711 1,702,490Domestic air traffic liabilities 405,242 437,473Salaries and wages payable 269,079 254,073Taxes payable 1,240,781 1,906,067Interests payable 338,829 273,824Dividend payable - -Other payables 2,058,957 2,221,096Amounts payable on reinsurance - -Provisions on insurance contracts - -Brokerage payable - -Underwriting fees payable - -Non-current liabilities due within a year 7,074,143 6,344,212Other current liabilities - -Total current liabilities 26,642,048 26,092,268 NON-CURRENT LIABILITIES:Long-term borrowings 15,556,773 12,938,092Debentures payable 3,000,000 3,000,000Long-term payables 14,667,283 14,630,037Specific payables - -Estimated liabilities 202,976 191,533Deferred income tax liabilities 578,081 5,000Other non-current liabilities - -Total non-current liabilities 34,005,113 30,764,662Total liabilities 60,647,161 56,856,930 OWNER'S EQUITY (OR SHAREHOLDERS' EQUITY):Paid-up capital (or equity) 12,251,362 12,251,362Capital surplus 11,882,408 11,852,408Less: Treasury shares - -Surplus reserves 1,299,214 1,299,214General risk provisions - -Profit available for appropriation 7,932,857 6,888,843Currency translation differences -1,401,296 -1,003,732Total equities attributable to owners of Company 31,964,545 31,288,095Minority interests 567,749 150,214Total owners' equity 32,532,294 31,438,309Total liabilities and owners' equity 93,179,455 88,295,239 Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang Balance Sheet of the Company 31 March 2008 Prepared by Air China Limited Unit: RMB'000 (Unaudited) Items Balance at the Balance at the end of the period beginning of the year CURRENT ASSETS:Cash and bank balances 2,796,308 1,351,373Trading financial assets 46,207 6,493Bills receivable 4,571 1,599Accounts receivable 2,562,333 2,446,047Prepayments 285,640 264,840Interests receivable - -Dividend receivable - -Other receivables 1,113,915 984,279Inventories 718,282 689,871Non-current liabilities due within a year - -Other current assets - -Total current assets 7,527,256 5,744,502 NON-CURRENT ASSETS:Available-for-sale financial assets - -Held-to-maturity investment - -Long-term receivables 242,175 192,848 Long-term equity investment 13,864,156 13,804,257 Investment property - -Fixed assets 56,191,104 54,672,583 Construction in progress 10,749,855 10,967,675 Construction materials - -Disposal of fixed assets - -Biological assets for production - -Oil and gas assets - -Intangible assets 1,382,868 1,396,527Development expenses - -Goodwill - -Long-term deferred expenses 77,670 79,307Deferred income tax assets 394,105 372,000Other non-current assets - -Total non-current assets 82,901,933 81,485,197Total assets 90,429,189 87,229,699 CURRENT LIABILITIES:Short-term borrowings 6,797,312 6,533,088Trading financial liabilities 15,494 6,819Bills payable - -Accounts payable 5,726,963 5,750,093Receipts in advance 51,093 27,235International air traffic liabilities 1,469,273 1,575,568Domestic air traffic liabilities 402,142 437,473Salaries and wages payable 221,097 248,977Taxes payable 1,217,606 1,895,869Interests payable 324,506 273,824Dividend payable - -Other payables 1,958,732 2,067,698Non-current liabilities due within a year 6,971,148 6,344,212Other current liabilities - -Total current liabilities 25,155,366 25,160,856 NON-CURRENT LIABILITIES:Long-term borrowings 14,572,127 12,938,092Debentures payable 3,000,000 3,000,000Long-term payables 14,476,144 14,427,049Specific payables - -Estimated liabilities 202,976 191,533Deferred income tax liabilities 578,081 5,000Other non-current liabilities - -Total non-current liabilities 32,829,328 30,561,674Total liabilities 57,984,694 55,722,530 OWNER'S EQUITY (OR SHAREHOLDERS' EQUITY):Paid-up capital (or equity) 12,251,362 12,251,362Capital surplus 14,310,532 14,280,532Less: Treasury shares - -Surplus reserves 1,289,624 1,289,624Profit available for appropriation 4,592,977 3,685,651Total owner's equity (or shareholders' equity) 32,444,495 31,507,169Total liabilities and owner's equity 90,429,189 87,229,699 (or shareholders' equity) Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang 4.2 Consolidated Income Statement January to March 2008 Unit: RMB'000 (Unaudited) Items Amounts for Amounts for the the period corresponding period of previous year I. Total revenue from operations 12,756,278 10,471,131 Including: Operating income 12,756,278 10,471,131 Interest income - - Premium earned - - Fees and commission income - -II. Total operating cost 12,039,068 10,434,911 Including: Operating costs 11,139,496 9,123,346 Interest expenses - - Fees and commission expenses - - Returned premium - - Net reimbursement paid - - Net amounts of provisions on insurance - - contracts drawn Bonus paid on insurance policy - - Reinsurance premium - - Business taxes and other surcharges 314,813 253,554 Selling expenses 800,449 586,168 Administrative expenses 244,274 254,613 Finance expenses -459,964 217,230 Impairment loss of assets - - Add: Gains from changes in fair value 19,300 256,595 (loss is represented by "-" sign) Investment income (loss is represented 364,270 220,683 by "-" sign) Including: Gains arising from investments in 218,854 220,683 associated companies and joint ventures Exchange gains (loss is represented - - by "-" sign)III Profit from operations (loss is represented 1,100,780 513,498 by "-" sign) Add: Non-operating income 39,473 1,401 Less: Non-operating expenses 48,079 14,686 Including: Net loss arising from disposal - - of non-current assets Items Amounts for Amounts for the the period corresponding period of previous yearIV. Total profit (loss is represented by 1,092,174 500,213 "-" sign) Less: Income tax expenses 84,181 97,079V. Net profit (loss is represented by "-" sign) 1,007,993 403,134 Net profits attributable to owners of 1,044,014 422,945 Company Gains or losses from minority interests -36,021 -19,811VI. Earnings per share: (I) Basic 0.09 0.04 (II) Diluted n/a n/a Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang Income Statement of the Company January to March 2008 Unit: RMB'000 (Unaudited) Items Amounts for Amounts for the the period corresponding period of previous year I. Revenue from operations 11,292,574 9,849,262 Less: Operating cost 9,654,633 8,492,676 Business taxes and other surcharges 291,259 251,994 Selling expenses 775,159 568,807 Administrative expenses 216,479 215,978 Finance expenses -404,021 234,569 Impairment loss of assets - - Add: Gains from changes in fair value 31,039 242,055 (loss is represented by "-"sign) Investment income (loss is represented 205,315 -105,843 by "-" sign) Including: Gains arising from investments in 59,899 -105,843 associated companies and joint venturesII. Profit from operations (loss is represented 995,419 221,450 by "-" sign) Add: Non-operating income 37,807 1,340 Less: Non-operating expenses 47,650 14,682 Including: Net loss arising from disposal - - of non-current assetsIII. Total profit (loss is represented by "-" 985,576 208,108 sign) Less: Income tax expenses 78,249 86,927IV. Net profit (loss is represented by "-" sign) 907,327 121,181 Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang 4.3 Consolidated Cash Flow Statement January to March 2008 Unit: RMB'000 (Unaudited) Items Amounts for Amounts for the the period corresponding period of previous year I. Cash flows from operating activities: Cash received from sales of goods, 12,016,400 10,189,269 provision of services Net increase in deposits from clients and - - placements from other banks Net increase in borrowings from central bank - - Net increase in contributions made to other - - financial institutions Cash received from premiums of original - - insurance contracts Net cash receipt from reinsurance operations - - Net increase in reserve of the insured and - - investment Net increase in trading financial assets - - Cash received from interests, fees and - - commission Net increase in contributions - - Net increase in cash from repurchase - - operations Refund of tax and levy 28,143 - Other cash received relating to operating 213,848 169,131 activities Subtotal of cash inflows of operating 12,258,391 10,358,400 activities Cash paid for goods purchased, services 7,022,906 5,945,414 rendered Net increase in loans and advances to clients - - Net increase in deposits to central bank and - - to other banks Cash payment of claims under original - - insurance contracts Cash payment of interests, fees and - - commission Cash payment of bonus paid to insurance - - policy Cash paid to or on behalf of employees 1,168,885 946,491 Tax paid 742,176 809,893 Other cash paid in relation to operating 1,237,804 1,088,771 activities Subtotal of cash outflows of operating 10,171,771 8,790,569 activities Net cash flows from operating activities 2,086,620 1,567,831 II. Cash flows from investing activities: Cash received from investments - - Cash from investment income 14,405 34,807 Net cash from disposal of fixed assets, 24,559 17,045 intangible assets and other long-term assets Net cash from disposal of subsidiaries and - - other business units Other cash received from investing activities 466,902 43,856 Subtotal of cash inflows of investment 505,866 95,708 activities Cash paid to purchase of fixed assets, 2,709,571 2,304,868 intangible assets and other long-term assets Cash paid to investments 826,364 3,032,433 Net increase in pledged loans - - Net cash from subsidiaries and other - - business units Cash payments relating to other investments - - Subtotal of cash outflows of investment 3,535,935 5,337,301 activities Net cash flows from investing activities -3,030,069 -5,241,593III. Cash flows from financing activities: Cash received from investments - - Including: Cash received from investments of - - minority shareholders through subsidiaries Cash received from borrowings 7,695,234 6,572,494 Cash received from issue of debentures - - Other cash relating to financing activities - - Subtotal of cash inflows of financing 7,695,234 6,572,494 activities Cash repaid to amounts borrowed 4,287,843 2,912,369 Cash payments for distribution of dividends, 414,244 465,467 profits or interest expenses Including: Dividends and profit paid to - - minority shareholders by subsidiaries Other cash payments relating to financing 1,314,895 1,178,472 activities Subtotal of cash outflows of financing 6,016,982 4,556,308 activities Net cash flows from financing activities 1,678,252 2,016,186 IV. Effect of exchange rate changes on cash -28,875 -15,610 and cash equivalentsV. Net increase in cash and cash equivalents 705,928 -1,673,186 Add: Balance of cash and cash equivalents at 3,668,528 4,771,340 the beginning of the periodVI. Balance of cash and cash equivalents at 4,374,456 3,098,154 the end of the period Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang Cash Flow Statement of the Company January to March 2008 Unit: RMB'000 (Unaudited) Items Amounts for Amounts for the the period corresponding period of previous year I. Cash flows from operating activities: Cash received from sales of goods, provision 11,037,294 9,711,463 of services Refund of tax and levy 28,143 - Other cash received relating to operating 152,363 154,664 activities Subtotal of cash inflows of operating 11,217,800 9,866,127 activities Cash paid for goods purchased, services 6,294,726 5,582,382 rendered Cash paid to or on behalf of employees 1,065,998 826,972 Tax paid 699,669 795,041 Other cash paid in relation to operating 1,104,204 992,384 activities Subtotal of cash outflows of operating 9,164,597 8,196,779 activities Net cash flows from operating activities 2,053,203 1,669,348 II. Cash flows from investing activities: Cash received from investments - - Cash from investment income - 14,713 Net cash from disposal of fixed assets, 24,559 15,691 intangible assets and other long-term assets Net cash from disposal of subsidiaries and - - other business units Other cash received from investing activities 149,483 13,051 Subtotal of cash inflows of investment 174,042 43,455 activities Cash paid to purchase of fixed assets, 2,469,311 2,304,763 intangible assets and other long-term assets Cash paid to investments - 3,032,433 Net cash from subsidiaries and other - - business units Cash payments relating to other investments - - Subtotal of cash outflows of investment 2,469,311 5,337,196 activities Net cash flows from investing activities -2,295,269 -5,293,741III. Cash flows from financing activities: Cash received from investments - - Cash received from borrowings 7,664,882 6,562,494 Other cash relating to financing activities - - Subtotal of cash inflows of financing 7,664,882 6,562,494 activities Cash repaid to amounts borrowed 4,257,492 2,892,369 Cash payments for distribution of dividends, 395,334 464,919 profits or interest expenses Other cash payments relating to financing 1,314,896 1,178,472 activities Subtotal of cash outflows of financing 5,967,722 4,535,760 activities Net cash flows from financing activities 1,697,160 2,026,734IV. Effect of exchange rate changes on cash -10,159 -1,156 and cash equivalentsV. Net increase in cash and cash equivalents 1,444,935 -1,598,815 Add: Balance of cash and cash equivalents at 1,348,887 2,921,900 the beginning of the periodVI. Balance of cash and cash equivalents 2,793,822 1,323,085 at the end of the period Person in charge of the Company: Chairman Kong Dong Person in charge of accounting function: Chief Financial Officer Fan Cheng Person in charge of accounting department: General Manager of Finance Department Li Youqiang II. APPOINTMENT OF CHAIRMAN OF THE SECOND SESSION OF THE BOARD Mr. Kong Dong was appointed as Chairman of the second session of the Board.Please see page 46 of the 2007 annual report of the Company for the profile ofMr. Kong Dong. III. SALE OF CERTAIN EQUITY INTEREST HELD BY CHINA NATIONAL AVIATION COMPANY LIMITED It was approved at the Board Meeting that CNAC, a wholly-owned subsidiary of theCompany, will transfer 100% equity interest held by it in Fly Top Limited, 100%equity interest held by it in China National Aviation Logistics Company Limitedand 50% equity interest held by it in Jardine Airport Services Limited(collectively the "Transaction") to CNACG. The management of the Company wasauthorised to handle the related matters including but not limited tonegotiating the Transaction within a price range of RMB748 million to RMB863million, signing related agreement and obtaining necessary approvals. CNACG is a wholly-owned subsidiary of China National Aviation Holding Company,which is a substantial shareholder of the Company, and is therefore a connectedperson of the Company as defined under the Hong Kong Listing Rules.Consequently, the Transaction constitutes a connected transaction of theCompany. The agreement relating to the Transaction is still under negotiation.The Company will further disclose the details of the Transaction pursuant todomestic and overseas regulatory rules after the related agreement is signed. IV. AMENDMENT OF THE ARTICLES OF ASSOCIATION OF THE COMPANY IN RESPECT OF THE COMPANY'S SHARE CAPITAL STRUCTURE Since the initial public offering of A shares by the Company in 2006, all thethen issued domestic shares and the foreign shares held by CNACG have beenpermitted to be tradable on the Shanghai Stock Exchange and some of which willbecome tradable when the relevant lock-up periods expire. Considering that boththe shareholders of A shares and the shareholders of H shares may increase ordecrease their shareholdings in accordance with the relevant laws, which maychange the shareholdings of the Company's major shareholders from time to time,the Board proposed to amend the Articles of Association of the Company asfollows: The sixth paragraph of Article 20 of the Articles of Association of the originaldraft, which reads: "The share capital structure after the said additional issuance of H sharesshall be as follows: the Company has a total of 12,251,362,273 ordinary shares,of which China National Aviation Holding Company holds 4,949,066,567 DomesticShares, representing approximately 40.40% of the Company's total share capital;China National Aviation Corporation (Group) Limited holds 1,380,482,920 ForeignShares, representing approximately 11.27% of the Company's total share capital;Cathay Pacific Airways Limited holds 2,122,472,455 Overseas-Listed ForeignShares (H shares), representing approximately 17.34% of the Company's totalshare capital; other holders of Overseas-Listed Foreign Shares (H shares) hold2,283,210,909 shares, representing approximately 18.63% of the Company's totalshare capital; other holders of the Domestic Shares hold 1,516,129,422 shares,representing approximately 12.38% of the Company's total ordinary shares inissue." is hereby amended as follows: "The current share capital structure of the Company shall be as follows: theCompany has a total of 12,251,362,273 ordinary shares, of which holders of Ashares hold 7,845,678,909 shares, representing approximately 64.04% of theCompany's total issued ordinary shares; holders of H shares hold 4,405,683,364shares, representing approximately 35.96% of the Company's total issued ordinaryshares." According to the Articles of Association of the Company and the relevant lawsand regulations, the proposed amendment is subject to the shareholders' approvalby way of special resolution at the Company's general meeting. Further, theproposed amendment will become effective after relevant PRC authorities approveit. By Order of the Board Air China Limited Huang Bin Li Man Kit Joint Company Secretaries Beijing, 24 April 2008 As at the date of this announcement, the directors of the Company are MessrsKong Dong, Wang Shixiang, Yao Weiting, Ma Xulun, Christopher Dale Pratt, Chen Nan Lok Philip, Cai Jianjiang, Fan Cheng, Hu Hung Lick, Henry*, Wu Zhipan*, Zhang Ke* and Jia Kang*. * Independent non-executive director of the Company This information is provided by RNS The company news service from the London Stock Exchange