REG - Air China Ld - 2023 ANNUAL RESULTS
02/04/2024 09:00
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RNS Number : 9299I Air China Ld 02 April 2024
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中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
2023 ANNUAL RESULTS
FINANCIAL HIGHLIGHTS
• During the Reporting Period, the Group recorded a revenue of
RMB141,100 million. The net loss attributable to equity shareholders of the
Company was RMB1,038 million.
• As considered and approved by the 28th meeting of the sixth
session of the Board of the Company, the Company proposed not to make profit
distribution for the year of 2023.
2023 ANNUAL RESULTS
The Board hereby announces the audited consolidated financial results of the
Group for the year ended 31 December 2023, which have been prepared in
accordance with IFRSs, together with the corresponding comparative figures for
the year ended 31 December 2022 as follows:
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
NOTES RMB'000 RMB'000
Revenue 3 141,100,234 52,897,584
Other income and gains 5 7,401,756 3,374,778
148,501,990 56,272,362
Operating expenses
Jet fuel costs (46,725,219) (22,762,814)
Employee compensation costs (29,300,310) (25,338,553)
Depreciation and amortisation (27,110,507) (21,233,674)
Take-off, landing and depot charges (15,554,795) (6,499,775)
Aircraft maintenance, repair and overhaul costs (9,921,853) (5,640,163)
Air catering charges (3,002,720) (872,189)
Aircraft and engine lease expense (237,319) (135,767)
Other lease expenses (602,403) (442,115)
Other flight operation expenses (7,838,908) (5,869,052)
Selling and marketing expenses (3,423,478) (1,639,889)
General and administrative expenses (1,683,284) (1,240,365)
Impairment loss recognised on other non-current assets (187,054) (62,584)
Net impairment loss (recognised)/reversed under (24,617) 20,784
expected credit loss model
(145,612,467) (91,716,156)
Profit/(loss) from operations 6 2,889,523 (35,443,794)
Finance income 605,004 228,720
Finance costs 7 (6,943,087) (6,472,620)
Share of results of associates 2,554,412 (477,414)
Share of results of joint ventures 279,566 376,872
Exchange losses, net (1,035,197) (4,088,655)
Loss before taxation (1,649,779) (45,876,891)
Income tax credit 8 88,531 702,981
Loss for the year (1,561,248) (45,173,910)
Attributable to:
- Equity shareholders of the Company (1,038,411) (38,617,495)
- Non-controlling interests (522,837) (6,556,415)
(1,561,248) (45,173,910)
Loss per share
- Basic and diluted 9 RMB(6.74) cents RMB(281.16) cents
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
RMB'000 RMB'000
Loss for the year (1,561,248) (45,173,910)
Other comprehensive income/(expense) for the year
Items that will not be reclassified to profit or loss:
- Fair value gains on investments in equity instruments at fair value through 149,253 65,394
other comprehensive income
- Remeasurement of net defined benefit liability (912) (952)
- Share of other comprehensive income of associates and joint ventures 43,458 26,901
- Income tax expense relating to items that will not be reclassified to profit (37,313) (16,348)
or loss
Items that may be reclassified subsequently to profit or loss:
- Fair value gains/(losses) on investments in debt instruments at fair value 9,138 (9,101)
through other comprehensive income
- Impairment loss recognised on investments in debt instruments at fair value (6,688) (3,275)
through other comprehensive income
- Share of other comprehensive expense of associates and joint ventures (472,484) (550,580)
- Exchange differences on translation of foreign operations 250,817 1,356,971
- Income tax relating to items that may be reclassified subsequently to profit (613) 3,094
or loss
Other comprehensive (expense)/income for the year (net of tax) (65,344) 872,104
Total comprehensive expense for the year (1,626,592) (44,301,806)
Attributable to:
- Equity shareholders of the Company (1,097,758) (37,791,121)
- Non-controlling interests (528,834) (6,510,685)
(1,626,592) (44,301,806)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2023
31 December 31 December
2023 2022
NOTE RMB'000 RMB'000
Non-current assets
Property, plant and equipment 117,728,498 99,574,059
Right-of-use assets 120,971,059 125,818,601
Investment properties 726,594 530,510
Intangible assets 106,580 35,031
Goodwill 4,095,732 1,099,975
Interests in associates 12,863,023 10,536,483
Interests in joint ventures 2,413,799 2,177,809
Advance payments for aircraft and flight equipment 26,114,064 20,094,732
Deposits for aircraft under leases 525,463 539,624
Equity instruments at fair value through other comprehensive income 1,547,986 241,717
Debt instruments at fair value through other comprehensive income 1,397,310 1,360,982
Deferred tax assets 13,757,180 10,473,327
Other non-current assets 696,685 251,396
302,943,973 272,734,246
Current assets
Inventories 3,682,821 2,557,823
Accounts receivable 11 3,182,797 1,649,356
Bills receivable 3,601 7,483
Prepayments, deposits and other receivables 5,852,345 3,176,418
Financial assets at fair value through profit or loss 2,505 3,398
Restricted bank deposits 611,692 828,166
Cash and cash equivalents 15,016,804 10,607,711
Assets held for sale 108,527 1,302
Other current assets 3,873,629 3,413,474
32,334,721 22,245,131
Total assets 335,278,694 294,979,377
31 December 31 December
2023 2022
NOTE RMB'000 RMB'000
Current liabilities
Air traffic liabilities (8,366,222) (2,757,601)
Accounts payable 12 (17,954,298) (10,935,546)
Bills payable (500,160) -
Dividends payable (98,000) (98,000)
Other payables and accruals (15,701,546) (16,548,144)
Advance - (58,970)
Current taxation (76,662) (9,359)
Lease liabilities (18,175,349) (17,085,829)
Interest-bearing borrowings (47,271,768) (42,957,170)
Provision for return condition checks (650,777) (936,804)
Contract liabilities (1,522,492) (1,095,185)
(110,317,274) (92,482,608)
Net current liabilities (77,982,553) (70,237,477)
Total assets less current liabilities 224,961,420 202,496,769
Non-current liabilities
Lease liabilities (64,053,967) (76,897,347)
Interest-bearing borrowings (104,759,631) (92,847,116)
Provision for return condition checks (17,196,982) (8,605,418)
Provision for early retirement benefit obligations (720) (807)
Long-term payables (1,082,301) (251,497)
Contract liabilities (1,663,987) (1,422,843)
Defined benefit obligations (187,810) (202,016)
Deferred income (404,103) (418,200)
Deferred tax liabilities (347,910) (323,297)
(189,697,411) (180,968,541)
NET ASSETS 35,264,009 21,528,228
CAPITAL AND RESERVES
Issued capital 16,200,793 14,524,815
Treasury shares (3,047,564) (3,047,564)
Reserves 24,052,746 12,099,925
Total equity attributable to equity shareholders of the Company 37,205,975 23,577,176
Non-controlling interests (1,941,966) (2,048,948)
TOTAL EQUITY 35,264,009 21,528,228
NOTES
FOR THE YEAR ENDED 31 DECEMBER 2023
1. BASIS OF PREPARATION
As at 31 December 2023, the Group's current liabilities exceeded its current
assets by approximately RMB77,983 million. The liquidity of the Group is
primarily dependent on its ability to maintain adequate 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 RMB125,153 million as at 31 December 2023, the
Directors believe that adequate funding is available to fulfil the Group's
debt obligations and capital expenditure requirements to continue in
operational existence for the foreseeable future when preparing the
consolidated financial statements for the year ended 31 December 2023.
Accordingly, the consolidated financial statements have been prepared on a
basis that the Group will be able to continue as a going concern.
The consolidated financial statements have been prepared in accordance with
IFRSs issued by the International Accounting Standards Board (the "IASB"). For
the purpose of preparation of the consolidated financial statements,
information is considered material if such information is reasonably expected
to influence decisions made by primary users. In addition, the consolidated
financial statements include applicable disclosures required by the Listing
Rules and by the Hong Kong Companies Ordinance ("Companies Ordinance").
The consolidated financial statements have been prepared on the historical
cost basis, except for certain financial instruments that are measured at fair
values at the end of each reporting period. Historical cost is generally based
on the fair value of the consideration given in exchange for goods and
services
2. APPLICATION OF NEW AND AMENDMENTS TO IFRSs
New and amendments to IFRSs that are mandatorily effective for the current
year
In the current year, the Group has applied the following new and amendments to
IFRSs issued by the IASB for the first time, which are mandatorily effective
for the Group's annual period beginning on 1 January 2023 for the preparation
of the consolidated financial statements:
IFRS 17 (including the June 2020 and Insurance Contracts
December 2021 Amendments to IFRS 17)
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
Amendments to IAS 8 Definition of Accounting Estimates
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
Amendments to IAS 12 International Tax Reform-Pillar Two model Rules
Except as described below, the application of the new and amendments to IFRSs
in the current year has had no material impact on the Group's financial
positions and performance for the current and prior years and/or on the
disclosures set out in these consolidated financial statements.
2.1 Impacts on application of Amendments to IAS 12 Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
The Group has applied the amendments for the first time in the current year.
The amendments narrow the scope of the recognition exemption of deferred tax
liabilities and deferred tax assets in paragraphs 15 and 24 of IAS 12 Income
Taxes so that it no longer applies to transactions that, on initial
recognition, give rise to equal taxable and deductible temporary differences.
In accordance with the transitional provisions:
(i) the Group has applied the new accounting policy retrospectively
to leasing transactions that occurred on or after 1 January 2022;
(ii) the Group also, as at 1 January 2022, recognised a deferred tax
asset (to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilised) and a
deferred tax liability for all deductible and taxable temporary difference
associated with lease liabilities, provision for return condition checks, the
provision for major overhauls and related right-of-use assets separately.
The application of the amendments has had no material impact on the Group's
financial position and performance, except that the Group recognised the
related deferred tax assets and deferred tax liabilities on a gross basis, but
it has no material impact on the retained earnings at the earliest period
presented.
2.2 Impacts on application of Amendments to IAS1 and IFRS Practice
Statement 2 Disclosure of Accounting Policies
The Group has applied the amendments for the first time in the current year.
IAS 1 Presentation of Financial Statements is amended to replace all instances
of the term "significant accounting policies" with "material accounting policy
information". Accounting policy information is material if, when considered
together with other information included in an entity's financial statements,
it can reasonably be expected to influence decisions that the primary users of
general purpose financial statements make on the basis of those financial
statements.
The amendments also clarify that accounting policy information may be material
because of the nature of the related transactions, other events or conditions,
even if the amounts are immaterial. However, not all accounting policy
information relating to material transactions, other events or conditions is
itself material. If an entity chooses to disclose immaterial accounting policy
information, such information must not obscure material accounting policy
information.
IFRS Practice Statement 2 Making Materiality Judgements (the "Practice
Statement") is also amended to illustrate how an entity applies the "four-step
materiality process" to accounting policy disclosures and to judge whether
information about an accounting policy is material to its financial
statements. Guidance and examples are added to the Practice Statement.
The application of the amendments has had no material impact on the Group's
financial positions and performance but has affected the disclosure of the
Group's accounting policies.
Amendments to IFRSs in issue but not yet effective
The Group has not early applied the following amendments to IFRSs that have
been issued but are not yet effective:
Amendments to IFRS 10 Sale or Contribution of Assets between an Investor and its Associate or Joint
and IAS 28 Venture(1)
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback(2)
Amendments to IAS 1 Classification of Liabilities as Current or Non-current(2)
Amendments to IAS 1 Non-current Liabilities with Covenants(2)
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements(2)
Amendments to IAS 21 Lack of Exchangeability(3)
(1) Effective for annual periods beginning on or after a date to
be determined.
(2) Effective for annual periods beginning on or 1 January 2024.
(3) Effective for annual periods beginning on or 1 January 2025.
The Directors anticipate that the application of all amendments to IFRSs will
have no material impact on the consolidated financial statements in the
foreseeable future.
3. REVENUE
2023 2022
RMB'000 RMB'000
Revenue from contracts with customers 140,721,730 52,612,867
Rental income (included in revenue of airline operations segment) 378,504 284,717
Total revenue 141,100,234 52,897,584
Disaggregation of revenue from contracts with customers
2023 2022
Segments Airline operations Other operations Airline operations Other operations
RMB'000 RMB'000 RMB'000 RMB'000
Type of goods or services
Airline operations
Passenger 130,516,558 - 38,296,190 -
Cargo and mail 4,164,743 - 10,084,634 -
Others 1,704,339 - 1,621,602 -
136,385,640 - 50,002,426 -
Other operations
Aircraft engineering income - 4,238,926 - 2,505,219
Others - 97,164 - 105,222
- 4,336,090 - 2,610,441
Total 136,385,640 4,336,090 50,002,426 2,610,441
Geographical markets
Mainland China 108,050,710 4,336,090 35,606,207 2,610,441
Hong Kong Special Administrative Region ("SAR"), Macau SAR and Taiwan, China 4,126,997 - 1,097,125 -
International 24,207,933 - 13,299,094 -
Total 136,385,640 4,336,090 50,002,426 2,610,441
Performance obligations for contracts with customers
Passenger revenue is recognised when transportation services are provided.
Besides, the Group recognises the expected breakage amount as passenger
revenue in proportion to the pattern of rights exercised by the passenger (or
flown revenue) based on historical experience. Ticket sales for transportation
not yet provided are recorded in air traffic liabilities.
The Group operates frequent-flyer programme and provides free services or
products to the customers according to the miles they earn. The Group
allocates the transaction price to each performance obligation on a relative
stand-alone selling price basis. The amount allocated to the miles earned by
the frequent-flyer programme members is recorded in contract liabilities and
deferred until the miles are redeemed when the Group fulfils its obligations
to supply services or products or when the miles expire. During the year, the
Group recognised revenue of RMB1,455 million (2022: RMB1,483 million) which
was included in contract liabilities in relation to frequent-flyer programme
at the beginning of the year.
Cargo and mail revenue is recognised when contract services are provided.
Revenue from other airline-related services is recognised when the related
performance obligations are satisfied.
Sale of goods is recognised when control of the goods has transferred to the
customer, being at the point the goods are delivered to the customer.
Transaction price allocated to the remaining performance obligation for
contracts with customers
The customer loyalty points in frequent-flyer programme have a three-year term
and these points can be redeemed anytime at customers' discretion during the
valid period.
4. 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.
Inter-segment 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 CASs
for the years ended 31 December 2023 and 2022, and the reconciliations of
reportable segment revenue and loss before taxation to the Group's
consolidated amounts under IFRSs:
Year ended 31 December 2023
Airline operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 136,764,144 4,336,090 - 141,100,234
Inter-segment sales 206,970 7,909,425 (8,116,395) -
Revenue for reportable segments under CASs and IFRSs 136,971,114 12,245,515 (8,116,395) 141,100,234
Segment (loss)/profit before taxation
(Loss)/profit before taxation for reportable segments under CASs (2,084,670) 475,041 (50,778) (1,660,407)
Effect of differences between IFRSs and CASs 10,628
Loss before taxation for the year under IFRSs (1,649,779)
Year ended 31 December 2022
Airline operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 50,287,143 2,610,441 - 52,897,584
Inter-segment sales 211,473 5,134,296 (5,345,769) -
Revenue for reportable segments under CASs and IFRSs 50,498,616 7,744,737 (5,345,769) 52,897,584
Segment loss before taxation
Loss before taxation for reportable segments under CASs (44,354,029) (1,418,775) (106,759) (45,879,563)
Effect of differences between IFRSs and CASs 2,672
Loss before taxation for the year under IFRSs (45,876,891)
The following tables present the assets, liabilities and other information of
the Group's operating segments under CASs as at 31 December 2023 and 2022 and
the reconciliations of reportable segment assets, segment liabilities and
other segment information 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 31 December 2023 under CASs 323,324,926 30,250,454 (18,272,699) 335,302,681
Effect of differences between IFRSs and CASs (23,987)
Total assets under IFRSs 335,278,694
Total assets for reportable segments as at 31 December 2022 under CASs 284,165,518 26,473,501 (15,627,684) 295,011,335
Effect of differences between IFRSs and CASs (31,958)
Total assets under IFRSs 294,979,377
Airline operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Segment liabilities
Total liabilities for reportable segments as at 31 December 2023 under CASs 294,072,306 23,748,047 (17,805,668) 300,014,685
and IFRSs
Total liabilities for reportable segments as at 31 December 2022 under CASs 268,114,481 20,560,734 (15,224,066) 273,451,149
and IFRSs
Year ended 31 December 2023
Airline operations Other operations Elimination Total Effect of differences between IFRSs and CASs Amounts under IFRSs
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Other segment information
Share of profit of associates and joint ventures 2,501,992 331,986 - 2,833,978 - 2,833,978
Net impairment losses (recognised)/reversed on financial assets (18,271) 41,094 (47,440) (24,617) - (24,617)
Impairment losses recognised on non-financial assets 192,203 29,900 - 222,103 - 222,103
Depreciation and amortisation 26,839,044 437,075 (154,982) 27,121,137 (10,630) 27,110,507
Income tax credit/(expense) 254,127 (170,957) 8,018 91,188 (2,657) 88,531
Interests in associates and joint ventures 12,559,126 2,656,782 (79,005) 15,136,903 139,919 15,276,822
Additions to non-current assets 25,053,588 346,788 (17,211) 25,383,165 - 25,383,165
Year ended 31 December 2022
Airline operations Other operations Elimination Total Effect of differences between IFRSs and CASs Amounts under IFRSs
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Other segment information
Share of (loss)/profit of associates and joint ventures (484,499) 383,957 - (100,542) - (100,542)
Net impairment losses reversed/(recognised) on financial assets 7,239 (4,760) 18,305 20,784 - 20,784
Impairment losses recognised/(reversed) on non-financial assets 66,278 (526) - 65,752 - 65,752
Depreciation and amortisation 20,902,720 475,483 (132,746) 21,245,457 (11,783) 21,233,674
Income tax credit 336,326 337,427 29,896 703,649 (668) 702,981
Interests in associates and joint ventures 10,257,014 2,389,058 (71,699) 12,574,373 139,919 12,714,292
Additions to non-current assets 26,238,224 367,171 (39,835) 26,565,560 - 26,565,560
Geographical information
The following table presents the Group's consolidated revenue under IFRSs by
geographical location for the years ended 31 December 2023 and 2022,
respectively:
Year ended 31 December 2023
Mainland China Hong Kong SAR, Macau SAR and Taiwan, China International Total
RMB'000 RMB'000 RMB'000 RMB'000
Sales to external customers and total revenue 112,765,304 4,126,997 24,207,933 141,100,234
Year ended 31 December 2022
Mainland China Hong Kong SAR, Macau SAR and Taiwan, China International Total
RMB'000 RMB'000 RMB'000 RMB'000
Sales to external customers and total revenue 38,501,365 1,097,125 13,299,094 52,897,584
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.
There was no individual customer that amounted to 10% or more of the Group's
revenue during the year ended 31 December 2023 (2022: CNAHC and its
subsidiaries (other than the Group) amounted to 21% of the Group's revenue).
5. OTHER INCOME AND GAINS
2023 2022
RMB'000 RMB'000
Co-operation routes income and subsidy income 4,450,650 2,899,943
Dividend income 14,286 9,368
Gains/(losses) on disposal of:
- Property, plant and equipment and right-of-use assets 934,614 64,922
- Asset held for sale 18,519 (6,774)
- Investment in an associate - 4,599
- Investment properties (315) -
(Loss)/gain arising on financial assets at FVTPL (893) 168
Others (Note) 1,984,895 402,552
7,401,756 3,374,778
Note: These mainly include flight operation remedies.
6. PROFIT/(LOSS) FROM OPERATIONS
The Group's profit/(loss) from operations is arrived at after charging:
2023 2022
RMB'000 RMB'000
Depreciation of property, plant and equipment 11,611,121 8,784,570
Depreciation of right-of-use assets 15,468,124 12,425,265
Depreciation of investment properties 31,256 23,839
Amortisation of intangible assets 6 -
Total depreciation and amortisation 27,110,507 21,233,674
Impairment losses recognised on property, plant and equipment 184,166 62,584
Impairment losses recognised on inventories 35,049 3,168
Impairment losses recognised on interests in associates 2,888 -
Auditors' remuneration:
- Audit related services 19,395 17,817
- Other services 1,088 4,443
7. FINANCE COSTS
2023 2022
RMB'000 RMB'000
Interest on interest-bearing borrowings 3,872,746 3,383,021
Interest on lease liabilities 3,328,563 3,363,993
Imputed interest expenses on defined benefit obligations 6,204 6,573
7,207,513 6,753,587
Less: Interest capitalised (Note) (264,426) (280,967)
6,943,087 6,472,620
Note: The interest capitalisation rates ranged from 2.40% to 4.45% per annum
(2022: 2.73% to 5.80% per annum) relating to the costs of related borrowings
during the year.
8. INCOME TAX CREDIT
2023 2022
RMB'000 RMB'000
Current income tax:
- Mainland China 214,771 26,148
- Hong Kong SAR and Macau SAR, China - 1,587
Under provision in respect of prior years 13,600 1,310
Deferred tax (316,902) (732,026)
(88,531) (702,981)
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and
Implementation Regulation of the EIT Law, except for three (2022: three)
branches and five (2022: three) subsidiaries of the Company, and some branches
of two subsidiaries of the Company which are taxed at a preferential rate of
15% (2022: 15%), all group companies located in Mainland China are subject to
a income tax rate of 25% during the year (2022: 25%). Subsidiaries in Hong
Kong SAR, China are taxed at profits tax rate of 16.5% (2022: 16.5%) and
subsidiaries in Macau SAR, China are taxed at profits tax rate of 12% (2022:
12%), for each reporting period.
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 years.
The taxation for the year can be reconciled to the loss before taxation per
consolidated statement of profit or loss as follows:
2023 2022
RMB'000 RMB'000
Loss before taxation (1,649,779) (45,876,891)
Tax at the applicable tax rate of 25% (412,445) (11,469,223)
Preferential tax rates on income of group entities 85,063 676,241
Tax effect of share of results of associates and joint ventures (703,457) 98,907
Tax effect of non-deductible expenses 139,600 259,889
Tax effect of non-taxable income (18,395) (8,112)
Tax effect of deductible temporary differences and tax losses not recognised 1,005,444 9,734,551
Utilisation of tax losses and deductible temporary differences not recognised (197,941) (1,188)
in prior years
Under provision in respect of prior years 13,600 1,310
Others - 4,644
Income tax credit (88,531) (702,981)
9. LOSS PER SHARE
The calculation of the basic and diluted loss per share attributable to equity
shareholders of the Company is based on the following data:
2023 2022
RMB'000 RMB'000
Loss
Loss for the purpose of basic and diluted loss per share (1,038,411) (38,617,495)
2023 2022
'000 '000
Number of shares
Number of ordinary shares for the purpose of basic and diluted loss per share 15,401,755 13,734,961
The number of ordinary shares for the purpose of basic and diluted loss per
share is calculated based on the number of ordinary shares in issue during the
year, as adjusted to reflect the number of treasury shares held by Cathay
Pacific through reciprocal shareholding.
The Group had no potential dilutive ordinary shares in issue during both
years.
10. DIVIDENDS
No dividend was paid or proposed for ordinary shareholders of the Company
during the years ended 31 December 2022 and 2023, nor has any dividend been
proposed since the end of both reporting periods.
11. ACCOUNTS RECEIVABLE
2023 2022
RMB'000 RMB'000
Accounts receivable 3,357,916 1,794,464
Less: Allowance for expected credit losses (175,119) (145,108)
3,182,797 1,649,356
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:
2023 2022
RMB'000 RMB'000
Within 30 days 2,349,927 871,543
31 to 60 days 265,953 354,939
61 to 90 days 155,337 103,925
Over 90 days 411,580 318,949
3,182,797 1,649,356
12. 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:
2023 2022
RMB'000 RMB'000
Within 30 days 7,517,749 4,233,975
31 to 60 days 2,479,368 1,228,802
61 to 90 days 3,411,397 950,354
Over 90 days 4,545,784 4,522,415
17,954,298 10,935,546
The accounts payable are non-interest-bearing and have normal credit terms up
to 90 days.
CONSOLIDATED BALANCE SHEET
At 31 DECEMBER 2023
(Prepared under the CASs)
31 December 31 December
ASSETS 2023 2022
RMB'000 RMB'000
Current assets
Cash and bank 15,628,496 11,435,877
Financial assets at fair value through profit or loss 2,505 3,398
Bills receivable 3,601 7,483
Accounts receivable 3,182,797 1,649,356
Prepayments 414,431 368,692
Other receivables 5,437,914 2,807,726
Inventories 3,682,821 2,557,823
Assets held for sale 108,527 1,302
Other current assets 3,873,629 3,413,474
Total current assets 32,334,721 22,245,131
Non-current assets
Debt instruments at fair value through other comprehensive income 1,397,310 1,360,982
Long-term receivables 847,273 539,624
Long-term equity investments 15,136,903 12,574,373
Equity instruments at fair value through other comprehensive income 1,550,029 243,760
Investment properties 320,827 106,118
Fixed assets 104,970,803 86,369,754
Right-of-use assets 116,342,903 122,591,793
Construction in progress 38,407,989 32,908,551
Intangible assets 5,817,144 4,300,216
Goodwill 4,097,942 1,102,185
Long-term deferred expenses 286,247 249,268
Deferred tax assets 13,703,962 10,417,452
Other non-current assets 88,628 2,128
Total non-current assets 302,967,960 272,766,204
TOTAL assets 335,302,681 295,011,335
31 December 31 December
LIABILITIES AND SHAREHOLDERS' EQUITY 2023 2022
RMB'000 RMB'000
Current liabilities
Short-term loans 21,363,178 19,946,147
Short-term bonds payable - 2,006,149
Bills payable 500,160 -
Accounts payable 18,595,075 11,628,611
Air traffic liabilities 8,366,222 2,757,601
Advance - 58,970
Contract liabilities 1,522,492 1,095,185
Employee compensations payable 3,088,820 4,317,738
Taxes payable 571,838 275,930
Other payables 16,085,401 13,131,744
Non-current liabilities repayable within one year 40,224,088 37,264,533
Total current liabilities 110,317,274 92,482,608
Non-current liabilities
Long-term loans 80,777,799 66,868,774
Corporate bonds 9,196,832 11,193,342
Long-term payables 28,752,343 20,551,757
Lease liabilities 64,053,967 76,897,347
Defined benefit obligations 187,810 202,016
Accrued liabilities 4,312,660 3,090,965
Deferred income 404,103 418,200
Deferred tax liabilities 347,910 323,297
Other non-current liabilities 1,663,987 1,422,843
Total non-current liabilities 189,697,411 180,968,541
Total liabilities 300,014,685 273,451,149
Shareholders' equity
Issued capital 16,200,793 14,524,815
Capital reserve 39,587,767 26,270,841
Other comprehensive income 215,566 421,075
Reserve funds 11,564,287 11,564,287
Retained earnings (30,495,138) (29,309,022)
General reserve 153,747 137,138
Safety funds 2,940 -
Equity attributable to shareholders of the Company 37,229,962 23,609,134
Non-controlling interests (1,941,966) (2,048,948)
Total shareholders' equity 35,287,996 21,560,186
Total liabilities and shareholders' equity 335,302,681 295,011,335
EFFECTS OF DIFFERENCES BETWEEN IFRSs AND CASs
The effects of differences between the consolidated financial statements of
the Group prepared under IFRSs and CASs are as follows:
2023 2022
RMB'000 RMB'000
Net loss attributable to shareholders of the Company under CASs (1,046,382) (38,619,499)
Deferred taxation (2,657) (668)
Differences in value of fixed assets and certain non-current assets 10,628 2,672
Net loss attributable to shareholders of the Company under IFRSs (1,038,411) (38,617,495)
31 December 31 December
2023 2022
RMB'000 RMB'000
Equity attributable to shareholders of the Company under CASs 37,229,962 23,609,134
Deferred taxation 53,218 55,875
Differences in value of fixed assets and certain non-current assets (217,124) (227,752)
Unrealised profit on the disposal of Hong Kong Dragon Airlines Limited 139,919 139,919
Equity attributable to shareholders of the Company under IFRSs 37,205,975 23,577,176
SUMMARY OF OPERATING DATA
The following is the operating data summary of the Company, Shenzhen Airlines
(including Kunming Airlines), Shandong Airlines, Air Macau, Beijing Airlines,
Dalian Airlines and Air China Inner Mongolia.
Current Previous Increase/
year year (decrease)
Capacity
ASK (million) 292,513.16 110,735.88 164.15%
International 47,693.43 4,691.31 916.63%
Mainland China 237,326.42 104,413.50 127.29%
Hong Kong SAR, Macau SAR and Taiwan, China 7,493.31 1,631.07 359.41%
AFTK (million) 9,648.19 8,510.90 13.36%
International 2,939.26 5,904.80 (50.22%)
Mainland China 6,511.56 2,488.21 161.70%
Hong Kong SAR, Macau SAR and Taiwan, China 197.37 117.88 67.43%
ATK (million) 36,002.19 18,482.42 94.79%
Traffic
RPK (million) 214,172.87 69,966.58 206.11%
International 32,306.61 2,076.48 1455.84%
Mainland China 176,788.86 67,134.33 163.34%
Hong Kong SAR, Macau SAR and Taiwan, China 5,077.40 755.76 571.82%
RFTK (million) 3,015.54 3,502.13 (13.89%)
International 1,637.80 2,532.04 (35.32%)
Mainland China 1,337.20 933.23 43.29%
Hong Kong SAR, Macau SAR and Taiwan, China 40.55 36.86 10.01%
Passengers carried (thousand) 125,454.54 45,086.67 178.25%
International 6,730.76 379.10 1675.48%
Mainland China 115,547.16 44,266.54 161.03%
Hong Kong SAR, Macau SAR and Taiwan, China 3,176.62 441.04 620.25%
Cargo and mail carried (tonnes) 1,070,372.96 902,821.18 18.56%
Kilometres flown (million) 1,565.96 748.10 109.33%
Block hours (thousand) 2,529.46 1,166.89 116.77%
Number of flights 902,517 409,870 120.20%
International 46,956 16,189 190.05%
Mainland China 830,317 387,566 114.24%
Hong Kong SAR, Macau SAR and Taiwan, China 25,244 6,115 312.82%
RTK (million) 21,887.15 9,688.36 125.91%
Load factor
Passenger load factor (RPK/ASK) 73.22% 63.18% 10.03 ppt
International 67.74% 44.26% 23.48 ppt
Mainland China 74.49% 64.30% 10.20 ppt
Hong Kong SAR, Macau SAR and Taiwan, China 67.76% 46.34% 21.42 ppt
Cargo and mail load factor (RFTK/AFTK) 31.26% 41.15% (9.89 ppt)
International 55.72% 42.88% 12.84 ppt
Mainland China 20.54% 37.51% (16.97 ppt)
Hong Kong SAR, Macau SAR and Taiwan, China 20.54% 31.27% (10.72 ppt)
Overall load factor (RTK/ATK) 60.79% 52.42% 8.37 ppt
Utilisation
Daily utilisation of aircraft 8.14 3.90 4.24 hours
(block hours per day per aircraft)
Yield
Yield per RPK (RMB) 0.6094 0.6345 (3.96%)
International 0.6627 2.3444 (71.73%)
Mainland China 0.5948 0.5688 4.57%
Hong Kong SAR, Macau SAR and Taiwan, China 0.7785 1.0105 (22.96%)
Yield per RFTK (RMB) 1.3811 2.9644 (53.41%)
International 1.7094 3.3614 (49.15%)
Mainland China 0.8907 1.4926 (40.33%)
Hong Kong SAR, Macau SAR and Taiwan, China 4.2950 9.1181 (52.90%)
Unit cost
Cost of operation per ASK (RMB) 0.4978 0.9533 (47.78%)
Cost of operation per ATK (RMB) 4.0445 5.3980 (25.07%)
Note: As at 21 March 2023, the Company has gained control of Shandong Aviation
Group Corporation, and its subsidiaries within the consolidation scope of
Shandong Aviation Group Corporation, including Shandong Airlines, have become
companies within the scope of the consolidated financial statements of the
Group. For details, please refer to the announcement of the Company dated 21
March 2023. The sections headed "SUMMARY OF OPERATING DATA" and "DEVELOPMENT
OF FLEET" in this results announcement include relevant operating data and
fleet information of Shandong Airlines, and the historical data in the above
table have been adjusted to a comparable basis.
DEVELOPMENT OF FLEET
During the year of 2023, the Group introduced a total of 23 aircraft,
including seven A350, three A321NEO, three A320NEO, one B737-800 and nine
ARJ21-700, and phased out a total of 12 aircraft, including three A330-200,
one A320, seven B737-800 and one business jet.
As at the end of 2023, the Group had a total of 905 aircraft with an average
age of 9.36 years, of which the Company operated a fleet of 495 aircraft in
total, with an average age of 9.12 years. The Company introduced 20 aircraft
and phased out 12 aircraft.
Details of the fleet of the Group are set out in the table below:
31 December 2023
Sub-total Self-owned Finance leases Operating leases Average age
(year)
Airbus 438 195 123 120 8.96
A320 351 161 97 93 9.15
A330 57 24 6 27 11.07
A350 30 10 20 - 2.63
Boeing 439 183 81 175 10.19
B737 387 150 70 167 10.23
B747 10 8 2 - 14.47
B777 28 13 9 6 9.71
B787 14 12 - 2 6.86
COMAC 24 12 12 - 1.35
ARJ21 24 12 12 - 1.35
Business jets 4 1 - 3 10.28
Total 905 391 216 298 9.36
Introduction Plan Phase-out Plan
2024 2025 2026 2024 2025 2026
Airbus 4 26 33 11 6 11
A320 4 26 33 6 4 11
A330 - - - 5 2 -
Boeing 32 2 33 1 - -
B737 32 - 23 1 - -
B787 - 2 10 - - -
COMAC 9 2 - - - -
ARJ21 9 2 - - - -
Total 45 30 66 12 6 11
Note: Please refer to the actual operation for the introduction and phase-out
of the Group's fleet in the future.
2023 REVIEW
2023 is the year of marking the beginning of comprehensive implementation of
the spirit of the 20th National Congress of the Communist Party of China and a
critical year for carrying forward the "14th Five-Year Plan" development
blueprint. Over the past year, the Group has adhered to the underlying
principle of seeking progress while maintaining stability, coordinated safety
and development, made full efforts to reduce losses and break through
difficulties, accelerated its development into a world-class enterprise,
continued to promote in-depth reforms, improved service quality, strengthened
Party building for its leadership and support, and made significant progress
in all aspects of work.
Steadily maintaining safe development to lay a more solid safety foundation.
Faced with a complex environment and severe challenges, the Group has always
regarded safety as its primary political mission and a matter of paramount
importance. The Group comprehensively implements the overall national security
concept, and maintained a stable situation in safe operation. The Group has
rigorously implemented its safety responsibilities, firmly established the
concept of safety development, resolutely implemented the Law on the
Production Safety (《安全生產法》) and the "15 Hard Measures"
("十五條硬措施") adopted by the Work Safety Committee of the State
Council（國務院安委會）, and continuously strengthened organisational
leadership in safety work. The Group thoroughly carried out key tasks,
diligently implemented the safety supervision and inspection requirements of
the Civil Aviation Administration of China, earnestly conducted rectification
and reform and improved the long-term mechanism in a bid to enhance the
overall level of safety management. By earnestly focusing on the key aspects,
the Group carried out specialised risk assessments in conjunction with the
characteristics of market recovery at various stages and seasonal
environmental changes so as to ensure that the operation support capability
matched the actual flight operations. In 2023, the Group successfully
safeguarded major transportation tasks such as the Chengdu Summer World
University Games, the Hangzhou Asian Games, "Belt and Road" Forum and
earthquake relief.
Significant improvement in operating performance with effective strides in
profitability. During the year, the Group seized the opportunity of market
recovery, implementing comprehensive measures to enhance quality and
efficiency, resulting in a substantial reduction in operational losses.
Capitalising on opportunities of increasing flight schedules at major domestic
airports, the Group continued to upgrade the quality of express routes,
enhanced the efficiency of utilizing advantageous aircraft types, and made
every effort to expand effective investment in the domestic market. With a
commitment to high-quality service for the country's "Going Global" and "Belt
and Road" initiatives, the Group strived to promote the resumption and
expansion of international routes. As of the end of the Reporting Period, the
number of weekly flights on international and regional routes had been
restored to 74% of the level in the same period in 2019. Proactively
maintaining market order, strengthening sales arrangement and yield level
management, the Group ensured yield level remaining stable. Furthermore, by
further integrating passenger and cargo operations and leveraging
international passenger aircraft capacity and hub networks, revenue from
bellyhold capacity saw significant year-on-year growth. Through rigorous cost
reduction and efficiency enhancement efforts, adhering to the concept of
"living within our means" ("過緊日子"), controlling major costs throughout
the entire process and tightening control over non-budgetary expenses, the
Group achieved cost reduction and efficiency improvements.
Enhancing standard quality management and steadily elevating service
standards. The Group is deeply committed to the people-centred ideology,
continuously refining and enhancing the quality of its aviation services. The
Group actively advanced the construction of the service standard system,
redesigned the top-level management of service standards, strengthened the
implementation of service standards, and promoted consistency in key service
standards among member companies. With efforts made to create outstanding
service products, expedite the launch of branded lounges, and introduce new
onboard products, the Group has continued to enhance the image of the service
brand. It strived to improve the management capabilities for service quality,
consolidate flight regularity management, optimise ticket refund and change
services, and enhance passenger service experience. In addition, the Group
accelerated the digital transformation of services, completing the functional
development of the in-flight catering reservation management system,
continuously enhancing the application of mobile-end scenarios, and steadily
upgraded the digitalisation of services.
Contributing to the "national priorities" and exemplifying our mission and
responsibility. The Group remains steadfast in its functional mission,
dedicated to the national strategies and fulfilling its political and social
responsibilities. New progress has been made in supporting regional
strategies. Proactively aligning with the national strategies, the Group
further refined regional development plans to continuously optimise market
layout and route networks. Achieving new results in technology innovation,
focusing on the three major areas in safety operation, service marketing and
management synergy, resulting in the formulation of a top-level design for the
Group's digital development. Embracing the concept of green development, the
Group actively participated in formulating rules for the civil aviation carbon
market, released its action plan for achieving the "Carbon Peak" initiative
and drove its implementation. Demonstrating new roles in fulfilling social
responsibility, the Group effectively facilitated rural revitalisation and
consolidated achievements in poverty alleviation, earning the highest rating
for six consecutive years.
Strengthening Party building and its leadership to ensure high-quality
development. The Group fully implemented the spirit of the 20th National
Congress of the Communist Party of China, reinforcing Party leadership in
corporate governance, enhancing the development of cadre talent, and
steadfastly advancing comprehensive and strict Party self-governance. Such
effort aims to cultivate a clean and upright political environment, providing
a robust foundation for promoting high-quality development and advancing the
Group's transformation into a world-class enterprise.
The year 2024 marks the 75th anniversary of the founding of the People's
Republic of China, and an important year for the Group's journey towards
becoming a world-class enterprise. The Group will adhere to the principle of
seeking progress while ensuring stability, fully, precisely and
comprehensively implementing the new development philosophy, and contributing
to accelerating the establishment of the new development paradigm. The Group
will coordinate high-quality development and top-level safety, strengthen core
functions and enhance core competitiveness. By focusing on tasks such as
ensuring safe operations, enhancing quality and efficiency, deepening reform,
improving services and strengthening Party building, the Group aims to enhance
its ability for value creation, and will play its role in technological
innovation, industrial control and safety support, so as to make new
contributions to advancing civil aviation and building a strong transportation
nation.
BUSINESS OVERVIEW
Safe Operation
The Group firmly rooted the concept of safety development, and diligently
conducted specific investigations and rectification of major hidden safety
hazards. The Group exerted full effort to ensure the support for safe and
orderly restoration of flight operation, conducting comprehensive risk
assessment for flight resumption work covering the aspects such as human
factors, mechanical issues, environmental concerns and management practices,
to ensure operational support capabilities aligned with actual flight
operations. Furthermore, the Group continued to bolster the development of
four safety operation systems encompassing safety management, flight training,
aircraft maintenance and operation management, The Group also deepened the
utilisation of the flight data management and application system (QBD).
Additionally, efforts were continued to advance the establishment of a safety
management system for the air transport of dangerous goods (SMS-DG),
implementing the dual prevention mechanism for risk control and hidden hazard
investigation. The Group organised and conducted the self-inspections to
ensure compliance with qualifications for personnel involved in air transport
of dangerous goods, including outsourced personnel. Moreover, comprehensive
enhancements were made to the construction of aviation security management
systems and capabilities, with the organisation of aviation security tests,
air defense drills, special fire safety inspections and firefighting and
rescue drills. Key personnel in fire safety management were duly licensed for
their duties.
The Group earnestly implemented all the directives from safety supervision
units, conducting comprehensive investigations and research in safety areas.
The Group exerted significant efforts to translate the findings of thematic
education research into action, successfully achieving the safety improvement
goals set during thematic education. The Group continued to improve its
emergency planning system, promptly responded to and effectively managed
emergencies. Through a focused cultivation of safety culture and the practical
promotion of safety practices, the Group launched qualification training for
safety officers in charge and management personnel at all levels, all of whom
successfully passed the assessments. The Group successfully safeguarded major
transportation tasks such as the Chengdu Summer World University Games, the
Hangzhou Asian Games, "Belt and Road" Forum and earthquake relief.
During the Reporting Period, the Group recorded 2.5295 million safe flight
hours, transported 125 million passengers safely, continuously maintaining an
overall stable and safe operation.
Maximising Operating Performance
Seizing the opportunity presented by the recovery of the air passenger
transportation market, and prioritizing safe operation, the Group further
advanced various initiatives aimed at enhancing quality and efficiency. The
Group made every effort to maximise operational performance, actively pursue
revenue generation and reduce costs. As a result, there was a year-on-year
increase in revenue of 166.74%, coupled with a decrease of RMB44,227 million
in loss before taxation, demonstrating a significant improvement in
operational performance amid stable economic conditions and operations.
Adhering to the principal of "increasing investment, maintaining price level
and competing for business volume", the Group bolstered its capacity for
"synergistic" development and focused on optimizing the allocation of core
resources. The Group enhanced the efficiency of utilizing advantageous
aircraft types and expanded effective inputs. By capturing opportunities of
increasing flight schedules at major domestic airports, the Group continued to
upgrade the express route products. To support the national "Going Global"
strategy and the "Belt and Road" initiative with high-quality service, the
Group has operated 55 "Belt and Road" related routes across 31 cities in 25
countries, with flight numbers close to 90% of those in the same period in
2019. The Group continued to promote the resumption and expansion of
international routes accordingly. Furthermore, the Group expedited marketing
innovation and digital transformation, and further implemented the linkage
between passenger aircraft and cargo operations, driving the year-on-year
growth in passenger and cargo transportation revenue.
Maintaining strict cost control and upholding the concept of "living within
our means" ("過緊日子"), the Group implemented rigorous budgetary
constraints and diligently reduced costs throughout the entire business chain
and the business. The Group optimised operational costs and effectively
managed fixed costs to reduce overall expenditure. Emphasizing the importance
of secure and sustainable cash flow, the Group strengthened its capital
management and control, enhanced the efficiency of fund using, continued to
optimise debt structure, effectively controlled interest-bearing liabilities
and reduced financial costs. In addition, the Group focused on improving labor
productivity across all levels and scientifically managed labor costs.
Enhancing Services
The Group has firmly embraced a "people-centred" development ideology and put
the concept of "sincere services" into practice. The Group has continuously
refined its service standard system, promoted the branding of its services and
products, optimised the end-to-end service experience and expedited the
enhancement of its high-quality service standards to consistently meet
passengers' expectations for a pleasant air travel experience.
In order to improve service standard system and revamp the service standard
management structure, the Group has ensured stable presentation of products
and services by refining the product and service standards and establishing or
revising several quality management standards and work standards. It promoted
the branding of service and products, with the opening of the "Zixuan"
("紫軒") and "Zichen" ("紫宸") branded self-operated lounges in Hangzhou
and Guiyang, the introducing of the "Phoenix Dance in the Cloud"
("鳳舞雲端") cabin new visual package products and a new version of
in-flight entertainment system, offering passengers a comprehensive and
exclusive audio-visual experience. The Group actively integrated regional food
and beverage cultures to launch featured meal sets and beverages, creating a
distinctive flavor for Air China. Besides, Air China Express Routes were
expanded to seven routes, and free ticket change and transfer services were
launched between Air China family airlines to facilitate convenient travel for
passengers.
To optimise the end-to-end service experience, the Company has strengthened
flight plan management, flight regularity monitoring and analysis as well as
comprehensive ground control over flights. As a result, the Company's flight
regularity has consistently surpassed the industry average. The Company has
formulated and implemented 11 measures to improve passenger ticket services,
enhancing the friendliness and convenience of ticket refunds and changes
services. Catering to the travel needs of special passengers, the Company has
provided special counters and terminal guidance for "first-time passengers".
With the launch of "automatic check-in" services on three routes in Guangzhou,
travel procedures have been effectively simplified for passengers. The Company
has also launched whole-process luggage tracking and inquiry services at 23
terminals, including Xi'an and Changsha, bringing the total number of
terminals having such services to 53.
Digital Transformation
To accelerate the promotion of digital transformation, the Group insisted on
safety operations as the bottom line, placing passenger service at the
forefront. By leveraging management synergy as the foundation, the Group
focused on cultivating the construction of three major digital platforms,
promoting the convergence of business and technology, and facilitating the
integration of the entire business process.
In 2023, the Group pushed forward the deepening application and dissemination
of the global ground flight support platform, on which four major modules have
been launched, namely flight monitoring, smart scheduling, mobile ground
services and data platform, covering over 1,200 functional points such as
flight plan management, security task monitoring and real-time dispatching.
Since its launch, the platform has safeguarded over 250,000 inbound and
outbound flights, benefiting approximately 6,000 business users including the
Ground Services Department, Comprehensive Security Support Department and
Beijing Aviation Catering, which significantly enhanced large-scale ground
production organisation efficiency. At the same time, the Group completed the
full-scale deployment of the Tianjin Branch, encompassing the Production
Command Centre, Ground Services Department, aircraft services and other major
security units.
Focusing on improving passenger service quality, the Group has comprehensively
promoted the system development in the full-process passenger service domain.
The Group introduced facial recognition functionality at lounges in Hangzhou
to provide passengers with an intelligent access method and, at the same time,
implemented management service functions on the mobile end to empower
frontline staff. Since January 2024, it has been rolling out mobile-end
functions across all 32 self-operated lounges in China, and expanding the face
recognition access scenarios in the lounges in regions including Xinjiang and
Shanghai.
To establish a high-quality air-to-ground interconnection network and increase
the speed of passengers' Internet access in order to significantly improve the
passengers' Internet experience, Air China's A350 fleet pioneered the
extension of in-flight Internet services to the take-off and landing phases in
September 2023, covering the entire passenger flight and laying the groundwork
for Internet services to encompass passenger trips "door-to-door". Moving
forward, the Group will continue to accelerate the building of an
internationally leading Internet fleet.
Risk Prevention and Control
Continuing to deepen the integrated collaborative mechanism of "emphasizing
the rule of law, strengthening internal control, preventing risks and
promoting compliance", the Group accelerated the implementation of risk
prevention and control across all processes, chains and areas, comprehensively
strengthening safety operation risk management and operational risk
prevention.
The Group secured a stable mechanism of risk assessment. Adhering to
governance decision-making procedures, the Group actively and steadily
reviewed and assessed major risks annually through in-depth research and
thematic diagnosis, and implemented comprehensive measures accordingly. By
enhancing the precision of risk quantification and quantifying key risk
indicators, the Group further improved graded and classified rolling
monitoring of important risk issues, carrying out closed-loop management. The
Group implemented a regular mechanism for annual inspection on overseas legal
compliance risks, emphasising the focus on risk control in foreign-related
legal compliance. Extending decision-making risk assessment mechanisms, the
Group ensured comprehensive risk evaluation for major decisions while
prioritising compliance as the premise, proactively mitigating and eliminating
risks. The Group promoted the in-depth integration of risk assessment into
reform and development, central tasks and material project management. The
Group soundly improved the coordinated mechanism of risk prevention and
control. The management supervised key task progress, focused on researching
and assessing risk control and management difficulties, and promoted practical
experience of risk control and management. The Group continued to strengthen
the information sharing mechanism among risk control, compliance, discipline
inspection, inspection and audit, collectively establishing three lines of
defense for risk prevention in management coordination. The responsibility
mechanism for risk prevention and control was comprehensively consolidated.
With strict risk classification and hierarchical management, the Group
enforced the responsibilities of risk mitigation to the specific position and
individual staff to enhance overall handling capacity of risk management
throughout the entire process.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING
RESULTS
The following discussion and analysis are based on the Group's consolidated
financial statements and the notes thereto prepared in accordance with the
IFRSs and are designed to assist the readers in further understanding the
information provided in this announcement so as to better understand the
financial conditions and results of operations of the Group as a whole.
Revenue
During the Reporting Period, the Group's revenue was RMB141,100 million,
representing an increase of RMB88,203 million or 166.74% as compared with last
year. Among which, air traffic revenue was RMB134,681 million, representing an
increase of RMB86,300 million or 178.38% as compared with last year; other
operating revenue was RMB6,419 million, representing a year-on-year increase
of RMB1,902 million or 42.11%.
Revenue Contributed by Geographical Segments
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 112,765,304 79.92% 38,501,365 72.79% 192.89%
International 24,207,933 17.16% 13,299,094 25.14% 82.03%
Hong Kong SAR, Macau SAR and 4,126,997 2.92% 1,097,125 2.07% 276.16%
Taiwan, China
Total 141,100,234 100.00% 52,897,584 100.00% 166.74%
Air Passenger Revenue
During the Reporting Period, the Group recorded an air passenger revenue of
RMB130,517 million, representing an increase of RMB92,220 million over the
previous year. Among the air passenger revenue, the increase of capacity
contributed an increase of RMB78,135 million in the revenue, and the increase
of passenger load factor led to an increase of RMB19,465 million in the
revenue, while the decrease of passenger yield resulted in a decrease in
revenue of RMB5,380 million. The Group's capacity, passenger load factor and
yield per RPK in 2023 are as follows:
2023 2022 Change
ASK (million) 292,513.16 96,212.39 204.03%
Passenger load factor (%) 73.22 62.73 10.49 ppt
Yield per RPK (RMB) 0.6094 0.6345 (3.96%)
Note: The operating data for the corresponding period in 2022 in the above
table does not include the operating data of Shandong Airlines.
Air Passenger Revenue Contributed by Geographical Segments
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 105,155,385 80.57% 32,736,473 85.48% 221.22%
International 21,408,328 16.40% 4,798,616 12.53% 346.14%
Hong Kong SAR, Macau SAR and Taiwan, China 3,952,845 3.03% 761,101 1.99% 419.36%
Total 130,516,558 100.00% 38,296,190 100.00% 240.81%
Air Cargo and Mail Revenue
During the Reporting Period, the Group's air cargo and mail revenue was
RMB4,165 million, representing a decrease of RMB5,920 million as compared with
last year. Among which, the increase of capacity contributed an increase of
RMB1,601 million in the revenue, while the decrease of cargo and mail load
factor resulted in a decrease in revenue of RMB2,746 million, and the decrease
of yield of cargo and mail resulted in a decrease of RMB4,775 million in the
revenue. The capacity, cargo and mail load factor and yield per RFTK in 2023
are as follows:
2023 2022 Change
Available freight tonne kilometres (million) 9,648.19 8,326.31 15.88%
Cargo and mail load factor (%) 31.26 40.86 (9.60 ppt)
Yield per RFTK (RMB) 1.3811 2.9644 (53.41%)
Note: The operating data for the corresponding period in 2022 in the above
table does not include the operating data of Shandong Airlines.
Air Cargo and Mail Revenue Contributed by Geographical Segments
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 1,190,986 28.60% 1,248,132 12.38% (4.58%)
International 2,799,606 67.22% 8,500,478 84.29% (67.07%)
Hong Kong SAR, Macau SAR and Taiwan, China 174,151 4.18% 336,024 3.33% (48.17%)
Total 4,164,743 100.00% 10,084,634 100.00% (58.70%)
Operating Expenses
During the Reporting Period, the Group's operating expenses were RMB145,612
million, representing an increase of 58.76% from RMB91,716 million of last
year. The breakdown of the operating expenses is set out below:
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
Jet fuel costs 46,725,219 32.09% 22,762,814 24.82% 105.27%
Take-off, landing and depot charges 15,554,795 10.68% 6,499,775 7.09% 139.31%
Depreciation and amortisation 27,110,507 18.62% 21,233,674 23.15% 27.68%
Aircraft maintenance, repair and overhaul costs 9,921,853 6.81% 5,640,163 6.15% 75.91%
Employee compensation costs 29,300,310 20.12% 25,338,553 27.63% 15.64%
Air catering charges 3,002,720 2.06% 872,189 0.95% 244.27%
Selling and marketing expenses 3,423,478 2.35% 1,639,889 1.79% 108.76%
General and administrative expenses 1,683,284 1.16% 1,240,365 1.35% 35.71%
Others 8,890,301 6.11% 6,488,734 7.07% 37.01%
Total 145,612,467 100.00% 91,716,156 100.00% 58.76%
• Jet fuel costs increased by RMB23,962 million on a
year-on-year basis, mainly due to the combined effect of the increase in the
consumption of jet fuel and decrease in the prices of jet fuel.
• Take-off, landing and depot charges increased by RMB9,055
million on a year-on-year basis, mainly due to the year-on-year increase in
the number of take-offs and landings.
• Depreciation and amortisation expenses increased by RMB5,877
million on a year-on-year basis, mainly due to the acquisition of Shandong
Aviation Group Corporation, the expansion of fleet as well as the year-on-year
increase in flying hours.
• Aircraft maintenance, repair and overhaul costs increased by
RMB4,282 million on a year-on-year basis, mainly due to the year-on-year
increase in flying hours.
• Employee compensation costs increased by RMB3,962 million on
a year-on-year basis, mainly due to the acquisition of Shandong Aviation Group
Corporation and the year-on-year increase in flight hour fees.
• Air catering charges increased by RMB2,131 million on a
year-on-year basis, mainly due to the increase in the number of passengers.
• Selling and marketing expenses increased by RMB1,784 million
on a year-on-year basis, mainly due to the acquisition of Shandong Aviation
Group Corporation, and the increase in handling fees for agency services and
booking fees resulting from the increase in the sales volumes and the number
of passengers.
• General and administrative expenses increased by RMB443
million on a year-on-year basis, mainly due to the acquisition of Shandong
Aviation Group Corporation.
• Other operating expenses mainly included aircraft and engine
operating lease expenses, civil aviation development fund and
non-above-mentioned ordinary expenses arising from the core air traffic
business, which increased by RMB2,402 million on a year-on-year basis, mainly
due to the acquisition of Shandong Aviation Group Corporation and the increase
in the investment in production and operation.
Finance Income, Finance Costs and Net Exchange Losses
During the Reporting Period, the Group recorded a finance income of RMB605
million, representing a year-on-year increase of RMB376 million or 164.52%;
and incurred finance costs (excluding the capitalised portion) of RMB6,943
million, representing a year-on-year increase of RMB470 million. During the
Reporting Period, the Group recorded net exchange losses of RMB1,035 million,
which is decreased by RMB3,053 million on a year-on-year basis.
Share of Results of Associates and Joint Ventures
During the Reporting Period, the net gain from the Group's share of results of
its associates and joint ventures was RMB2,834 million, as compared to a net
loss of RMB101 million for the previous year. Among which, during the
Reporting Period, the Group recognised a gain on investment of Cathay Pacific
of RMB2,432 million, representing a year-on-year increase of RMB2,180 million.
Material Acquisitions and Disposals
On 30 December 2022, the Company entered into the equity transfer agreements
with Shansteel Financial Holdings Asset Management (Shenzhen) Company Limited
(山鋼金控資產管理(深圳)有限公司) and Qingdao Qifa Trading Co.,
Ltd. (青島市企發商貿有限公司), respectively, pursuant to which the
Company shall acquire the 1.4067% and 0.9043% equity interest in Shandong
Aviation Group Corporation held by each of the above companies at the
consideration of RMB20,064,883.27 and RMB12,898,394.49, respectively (the
"Equity Transfer"). The Company held 51.7178% equity interest in Shandong
Aviation Group Corporation upon the completion of the Equity Transfer.
Meanwhile, as the shareholders of Shandong Aviation Group Corporation proposed
to implement certain equity interest transfer arrangements in relation to the
equity interests of Shandong Aviation Group Corporation, upon the completion
of implementing the relevant Equity Transfer, the Company and Shandong
Hi-Speed Group Co., Ltd. (山東高速集團有限公司) proposed to make
capital increase to Shandong Aviation Group Corporation collectively, of which
the Company shall invest RMB6,600,000,000 (the "Capital Increase"). Upon the
completion of the Capital Increase, the Company held 66% equity interest in
Shandong Aviation Group Corporation.
As at 7 April 2023, the registration procedures for industrial and commercial
changes in respect of the transactions under the abovementioned equity
transfer agreements and capital increase agreement were completed, and the
closing thereof was also completed. The Company has acquired the control of
Shandong Aviation Group Corporation and the percentage of the equity interest
of Shandong Aviation Group Corporation held by the Company increased from
49.4067% to 66%. Shandong Aviation Group Corporation, Shandong Airlines and
their subsidiaries within the scope of consolidated financial statements have
been consolidated into the financial statements of the Company. The Company
also completed the registration of transfer of shares involved in the offer to
acquire Shandong Airlines on 26 April 2023. Finally, 25 accounts with a total
of 5,832 listed tradable shares (B shares) accepted the offer issued by the
Company. As at 26 April 2023, the Company directly held 22.8% of the shares of
Shandong Airlines and indirectly held, through Shandong Aviation Group
Corporation, 42% of the shares of Shandong Airlines. For details, please refer
to the announcements of the Company dated 21 March 2023 and 7 April 2023 and
the overseas regulatory announcement of the Company dated 26 April 2023.
Save as disclosed above, the Company did not make any material acquisitions
and disposals of subsidiaries, associates or joint ventures during the
Reporting Period.
Assets Structure Analysis
As at the end of the Reporting Period, the total assets of the Group was
RMB335,279 million, representing an increase of 13.66% from that of 31
December 2022, among which current assets accounted for RMB32,335 million or
9.64% of the total assets, while non-current assets accounted for RMB302,944
million or 90.36% of the total assets.
Among the current assets, cash and cash equivalents were RMB15,017 million,
accounting for 46.44% of the current assets and representing an increase of
41.56% from that as at 31 December 2022.
Among the non-current assets, the aggregated book value of property, plant and
equipment and right-of-use assets as at the end of the Reporting Period
amounted to RMB238,700 million, accounting for 78.79% of the non-current
assets and representing an increase of 5.90% from that of 31 December 2022.
Asset Mortgage/Pledge
As of 31 December 2023, the Group, pursuant to certain bank loans and finance
leasing agreements, had secured aircraft and buildings with an aggregated book
value of approximately RMB84,599 million (RMB95,499 million as at 31 December
2022) and land use rights with book value of approximately RMB24 million
(RMB25 million as at 31 December 2022). Meanwhile, the Group had monetary
capital with restricted ownership of approximately RMB612 million
(approximately RMB828 million as at 31 December 2022), which was mainly
statutory reserves deposited in the People's Bank of China.
Capital Expenditure
In 2023, the Group's capital expenditure totalled RMB27,505 million, of which
the total investment in aircraft was RMB15,425 million, mainly including
procurement of aircraft and engines, aircraft modifications, flight
simulators, etc. The cash component for the long-term investments amounted to
RMB9,297 million, mainly including the acquisition of Shandong Aviation Group
Corporation, the capital increase of Shandong Airlines in Sichuan Airlines,
etc. Other capital expenditure investment amounted to RMB2,783 million, mainly
including infrastructure construction, IT system construction, ground
equipment procurement, etc.
Equity Investment
As at the end of the Reporting Period, the Group's equity investment in its
associates amounted to RMB12,863 million, representing an increase of 22.08%
from that of 31 December 2022, mainly due to the combined effect of
recognising the share of gains of associates and other comprehensive income
during the year. Among this, the balance of the equity investment of the Group
in Cathay Pacific amounted to RMB12,596 million.
As at the end of the Reporting Period, the Group's equity investment in its
joint ventures was RMB2,414 million, representing an increase of 10.84% from
that as at 31 December 2022, mainly due to new investments and recognising the
share of gains of joint ventures during the Reporting Period.
Debt Structure Analysis
At the end of the Reporting Period, the Group's total liabilities were
RMB300,015 million, representing an increase of 9.71% from that as at 31
December 2022. Among them, current liabilities amounted to RMB110,317 million,
accounting for 36.77% of the total liabilities; and non-current liabilities
amounted to RMB189,698 million, accounting for 63.23% of the total
liabilities.
Among the current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB65,447
million, representing an increase of 9.00% from that as at 31 December 2022.
Among the non-current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB168,814
million, representing a decrease of 0.55% from that as at 31 December 2022.
The increase in interest-bearing debts was mainly due to the acquisition of
Shandong Aviation Group Corporation. Excluding this effect, the Group's
interest-bearing debts demonstrated a decreasing trend as compared with that
as at 31 December 2022.
Details of interest-bearing debts of the Group categorised by currency are set
out below:
31 December 2023 31 December 2022
(in RMB'000) Amount Percentage Amount Percentage Change
RMB 197,161,354 84.16% 187,990,038 81.81% 4.88%
US dollars 36,018,880 15.38% 39,999,600 17.41% (9.95%)
Others 1,080,481 0.46% 1,797,824 0.78% (39.90%)
Total 234,260,715 100.00% 229,787,462 100.00% 1.95%
Commitments and Contingent Liabilities
The Group's capital commitments, which mainly consisted of the expenditure in
the next few years for purchasing certain number of aircraft and related
equipment, increased by 23.19% from RMB58,509 million as at 31 December 2022
to RMB72,079 million as at 31 December 2023. The Group's investment
commitments mainly represented the investment agreements entered into,
amounted to RMB457 million as at 31 December 2023, as compared to RMB512
million as at 31 December 2022.
Gearing Ratio
As at the end of the Reporting Period, the Group's gearing ratio (total
liabilities divided by total assets) was 89.48%, representing a decrease of
3.22 percentage points from that of 31 December 2022.
Working Capital and its Sources
At the end of the Reporting Period, the Group's net current liabilities
(current liabilities minus current assets) were RMB77,983 million,
representing an increase of RMB7,745 million from that as at 31 December 2022.
Based on the structure of current assets and current liabilities, the Group's
current ratio (current assets divided by current liabilities) was 0.29,
representing an increase of 0.05 as compared to that of 31 December 2022.
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 RMB27,905 million, as
compared to the net cash outflow of RMB23,341 million for the corresponding
period in 2022, which was mainly due to the significant increase in revenue on
a year-on-year basis. Net cash outflow from investing activities was RMB15,246
million, representing an increase of net outflow of 121.89% from RMB6,871
million for the corresponding period in 2022, mainly due to the year-on-year
increase in the cash payments for the purchase of property, plant and
equipment, and the effect of the acquisition of Shandong Aviation Group
Corporation. Net cash outflow from financing activities amounted to RMB8,333
million, as compared to the net cash inflow of RMB24,677 million for the
corresponding period in 2022, mainly due to the year-on-year increase in
repayment of borrowings and rental payments.
The Company has obtained bank facilities of RMB217,683 million in aggregate
granted by several banks in China, among which approximately RMB92,530 million
has been utilised and approximately RMB125,153 million remained unutilised.
The remaining amount is sufficient to meet the Group's demands on working
capital and future capital commitments.
OPERATIONAL PLAN
The Company has established its operational focuses for 2024, which included
(1) to unwaveringly uphold the principle of safety first and firmly secure the
bottom line of safety; (2) to vigorously enhance efficiency and quality, and
significantly boosting the level of profitability; (3) to intensify efforts in
reform and innovation, and accelerating the development into a world-class
enterprise; (4) to focus on creating "four excellence" and promoting
comprehensive improvement in service quality; (5) to strengthen the leading
and supporting roles, further enhancing the Party's leadership and Party
building.
OUTLOOK FOR FUTURE
1. Making contributions to the national development strategies by
the civil aviation industry in China
As a strategic pillar industry, China's civil aviation industry will shoulder
the mission and task of promoting high-quality development of the country. It
will leverage the supportive role of civil aviation in promoting circulation
and expanding circulation, further improve the modern airport system and route
network mutually in line with the development of the national economy and
society, the spatial layout of national land and space development, and major
production layout and serve the national major strategies for regional
development and coordination. Promoting the development of the "Silk Road in
the Sky" ("空中絲綢之路"), the Group will further optimise the overseas
market layout, expand global coverage and serve China's deeper participation
in global industrial division and cooperation. Playing its role of promoting
economic structural transformation and upgrading, the civil aviation industry
will encourage manufacturers to continuously improve the quality and
performance of their products, thereby promoting the development and robust
growth of China's aviation industry. Playing the leading role of civil
aviation industry in consumption upgrade, the Group will continue to innovate
services and products to improve the quality of life for the people. Giving
play to its leading role in the comprehensive transport system, the civil
aviation industry will develop a modern and comprehensive transport hub and
implement multiple-modal interlink operation to accelerate the development of
China into a strong nation in terms of transport.
2. Passenger volume will resume natural growth in China's civil
aviation industry
There is no change in the fundamentals of the Chinese economy with the basic
trend of economic stability and long-term improvement still intact. China
continues to be in a period of strategic opportunities. Leveraging the super
large-scale domestic demand market formed by a population of 1.4 billion,
including a middle income group of over 400 million people, China is striving
to build a new development paradigm centred around domestic circulation, with
the international and domestic circulations mutually reinforcing each other.
The demand for civil aviation in China will continue to maintain a positive
growth momentum.
3. Competition landscape of the domestic aviation market
It is expected that the competitive pressures in the domestic aviation market
will alleviate. On the demand side, with the continued rebound and improvement
of the national economy, the foundation for industrial recovery and
development will become more solid. This will lead to steady growth in the
domestic passenger transportation market, and the international passenger
transportation market will sooner recover, effectively alleviating the
situation of oversupply in the domestic aviation market. In terms of policy,
the CAAC has been advancing a series of reform measures to strengthen the
foundation for the industry building and development, enhance the
international competitiveness of aviation hubs, leading to diversified
operations among various types of airlines in the market and reducing
disorderly market competition.
SHARE CAPITAL STRUCTURE
As at the end of the Reporting Period, the Company had a total share capital
of RMB16,200,792,838, divided into 16,200,792,838 shares with par value of
RMB1.00 each. The following table sets out the share capital structure of the
Company as at the end of the Reporting Period:
Number of shares Percentage of the total share capital
A Shares 11,638,109,474 71.84%
H Shares 4,562,683,364 28.16%
Total 16,200,792,838 100.00%
The Company completed the issuance of new H Shares to specific investor after
the Reporting Period. For the share capital structure of the Company as at the
date of this announcement, please refer to the section headed "SUBSEQUENT
EVENT" in this announcement.
PURCHASES, SALES OR REDEMPTION OF LISTED SECURITIES
During the Reporting Period, neither the Company nor any of its subsidiaries
purchased, sold or redeemed any listed securities of the Company (the term
"securities" has the meaning ascribed to it under Paragraph 1 of Appendix D2
to the Listing Rules).
CORPORATE GOVERNANCE
Compliance with the Corporate Governance Code
The Company has always been committed to maintaining and enhancing the level
of its corporate governance so as to ensure greater accountability and
transparency of the Group and deliver long-term return to its shareholders.
The Company has complied with the code provisions in Part 2 of the Corporate
Governance Code in Appendix C1 to the Listing Rules throughout the Reporting
Period.
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. 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.
DIVIDENDS
According to the audited financial statements of the Company prepared in
accordance with the CASs and the IFRSs, the Company recorded negative profits
available for distribution to shareholders in 2023. As considered and approved
by the 28th meeting of the sixth session of the Board of the Company, the
Company proposed not to make profit distribution for the year of 2023.
SUBSEQUENT EVENTS
The Company convened the 25th meeting of the sixth session of the Board on 22
December 2023 and convened the first extraordinary general meeting of 2024 on
26 January 2024, at which relevant resolutions, including the proposal in
relation to the issuance of A Shares and H Shares to specific investors by the
Company in 2023, were considered and approved. On 7 February 2024, the Company
completed the issuance of H Shares to the specific investor, CNACG.
392,927,308 H Shares were issued at the issue price of HKD5.09 per share. Upon
completion of the issue of H Shares to CNACG, the total share capital of the
Company increased to 16,593,720,146 shares, comprising 11,638,109,474 A Shares
and 4,955,610,672 H Shares. For details, please refer to the announcements of
the Company dated 7 February 2024, 26 January 2024 and 22 December 2023.
ANNUAL GENERAL MEETING ("AGM") AND CLOSURE OF REGISTER OF MEMBERS
The Company proposed to hold the AGM on Thursday, 30 May 2024. The register of
members of H Shares will be closed from Thursday, 23 May 2024 to Thursday, 30
May 2024 (both days inclusive), during which period no transfer of shares will
be effected. In order to qualify for attendance and voting at the AGM, the
holders of H Shares must return all the transfer documents to the Company's H
Shares registrar in Hong Kong, Computershare Hong Kong Investor Services
Limited, at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wan
Chai, Hong Kong by 4:30 p.m. on Wednesday, 22 May 2024. The holders of H
Shares whose names appear on the register of members of the Company at the
close of business on Wednesday, 22 May 2024 are entitled to attend and vote at
the AGM.
ANNUAL REPORT
The annual report for the year ended 31 December 2023 containing all
information required by Appendix D2 to the Listing Rules will be published on
the HKEXnews website of the Hong Kong Stock Exchange (www.hkexnews.hk) as well
as the website of the Company (www.airchina.com.cn) in due course.
FORWARD-LOOKING STATEMENT
The Company would like to remind the readers of this announcement that the
airline operations are substantially influenced by global political and
economic developments. Accidental and unexpected incidents may have material
impacts on our operations or the industry as a whole. This 2023 annual results
announcement of the Company contains, inter alia, certain forward-looking
statements, such as forward-looking statements on the global and Chinese
economies and aviation markets. Such forward-looking statements are subject to
some uncertainties and risks.
AUDIT AND RISK CONTROL COMMITTEE (supervision committee)
The 2023 annual results of the Company have been reviewed by the audit and
risk control committee (supervision committee) of the Board.
GLOSSARY OF TECHNICAL TERMS
Capacity Measurements
"available tonne kilometres" or "ATK(s)" the number of tonnes of capacity available for transportation multiplied by
the kilometres flown
"available seat kilometres" or "ASK(s)" the number of seats available for sale multiplied by the kilometres flown
"available freight tonne kilometres" or "AFTK(s)" the number of tonnes of capacity available 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" or the number of revenue passengers carried multiplied by the kilometres flown
"RPK(s)"
"cargo and mail traffic" measured in RFTK, unless otherwise specified
"revenue freight tonne kilometres" or "RFTK(s)" the revenue cargo and mail load in tonnes multiplied by the kilometres flown
"revenue tonne kilometres" or "RTK(s)" the revenue load (passenger and cargo) in tonnes multiplied by the kilometres
flown
Load Factors
"overall load factor" RTK expressed as a percentage of ATK
"passenger load factor" RPK expressed as a percentage of ASK
"cargo and mail load factor" RFTK expressed as a percentage of AFTK
"Block hours" each 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 RPK" revenues from passenger operations divided by RPKs
"cargo yield"/"yield per RFTK" revenues from cargo operations divided by RFTKs
DEFINITIONS
In this announcement, unless the context otherwise requires, the following
terms shall have the following meanings:
"Airbus" Airbus S.A.S., a company established in Toulouse, France
"Air China Cargo" Air China Cargo Co., Ltd., a non-wholly owned subsidiary of CNAHC
"Air China Inner Mongolia" Air China Inner Mongolia Co., Ltd., a non-wholly owned subsidiary of the
Company
"Air Macau" Air Macau Company Limited, a non-wholly owned subsidiary of the Company
"Ameco" Aircraft Maintenance and Engineering Corporation, a non-wholly owned
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
Shanghai Stock Exchange
"Beijing Airlines" Beijing Airlines Company Limited, a non-wholly owned subsidiary of the Company
"Board" the board of directors of the Company
"Boeing" The Boeing Company
"CAAC" Civil Aviation Administration of China
"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, a wholly-owned subsidiary
of CNAHC
"CNAHC" China National Aviation Holding Corporation Limited
"COMAC" Commercial Aircraft Corporation of China, Ltd.
"Company", "We", or Air China Limited, a company incorporated in the PRC, whose H Shares are
"Air China" 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 non-wholly owned 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)" ordinary 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 Standards" or "IFRSs" International Financial Reporting Standards
"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 as
set out in Appendix C3 to the Listing Rules
"Reporting Period" the period from 1 January 2023 to 31 December 2023
"RMB" Renminbi, the lawful currency of the PRC
"SASAC" State-owned Assets Supervision and Administration Commission of the State
Council
"SFO" The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
"Shandong Airlines" Shandong Airlines Co., Ltd., a non-wholly owned subsidiary of the Company
"Shandong Aviation Group Corporation" Shandong Aviation Group Company Limited, a non-wholly owned subsidiary of the
Company
"Shenzhen Airlines" Shenzhen Airlines Company Limited, a non-wholly owned subsidiary of the
Company
"Sichuan Airlines" Sichuan Airlines Co., Ltd., a company incorporated under the laws of the PRC
"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
By Order of the Board
Air China Limited
Xiao Feng Huen Ho Yin
Joint Company Secretaries
Beijing, the PRC, 28 March 2024
As at the date of this announcement, the directors of the Company are Mr. Ma
Chongxian, Mr. Wang Mingyuan, Mr. Feng Gang, Mr. Patrick Healy, Mr. Xiao Peng,
Mr. Li Fushen*, Mr. He Yun*, Mr. Xu Junxin* and Ms. Winnie Tam Wan-chi*.
* Independent non-executive director of the Company
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. END FR QKBBQOBKKCQKRecent news on Air China
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