Air China Regulatory News (AIRC)

12 Sep 2007 07:03

Air China Ld12 September 2007 CONTENTS Important Notice 2Corporate Information 3Summary of Financial Information 4Summary of Operating Data 5Chairman's Statement 7Operating Results Review 9Management Discussion and Analysis 13Major Events 18Shareholdings of Directors, Supervisors and Senior Management and Substantial shareholders of the Company 19Corporate Governance 22Miscellaneous 23Review Report 24Financial Information prepared under International Financial Reporting Standards 25Financial Information prepared under China Accounting Standards and Supplementary Information 48Glossary of Technical Terms 70 IMPORTANT NOTICE The board of directors (the "Board") and directors ("Directors") of the Companyhereby confirm that there are no false representations, misleading statements ormaterial omissions in this report, and the Directors severally and jointlyaccept full responsibility for the truthfulness, accuracy and completeness ofthe contents of this report. The Chairman Mr. Li Jiaxiang, the Chief Financial Officer Mr. Fan Cheng and theGeneral Manager of the Finance Department Mr. Li Youqiang of the Company herebyjointly declare that the unaudited interim condensed consolidated financialstatements set out in this interim report is true and complete. CORPORATE INFORMATION CHINESE REGISTERED NAME ENGLISH NAMEAir China Limited REGISTERED OFFICE9/F, Blue Sky Mansion28 Tianzhu RoadZone A, Tianzhu Airport Industrial ZoneShunyi DistrictBeijingChina PRINCIPAL PLACE OF BUSINESS IN HONG KONG5th Floor, CNAC House12 Tung Fai RoadHong Kong International AirportHong Kong WEBSITE ADDRESSwww.airchina.com.cn DIRECTORSLi JiaxiangKong DongWang ShixiangYao WeitingChristopher Dale PrattChen Nan Lok, PhilipMa XulunCai JianjiangFan ChengHu Hung Lick, HenryWu ZhipanZhang KeJia Kang SUPERVISORSZhang XianlinLiao WeiZhang HuilanLiu FengLiu Guoqing LEGAL REPRESENTATIVE OF THE COMPANYLi Jiaxiang JOINT COMPANY SECRETARIESHuang BinLi Man Kit (ACIS, ACS) QUALIFIED ACCOUNTANTTze-kin Ng, David (CPA) AUTHORISED REPRESENTATIVESCai JianjiangLi Man Kit LEGAL ADVISER TO THE COMPANYHaiwen & Partners (as to PRC Law)Freshfields Bruckhaus Deringer (as to Hong Kong and English Law) INDEPENDENT AUDITORSErnst & Young H SHARE REGISTRAR AND TRANSFER OFFICEComputershare Hong Kong Investor Services LimitedRooms 1712-1716, 17th FloorHopewell Centre183 Queen's Road EastWanchaiHong Kong LISTING VENUESHong Kong, London and Shanghai SUMMARY OF FINANCIAL INFORMATION For the For the six months six months ended ended 30 June 30 June 2007 2006 Change RMB'000 RMB'000 (%) Operating revenue(1) 23,352,820 19,930,907 17.17Profit from operations 1,366,652 893,265 53.00Profit before tax 2,072,407 660,482 213.77Profit after tax (including profit attributable to equity holders of the Company and minority interests) 1,476,035 477,653 209.02Profit attributable to minority interests (92,544) 19,679 (570.27)Profit attributable to equity holders of the Company 1,568,579 457,974 242.50EBITDA(2) 4,063,013 3,557,871 14.20EBITDAR(3) 5,387,864 4,638,167 16.16Earnings per share attributable to equity holders of the Company (RMB) 0.132 0.049 169.39Return on equity (%)(4) 5.39 2.26 138.50 (1) Operating revenue include air traffic revenue and other operating revenue. (2) EBITDA represents earnings before finance revenue, finance costs, income taxes, share of profits less losses of associates and depreciation as computed under the International Financial Reporting Standards. (3) EBITDAR represents EBITDA before deducting operating lease expenses on aircraft and engines as well as other operating lease expenses. (4) Return on equity represents profit for the period attributable to the equity holders divided by the Group's equity as at period end. 30 June 31 December 2007 2006 Change RMB'000 RMB'000 (%) Total assets 85,763,284 83,963,601 2.14Total liabilities 56,468,446 52,227,908 8.12Minority interests 174,707 2,011,435 (91.31)Equity attributable to equity holders of the Company 29,120,131 29,724,258 (2.03)Equity per share (RMB) 2.45 2.50 (2.00) SUMMARY OF OPERATING DATA For the For the six months six months ended ended 30 June 30 June Change 2007 2006 (%) Traffic RPKs (in millions) 33,286.32 29,104.08 14.37International 14,154.97 12,157.66 16.43Domestic 17,594.30 15,449.60 13.88Hong Kong and Macau 1,537.05 1,496.83 2.69 RFTKs (in millions) 1,866.92 1,566.32 19.19International 1,417.89 1,165.33 21.67Domestic 381.90 333.20 14.62Hong Kong and Macau 67.12 67.79 (0.99) Passengers carried (in thousands) 17,870.13 15,722.06 13.66International 3,510.78 3,044.28 15.32Domestic 13,430.80 11,744.70 14.36Hong Kong and Macau 928.55 933.08 (0.49) Cargo and mail carried (in tonnes) 535,716.64 464,705.25 15.28 Kilometres flown (in millions) 257.12 228.09 12.73 Block hours (in thousands) 405.43 355.59 14.01 Number of flights 146,752 132,283 10.94International 27,503 23,718 15.96Domestic 109,633 98,739 11.03Hong Kong and Macau 9,616 9,826 (2.14) RTKs (in millions) 4,861.89 4,184.72 16.18 Capacity ASKs (in millions) 43,891.33 39,434.98 11.30International 19,057.40 16,821.03 13.30Domestic 22,622.90 20,450.50 10.62Hong Kong and Macau 2,211.03 2,163.45 2.20 AFTKs (in millions) 3,515.47 2,873.34 22.35International 2,611.64 2,033.83 28.41Domestic 789.50 714.60 10.48Hong Kong and Macau 114.33 125.01 (8.55) ATKs (in millions) 7,485.27 6,441.71 16.20 Load factor Passenger load factor (RPKs/ASKs) 75.84% 73.80% 2.04 percentage pointInternational 74.28% 72.28% 2.00 percentage pointDomestic 77.77% 75.55% 2.23 percentage pointHong Kong and Macau 69.52% 69.19% 0.33 percentage point Cargo and mail load factor (RFTKs/AFTKs) 53.11% 54.51% -1.41 percentage pointInternational 54.29% 57.30% -3.01 percentage pointDomestic 48.37% 46.63% 1.74 percentage pointHong Kong and Macau 58.71% 54.23% 4.48 percentage point For the For the six months six months ended ended 30 June 30 June Change 2007 2006 (%) Yield Yield per RPK (RMB) 0.5939 0.5670 4.74International 0.5747 0.5260 9.26Domestic 0.5991 0.5865 2.15Hong Kong and Macau 0.7107 0.6992 1.64 Yield per RFTK (RMB) 1.8377 2.1032 (12.62)International 1.8196 2.2180 (17.96)Domestic 1.4790 1.2971 14.02Hong Kong and Macau 4.2618 4.0915 4.16 FleetTotal number of aircraft in service at period end 230 210 9.52Daily utilization (block hours per day per aircraft) 9.99 9.97 0.20 Note: The above summary of operating data for the six months ended 30 June 2007 includes the entire Air China Cargo and Air Macau. Accordingly, the summary of operating data for the six months ended 30 June 2006 has been adjusted to conform to the basis of the current period's presentation. CHAIRMAN'S STATEMENT Dear Shareholders, During the first half of 2007, with the macro economy of China continuing togrow rapidly and steadily and the total demand in the aviation market expandingat a greater pace, the Company has proactively taken good advantage of theopportunities arising in the market and successfully offset the adverse impactof high oil price and achieved remarkable economic growth. Meanwhile, we havebeen developing our strategic cooperation and making significant progress inorganization transformation, hub integration, service network improvement aswell as brand building, laying a solid foundation for achieving the strategicgoal of "becoming the recognised airline of mainstream passengers, the mostvaluable and profitable airline in China, and an airline with internationalcompetitive strength". The Company has always been putting safety on the first place in its productionand operation, handling properly the correlation between safety and economicbenefits, safety and development, safety and reform, and aiming at establishinga long-term and effective mechanism for the Company's safety management. Thefirst measure is to implement the accountability system for safety in operation,the second is to reinforce the construction of the safety system, and the thirdis to constantly reexamine and review the principles and methodology for safetymanagement. Only with the further improvement of safety management andenhancement of management capability, can safety in operation be guaranteed. During the reporting period, the Company's operating performance improvedsteadily, and the Group (including the Company, its subsidiaries andjoint-ventures) recorded an operating revenue (including air traffic revenue andother operating revenue) of RMB23.353 billion, representing an increase of17.17% from the same period of the previous year. While ensuring absolute flightsafety, cheerful results have been achieved in both passenger and cargoservices, with passenger volume reaching 17.870 million passengers and cargo andmail volume reaching 535.717 thousand tonnes, representing an increase of 13.7%and 15.3%, respectively, from the same period of the previous year. Profit fromoperations amounted to RMB1.367 billion, securing its leading position in termsof profitability among the airlines in China. In order to maintain a long-term competitive strength and continuously generatesound returns to the shareholders, the Company implemented important plans inthe following aspects during the first half of 2007: Commencing aviation alliance cooperation and building a global network. The Company continued to implement the business cooperation plans with StarAlliance and Project Star, and has met 21 out of the 57 entry requirements forStar Alliance. The Company has enabled free sales through code-sharing withCathay Pacific Airways Limited and has designated Beijing, Hong Kong and Taiwanto be the pilot sales regions for the reciprocal sales representation. TheCompany has also embarked on a number of cooperation projects with Lufthansa,United Airlines, SAS Scandinavian Airlines, Air New Zealand, Austrian Airlinesand Asiana Airlines. Integrating regional hubs and optimizing route networks. The Company has steadily improved the quality in building the three majordomestic hubs in Beijing, Chengdu and Shanghai and increased the operationcapacity of those three places, so that the number of connecting flightsavailable has experienced a stable growth with a significant increase in thevolume of transit passengers. The Company also stressed on developing itsinternational routes such as those to North America and Europe as well asimproving the quality of its brand and service of highly profitable routes suchas those to Japan and South Korea, aiming to expand its existing market share. Boosting organization transformation and making progressive breakthrough.Through entering into new performance evaluation contracts and establishing newevaluation system for both its divisions and individuals, the Company hasfurther optimized its management models and resources allocation and boosted thetransformation of our core values and adjustment of personnel structure, whichlaid down a solid foundation for the establishment of a market-oriented humanresources management system. Perfecting service system and improving service management. The function of complaint management through the call centre and service hotlinehas been brought into full play; and the renovation work for both the first andbusiness class cabins has been completed; the Global Luggage Enquiry System hasbeen put into use; the building of call centres and electronic payment platformsin China and other countries has been accelerated; self-service check-inequipment have been installed in major airports; and check-in areas for firstand business classes passengers have been put into use . Taking advantage of serving the Olympics to enhance brand recognition. As an air-transportation service partner of the 2008 Beijing Olympic Games, theCompany has launched a series of Olympics-related promotional activities andbeen actively participating in highly influential social charity activities. OurOlympic marketing campaign has made significant progress, with theOlympics-oriented products designed and put to the market with sound feedbackfrom our customers. According to Forbes' ranking of the global leading enterprises in 2007, theCompany was among The World's 2000 Largest Public Companies, ranking 13th amonginternational airlines; and 9th among the same in terms of profitability. TheCompany was also ranked 461st among the top 500 international brands, and thefirst ever among Chinese airlines to receive an award of "the Most CompetitiveChinese Enterprises in the World", representing that the Company has secureditself a place among the world-class prestigious brands. With further opening up of China's aviation market, and benefiting from thecontinuing growth in passenger and cargo transportation capability, the Companywill secure its leading role in China's aviation industry and devote to buildand promote the brand of Air China's services, aiming at achieving betteroperating results and fulfilling our commitment to the shareholders. Finally, on behalf of the Board, I would like to thank the dedicated managementand staff of the Company for their hard work, who have demonstrated excellentprofessional quality and devotion in their endeavour in creating the greatestvalue for our shareholders. Li JiaxiangChairman Beijing, PRC28 August 2007 To view the full text of this press release, paste the following link into your web browser: http://www.rns-pdf.londonstockexchange.com/rns/6341d_-2007-9-12.pdf This information is provided by RNS The company news service from the London Stock Exchange