REG - Air China Ld - ANNUAL REPORT 2024
24/04/2025 07:02
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RNS Number : 0161G Air China Ld 24 April 2025
中國國際航空股份有限公司 (short name: 中國國航) (English name:
Air China Limited, short name: Air China) is the only national flag carrier of
China.
As the old saying goes, "Phoenix, a bird symbolizing benevolence" and "The
whole world will be at peace once a phoenix reveals itself". The corporate
logo of Air China is composed of an artistic phoenix figure, the Chinese
characters of "中國國際航空公司" in calligraphy written by Deng
Xiaoping, by whom the China's reform and opening-up blueprint was designed,
and the characters of "AIR CHINA" in English. Signifying good auspices in the
ancient Chinese legends, phoenix is the king of all birds. It "flies from the
eastern Happy Land and travels over mountains and seas and bestows luck and
happiness upon all parts of the world". Air China advocates the core spirit of
phoenix which is to "serve the world, to lead and move forward to higher
goals". By virtue of the immense historical heritage, Air China strives to
create perfect travel experience and keep passengers safe by upholding the
spirit of phoenix of being a practitioner, promoter and leader for the
development of the Chinese civil aviation industry. The Company is also
committed to leading the industrial development by establishing itself as a
national brand, at the same time pursuing outstanding performance through
innovation and excelling efforts.
Air China was listed on The Stock Exchange of Hong Kong Limited (stock code:
00753) and the London Stock Exchange (stock code: AIRC) on 15 December 2004,
and was listed on the Shanghai Stock Exchange (stock code: 601111) on 18
August 2006.
Headquartered in Beijing, Air China has set up branches in Southwest China,
Zhejiang, Chongqing, Tianjin, Shanghai, Hubei, Xinjiang, Guangdong, Guizhou,
Tibet and Wenzhou. As at the end of the Reporting Period, the major
subsidiaries of Air China are Shenzhen Airlines Company Limited (including
Kunming Airlines Company Limited), Shandong Aviation Group Company Limited
(including Shandong Airlines Co., Ltd.), Air Macau Company Limited, Beijing
Airlines Company Limited, Dalian Airlines Company Limited, Air China Inner
Mongolia Co., Ltd., Aircraft Maintenance and Engineering Corporation, Air
China Import and Export Co., Ltd., Chengdu Falcon Aircraft Engineering Service
Co., Ltd., Air China Shantou Industrial Development Company; and its joint
ventures mainly include Sichuan Services Aero-Engine Maintenance Co., Ltd,
Beijing Aero-Engine Services Co., Ltd. and GA Innovation China Co., Ltd.
Moreover, the associates of Air China include Cathay Pacific Airways Limited
and Tibet Airlines Co., Ltd.
With the goal of becoming "the world's leading airline", Air China remains
committed to the mission of "put safety first, serve passengers with
credibility, convenience, comfort and choice, maintain stable development,
help employees achieve success and fulfill corporate responsibilities",
advocates the values of "people-oriented, accountable, excelling efforts and
enjoyable flights" and positions the brand as "professional and reliable with
both international quality and Chinese temperament". The "Air China Miles"
programme of Air China is the oldest frequent flier programme in China, under
which all members of the frequent flier programmes of Air China family
carriers have been consolidated into the brand of "Phoenix Miles".
Contents
3 Corporate Information
4 Chairman's Statement
6 Summary of Financial Information
7 Summary of Operating Data
9 Fleet Information
10 Business Overview
24 Management's Discussion and Analysis of Financial Position and Operating
Results
30 Corporate Governance Report
51 Report of the Directors
81 Profile of Directors, Supervisors and
Senior Management
Financial Statements Prepared under
IFRS Accounting Standards
86 Independent Auditor's Report
91 Consolidated Statement of Profit or Loss
92 Consolidated Statement of Profit or Loss and Other Comprehensive Income
93 Consolidated Statement of Financial Position
95 Consolidated Statement of Changes in Equity
96 Consolidated Statement of Cash Flows
98 Notes to the Consolidated Financial Statements
200 Supplementary Information
201 Glossary of Technical Terms
202 Definitions
Corporate Information
REGISTERED CHINESE NAME:
中國國際航空股份有限公司
ENGLISH NAME:
Air China Limited
REGISTERED OFFICE:
1st Floor-9th Floor 101
Building 1
30 Tianzhu Road
Shunyi District
Beijing, the PRC
PRINCIPAL PLACE OF BUSINESS IN HONG KONG:
5th Floor
CNAC House
12 Tung Fai Road
Hong Kong International Airport
Hong Kong
WEBSITE:
www.airchina.com.cn
DIRECTORS:(1)
Mr. Ma Chongxian
Mr. Wang Mingyuan
Mr. Cui Xiaofeng
Mr. Patrick Healy
Mr. Xiao Peng
Mr. Xu Niansha*
Mr. He Yun*
Ms. Winnie Tam Wan-chi*
Mr. Gao Chunlei*
SUPERVISORS:
Mr. Xiao Jian
Mr. Wang Mingzhu
Mr. Li Shuxing
Ms. Lyu Yanfang
Ms. Guo Lina
* Independent Non-executive Directors
LEGAL REPRESENTATIVE OF THE COMPANY:
Mr. Ma Chongxian
JOINT COMPANY SECRETARIES:
Mr. Xiao Feng
Mr. Huen Ho Yin
AUTHORISED REPRESENTATIVES:
Mr. Ma Chongxian
Mr. Xiao Feng
LEGAL ADVISERS TO THE COMPANY:
DeHeng Law Offices
(as to domestic laws)
Jingtian & Gongcheng LLP
(as to overseas laws)
INTERNATIONAL AUDITOR:
Deloitte Touche Tohmatsu
Registered Public Interest Entity Auditors
H SHARE REGISTRAR AND TRANSFER OFFICE:
Computershare Hong Kong Investor Services Limited
Rooms 1712-1716, 17th Floor, Hopewell Centre
183 Queen's Road East
Wanchai
Hong Kong
LISTING VENUES:
Hong Kong, London and Shanghai
1 For details of changes in Directors of the Company during the
Reporting Period and up to the date of this annual report, please refer to
page 60 of this annual report.
Chairman's Statement
2024 REVIEW
2024 marked the 75th anniversary of the founding of New China and served as a
critical year for achieving the goals and tasks outlined in the "14th
Five-Year Plan". Over the past year, under the guidance of Xi Jinping Thought
on Socialism with Chinese Characteristics for a New Era, we thoroughly
implemented the guiding principles of the 20th National Congress of the
Communist Party of China (CPC) and the Second and Third Plenary Sessions of
the 20th CPC Central Committee as well as the resolutions and deployments of
the CPC Central Committee and the State Council. The Group, focusing on
enhancing core functions and improving core competitiveness, while upholding
the Party's comprehensive leadership, insisting on deepening reforms and
pursuing high-quality development, has achieved new progress in various areas,
including safety, operating performance, service and reform, taking
significant strides toward building a world-class enterprise.
Ensuring stringent safety management for stable and secure operations. The
Group thoroughly implemented General Secretary Xi Jinping's key directives on
safety production and civil aviation, taking concrete actions to ensure "Two
Absolute Safeties (兩個絕對安全)". The Group formulated a dedicated
safety production work plan, steadily advanced the three-year action plan for
fundamental improvements in work safety and carried out comprehensive
self-inspections and corrective measures for major hidden safety hazards, thus
driving the dynamic elimination of hidden safety hazards. The Group continued
to enhance the development of five major systems: safety management, flight
training, aircraft maintenance, operation management, risk identification and
hidden hazard investigation, while further strengthening the safety foundation
and enhancing safety capabilities. Through meticulous production and
operational coordination, the Group strengthened oversight and control over
safety processes, ensuring that flight operations were dynamically aligned
with support capabilities. In 2024, the Group recorded 2.95 million safe
flight hours, representing a year-on-year increase of 17%, and successfully
completed major aviation transport support missions, including major charter
flights, the Paris Olympics, the Forum on China-Africa Cooperation, and the
evacuation of Chinese nationals from Lebanon.
Focusing on enhancing development quality and continuously improving operating
quality and performance. The Group made every effort to strengthen financial
outcomes, achieving quantitative growth and qualitative improvements in
production and operating performance. By "consolidating existing capacity and
expanding incremental capacity", the Group significantly increased its
effective capacity. Over the year, the Group's available seat kilometers (ASK)
reached 356.1 billion, representing a year-on-year increase of 22%. The Group
actively supported national diplomacy initiatives by accelerating the
resumption and opening of new international routes, doubling the Group's
international capacity compared to the previous year. The Group established a
resource management mechanism to maximise aircraft utilization and strived to
enhance aircraft operational usage efficiency, leading to a year-on-year
increase in daily aircraft utilisation rates. The Group intensified marketing
innovation by implementing a quarterly product release mechanism, refining its
inbound
tourism product system and organising a series of campaigns celebrating the
30th anniversary of "Phoenix Miles", so as to further strengthen brand
influence. Amid intensifying industry competition, the Group reinforced yield
management and maintained a leading position in yield level. The Group pursued
rigorous income and efficiency management and cost control, continuously
expanded financing channels, and achieved notable results through refined
financial management and oversight.
Fulfilling Our Mission and Responsibility to Serve the Nation's Priorities
with Greater Efficacy. We fully supported the development of domestically
produced civil aircraft, marking a significant milestone in the large-scale
operation of such aircraft. With the C909 and C919 aircraft soaring through
the skies adorned with the national flag, the Group aspired to become the
world's first operator of the C929. In alignment with the national regional
development strategy, the Group actively promoted the construction of hub
networks, increasing capacity concentration in key markets such as
Beijing-Tianjin-Hebei, Chengdu-Chongqing, Guangdong-Hong Kong-Macao and the
Yangtze River Delta. The Group accelerated the development of Beijing Capital
Airport and Chengdu Tianfu International Airport into international hubs,
optimising network structures and improving the quality of hub operation.
Continuing to strengthen its "Belt and Road" route network, the Group expanded
its coverage to 29 countries and operating 65 flight routes. The Group is
dedicated to rural revitalisation, with its targeted assistance efforts
earning the highest rating from the SASAC for seven consecutive years.
Committed to green and low-carbon development, the Group made steady progress
toward achieving carbon peaking, and initiated the routine use of domestically
produced sustainable aviation fuel on designated flights.
Enhancing service excellence with care and dedication. Guided by our
"people-centered" development philosophy, we focused on the objectives of the
"Year of Quality and Efficiency Enhancement for Civil Aviation Services",
striving to deliver high-quality services that meet customer expectations.
Adhering to the principles of "customer-oriented, problem-oriented and
value-oriented" services, the Group concentrated resources on establishing a
customer service centre and further refined its professional service
management system. Key systems, such as full-process passenger service
notification and in-flight meal reservation, were successfully launched,
steadily advancing the digital transformation of services. The Group further
improved its customer service mechanism to better understand customer needs,
design and deliver tailored products, thereby promoting continuous growth in
customer value.
Strengthening Party leadership and Party building to ensure new achievements
in high-quality development. The Group remains committed to high-quality Party
building as a cornerstone for high-quality development, fully embracing its
responsibilities and missions as a national flag carrier. The Group rigorously
implements the "Two Consistencies (兩個一以貫之)" approach, ensuring the
comprehensive strengthening of Party leadership while enhancing corporate
governance. The Group further optimised organisational structures in key
areas, reinforced the development of a robust cadre talent pipeline, and
continuously improved team vitality. The Group remains steadfast in advancing
comprehensive and strict governance of the Party, fostering a clean and
upright political environment that serves as a solid foundation for promoting
high-quality development and accelerating the construction of a world-class
enterprise.
As 2025 marks the final year of the "14th Five-Year Plan" and a pivotal
transition to the "15th Five-Year Plan", we will uphold the fundamental
principle of seeking progress while maintaining stability. The Group will
continue to shoulder its political responsibility for operational safety,
strengthen strategic support capabilities, and accelerate the development of
new business models. By pursuing high-quality development
and accelerating the construction of a world-class enterprise with tangible
outcomes, the Group will make new and greater contributions to building a
great country and advancing the grand cause of national rejuvenation!
Ma Chongxian
Chairman
Beijing, China
27 March 2025
Summary of Financial Information
(RMB'000)
2024 2023 2022 2021 2020
Revenue 166,698,880 141,100,234 52,897,584 74,531,670 69,503,749
Profit/(loss) from operations 2,218,203 2,889,523 (35,443,794) (16,862,176) (11,168,820)
(Loss) before taxation (1,598,868) (1,649,779) (45,876,891) (21,825,530) (18,466,406)
(Loss) after taxation (including (loss) attributable to non-controlling (2,445,342) (1,561,248) (45,173,910) (18,822,238) (15,816,131)
interests)
(Loss) attributable to (2,212,785) (522,837) (6,556,415) (2,187,060) (1,412,788)
non-controlling interests
(Loss) attributable to equity (232,557) (1,038,411) (38,617,495) (16,635,178) (14,403,343)
shareholders of the Company
EBITDA((1)) 31,321,171 30,000,030 (14,210,120) 4,072,326 9,239,497
EBITDAR((2)) 32,278,677 30,839,752 (13,632,238) 4,981,874 9,925,796
(Loss) per share attributable to equity shareholders of the Company (RMB) (0.01) (0.07) (2.81) (1.21) (1.05)
(Loss) on equity attributable to equity shareholders of the Company (%) (0.52) (2.79) (163.79) (27.11) (18.58)
Notes:
(1) EBITDA represents earnings before finance income and finance
costs, exchange gains/losses, income tax, share of profits or losses of
associates and joint ventures, depreciation and amortisation as computed under
IFRS Accounting Standards.
(2) EBITDAR represents EBITDA before deducting lease expenses on
aircraft as well as other lease expenses.
(RMB'000)
31 December 31 December 31 December 31 December 31 December
2024
2023
2022
2021
2020
Total assets 345,750,173 335,278,694 294,979,377 298,381,190 284,029,616
Total liabilities 304,824,203 300,014,685 273,451,149 232,550,079 200,256,580
Non-controlling interests (4,202,202) (1,941,966) (2,048,948) 4,462,554 6,231,709
Equity attributable to equity shareholders 45,128,172 37,205,975 23,577,176 61,368,557 77,541,327
of the Company
Equity attributable to equity shareholders 2.71 2.30 1.62 4.23 5.34
of the Company per share (RMB)
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 year Previous year Increase/
(decrease)
Capacity
ASK (million) 356,103.62 292,513.16 21.74%
International 95,626.32 47,693.43 100.50%
Mainland China 250,051.04 237,326.42 5.36%
Hong Kong SAR, Macau SAR and Taiwan, China 10,426.25 7,493.31 39.14%
AFTK (million) 12,629.76 9,648.19 30.90%
International 5,593.32 2,939.26 90.30%
Mainland China 6,764.65 6,511.56 3.89%
Hong Kong SAR, Macau SAR and Taiwan, China 271.79 197.37 37.70%
ATK (million) 44,726.10 36,002.19 24.23%
Traffic
RPK (million) 284,349.95 214,172.87 32.77%
International 72,918.97 32,306.61 125.71%
Mainland China 203,880.63 176,788.86 15.32%
Hong Kong SAR, Macau SAR and Taiwan, China 7,550.35 5,077.40 48.71%
RFTK (million) 4,732.69 3,015.54 56.94%
International 3,001.96 1,637.80 83.29%
Mainland China 1,663.75 1,337.20 24.42%
Hong Kong SAR, Macau SAR and Taiwan, China 66.98 40.55 65.20%
Passengers carried (thousand) 155,315.51 125,454.54 23.80%
International 16,317.71 6,730.76 142.43%
Mainland China 134,256.06 115,547.16 16.19%
Hong Kong SAR, Macau SAR and Taiwan, China 4,741.74 3,176.62 49.27%
Cargo and mail carried (tonnes) 1,480,085.34 1,070,372.96 38.28%
Kilometres flown (million) 1,856.98 1,565.96 18.58%
Block hours (thousand) 2,950.89 2,529.46 16.66%
Number of flights 1,024,492 902,517 13.51%
International 102,399 46,956 118.07%
Mainland China 886,944 830,317 6.82%
Hong Kong SAR, Macau SAR and Taiwan, China 35,149 25,244 39.24%
RTK (million) 29,743.08 21,887.15 35.89%
Load factor
Passenger load factor (RPK/ASK) 79.85% 73.22% 6.63 ppt
International 76.25% 67.74% 8.52 ppt
Mainland China 81.54% 74.49% 7.04 ppt
Hong Kong SAR, Macau SAR and Taiwan, China 72.42% 67.76% 4.66 ppt
Cargo and mail load factor (RFTK/AFTK) 37.47% 31.26% 6.21 ppt
International 53.67% 55.72% (2.05 ppt)
Mainland China 24.59% 20.54% 4.06 ppt
Hong Kong SAR, Macau SAR and Taiwan, China 24.64% 20.54% 4.10 ppt
Overall load factor (RTK/ATK) 66.50% 60.79% 5.71 ppt
Utilisation
Daily utilisation of aircraft 8.90 8.14 0.76 hours
(block hours per day per aircraft)
Yield
Yield per RPK (RMB) 0.5338 0.6094 (12.41%)
International 0.5127 0.6627 (22.63%)
Mainland China 0.5371 0.5948 (9.70%)
Hong Kong SAR, Macau SAR and Taiwan, China 0.6488 0.7785 (16.66%)
Yield per RFTK (RMB) 1.5665 1.3811 13.42%
International 1.8999 1.7094 11.14%
Mainland China 0.8959 0.8907 0.58%
Hong Kong SAR, Macau SAR and Taiwan, China 3.2855 4.2950 (23.50%)
Unit cost
Operating expenses per ASK (RMB) 0.4824 0.4978 (3.09%)
Operating expenses per ATK (RMB) 3.8412 4.0445 (5.03%)
Fleet Information
During the year of 2024, the Group introduced a total of 36 aircraft,
including four A320 series aircraft, 19 B737 series aircraft, three C919
aircraft, nine C909 aircraft and one business jet, and phased out a total of
11 aircraft, including three A330 series aircraft, six A320 series aircraft,
one B737 series aircraft and one business jet.
As at the end of 2024, the Group had a total of 930 aircraft with an average
age of 9.90 years, of which the Company operated a fleet of 504 aircraft in
total, with an average age of 9.60 years. The Company introduced 22 aircraft
and phased out 13 aircraft.
Details of the fleet of the Group are set out in the table below:
31 December 2024
Sub-total Self-owned Finance Operating Average age (year)
leases
leases
Airbus 433 195 119 119 9.70
A320 349 163 94 92 9.90
A330 54 22 5 27 11.79
A350 30 10 20 - 3.63
Boeing 457 186 97 174 10.73
B737 405 149 90 166 10.71
B747 10 8 2 - 15.47
B777 28 17 5 6 10.71
B787 14 12 - 2 7.86
COMAC 36 24 12 - 1.68
C909 33 21 12 - 1.81
C919 3 3 - - 0.17
Business jets 4 1 - 3 9.30
Total 930 406 228 296 9.90
Introduction Plan Phase-out Plan
2025 2026 2027 2025 2026 2027
Airbus 22 32 19 13 13 3
A320 22 32 19 9 13 3
A330 - - - 4 - -
Boeing 13 2 30 4 1 1
B737 13 - 22 4 1 1
B787 - 2 8 - - -
COMAC 12 10 10 - - -
C909 2 - - - - -
C919 10 10 10 - - -
Total 47 44 59 17 14 4
Note: Please refer to the actual operation for the introduction and
phase-out of the Group's fleet in the future.
Business Overview
SAFE OPERATION
The Group remained committed to strictly implementing the comprehensive
national security concept and adhering to the political mandate of "Two
Absolute Safeties (兩個絕對安全)". It made every effort to achieve the
objectives of the three-year action plan for fundamentally improving work
safety, with a focus on the "Year of Tackling Hidden Hazards". Rigorous
investigations and rectifications of major hidden safety hazards were carried
out, emphasising immediate corrective actions and ensuring the dynamic
elimination of hidden hazards. The Group continued to strengthen the
development of five key systems: safety management, flight training, aircraft
maintenance, operation management, risk identification and hidden hazard
investigation. To establish a "Holistic Safety (大安全)" framework, the
Group built a long-term safety management mechanism, promoted voluntary
incident reporting and advanced the digital transformation of various business
systems. Meticulous oversight was applied to flight operations, ensuring
smooth seasonal flight adjustments, efficient peak-season scheduling and
comprehensive safety inspections. The Group successfully introduced the C919
aircraft and provided high-quality operational support, ensuring seamless
dynamic alignment between flight operations and support capabilities. Strict
management of dangerous goods air transport was maintained, including the
successful verification of transportation licenses. The Group continued to
strengthen aviation security measures and organised annual security
assessments for international flight routes. It implemented targeted measures
to address disruptive passenger behavior, and successfully passed the CAAC's
aviation security audit.
Air China recorded over 20 million consecutive safe flight hours, and was
awarded the "Two-Star Diamond Award for Flight Safety
(飛行安全鑽石二星獎)" by the CAAC. The Group successfully completed a
number of major aviation transport support missions, including the Spring
Festival travel rush, the Two Sessions, the Paris Olympics, the Forum on
China-Africa Cooperation, and the evacuation of Chinese nationals from
Lebanon. During the Reporting Period, the Group recorded 2.95 million safe
flight hours and safely transported 155 million passengers, maintaining an
overall stable and safe operational environment on an ongoing basis.
ENHANCING OPERATING PERFORMANCE
In 2024, the global economy maintained overall growth, while China's economy
showed a general recovery and improvement. The recovery process of the civil
aviation market also accelerated. Seizing market opportunities, the Company
focused on improving financial outcomes while ensuring safe operations. Fleet
efficiency was enhanced through meticulous production planning. The Company
strengthened capacity and pricing management to stabilise yield quality,
enforced strict cost controls to drive efficiency and reduce expenses, and
continuously improved operating quality and performance, achieving a
significant year-on-year reduction in losses.
Focusing on its annual production and operational targets, the Group remained
committed to increasing capacity, maintaining pricing and competing for market
share. By actively improving aircraft utilisation, closely monitoring market
trends and seizing opportunities, the Group achieved notable progress in
enhancing financial outcomes. The Group tapped into the potential of
connecting flight markets, targeted key market shares, refined base pricing,
and made precise capacity allocations. The Company continuously optimised
product design and refined marketing controls, enhancing product offerings
such as up-selling strategies and inbound travel packages for foreign
passengers to drive targeted sales. A multi-faceted approach was adopted to
boost flight revenue. The Group strengthened ancillary revenue streams,
implementing refined management of competitive products such as seat selection
services. Upholding a customer-centric approach, the Group deepened engagement
with high-value customers and launched the "Business Travel Prime Zone
(商旅專區)", a one-stop service platform for corporate clients, ensuring
seamless access to exclusive benefits. Furthermore, the Group amplified
marketing innovation, established a quarterly product release mechanism and
organising a series of campaigns to celebrate the 30th anniversary of "Phoenix
Miles", further strengthening Air China's brand influence. The Group deepened
the integration of passenger and cargo operations, driving year-on-year growth
in passenger and cargo transportation revenue.
The Group implemented strict cost control measures in line with the
requirements of "intensification, coordination and refinement". The Group
optimised the matching of aircraft types and routes with market demand to
manage operating costs and enhanced precision management of resource
utilization efficiency to ensure effective cost control. The Group
strengthened fund management, optimised its debt structure and reduced
financial expenses. The Group focused on improving labor productivity at all
levels and maintaining a balanced approach to labor cost management, in order
to effectively expanding profitability potential.
ENHANCING SERVICE
Guided by a "people-centred" development philosophy, the Group remained
focused on passenger needs, continuously upgrading service standards and
quality. The Group introduced innovative service products, improved the
full-process travel experience, and enhanced service delivery capabilities,
driving a comprehensive upgrade in service quality.
The Group elevated its service quality, systematically enhanced service
standards at all levels, laying a solid foundation for delivering high-quality
service. Focusing on the travel needs of "first-time flyers", the Group
pioneered the industry's first customised service for first-time passengers,
offering comprehensive travel guides, ground instructions and in-flight
assistance to ensure full coverage of their needs. Attention to service
details was emphasized, with the introduction of the "Travel with Care"
series. The in-flight Wi-Fi and Internet platforms were revamped with updated
entertainment content and layouts to meet the diverse needs of passengers. The
Group actively catered to passengers' needs and local culinary cultures, and
launched "Light Dishes on the Clouds (雲饗輕食)", "Sky-high Seafood
(萬尺鱘鮮)" and a variety of regional specialty meal sets. On the C919
aircraft, the Group unveiled Air China's exclusive, first-of-its-kind
in-flight seat and cabin interior design, along with dedicated cabin
announcements, in-flight entertainment programs and amenities. The Group
optimised and upgraded Air China Express Routes to eight routes, strengthened
collaboration across the Air China family carriers, and leveraged key
resources to enhance the express route experience.
The Group optimised passenger compensation standards in irregular situations,
improving the overall service experience during irregular flights. The Group
refined voluntary ticket change policies, upgraded the ticket purchase
protection, and continued to improve ticketing services for passengers. The
Group newly introduced full-process luggage tracking services at 12 overseas
terminals, enabling cross-company baggage inquiries among Air China family
carriers. The Group expanded the booking permissions for five special services
within the Air China family on mobile platforms, along with membership
services and convenient functions, thereby enhancing passenger mobile service
experience. A full-process service information notification system was
launched, ensuring that passengers receive more comprehensive and accurate
information. The Group introduced an in-flight meal reservation management
system, enabling personalised meal selections for passengers. The Group
established a service expert team, selecting 157 specialists to provide core
support for future standard upgrades, quality improvements, and other service
enhancement initiatives.
DIGITAL TRANSFORMATION
To comprehensively advance digital transformation, the Group optimised the
organisational framework for digital transformation and enhanced its
operational mechanisms. Focusing on three key business areas, namely safety
operations, marketing services and management collaboration, the Group
continuously improved safety performance, precision marketing capabilities,
the end-to-end travel experience for passengers and the efficiency of
management collaboration. In addition, the Group promoted the integration of
"technology, business and management", leveraging the full potential of data
to drive efficiency and enhance quality.
In terms of safety operations, the Group accelerated promotion and deepened
the application of its global ground flight support platform, which enabled
visualised flight monitoring and support, intelligent flight scheduling and
mobile frontline operations, significantly enhancing flight ground support
capabilities. The Group also expedited the development of the operation
monitoring platform, optimising the process for end-to-end operational
monitoring and special situation handling. In the realm of marketing services,
the Group adopted a customer-centric approach, leveraging digital technology
to drive innovation in marketing models, business models and service quality
improvements. With the second phase of business model innovation, the Group
comprehensively upgraded the user-friendliness, convenience and smoothness of
its website sales and services, creating a one-stop digital air travel
platform to strengthen precision marketing and diversified product management
capabilities. The Group launched an in-flight meal reservation management
system, offering new services to passengers. Starting in September 2024, the
system undergoes trial operations on six routes, including Beijing-Sanya and
Beijing-Chongqing, providing passengers with personalised services such as
ordering, selecting or cancelling meals. The Group advanced the development of
intelligent customer service systems to improve the efficiency of passenger
services. In the area of management collaboration, the Group vigorously
promoted digital transformation in human resources, financial management and
internal controls, enhancing the effectiveness of internal management process.
RISK PREVENTION AND CONTROL
The Group continued to refine its integrated collaboration mechanism of
"upholding the rule of law, reinforcing internal controls, preventing risks
and promoting compliance". The risk prevention and control system was further
improved, enabling the Group to proactively and prudently address various
risks through comprehensive measures, ensuring that risks in all aspects
remain controllable and within manageable limits.
The Group solidified its risk assessment mechanism, enhancing the foresight
and predictability of risk forecasting. The Group conducted in-depth analysis
of major operating risks on an annual basis and implemented comprehensive
measures to address them. The Group improved the precision of risk
quantification, and actively built a monitoring and early-warning system for
material operating risks, employing tiered and rolling monitoring with
closed-loop management for key risk factors. The mechanism for evaluating
risks in major decision-making has been strengthened, continuously improving
the quality of evaluations and proactively preventing and mitigating risks.
Risk assessment was deeply integrated into corporate reforms, core tasks and
major project management. The Group refined its risk prevention and control
collaboration mechanism, with the Audit and Risk Management Committee (the
Supervision Committee) regularly reviewing reports on risk management,
internal controls and compliance. Senior management actively supervised key
risk control efforts, ensuring a prudent and sound response to various risks.
The Group continued to establish and improve the three lines of defense in
risk control and compliance management, reinforcing the responsibility
mechanism for risk prevention and control. Strict tiered and layered risk
management is enforced, with risk mitigation responsibilities clearly assigned
to specific roles and individuals, enhancing the Group's ability to manage
risks throughout the entire process.
CORE COMPETENCE ANALYSIS DURING THE REPORTING PERIOD
Strong brand advantage
Air China positioned its brand as "professional and reliable with both
international quality and Chinese temperament". By virtue of the immense
historical heritage, Air China strives to create perfect travel experience and
help passengers to stay safe by upholding the spirit of phoenix of being a
practitioner, promoter and leader for the high-quality development of the
aviation transportation industry in the PRC. While pursuing outstanding
performance through innovation and excelling efforts, the Company is also
committed to leading the industrial development and establishing itself as a
"National Brand". By maintaining its world-class safety operation performance
and leading comprehensive operating strengths in Mainland China, the Group has
extensive brand recognition and excellent brand reputation.
In 2024, the Group adhered to the goal of accelerating the development into a
world-class enterprise with a "distinctive brand", and concentrated its
resources on establishing the Brand and Quality Management Department, which
introduced new momentum into the development of the brand strengths. Actively
launching brand communication, the Group planned and carried out brand
activities in relation to major annual events, organized a series of
activities for the inaugural flight of Air China's C919 and the participation
of C919 in the 13th Macau Business Aviation Exhibition. It participated in the
China Brand Fair, the China-Eurasia Expo, Zhuhai Airshow, the Western China
International Fair for Investment and Trade, the China International Travel
Mart, and the CATA Aviation Conference at a high level. It placed
advertisements of brand image on selected channels to enhance brand awareness
and brand reputation. In addition, it strengthened domestic and international
social media communication, and launched in-depth brand promotion for key
markets such as Europe, North America and Japan.
According to the ranking list released by the World Brand Lab, Air China
ranked no. 280 in the "World's Top 500 Brands" in 2024 and no. 25 in the
"China's 500 Most Valuable Brands" with a brand value of RMB259.695 billion,
maintaining a leading position in the domestic aviation service industry.
Market leader of the Beijing hub
In 2024, basing itself on the domestic cycle, the Group actively promoted hub
construction in a bid to implement the national regional development strategy
by continuing to increase the concentration of investment in the
transportation capacity in the four-pole regional clusters of
Beijing-Tianjin-Hebei, Chengdu-Chongqing, Guangdong-Hong Kong-Macau and the
Yangtze River Delta. The Group accelerated the hub development of Beijing
Capital International Airport and Chengdu Tianfu International Airport,
improved the network structure and enhanced the hub operation quality. Air
China has achieved an average of 746 scheduled flights per day at Beijing
Capital International Airport.
At the same time, Air China continued to focus its resources and efforts on
accelerating the optimization of hub functions, enhancing the operation
efficiency and quality assurance of services, constantly improving its route
network. During the Reporting Period, in addition to increasing its
investment, Air China meticulously developed well-established express route
products and strong express route brands. It continued to develop 8 express
routes between Beijing-Chengdu, Beijing-Shenzhen, Beijing-Guangzhou,
Beijing-Shanghai, Beijing-Chongqing, Beijing-Hangzhou, Beijing-Xiamen and
Chengdu-Shenzhen, with a total number of flights amounted to approximately 120
flights per day.
Balanced and complementary route network
In 2024, the Group proactively supported national key strategies and advanced
high-standard opening-up. Adhering to the principle of "Four Maximizations" as
always in the implementation of production organization, it steadily pushed
forward the opening and resumption of international flights, and continuously
improved the "Belt and Road" related route network layout. Focusing on the
construction of route networks among Beijing-Tianjin-Hebei, the Yangtze River
Delta, the Guangdong-Hong Kong-Macau Greater Bay Area and the
Chengdu-Chongqing Dual-Economic Circle, the Group seized the development
opportunities of core hubs and bases in the region. Furthermore, it further
deepened collaboration among Air China family carriers to achieve
complementary network advantages and enhance the overall core competitiveness
of Air China family carriers. As of the end of Reporting Period, the Group
operated 847 passenger routes, including 657 domestic routes and 190
international and regional routes, covering 45 countries and regions.
The Group continued to serve for the national "Going Global" strategy by
actively promoting the resumption and launch of "Belt and Road" related
routes. The number of executed "Belt and Road" related routes reached 65,
involving 29 countries and 37 cities, and the number of flights exceeded that
of the same period in 2019. During the Reporting Period, Air China launched
seven new "Belt and Road" related routes, including Beijing-Riyadh,
Beijing-Dhaka, Chengdu-Milan, Urumqi-Moscow, Urumqi-Tbilisi, Shanghai-Hanoi,
and Beijing-Xi'an-Minsk. On the domestic front, serving for the national
strategy of expanding domestic demand, Air China efficiently coordinated its
production organization and continued to expand its effective capacity
deployment in the domestic market. In 2024, its domestic available seat
kilometers (ASK) grew by 49% compared to 2019.
High quality customer base
In line with the Company's strategy for hub network, the Group is positioned
in the mid-to-high-end business mainstream traveler market and currently has
the most valuable traveler base in China. As at the end of the Reporting
Period, the number of "Phoenix Miles" members has exceeded 94.172 million,
revenue contributed by frequent fliers accounted for 53% of the Company's air
passenger revenue, and the total number of users of Air China APP have reached
27.58 million. As at the end of the Reporting Period, the total number of
corporate customers amounted to 7,078.
MAJOR SUBSIDIARIES AND ASSOCIATES AND THEIR OPERATING RESULTS
Note: As at the end of the Reporting Period, CNACG is a wholly-owned
subsidiary of CNAHC. Accordingly, CNAHC is directly and indirectly interested
in 53.71% of the shares of the Company.
During the Reporting Period, the operating results of the major subsidiaries
and associates of the Company were as follows:
Shenzhen Airlines Shandong Aviation Group Corporation Beijing Airlines Dalian Airlines Air China Air Macau Ameco CNAF Cathay Pacific
Inner Mongolia
Year of establishment 1992 1995 2011 2011 2013 1994 1989 1994 1946
Place of domicile Shenzhen Shandong Beijing Dalian Inner Mongolia Macau Beijing Beijing Hong Kong
Principal business Air passenger and air cargo services Air passenger and Business charter and public air passenger and air cargo services Air passenger and air cargo services Air passenger and air cargo services Air passenger and air cargo services Repair and overhaul of aircraft, engines and components Provision of financial services to CNAHC Group and the Group Air passenger and air cargo services
air cargo services
Registered capital RMB5,360,000,000 RMB10,454,489,846.24 RMB1,000,000,000 RMB3,000,000,000 RMB1,000,000,000 MOP842,042,000 USD300,052,800 RMB1,127,961,864 6,439,409,250 shares in issue
Percentage of shareholding by the Company 51% 66% 51% 80% 80% 66.92% 75% 51% 29.98%
Revenue (RMB100 million) 330.70 204.46 4.62 19.70 17.68 31.13 131.01 1.49 956.17
(on a consolidated basis)
(on a consolidated
(on a consolidated basis)
basis)
Year-on-year changes (%) 10.28 30.44 7.69 4.95 6.06 15.85 18.82 (32.27) 12.47
Total assets (RMB100 million) 691.92 334.86 8.28 33.10 23.92 55.57 74.77 239.16 1,585.79
Profit/(loss) attributable to parent company (28.13) (5.06) (1.29) (3.49) (0.40) (5.95) 4.01 0.54 88.01
(RMB100 million)
Profit/(loss) attributable to parent company in the corresponding period of (17.22) 6.02 (0.81) (0.06) 0.00 (1.75) 2.35 0.47 81.58
last year (RMB100 million)
The fleet information and operating data of the major subsidiaries and
associates of the Company were as follows:
As at the end of the Reporting Period/ Shenzhen Airlines Shandong Airlines Beijing Airlines* Dalian Airlines Air China Air Macau Cathay Pacific
During the Reporting Period
Inner Mongolia
Fleet size (unit) 235 137 7 13 11 23 236
(on a consolidated basis)
(on a consolidated basis)
Average age (year) 9.97 10.78 11.78 11.24 11.04 8.54 11.1
ASK (100 million) 769.17 476.74 8.81 42.62 35.27 74.53 1,117.89
Year-on-year changes (%) 12.68 33.77 14.32 3.00 0.33 53.23 30.6
RPK (100 million) 638.46 400.95 5.99 33.29 27.22 55.59 930.16
Year-on-year changes (%) 22.93 41.51 23.35 9.67 7.01 59.50 26.8
Passengers carried (10 thousand) 3,999.36 2,732.51 49.30 238.48 205.82 321.14 2,282.7
Year-on-year changes (%) 20.41 41.79 35.22 14.48 8.41 56.41 26.9
Average passenger load factor (%) 83.01 84.10 67.97 78.12 77.18 74.59 83.2
Year-on-year changes (ppt) 6.92 4.60 4.97 4.75 4.82 2.93 (2.5)
* Note: As at the end of the Reporting Period, Beijing Airlines operated a
fleet of three entrusted business jets and one self-owned business jet with an
average age of 9.30 years. During the Reporting Period, in terms of business
charter service, Beijing Airlines completed 221 flights, representing a
year-on-year decrease of 28.94%; it completed 767.32 flying hours,
representing a year-on-year decrease of 29.78%; it carried a total of 2,004
passengers, representing a year-on-year decrease of 14.51%.
OVERVIEW OF CHINA'S AIR TRANSPORT INDUSTRY
In 2024, the civil aviation industry's transportation turnover reached a
total of 148.52 billion tonne kilometres, 730 million passengers carried and
8.982 million tonnes of cargo and mail carried throughout the year,
representing a year-on-year growth of 25%, 17.9% and 22.1% respectively, and a
growth of 14.8%, 10.6% and 19.3% compared to 2019, respectively. International
passenger flights increased to 6,400 flights/week, recovering to 84% of the
pre-pandemic level, while international cargo and mail traffic increased by
29.3% year-on-year. With the addition of 19 new destinations in the "Belt and
Road" member countries, passenger carried from China to Central Asia, Western
Asia and Europe exceeded the 2019 level, with growth of 152.4%, 49.5% and
25.7%, respectively.
According to CAAC forecast, the civil aviation industry is expected to achieve
a transportation turnover of 161 billion tonne kilometers, a passenger
transport volume of 780 million and a cargo and mail transport volume of 9.5
million tonnes in 2025. Efforts will be made to accelerate the recovery of
international flights, with the goal of restoring the number of international
flights to more than 90% of the pre-pandemic level.
OPERATIONAL PLAN
The Company has identified the following key priorities for 2025: (1) to
firmly establish the concept of safe development and shoulder the political
responsibility for safety operations; (2) to accelerate the improvement of the
quality and efficiency of core business operations, continuously enhancing
profitability; (3) to continuously strengthen strategic support capabilities,
uphold fundamental principles while breaking new ground, and comprehensively
deepen reforms; (4) to fully enhance the passenger service experience,
striving to build brand value advantage; (5) to comprehensively strengthen the
Party's leadership and Party building, persistently enforce discipline, and
combat corruption.
OUTLOOK
Industry Landscape and Trends
1. China's Civil Aviation Serving National Development
Strategies
The civil aviation industry, as a strategic sector, consistently aligns with
and serves the nation's overarching development goals. The industry is
accelerating the construction of aviation hubs while enhancing air transport
capabilities to drive coordinated regional economic growth. Through expanding
global aviation networks, it has actively established and increased flight
frequencies to countries along the Belt and Road routes, facilitating enhanced
connectivity and economic cooperation. The aviation sector plays a pivotal
role in technological innovation, contributing to breakthroughs in indigenous
technologies such as China's domestically-developed large aircraft and
advancing research and innovation in aircraft maintenance and other
industry-wide technological developments. This promotes deeper integration
between scientific innovation and industrial applications. To meet evolving
consumer demands, the industry continues to innovate its service offerings and
elevate service quality standards, thereby improving the overall travel
experience for passengers. Furthermore, it is actively developing a modern
integrated transportation system by steadily promoting multimodal transport
solutions and expanding the aviation market's service coverage.
2. China's Civil Aviation Passenger Transport Will
Return to Natural Growth
The fundamental trend of China's economy stabilizing and improving in the long
term remains unchanged, and China's development is still in a period of
strategic opportunity. Relying on the super-sized domestic demand market
formed by a population of 1.4 billion, efforts will be made to build a new
development pattern with domestic circulation as the mainstay and domestic and
international circulations reinforcing each other. The market potential is
enormous, and the prospects for civil aviation demand are optimistic. In 2025,
China's civil aviation will adhere to coordinating both domestic and
international markets, while expanding transport scale, further enhancing the
industry's profitability level.
3. Competitive Landscape of China's Aviation Market
China's aviation market is expected to experience steady growth and continuous
transformation. On the demand side, with the national economy recovering and
improving, the industry's development foundation will become more solid, the
domestic passenger market will grow steadily, the international passenger
market will recover at a faster pace, and Chinese airlines will play a more
important role in the global aviation market. On the policy side, the
continuous implementation of various development policies will effectively
stimulate domestic demand potential, especially in boosting household
consumption, which will provide demand momentum for the subsequent development
of civil aviation. On the industry side, the CAAC is advancing a series of
reform measures to strengthen the foundation for industry development, enhance
the international competitiveness of aviation hubs, and guide domestic
airlines to adopt differentiated operations, thereby reducing homogeneous
competition in the civil aviation market.
Company Development Strategy
During the 14th Five-Year Plan period, the Group will adhere to the
development goal of "accelerating the development into a world-class aviation
transportation group with global competitiveness". The Company will focus on
four strategic directions: hub network, balanced passenger-cargo development,
cost leadership, and brand strategy. Efforts will be concentrated on key areas
such as enhancing safety management, optimising market layout, adjusting
resource structure, upgrading products and services, driving digital
innovation, and promoting green and low-carbon development to advance its
operations.
Safety Management Reaches New Heights. The safety management system, flight
training system, aircraft maintenance system, and operational management
system will be further improved. The safety control mechanism will be more
robust, safety management efficiency will continue to rise, and responsibility
implementation will be more clearly defined. During the 14th Five-Year Plan
period, the Group will maintain a high level of safe operations.
Market Layout Optimization Gathers New Advantages. Adhering to serving
national strategies and major policy decisions, the Group will optimise its
base market layout under the new development paradigm of dual domestic and
international circulation, highlighting strengths and key areas to gather new
competitive advantages. The core network structure of the four-corner diamond
and four-pole clusters will be further refined, and the network synergy within
Air China family carriers will continue to deepen.
Resource Structure Adjustment Presents a New Outlook. Core resources will be
better aligned with market characteristics, establishing long-term advantages
in fleet development. The efficiency of flight and human resource allocation
will be optimised, and the alignment of maintenance and investment layouts
with core business development will be continuously strengthened.
Product and Service Upgrades Reach New Levels. The quality of products and
services will be significantly improved, with service features becoming more
prominent. An efficient and integrated standard system will be established,
ensuring smoother full-process service support and more efficient
collaboration across business segments.
Digital Innovation Development Enters a New Stage. Scientific and
technological innovation management system will be improved, with innovation
gradually becoming a core pillar of the Group's development. The effectiveness
of innovation-driven development will be more pronounced, breakthroughs in
digital transformation will be achieved, and key progress will be made in
digital platform construction.
Green and Low-Carbon Development Demonstrates New Achievements. The energy
conservation and environmental protection management system will operate more
efficiently. Pollution and carbon reduction measures will be more effective,
pollution prevention achievements will be more significant, carbon emissions
and carbon asset management will become more professional, and participation
in social welfare activities will be more extensive.
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
IFRS Accounting Standards and are designed to assist the readers in further
understanding the information provided in this report so as to better
understand the financial conditions and results of operations of the Group as
a whole.
REVENUE
During the Reporting Period, the Group's revenue was RMB166,699 million,
representing an increase of RMB25,599 million or 18.14% as compared with last
year. Among which, air traffic revenue was RMB159,203 million, representing an
increase of RMB24,521 million or 18.21% as compared with last year; other
operating revenue was RMB7,496 million, representing a year-on-year increase
of RMB1,077 million or 16.79%.
REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 118,491,369 71.08% 112,765,304 79.92% 5.08%
International 43,088,622 25.85% 24,207,933 17.16% 77.99%
Hong Kong SAR, Macau SAR and Taiwan, China 5,118,889 3.07% 4,126,997 2.92% 24.03%
Total 166,698,880 100.00% 141,100,234 100.00% 18.14%
AIR PASSENGER REVENUE
During the Reporting Period, the Group recorded an air passenger revenue of
RMB151,789 million, representing an increase of RMB21,272 million over the
previous year. Among the air passenger revenue, the increase of capacity
contributed an increase of RMB28,373 million in the revenue, and the increase
of passenger load factor led to an increase of RMB14,392 million in the
revenue, while the decrease of passenger yield resulted in a decrease in
revenue of RMB21,493 million. The Group's capacity, passenger load factor and
yield per RPK in 2024 are as follows:
2024 2023 Change
ASK (million) 356,103.62 292,513.16 21.74%
Passenger load factor 79.85% 73.22% 6.63 ppt
Yield per RPK (RMB) 0.5338 0.6094 (12.41%)
AIR PASSENGER REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 109,504,532 72.14% 105,155,385 80.57% 4.14%
International 37,385,320 24.63% 21,408,328 16.40% 74.63%
Hong Kong SAR, Macau SAR and Taiwan, China 4,898,820 3.23% 3,952,845 3.03% 23.93%
Total 151,788,672 100.00% 130,516,558 100.00% 16.30%
AIR CARGO AND MAIL REVENUE
During the Reporting Period, the Group's air cargo and mail revenue was
RMB7,414 million, representing an increase of RMB3,249 million as compared
with last year. Among them, the increase of capacity contributed an increase
of RMB1,287 million in the revenue, while the increase of cargo and mail load
factor resulted in an increase in revenue of RMB1,085 million, and the
increase of yield of cargo and mail resulted in an increase of RMB877 million
in the revenue. The capacity, cargo and mail load factor and yield per RFTK in
2024 are as follows:
2024 2023 Change
Available freight tonne kilometres (million) 12,629.76 9,648.19 30.90%
Cargo and mail load factor 37.47% 31.26% 6.21 ppt
Yield per RFTK (RMB) 1.5665 1.3811 13.42%
AIR CARGO AND MAIL REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
Mainland China 1,490,484 20.10% 1,190,986 28.60% 25.15%
International 5,703,302 76.93% 2,799,606 67.22% 103.72%
Hong Kong SAR, Macau SAR and Taiwan, China 220,069 2.97% 174,151 4.18% 26.37%
Total 7,413,855 100.00% 4,164,743 100.00% 78.01%
OPERATING EXPENSES
During the Reporting Period, the Group's operating expenses were RMB171,801
million, representing an increase of 17.98% from RMB145,612 million of last
year. The breakdown of the operating expenses is set out below:
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
Jet fuel costs 53,720,436 31.27% 46,725,219 32.09% 14.97%
Take-off, landing and depot charges 20,915,459 12.18% 15,554,795 10.68% 34.46%
Depreciation and amortisation 29,102,968 16.94% 27,110,507 18.62% 7.35%
Aircraft maintenance, repair and overhaul costs 12,848,288 7.48% 9,921,853 6.81% 29.49%
Employee compensation costs 34,268,745 19.95% 29,300,310 20.12% 16.96%
Air catering charges 4,165,874 2.42% 3,002,720 2.06% 38.74%
Selling and marketing expenses 4,695,760 2.73% 3,423,478 2.35% 37.16%
General and administrative expenses 1,872,201 1.09% 1,683,284 1.16% 11.22%
Others 10,210,858 5.94% 8,890,301 6.11% 14.85%
Total 171,800,589 100.00% 145,612,467 100.00% 17.98%
• Jet fuel costs increased by RMB6,995 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
RMB5,361 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
RMB1,992 million on a year-on-year basis, mainly due to the expansion of fleet
as well as the year-on-year increase in flying hours.
• Aircraft maintenance, repair and overhaul costs
increased by RMB2,926 million on a year-on-year basis, mainly due to the
year-on-year increase in flying hours.
• Employee compensation costs increased by RMB4,968
million on a year-on-year basis, mainly due to the inclusion of Shandong
Aviation Group Corporation in the consolidated financial statements since 21
March 2023 and the year-on-year increase in flight hour fees.
• Air catering charges increased by RMB1,163 million on
a year-on-year basis, mainly due to the increase in the number of passengers.
• Selling and marketing expenses increased by RMB1,272
million on a year-on-year basis, mainly due to 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
RMB189 million on a year-on-year basis, mainly due to the effect of the
inclusion of Shandong Aviation Group Corporation in the consolidated financial
statements since 21 March 2023.
• 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 RMB1,321 million on a year-on-year basis, mainly
due to the inclusion of Shandong Aviation Group Corporation in the
consolidated financial statements since 21 March 2023 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 RMB521
million, representing a year-on-year decrease of RMB84 million or 13.83%; and
incurred finance costs (excluding the capitalised portion) of RMB6,399
million, representing a year-on-year decrease of RMB544 million or 7.84%.
During the Reporting Period, the Group recorded net exchange losses of RMB760
million, which was decreased by RMB276 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 RMB2,820 million, representing a
decrease of RMB14 million from the previous year. Among which, during the
Reporting Period, the Group recognised a gain on investment of Cathay Pacific
of RMB2,499 million, representing a year-on-year increase of RMB67 million.
MATERIAL ACQUISITIONS AND DISPOSALS
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
RMB345,750 million, representing an increase of 3.12% from that of 31 December
2023, among which current assets accounted for RMB40,687 million or 11.77% of
the total assets, while non-current assets accounted for RMB305,063 million or
88.23% of the total assets.
Among the current assets, cash and cash equivalents were RMB21,039 million,
accounting for 51.71% of the current assets and representing an increase of
40.11% from that as at 31 December 2023, which was mainly attributable to the
non-public issuance of shares by the Company, and the flexible adjustment of
its funds according to its capital arrangements.
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 RMB241,013 million, accounting for 79.00% of the non-current
assets and representing an increase of 0.97% from that as at 31 December 2023.
ASSET MORTGAGE/PLEDGE
As of 31 December 2024, the Group, pursuant to certain bank loans and finance
leasing agreements, had secured aircraft and buildings with an aggregated book
value of approximately RMB86,462 million (RMB84,599 million as at 31 December
2023) and land use rights with book value of approximately RMB23 million
(RMB24 million as at 31 December 2023). Meanwhile, the Group had monetary
capital with restricted ownership of approximately RMB1,428 million
(approximately RMB612 million as at 31 December 2023), which were mainly
statutory reserves deposited in the People's Bank of China, pledged bank
deposits, security deposits and time deposits with a maturity of more than
three months.
CAPITAL EXPENDITURE
In 2024, the Group's capital expenditure totalled RMB16,788 million, of which
the total investment in aircraft was RMB13,403 million, mainly including
procurement of aircraft and engines, aircraft modifications, flight
simulators, etc. The cash component for the long-term investments amounted to
RMB509 million, mainly including the Tianma Project and the capital increase
in Sichuan Airlines. Other capital expenditure investment amounted to RMB2,876
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 RMB14,633 million, representing an increase of 13.76%
from that of 31 December 2023, mainly due to the 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 RMB14,311 million.
As at the end of the Reporting Period, the Group's equity investment in its
joint ventures was RMB2,424 million, representing an increase of 0.42% from
that as at 31 December 2023, 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
RMB304,824 million, representing an increase of 1.60% from that as at 31
December 2023. Among them, current liabilities amounted to RMB137,610 million,
accounting for 45.14% of the total liabilities; and non-current liabilities
amounted to RMB167,214 million, accounting for 54.86% of the total
liabilities.
Among the current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB92,010
million, representing an increase of 40.59% from that as at 31 December 2023.
Among the non-current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB143,971
million, representing a decrease of 14.72% from that as at 31 December 2023.
Details of interest-bearing debts of the Group categorised by currency are set
out below:
31 December 2024 31 December 2023
(in RMB'000) Amount Percentage Amount Percentage Change
RMB 205,662,318 87.15% 197,161,354 84.16% 4.31%
US dollars 29,874,295 12.66% 36,018,880 15.38% (17.06%)
Others 443,893 0.19% 1,080,481 0.46% (58.92%)
Total 235,980,506 100.00% 234,260,715 100.00% 0.73%
Details of the interest-bearing borrowings at fixed rates and floating rates
of the Group (including the range of interest rates) are set out in note 35 to
the financial statements of this annual report.
As at 31 December 2024, the Group did not use financial instruments for
hedging purposes.
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 32.04% from RMB72,079 million as at 31 December 2023
to RMB95,175 million as at 31 December 2024. The Group's investment
commitments mainly represented the investment agreements entered into,
amounted to RMB313 million as at 31 December 2024, as compared to RMB457
million as at 31 December 2023. The Company plans to finance the above
payments by internal and external resources.
Details of the contingent liabilities of the Group are set out in note 41 to
the financial statements of this annual report.
GEARING RATIO
As at the end of the Reporting Period, the Group's gearing ratio (total
liabilities divided by total assets) was 88.16%, representing a decrease of
1.32 percentage points from that of 31 December 2023.
WORKING CAPITAL AND ITS SOURCES
At the end of the Reporting Period, the Group's net current liabilities
(current liabilities minus current assets) were RMB96,923 million,
representing an increase of RMB18,940 million from that as at 31 December
2023. Based on the structure of current assets and current liabilities, the
Group's current ratio (current assets divided by current liabilities) was
0.30, representing an increase of 0.01 as compared to that as at 31 December
2023.
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 RMB27,984 million,
representing an increase of RMB80 million from that in 2023. Net cash outflow
from investing activities was RMB17,863 million, representing an increase of
net outflow of RMB2,617 million, or 17.16% from that of 2023, mainly due to
the consolidation of Shandong Aviation Group Corporation into the Group for
the corresponding period of the previous year with the recognition of net cash
received from the acquisition of a subsidiary of RMB5,392 million. Net cash
outflow arising from financing activities amounted to RMB3,996 million,
representing a decrease of RMB4,337 million from that of 2023, mainly due to
the fact that the financing scale has been increased in order to ensure
security for liquidity.
The Company has obtained bank facilities of RMB232,246 million in aggregate
granted by several banks in China, among which approximately RMB88,140 million
has been utilised and approximately RMB144,106 million remained unutilised.
The remaining amount is sufficient to meet the Group's demands on working
capital and future capital commitments.
Details of the financial risk management objectives and policies of the Group
are set out in note 43 to the financial statements of this annual report.
Risk factors
Risks of External Environment
Market Fluctuation
As China's economy maintained steady growth with progress and major economic
indicators rebounded, both consumer demand and residents' income increased
steadily. In terms of the overall recovery of flights, the domestic market has
shown better performance than the international market. During the Reporting
Period, the progress of recovery in the international market was still lagging
behind under the influence of a number of factors. Based on the
characteristics of the new development stage, the Group will fully, precisely
and comprehensively implement the new development philosophy, coordinate
development and safety, and take the initiative to contribute to and integrate
with the new development paradigm. Seizing the development opportunities in
the industry, the Group will further develop its domestic route network and
expand the market of international routes, in a bid to proactively adapt to
the rapidly changing market environment.
Oil Price Fluctuation
Jet fuel is one of the main operating costs of the Group. The performance of
the Group is affected to a certain extent by fluctuations in jet fuel prices.
During the Reporting Period, with other variables remaining unchanged, if the
average price of the jet fuel rises or falls by 5%, the Group's jet fuel costs
will rise or fall by approximately RMB2.686 billion. The imposition of fuel
surcharges has relieved the Company's jet fuel cost pressure to a certain
extent.
Exchange Rate Fluctuation
The Group's certain assets and liabilities are denominated in US dollar.
Certain international income and expenses of the Group are denominated in
currencies other than RMB. Assuming that the risk variables other than the
exchange rate stay unchanged, the appreciation or depreciation of RMB against
US dollar by 1% due to the changes in the exchange rate will result in the
increase or decrease in the Group's net profit and shareholders' equity as at
31 December 2024 by RMB178 million. As of 31 December 2024, the Group had no
foreign exchange hedging instruments.
For further details of foreign currency risks and response measures, please
refer to note 43 to the financial statements of this annual report.
Risks of Competition
Industry competition
During the Reporting Period, as there was no significant reduction in the
number of operating entities in the market, the Company still faced relatively
huge industry competition pressure. In respect of the domestic market, as the
international market has not yet fully recovered, some wide-body aircraft were
used in the domestic market, and the imbalance between supply and demand in
the domestic market still existed. In respect of the international market, the
new routes of domestic airlines were mainly concentrated in destinations such
as Central Asia, Western Asia and Europe, resulting in intensified competition
in certain regions within a short period of time. Adhering to its strategy for
hub network, the Company will spare no efforts in building international
aviation hubs in Beijing and Chengdu, realising differentiated development
from other market competitors. Main routes and express routes will be launched
centering on hubs as well as principal bases and markets with a view to
strengthening core market competitiveness with high-quality products, services
and travel experience.
Alternative competition
With the increasing station density of high-speed railway network in China,
the existing passengers flow of short- and medium-haul flights were gradually
diverted to high-speed railway, which posed challenges to the civil aviation
industry. At the same time, the mass transportation network of high-speed
railway also provided punctual and fast transportation services to more
passengers from different regions for medium- and long-haul routes of civil
aviation, while more and more passengers chose the air-rail interlink
transportation mode. Looking forward, leveraging the enhanced cooperation and
competition between civil aviation and high-speed railway with complementary
advantages, the integrated development of the air-rail interlink operation
will accelerate the construction of a modern comprehensive transportation
system.
Corporate Governance Report
MEMBERS OF THE SIXTH SESSION OF THE BOARD
Mr. Ma Chongxian
Mr. Wang Mingyuan
Mr. Cui Xiaofeng
Mr. Patrick Healy
Mr. Xiao Peng
Mr. Xu Niansha
Mr. He Yun
Ms. Winnie Tam Wan-chi
Mr. Gao Chunlei
With the goal of becoming "the world's leading airline", the Company remains
committed to the mission of "put safety first, serve passengers with
credibility, convenience, comfort and choice, maintain stable development,
help employees achieve success and fulfill corporate responsibilities",
advocates the values of "people-oriented, accountable, excelling efforts and
enjoyable flights" and positions the brand as "professional and reliable with
both international quality and Chinese temperament".
The Company has 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 as set out in the Corporate Governance Code
in Appendix C1 to the Listing Rules (the "Code") during the Reporting Period.
The Company has established a Corporate Governance System in accordance with
the requirements of the corporate governance policy stipulated in the Code.
The Company's corporate governance practices are summarised and discussed
below.
BOARD OF DIRECTORS
Governance Structure
As at the end of the Reporting Period, the structure of the Board and each
special committee is set out as follows:
As at the date of this annual report, the seventh session of the Board
comprises nine Directors, out of whom four are independent non-executive
Directors.
MEMBERS OF THE SIXTH SESSION OF THE SUPERVISORY COMMITTEE
Mr. Xiao Jian
Ms. Lyu Yanfang
Ms. Guo Lina
Mr. Wang Mingzhu
Mr. Li Shuxing
As at the end of the Reporting Period, the sixth session of the Board
comprised eight Directors, out of whom three are independent non-executive
Directors. All of the Directors of the sixth session of the Board have
actively participated in the activities of the Company during the Reporting
Period.
The attendance records of all the Directors of the sixth session of the Board
present in person at general meetings, Board meetings and meetings of each
special committee during the Reporting Period are as follows:
Number of meetings attended in person/should be attended
General Meeting Board Audit and Risk Management Committee Nomination Committee Meeting Remuneration and Appraisal Committee Meeting Strategy and Investment Committee Meeting Aviation
Meeting
(the Supervision Committee) Meeting
Safety Committee Meeting
Executive Directors
Ma Chongxian 4/4 8/9 - 3/3 - 7/7 2/3
Wang Mingyuan 4/4 7/9 - - - - 2/3
Non-executive Directors
Feng Gang 2/2 5/5 - - - - -
(Resigned on 15 July 2024)
Cui Xiaofeng 1/1 3/3 - - - - -
(Appointed on 9 August 2024)
Patrick Healy 3/4 7/9 - - - - -
Employee Representative Director
Xiao Peng 2/4 6/9 - - - - -
Independent Non-executive Directors
Li Fushen 2/2 5/7 4/5 3/3 0/1 3/5 1/2
(Resigned on 30 August 2024)
He Yun 4/4 8/9 6/7 3/3 3/3 - -
Xu Junxin 4/4 9/9 - - 3/3 6/7 -
Winnie Tam Wan-chi 2/4 8/9 6/7 - - - -
Note: On 9 August 2024, the Company convened the second extraordinary
general meeting of 2024 at which Mr. Cui Xiaofeng was elected as a
non-executive Director of the Company.
During the Reporting Period, the number of Board meetings held, the convening
procedures, record keeping, meeting protocols and related matters were in full
compliance with the relevant code provisions of the Code. The attendance
records demonstrate that all Directors have diligently discharged their duties
and are committed to making contribution for the interests of the Company and
its shareholders as a whole.
The Responsibilities of the Board
The Board is accountable to the general meeting and exercises the power
according to the Articles of Association and the "Rules and the Procedures of
the Board". Pursuant to the Articles of Association, the main responsibilities
of the Board include: (1) to determine the Company's business policies and
investment plans; (2) to formulate the Company's preliminary and final annual
financial budgets; (3) to formulate the Company's profit distribution
proposals and loss recovery proposals; (4) to determine the establishment of
the Company's internal management bodies; and (5) to appoint or dismiss the
President of the Company and the Secretary to the Board, as well as appraise
them and determine their remuneration; and based on the nomination of the
President, to appoint or dismiss the Vice President, the Chief Financial
Officer, the Chief Pilot, the general counsel and other senior management
personnel of the Company, as well as appraise them and determine their
remuneration.
The Board shall be responsible for performing the following corporate
governance duties: (1) to develop and review the Company's policies and
practices on corporate governance, and provide recommendations in this regard;
(2) to review and monitor the training and continuous professional development
of the Directors and senior management; (3) to review and monitor the
Company's policies and practices on compliance with legal and regulatory
requirements; (4) to develop, review and monitor the code of conduct and
compliance manual applicable to employees and Directors; and (5) to review the
Company's compliance with the Corporate Governance Code and the disclosure in
the Corporate Governance Report. During the Reporting Period, the Board
actively performed the corporate governance duties. Please refer to the
disclosure in this Corporate Governance Report for details of the
implementation in this regard.
The Board has independent access to the senior management personnel for
enquiries in relation to the Company's management. The Board has established
special committees to provide support to the Board in its decision-making
process. For details, please refer to the section headed "Special Committees
of the Board" below.
Procedure of Board Meeting
Board meetings are held regularly throughout the year and the regular meetings
generally include annual meeting, interim meeting and meetings for the first
and third quarters. The Board formulates meeting plans on an annual basis,
which mainly include matters such as the time and venue of the Board meeting
as well as routine proposals such as review of financial reports, such plans
will be informed to all Directors in the beginning of the year.
Board meetings shall be convened by the Chairman and a notice of 14 days shall
be given to all Directors before each meeting. The Directors may attend in
person or through other electronic means of communication. If an extraordinary
Board meeting is proposed to be convened, the Chairman of the Board shall
issue a notice of the extraordinary Board meeting within 10 days from the
receipt of the proposal(s). The relevant documents of the meeting shall be
given to all Directors, Supervisors and other persons attending the meeting at
least three days in advance.
For the purpose of considering resolutions or matters during Board meetings,
the Directors may arrange senior management, the persons-in-charge of the
relevant departments of the Company and experts to attend the meetings as
necessary to interpret, answer queries or provide advisory opinions on the
resolutions involved. The General Counsel shall attend any Board meeting that
involves legal affairs to be considered and provide legal advice.
The Secretary to the Board shall be responsible for the communications and
liaison with all Directors from the time when the notice is served to the
commencement of the meeting, and shall provide in a timely manner the
necessary information to the Directors to facilitate their decision-making on
matters set out in the agenda. All Directors shall have access to the
Secretary to the Board. Under the leadership of the Board and the Chairman,
the Secretary to the Board shall take the initiative to keep himself or
herself abreast of the implementation progress of the Board resolutions, and
report to and advise the Board and the Chairman in a timely manner on major
issues arising in the course of implementation. Minutes of Board meetings
shall be kept by the Secretary to the Board and made available for inspection
by any Director at any time.
Election of Directors
Directors other than employee representative director(s) are elected at the
shareholders' general meeting of the Company, while employee representative
director(s) is/are elected or dismissed by the employee representative meeting
of the Company. Directors are appointed for a term of three years and are
eligible for re-election and re-appointment upon expiry of their terms of
office.
Chairman and President
The Chairman shall be elected and dismissed by a simple majority of the
Directors. The term of office of the Chairman shall be three years, and the
Chairman is eligible for re-election and re-appointment upon expiry of the
term. The Chairman is responsible for leading the Board and ensuring the
Board's efficient operation and that all major and relevant issues are
discussed by the Board in a prompt and constructive manner.
The Company has a President who shall be appointed or dismissed by the Board.
The President is authorized to oversee the Group's business, implement various
strategies and be responsible for the Company's daily operation to attain
overall commercial goals.
During the Reporting Period and as at the date of this annual report, the
Chairman and President of the Company are held by different persons. Details
are set out in the section headed "Changes in Shareholdings and Remuneration
of the Existing and Resigned Directors, Supervisors and Senior Management
during the Reporting Period" of this report.
Mechanism for the Board to Obtain Independent Opinions
The Company understands independent opinions for the Board is critical to good
corporate governance and effective operation. The Board has established a
mechanism to ensure the Board can obtain independent opinions when necessary
so as to enhance the objectivity and effectiveness of decision making.
Moreover, the Board reviews the implementation and effectiveness of the
following mechanisms annually:
1. The composition of the Board shall comply with the
requirements of the Listing Rules that the Board must comprise at least three
independent non-executive Directors and the so appointed independent
non-executive Directors must account for at least one-third of the Board;
2. Independent non-executive Directors must receive
appraisals on independence, qualifications and ability when appointed, and
regular assessments on the aforementioned matters shall be conducted after
appointment. Each independent non-executive Director must promptly notify the
Company regarding any changes in circumstances that may affect their
independence;
3. The Board receives the performance report by independent
non-executive Directors, and evaluates the time spent by independent
non-executive Directors on the affairs of the Company and their independent
opinions expressed during the year;
4. All Directors shall have the right to request further
information from the management on the matters under discussion at the Board
meetings. In order to facilitate their professional development, the Directors
may seek the assistance from the Company Secretary and external independent
professional advice when necessary while the relevant expenses shall be borne
by the Company;
5. Directors (including independent non-executive Directors)
having material interest in any contract, transaction or arrangement shall
abstain from voting and shall not be counted in a quorum for any Board
meetings approving such matters; and
6. Chairman shall hold meetings at least annually with
independent non-executive Directors without the presence of other Directors.
Board Diversity Policy
The Directors have extensive expertise and experience in the fields of
aviation, finance, law and financial management and provide substantial
support for the scientific and effective decision-making of the Board. The
"Board Diversity Policy" was adopted by the Board, which sets out the approach
of the Company towards achieving diversity of the Board.
• The Company takes into consideration a number of
factors, including but not limited to professional experience and
qualifications, cultural and educational background, skills, industry
knowledge and reputation, knowledge of the laws and regulations applicable to
the Company, gender, age, language skills and length of service, with a view
to achieving construction of the diversified and inclusive Board. Members of
the Board shall not be of a single gender. The Nomination Committee shall take
into overall consideration of the abovementioned factors and actual situations
such as business operation, development and strategy of the Company in
reviewing the structure and composition of the Board and making
recommendations to the Board on the appointment, re-appointment and succession
of Directors.
• The above factors should be balanced as appropriate in
determining the optimal composition of the Board. For the appointment of
Directors, the above factors shall be considered on a case-by-case basis in
light of the actual circumstances of the Company and its business operations,
development and strategies. Appointment of the members of the Board should be
made based on merits and the contributions that the individual is expected to
bring to the Board with due regard for the benefits of diversity in the Board.
The Board is structured to include more outside Directors than inside
Directors, and the members of the Board include one full-time deputy secretary
of the Party Committee as Non-executive Director, one shareholder
representative Director, one employee representative Director and four
independent Directors. Among the four independent Directors, at least one
shall possess extensive experience in accounting or relevant financial
management areas or hold the appropriate professional qualifications, and
other Directors shall possess extensive experience in the aviation, legal and
management areas to facilitate scientific decision-making of the Board. At
least one female director shall be appointed to the Board of the Company. On
25 February 2022, the Company appointed Ms. Winnie Tam Wan-chi as an
Independent Non-executive Director of the Company. In terms of Board
succession, the Company will continue to focus on gender diversity in
recruitment to reserve potential Board successors for the future.
• The Nomination Committee shall monitor the
implementation of the Board Diversity Policy on an ongoing basis, and review
this policy as appropriate.
Directors' Training and Continuous Professional Development
The management of the Company provides Directors with appropriate and
sufficient information in a timely manner so as to update them with the latest
developments of the Company and facilitate their discharge of duties.
Newly appointed Directors shall be given introduction in relation to the
Company to ensure that they have a sufficient understanding of the management,
business and governance practices of the Company. The Company also encourages
its Directors to participate in seminars and courses conducted by recognized
institutions so as to ensure that they constantly improve their skills and are
aware of the latest developments or changes in laws and regulations, the
Listing Rules and the Code with which they are required to comply in
discharging their duties.
The Directors confirmed that they have complied with code provision C.1.4 of
the Code in relation to the training of Directors. All Directors have
participated in continuing professional development by attending trainings and
courses or reading relevant materials to broaden their knowledge base and
sharpen their skills, and have provided their training records to the Company.
Training for Directors during the Reporting Period Category (Notes)
Executive Directors a, b
Ma Chongxian (Chairman) a, b
Wang Mingyuan (President) a, b
Non-executive Directors
Feng Gang (Ceased to act on 15 July 2024) b
Cui Xiaofeng (Appointed on 9 August 2024) a, b
Patrick Healy a, b
Employee Representative Director
Xiao Peng a, b
Independent Non-executive Directors
Li Fushen (Resigned on 30 August 2024) b
He Yun a, b
Xu Junxin (Ceased to act on 25 February 2025) a, b
Winnie Tam Wan-chi a, b
Notes:
a. Trainings on the responsibilities of the Directors
provided by the Company's legal advisers and the information about the latest
laws and regulations and regulatory developments in the domestic and foreign
capital markets prepared by the Company on a regular basis, for the Directors
to study by themselves.
b. Special trainings provided by the regulatory authorities.
On 9 August 2024, Mr. Cui Xiaofeng was appointed as a non-executive Director
of the Company and he has obtained the legal advice required under Rule 3.09D
of the Listing Rules on 6 August 2024. He has confirmed that he understands
his obligations as a director of a listed issuer under the Listing Rules.
Biographical Details and Other Information of Directors
The list of Directors and their respective roles on the Board and special
committees under the Board are set out in this annual report and published on
the websites of the Company and Hong Kong Stock Exchange. For biographical
details of the Directors, please refer to the section headed "Profile of
Directors, Supervisors and Senior Management" of this annual report.
On 5 September 2005, the Company formulated and adopted the Model Code for
Securities Transactions, which was subsequently amended on 19 March 2007 and 4
December 2009, respectively, on terms no less exacting than the required
standards of the Model Code. The Model Code for Securities Transactions of the
Company also applies to the Supervisors and the relevant employees. After
making specific enquiries, the Company confirmed that each Director and each
Supervisor have complied with the required standards of the Model Code set out
in Appendix C3 to the Listing Rules and the Company's code of conduct
throughout the Reporting Period.
The three independent non-executive Directors of the sixth session of the
Board of the Company as at the end of the Reporting Period, namely, Mr. He
Yun, Mr. Xu Junxin and Ms. Winnie Tam Wan-chi, have confirmed their
independence with the Hong Kong Stock Exchange when they were elected. The
Company had already received from those independent non-executive Directors
the annual statements concerning their independence in which their
independence were re-confirmed. The Company considers all independent
non-executive Directors as independent within the meaning of Rule 3.13 of the
Listing Rules. The four independent non-executive Directors of the seventh
session of the Board of the Company, namely, Mr. Xu Niansha, Mr. He Yun, Ms.
Winnie Tam Wan-chi and Mr. Gao Chunlei, have confirmed their independence when
they were elected, and the Company considers these independent non-executive
Directors to be independent.
Besides the working relationships in the Company, there are no financial,
business, family relationship or other material relationships among the
Directors, Supervisors and senior management.
The Company has purchased liability insurance for the Directors, Supervisors
and senior management.
SPECIAL COMMITTEES OF THE BOARD
Audit and Risk Management Committee (the Supervision Committee)
As at the end of the Reporting Period, the Audit and Risk Management Committee
(the Supervision Committee) of the sixth session of the Board comprised Mr. He
Yun and Ms. Winnie Tam Wan-chi, all being independent non-executive Directors.
As at the date of this annual report, the Audit and Risk Management Committee
(the Supervision Committee) of the seventh session of the Board comprised Mr.
Gao Chunlei, Mr. Xu Niansha, Mr. He Yun and Ms. Winnie Tam Wan-chi, all being
independent non-executive Directors, with Mr. Gao Chunlei serving as the
chairman of the committee.
The primary duties of the Audit and Risk Management Committee (the Supervision
Committee) include: (1) to make recommendations to the Board on the
appointment, re-appointment and removal of the external auditor, approve the
remuneration and terms of engagement of the external auditor pursuant to the
relevant authorizations and deal with any issues of its resignation or
dismissal; (2) to supervise and assess the internal audit work of the Company;
(3) to monitor the Company's financial information and disclosures, review the
truthfulness, accuracy and integrity of the Company's financial statements,
annual reports and accounts, interim reports, quarterly reports, and the key
opinions relating to financial reporting in any of the above; (4) to discuss
the establishment of the Company's risk management system and internal control
system with the management of the Company to ensure that the management has
performed its duty to establish an effective control system; (5) to consider
major investigation findings on risk management and internal control matters
and the management's responses to the above, as delegated by the Board or on
its own initiative; supervise the rectifying actions to address the
deficiencies in the Company's internal control; (6) to review the audit notes
submitted to the management by the certified public accountant for the annual
audit, any material enquiries raised by the auditor to the management
regarding accounting records, financial accounts and control systems, and the
management's responses to such enquiries; (7) to review the financial and
accounting policies and practices adopted by the Company and its subsidiaries;
(8) to supervise the Company's connected transactions control and the daily
management of such transactions; (9) to listen to the Company's reports on any
fraudulent conducts and the whistleblower reports of such conducts; and (10)
to address other matters authorized by the Board and other matters as required
by the laws and regulations as well as the relevant regulations of the stock
exchanges on which the shares of the Company are listed.
The main work of the Audit and Risk Management Committee (the Supervision
Committee) during the Reporting Period includes:
Date of the meeting Subject of the meeting Other performance of duties
26 January 2024 The sixteenth meeting of the Audit and Risk Management Committee (the The committee received the announcement of profit warning for 2023
Supervision Committee) of the sixth session of the Board was held to consider
the proposals relating to the 2024 investment plan and 2024 financial plan.
28 March 2024 The seventeenth meeting of the Audit and Risk Management Committee (the The committee received the report of Deloitte, the auditor, on the audit of
Supervision Committee) of the sixth session of the Board was held to consider the 2023 financial report, the internal control audit and the provision of
the 2023 annual report, the 2023 profit distribution plan, the accumulated non-assurance services.
losses of the Company exceeding one-third of the total amount of its paid-up
share capital, the special report on the deposit and actual use of proceeds
from A share issuance in 2023, the report of the Audit and Risk Management
Committee (the Supervision Committee) on the performance of supervision duties The committee received the report of the audit department on the standardized
of the auditor for 2023, the re-appointment of international and domestic operation of the Company in the second half of 2023.
auditors and internal control auditors for 2024, the provision of
non-assurance services by Deloitte, the auditor, the 2023 assessment report on
internal control and the audit report on internal control, the 2023 internal
audit work report and 2024 internal audit work plan, the 2023 continuous risk
assessment report of China National Aviation Finance Co., Ltd. and the 2023
performance report by the Audit and Risk Management Committee (the Supervision
Committee).
26 April 2024 The eighteenth meeting of the Audit and Risk Management Committee (the The committee received the report of the audit department on work in relation
Supervision Committee) of the sixth session of the Board was held to consider to the accountability of non-compliance operations and investments in 2023.
the first quarterly report of 2024.
9 August 2024 The nineteenth meeting of the Audit and Risk Management Committee (the -
Supervision Committee) of the sixth session of the Board was held to consider
the proposals relating to the selection and engagement of international and
domestic auditors and internal control auditors for 2025-2026.
29 August 2024 The twentieth meeting of the Audit and Risk Management Committee (the The committee received the report of Deloitte, the auditor, on the report on
Supervision Committee) of the sixth session of the Board was held to consider the completion of interim review for 2024 and the internal control audit plan
the 2024 interim report, the special report on the deposit and actual use of for 2024.
proceeds in the first half of 2024, the selection and engagement documents and
assessment criteria for the appointment of international and domestic auditors
and internal control auditors for 2025-2026, and the continuing risk
assessment report of China National Aviation Finance Co., Ltd. for the first The committee received the report of the legal department on comprehensive
half of 2024. risk and internal control, as well as the report on compliance management.
The committee received the report of the audit department on the work plan for
the 2024 internal control assessment, the report on internal audit for the
first half of 2024 and the report on standardized operation for the first half
of 2024.
The committee reviewed the list of related parties of A shares of the Company.
26 October 2024 The twenty-first meeting of the Audit and Risk Management Committee (the -
Supervision Committee) of the sixth session of the Board was held to consider
the third quarterly report of 2024, the continuing connected (related-party)
transactions between the Company and China National Aviation Holding
Corporation Limited and its subsidiaries, and the continuing connected
(related-party) transactions between the Company and Air China Cargo Co., Ltd.
5 December 2024 The twenty-second meeting of the Audit and Risk Management Committee (the The committee received the report of Deloitte, the auditor, on the audit plan
Supervision Committee) of the sixth session of the Board was held to receive for the 2024 financial report.
the report on the inspection and rectification of the Company and the report
on the rectification of internal control for 2024.
The annual results and the annual report of the Company for the year of 2024
had been reviewed by the Audit and Risk Management Committee (the Supervision
Committee).
On 30 August 2024, Mr. Li Fushen resigned as an independent non-executive
Director of the Company, the chairman and a member of the Audit and Risk
Management Committee (the Supervision Committee) of the Board, a member of the
Nomination Committee of the Board, a member of the Remuneration and Appraisal
Committee of the Board, a member of the Strategy and Investment Committee of
the Board and a member of the Aviation Safety Committee of the Board. In
subsequent months, the Company has been actively considering and processing
the adjustment of the composition of the Audit and Risk Management Committee
(the Supervision Committee) and the Nomination Committee, including but not
limited to exploring the candidate who will fill the vacancy resulted from Mr.
Li Fushen's resignation. As such, the Company has applied to the Hong Kong
Stock Exchange and the Hong Kong Stock Exchange has agreed to grant a waiver
from strict compliance with Rules 3.21 and 3.27A of the Hong Kong Listing
Rules, and extend the deadline for filling the vacancy from 30 November 2024
to 28
February 2025. Immediately following the election of Directors of the seventh
session of the Board and the change of the Board committee members on 25
February 2025, the Company has fully complied with the requirements as set out
in Rules 3.21 and 3.27A of the Hong Kong Listing Rules. Please refer to the
announcements of the Company dated 30 August 2024, 27 December 2024 and 25
February 2025 for details.
Nomination Committee
As at the end of the Reporting Period, the Nomination Committee of the sixth
session of the Board comprised Mr. Ma Chongxian, an executive Director, and
Mr. He Yun, an independent non-executive Director, with Mr. Ma Chongxian
serving as the chairman of the committee.
As at the date of this annual report, the Nomination Committee of the seventh
session of the Board comprised Mr. Ma Chongxian, an executive Director, and
Mr. He Yun, Ms. Winnie Tam Wan-chi and Mr. Gao Chunlei, all of whom are
independent non-executive Directors, with Mr. Ma Chongxian serving as the
chairman of the committee.
The primary duties of the Nomination Committee include: (1) to review the
structure, size and composition (including the skills, knowledge and
experience) of the Board at least annually and make recommendations on any
proposed changes to the Board to complement the Company's strategy; (2) to
study and propose to the Board the criteria and procedures for selecting
candidates for Directors and senior management of the Company; (3) to make
recommendations to the Board on the appointment or re-appointment of
Directors, succession planning for Directors (in particular the Chairman or
the President) and appointment of senior management; (4) to select qualified
candidates for Directors and senior management in accordance with relevant
requirements of Board diversity as well as review and make recommendations to
the Board on candidates for Director and senior management; (5) to assess the
independence of the independent non-executive Directors of the Company; and
(6) to address other matters authorized by the Board.
The main work of the Nomination Committee during the Reporting Period
includes:
Date of the meeting Subject of the meeting Other performance of duties
5 March 2024 The first meeting of the Nomination Committee of the sixth session of the -
Board was held to propose Mr. Yan Fei as the Vice President of the Company.
28 March 2024 The second meeting of the Nomination Committee of the sixth session of the -
Board was held to propose Mr. Xiao Feng as the Secretary to the Board and
Joint Company Secretary.
15 July 2024 The third meeting of the Nomination Committee of the sixth session of the -
Board was held to propose Mr. Cui Xiaofeng as a candidate for Director.
During the Reporting Period, the nomination policy for Directors implemented
by the Company was as follows: the Nomination Committee shall review the
qualification of candidates for directorship and senior management according
to the standards as set out in the Articles of Association and the Board
Diversity Policy and report the same to the Board. For the diversity policy,
please refer to the section headed "Board Diversity Policy" above. A
shareholder holding 3% or more of the shares of the Company is entitled to
nominate Directors to the Nomination Committee.
The Remuneration and Appraisal Committee
As at the end of the Reporting Period, the Remuneration and Appraisal
Committee of the sixth session of the Board comprised Mr. He Yun and Mr. Xu
Junxin, all of whom are independent non-executive Directors, with Mr. He Yun
serving as the chairman of the committee.
As at the date of this annual report, the Remuneration and Appraisal Committee
of the seventh session of the Board comprised Mr. Xu Niansha, Mr. He Yun and
Mr. Gao Chunlei, all of whom are independent non-executive Directors, with Mr.
Xu Niansha serving as the chairman of the committee.
The primary duties of the Remuneration and Appraisal Committee include: (1) to
make recommendations to the Board on the Company's remuneration policy and
structure for all Directors and senior management and on the establishment of
a formal and transparent procedure for developing the remuneration policy of
the Company, and supervise the implementation of the remuneration policy of
the Company; (2) to review and approve the proposals for the remuneration of
the Company's management with reference to the corporate goals and objectives
formulated by the Board; (3) to make recommendations to the Board on the
remuneration packages of the Directors and senior management of the Company
having regards to salaries paid by companies in the same industry, time
commitment and responsibilities, as well as employment conditions of other
positions in the Company and its subsidiaries; (4) to review and approve
compensation payable to executive Directors and senior management of the
Company for loss or termination of their office or appointment; (5) to review
and approve compensation arrangements relating to dismissal or removal of
Directors for misconduct; (6) to review the performance of duties of the
Directors and senior management, organize and carry out the business
performance appraisal of the members of the management, and make
recommendations to the Board in respect of the appraisal results and
remuneration payment proposals; (7) to review matters relating to share
schemes based on domestic and overseas regulatory requirements, including but
not limited to reviewing the Company's share incentive scheme proposal,
verifying the conditions of granting and exercising during the implementation
of the Company's share incentive scheme, and reporting to the Board for its
consideration; and (8) to address other matters authorised by the Board.
The main work of the Remuneration and Appraisal Committee during the Reporting
Period includes:
Date of the meeting Subject of the meeting Other performance of duties
30 May 2024 The second meeting of the Remuneration and Appraisal Committee of the sixth -
session of Board was held to consider the 2023 annual gross salary settlement
plan, the 2024 annual gross salary budget plan, and the 2024 annual appraisal
on the operational performance by the management of the Company.
30 October 2024 The third meeting of the Remuneration and Appraisal Committee of the sixth -
session of Board was held to receive the 2023-2024 remuneration and benefit
work report.
5 December 2024 The fourth meeting of the Remuneration and Appraisal Committee of the sixth -
session of Board was held to consider the 2023 annual appraisal results
regarding the operational performance and the remuneration payment plan of the
management.
During the Reporting Period, the remuneration policy for Directors implemented
by the Company is as follows: except for independent non-executive Directors,
other Directors will not receive director's remuneration. The remuneration
standards of the independent non-executive Directors shall be determined
according to the relevant national policies, and the remuneration of the
senior management shall be determined in accordance with the relevant laws and
regulations of the PRC and the provisions of the "Interim Measures for
Remuneration Administration of Responsible Persons of Enterprise" of the
Company. The Remuneration and Appraisal Committee made recommendations to the
Board on the remuneration packages of independent non-executive Directors and
senior management based on the above-mentioned standards. The remuneration of
the Directors and Supervisors of the Company shall be determined by the
general meeting, and that of the senior management shall be determined by the
Board after being considered by the Remuneration and Appraisal Committee.
Changes in Shareholdings and Remuneration of the Existing and Resigned
Directors, Supervisors and Senior Management during the Reporting Period
Name Position Gender Age Starting date of Expiry date of Total remuneration payables received Whether received remuneration from the Company's related parties or not
term of office
term of office
from the Company during the Reporting Period (RMB0'000)
Ma Chongxian Secretary of the Party Committee Male 59 27 September 2022 - - Yes
Chairman 27 September 2022 - -
Executive Director 20 July 2021 - -
Wang Mingyuan Deputy Secretary of the Party Committee Male 59 13 February 2023 - - Yes
President 13 March 2023 - -
Director, Vice Chairman 30 March 2023 - -
Cui Xiaofeng Deputy Secretary of the Party Committee Male 55 24 June 2024 - - Yes
Non-executive Director 9 August 2024 - -
Feng Gang Deputy Secretary of the Party Committee Male 61 19 November 2019 24 June 2024 - Yes
Non-executive Director 26 May 2020 15 July 2024 -
Patrick Healy Non-executive Director Male 59 19 December 2019 - - Yes
Xiao Peng Chairman of the Labour Union Male 59 15 November 2022 - 97.07 No
Chief Engineer 28 November 2022 - -
Employee Representative Director 2 March 2023 - -
Xu Niansha Independent Non-executive Director Male 67 25 February 2025 - - No
He Yun Independent Non-executive Director Male 63 25 February 2022 - - No
Winnie Tam Wan-chi Independent Non-executive Director Female 63 25 February 2022 - 10.75 No
Gao Chunlei Independent Non-executive Director Male 58 25 February 2025 - - No
Li Fushen Independent Non-executive Director Male 62 25 February 2022 30 August 2024 - No
Xu Junxin Independent Non-executive Director Male 60 25 February 2022 25 February 2025 - No
Xiao Jian Supervisor Male 61 10 February 2023 - - Yes
Chairman of the Supervisory Committee 10 March 2023 - -
Lyu Yanfang Supervisor Female 53 18 December 2020 - 98.82 No
Guo Lina Supervisor Female 54 25 February 2022 - 122.38 No
Wang Mingzhu Employee Representative Supervisor Male 57 2 March 2023 - 116.88 No
Li Shuxing Employee Representative Supervisor Male 57 2 March 2023 - 126.82 No
Tan Huanmin Secretary of Committee for Discipline Inspection Male 60 19 January 2019 - - Yes
Zhang Sheng Vice President Male 52 9 June 2020 - - Yes
Sun Yuquan Standing Committee Member of the Party Committee Male 51 7 April 2022 - - Yes
Chief Accountant 13 March 2023 - -
Ni Jiliang Vice President Male 58 12 May 2022 - - Yes
Zheng Weimin Vice President Male 59 23 August 2023 - - Yes
Yan Fei Vice President Male 56 5 March 2024 - - Yes
Chen Zhiyong Vice President Male 61 17 December 2012 5 March 2024 - Yes
Zhang Hua General Counsel Male 59 9 August 2017 - 101.14 No
Xiao Feng Chief Economist Male 56 13 March 2023 - 115.16 No
Secretary to the Board 28 March 2024 - -
Yan Simeng Chief Information Officer Male 42 7 September 2021 - 196.01 No
Shen Jianming Chief Safety Officer Male 57 19 October 2022 - 192.48 No
Li Yunchuan Chief Pilot Male 57 26 October 2023 - 184.22 No
Huang Bin Secretary to the Board Male 61 30 September 2021 28 March 2024 - No
Assistant to the President 10 December 2021 28 March 2024 -
Total / / / / / 1,361.73 /
Notes: 1. The remuneration of Mr. Xu Niansha, Mr. He Yun,
Ms. Winnie Tam Wan-chi, Mr. Gao Chunlei, Mr. Li Fushen and Mr. Xu Junxin,
being independent Directors, will be determined pursuant to relevant national
policies.
2. Directors, Supervisors and senior
managements' total remuneration payables received from the Company during the
Reporting Period include pre-tax remuneration and the portion of benefits and
security, including social insurance, housing fund and enterprise annuity,
contributed by the enterprise. For personnel with status changes during the
year, total compensation is calculated based on actual service period.
Details of the remuneration for the Directors during the Reporting Period are
set out in note 13 to the financial statements of this annual report.
Strategy and Investment Committee
As at the end of the Reporting Period, the Strategy and Investment Committee
of the sixth session of the Board comprised Mr. Ma Chongxian, an executive
Director, and Mr. Xu Junxin, an independent non-executive Director, with Mr.
Ma Chongxian serving as the chairman of the committee.
As at the date of this annual report, the Strategy and Investment Committee of
the seventh session of the Board comprised Mr. Ma Chongxian, an executive
Director, and Mr. Xu Niansha and Mr. He Yun, all of which are independent
non-executive Directors, with Mr. Ma Chongxian serving as the chairman of the
committee.
The primary duties of the Strategy and Investment Committee include: (1) to
study and make recommendations on the Company's strategic plan for long-term
development, annual investment plan, significant investment and financing
proposals that require the approval of the Board, important production and
operation decisions and projects that require the approval of the Board and
other significant matters that may affect the Company's development; (2) to
consider the establishment, merger and dissolution of branches of the Company;
(3) to formulate the environmental, social and governance structure,
objectives, management approaches and strategies of the Company; (4) to
consider the environmental, social and governance-related works and reports;
and (5) to address other matters authorised by the Board.
The main work of the Strategy and Investment Committee during the Reporting
Period includes:
Date of the meeting Subject of the meeting Other performance of duties
12 January 2024 The twelfth meeting of the Strategy and Investment Committee of the sixth The committee received the special reports on enhancing quality and efficiency
session of Board was held to receive the special reports on accelerating the and maximizing operational performance, promoting in-depth reforms and
development into a world-class enterprise and high-quality Party building. organizational
effectiveness, and digital transformation, and
held discussions with the senior management.
26 January 2024 The thirteenth meeting of the Strategy and Investment Committee of the sixth The committee received the reports on the completion of the 2023 investment
session of Board was held to consider the 2024 investment plan. plan and the evaluation of major investment projects.
28 March 2024 The fourteenth meeting of the Strategy and Investment Committee of the sixth -
session of Board was held to consider the 2023 Corporate Social Responsibility
(ESG) Report.
26 April 2024 The fifteenth meeting of the Strategy and Investment Committee of the sixth -
session of Board was held to consider the proposal relating to the
introduction of 100 C919 aircraft.
30 May 2024 The sixteenth meeting of the Strategy and Investment Committee of the sixth -
session of Board was held to consider the proposals relating to the
establishment of the Digital Transformation Office and the transfer of 1
B737-800 aircraft to Air China Inner Mongolia.
30 October 2024 The seventeenth meeting of the Strategy and Investment -
Committee of the sixth session of Board was held to consider the proposals
relating to the establishment of the Customer Service Centre, the setting up
of the Brand and Quality Management Department, and the restructuring of the
Office of the Comprehensive In-depth Reform Leading Group/Policy Research
Office.
22 December 2024 The eighteenth meeting of the Strategy and Investment Committee of the sixth The committee received the special reports on enhancing quality and efficiency
session of Board was held to receive the special reports on accelerating the and production safety, maximizing operational performance, strengthening
development into a world-class enterprise and high-quality Party building. service quality and technology innovation, and held discussions
with the senior management.
Aviation Safety Committee
As at the end of the Reporting Period, the Aviation Safety Committee of the
sixth session of the Board comprised Mr. Wang Mingyuan, an executive Director,
and Mr. Ma Chongxian, an executive Director, with Mr. Wang Mingyuan serving as
the chairman of the committee.
As at the date of this annual report, the Aviation Safety Committee of the
seventh session of the Board comprised Mr. Wang Mingyuan, an executive
Director, Mr. Xu Niansha, an independent non-executive Director, and Mr. Ma
Chongxian, an executive Director, with Mr. Wang Mingyuan serving as the
chairman of the committee.
The primary duties of the Aviation Safety Committee include: (1) to adhere to
the principle of "putting safety first", and supervise and guide the
production activities of the Company and the allocation of various kinds of
resources such as human resources, properties and materials to fulfil the
needs of safety operation of the Company; (2) to receive the safety analysis
report of the Company on a regular basis and report to the Board; (3) to study
and deal with significant problems in relation to aviation safety work of the
Company; and (4) to address other matters authorised by the Board.
The main work of the Aviation Safety Committee during the Reporting Period
includes:
Date of the meeting Subject of the meeting Other performance of duties
12 January 2024 The sixth meeting of the Aviation Safety Committee of the sixth session of -
Board was held to receive the aviation safety work report.
8 October 2024 The seventh meeting of the Aviation Safety Committee of the sixth session of -
Board was held to receive the report on aviation safety work in 2024.
22 December 2024 The eighth meeting of the Aviation Safety Committee of the sixth session of -
Board was held to receive the report on the current aviation safety landscape
and the 2025 work plan.
MANAGEMENT
Duties of the Management
The management of the Company shall be accountable to the Board and its main
responsibilities include: (1) to manage the operation of the Company and to
implement the resolutions of the Board; (2) to implement annual business plans
and investment proposals; (3) to make decision on transactions relating to the
Company's main business involving a value within a monetary threshold or
within a specific proportion of the Company's latest audited net asset value,
subject to applicable laws and the Articles of Association; (4) to sign
contracts and agreements on behalf of the Company in accordance with the
authorization granted by the Board or the legal representative; (5) to draft
plans for the establishment of the Company's internal management structure;
(6) to draft the Company's basic management system; (7) to formulate basic
rules and regulations for the Company; (8) to propose the appointment or
dismissal of the vice president, chief accountant, chief pilot and general
legal counsel of the Company; and (9) to appoint or dismiss responsible
management personnel other than those required to be appointed or dismissed by
the Board, etc.
The Company established the "Rules and Procedures for President's Office" to
regulate the daily operation of the President's Office.
FINANCIAL REPORTING
The Company prepares and publishes annual reports, interim reports and
quarterly reports in accordance with the requirements of the regulatory rules
of the listing places of the Company and other relevant laws and regulations
in a timely manner each year, and the information disclosed is adequate for
the shareholders to evaluate the performance, financial position and prospects
of the Company.
Key operating data of the Company are published monthly in order to improve
the transparency of the Company's performance and to provide the latest
developments of the Company in a timely manner.
The Company has a sound environment for implementing internal controls. The
Company has set up an effective electronic information system to support
business development which comprises various operation systems, settlement
system and a core accounting and audit platform, i.e. the Oracle financial
information system. For treasury management, the Company has implemented a
global online banking management system. An effective accounting information
system was also established.
The responsibilities of the Directors in relation to the financial statements
are set out below and shall be read together with the "Independent Auditor's
Report" set out in this annual report. The statement of reporting
responsibility of the auditors is included in the section headed "Independent
Auditor's Report" set out in this annual report.
• Annual reports and accounts
The Directors acknowledge that they are responsible for preparing the
financial statements for each financial year so as to present a true and fair
view of the financial position of the Company and the Group, and of the
financial performance and cash flow of the Group.
• Accounting policies
When preparing the financial statements of the Company and the Group, the
Directors have consistently applied appropriate accounting policies under the
relevant accounting standards.
• Accounting records
The Directors are responsible for ensuring that the Company shall keep the
accounting records, which will reflect the financial position of the Company
with reasonable accuracy, enabling the Group to prepare the financial
statements in accordance with the requirements of the Listing Rules, Hong Kong
Companies Ordinance and the relevant accounting standards.
• Ongoing operation
After making appropriate enquiries, the Directors believe that the Group has
sufficient resources for operation in the foreseeable future. Accordingly, the
Group's financial statements are prepared on a going concern basis.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board bears the ultimate responsibility for the Group's risk management
and internal control system and for reviewing the effectiveness of the system.
The risk management and internal control system is designed to manage rather
than eliminate the risk of failing to achieve business objectives and to make
reasonable, but not absolute, assurances that there will be no material
misstatement or loss. The Board monitors the risk level with the assistance of
the Audit and Risk Management Committee (the Supervision Committee) and the
management of the Company.
The Company conducts a review of the soundness and effectiveness of the risk
management and internal control system at least once annually. The Board will
publish the self-assessment annual report on the internal control after it is
reviewed by the Audit and Risk Management Committee (the Supervision
Committee) and reported to the Board.
The Board reviewed the Group's risk management and internal control system for
the Reporting Period through the Audit and Risk Management Committee (the
Supervision Committee) and considered that the system was adequate and
effective. The review of the Audit and Risk Management Committee (the
Supervision Committee) covered material control aspects, including financial
controls, operational controls and compliance controls. The Audit and Risk
Management Committee (the Supervision Committee) also reviewed the Group's
resources, qualifications and experience of the responsible staff, training
courses and related budget in respect of the accounting, internal audit,
financial reporting functions, environmental, social and governance
performance and reporting and expressed satisfaction with the adequacy of such
measures. The Board also confirmed that the Company has established effective
systems and procedures to ensure the control and management of the strategic
risks, financial risks, operational risks, legal risks, contingent risks,
etc..
The basic procedures of the Group's risk management include: (1) collection of
risk information; (2) identification and assessment of risks; (3) formulation
and implementation of risk reduction measures; and (4) monitoring of risk
management.
The Company has established a clear organizational structure to allocate
responsibilities for formulation, implementation and monitoring as required.
An information reporting mechanism has been formed for risk management, which
covers the Company's main business units to ensure that significant risks are
effectively monitored and coped with within the Group.
The Group ranks the risks based on priority so as to pay special attention to
critical risks. It sets risk indicators for critical risks, and monitors and
judges the key indicators on a regular basis so that the risks are always
under control. All the business units are required to compile a summary of the
risks and report to the Risk Management Working Group Office on a regular
basis. The Risk Management Working Group Office has set up a monthly reporting
procedure to regularly report the risk status and risk tracking to the
management and regulatory authorities.
According to the risk assessment in 2024, the main risks that the Group is
facing are set out in the section headed "Management's Discussion and Analysis
of Financial Position and Operating Results - Risk Factors" of this annual
report.
The audit department and legal department of the Company assist the Audit and
Risk Management Committee (the Supervision Committee) to analyse and evaluate
the adequacy and effectiveness of the Group's internal control and risk
management system, and to supervise and evaluate the risk management and
internal control of the Group. The audit department and legal department
regularly reports the annual, interim work reports and annual audit plans to
the Audit and Risk Management Committee (the Supervision Committee) for review
of risk management and internal control system. The Audit and Risk Management
Committee (the Supervision Committee) reviews the reporting compliance,
reviews and monitors the effectiveness of the internal audit, internal control
development and risk compliance, keeps tracks of the corrective actions for
the problems spotted and guides business units to operate efficiently.
The Company has implemented a registration and record-keeping system for the
insiders and established records on such insiders, who are obligated to
maintain confidentiality for the inside information they are aware of. The
Board should ensure the truthfulness, accuracy and completeness of the records
of the insiders. The Company will conduct regular and occasional inquiries on
the trading of shares and derivatives of the Company by the insiders. If
insiders are found to have involved in insider dealing or have breached the
laws and regulations due to dereliction of duty, the Company will ensure that
the relevant personnel are held accountable in accordance with relevant laws
and regulations and the Company's policies. The Company is also aware of its
obligations under the SFO and the Listing Rules for the handling and
disclosure of inside information, and unless the information falls within the
"Safe Harbor", the Company will disclose such inside information to the public
as soon as practicable.
COMPANY SECRETARY
From 1 January 2024 to 27 March 2024, the joint company secretaries of the
Company were Mr. Huang Bin and Mr. Huen Ho Yin. From 28 March 2024 to 31
December 2024, the joint company secretaries of the Company were changed to
Mr. Xiao Feng and Mr. Huen Ho Yin due to the retirement of Mr. Huang Bin.
Please refer to the announcement of the Company dated 28 March 2024 for
details.
The joint company secretaries are responsible for facilitating the procedures
of the Board, as well as facilitating the communications among Board members,
and communications with shareholders and with the management. Mr. Xiao Feng is
the main contact person of Mr. Huen Ho Yin at the Company. The biographies of
the joint company secretaries are set out in the section headed "Profile of
Directors, Supervisors and Senior Management" of this annual report. During
the Reporting Period, the joint company secretaries respectively attended a
total of more than 15 hours of professional training to update their skills
and knowledge.
AUDITORS AND THEIR REMUNERATION
In 2024, the international and domestic auditors of the Company are Deloitte
Touche Tohmatsu and Deloitte Touche Tohmatsu Certified Public Accountants LLP
respectively. Breakdown of the remuneration to the Company's external auditors
for providing audit and non-audit services for the Reporting Period is as
follows:
RMB10.242 million (including value-added tax) was charged in aggregate for the
review of the Group's condensed consolidated financial statements for the six
months ended 30 June 2024 and for the audit of the Group's consolidated
financial statements for the year ended 31 December 2024; an aggregate amount
of RMB7.375 million (including value-added tax) was charged for the audit of
the financial statements of certain subsidiaries of the Group for the year
ended 31 December 2024 and RMB3.23 million (including value-added tax) was
charged for other audit services; an aggregate of RMB1 million (including
value-added tax) was charged for providing internal control audit services to
the Group; and an aggregate of RMB1.54 million (including value-added tax) was
charged for the rendering of other non-audit services, such as tax advisory
services, to the Group.
AMENDMENTS TO THE ARTICLES OF ASSOCIATION
The Company made amendments to the Articles of Association twice during the
Reporting Period:
1. On 7 February 2024, as the total share capital in issue
and the registered capital of the Company changed to 16,593,720,146 shares and
RMB16,593,720,146 respectively following the completion of the issuance of
392,927,308 H Shares to CNACG, the Company made amendments to relevant
articles in the Articles of Association. Please refer to the announcement of
the Company dated 7 February 2024 for details.
2. On 12 December 2024, as the total share capital in issue
and the registered capital of the Company changed to 17,448,421,000 shares and
RMB17,448,421,000 respectively following the completion of the issuance of
854,700,854 A Shares to CNAHC, the Company made amendments to relevant
articles in the Articles of Association. Please refer to the announcement of
the Company dated 12 December 2024 for details.
SHAREHOLDER'S COMMUNICATION POLICY
The Company attaches great importance to the communication with shareholders
and has formulated "Measures for Investor Relation Management" to regulate and
strengthen its communication with shareholders and investors. During the
Reporting Period, the Company continued to establish various communication
channels with its shareholders through the publication of annual reports,
interim reports and quarterly reports, press releases and announcements on the
websites of the Company and the stock exchanges, results presentations,
roadshows, briefings on dividend distribution, etc., thus maintaining active,
effective and transparent communication with shareholders.
Moreover, the annual general meeting represents an effective means for the
shareholders to exchange their views with the Board. The Chairman of the
Board, as well as the respective chairmen of the Audit and Risk Management
Committee (the Supervision Committee), Remuneration and Appraisal Committee,
Nomination Committee, Strategy and Investment Committee and Aviation Safety
Committee will answer queries raised by shareholders at the general meeting.
Resolutions in respect of independent matters shall be tabled as separate
resolutions at the annual general meeting.
Other than the annual general meeting, the Company would also hold
extraordinary general meeting as required. In accordance with articles 57 and
58 of the Articles of Association, shareholder(s), individually or in
aggregate, holding more than 10% of the shares of the Company may request the
Board to convene an extraordinary general meeting by making one or more
written request(s) in the same form to the Board with a clearly stated topics
for discussion. The Board shall respond to such written request(s) within ten
days of receipt of such written request(s). If the Board agrees to convene an
extraordinary general meeting, it shall within five days of the Board
resolution resolving to hold an extraordinary general meeting issue a notice
convening an extraordinary general meeting and the extraordinary general
meeting should be held within two months of such request(s) from the
shareholder(s). If the Board does not accept the request(s) from
shareholder(s) for a meeting or fails to respond within ten days of the
receipt of such written request(s), such shareholder(s) shall request the
Supervisory Committee to convene an extraordinary general meeting by written
request(s). If the Supervisory Committee fails to issue a notice convening a
meeting within five days of the receipt of such written request(s),
shareholder(s), individually or in aggregate, holding more than 10% of the
shares of the Company for a consecutive 90 days or more may convene and hold a
meeting by themselves.
For including a resolution relating to other matters in a general meeting,
shareholders are requested to follow the requirements and procedures as set
out in article 59 of the Articles of Association which provides that
shareholder(s), individually or in aggregate, holding more than 3% of the
shares of the Company may put forward proposal(s) by providing a written
request to the convener of the meeting not less than ten days before the
meeting. The convener of the meeting shall, within two days of the receipt of
such written request, give supplemental meeting notice to shareholders which
specifies information on such proposal(s).
During the Reporting Period, the Company convened 1 annual general meeting and
3 extraordinary general meetings. During the Reporting Period, the Company
held 1 results presentation and 3 results briefings to interact with investors
in regard to their concerns. The Company has conducted a review on the
implementation and effectiveness of the aforesaid shareholder's communication
policies during the Reporting Period, and is satisfied with the review result.
The Board values the views and input of shareholders. Shareholders may send
their enquiries and concerns to the Board at any time by addressing them to
the Company Secretary, whose contact details are as follows:
Address: Air China Headquarter, 30 Tian Zhu Road, Shunyi District, Beijing,
101312
Email: ir@airchina.com
Telephone number: 86-10-61462560
Report of the Directors
STRATEGIC OBJECTIVES
The Group will, on the basis of enhancing safety management, continue to
advance the implementation of its strategies; improve global network coverage
to increase the commercial value of hub network; optimise the allocation of
its core resources to improve the efficiency of resource utilisation;
reasonably deploy transport capacity to grasp opportunities in the market;
take multiple measures to strengthen marketing competitiveness; enhance
service management, promote product innovation to improve customer experience
with an aim to ensure sound operation and bring better returns to its
shareholders and investors.
GROUP ACTIVITIES AND RESULTS
The Group is a provider of air passenger, air cargo and airline-related
services. The results of the Group for the year ended 31 December 2024 and the
financial position of the Group and the Company as at the same date are set
out in the audited financial statements of this annual report.
REVIEW OF BUSINESS
A fair review of the Group's business and the analysis using the financial key
performance indicators, the description of the principal risks and
uncertainties facing the Group, future prospects of the Group's business,
environment policy and performance of the Group, compliance of laws and
regulations that have a material impact on the Group and the important
relations statement with employees, customers and suppliers of the Group are
set out in this Report of the Directors, the section headed "Business
Overview" and the section headed "Management's Discussion and Analysis of
Financial Position and Operating Results" of this annual report, as well as
the 2024 Sustainability and ESG Report published by the Group.
FIVE-YEAR FINANCIAL HIGHLIGHTS
The Group's results and balance sheet prepared in accordance with IFRS
Accounting Standards for the five years ended 31 December 2024 are summarized
and set out in the section headed "Summary of Financial Information" of this
annual report.
SHARE CAPITAL STRUCTURE
As at the end of the Reporting Period, the Company had a total share capital
of RMB17,448,421,000, divided into 17,448,421,000 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:
Type of shares Number of shares Percentage of the
total share capital
A Shares 12,492,810,328 71.60%
H Shares 4,955,610,672 28.40%
Total 17,448,421,000 100.00%
SIGNIFICANT INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF
THE COMPANY
As at the end of the Reporting Period, to the knowledge of the Directors,
Supervisors and chief executive of the Company, the interests or short
positions of the following persons (other than a Director, Supervisor or chief
executive of the Company) in the shares and underlying shares of the Company
which were required to be recorded in the register kept by the Company
pursuant to Section 336 of the SFO are as follows:
Total long positions in the shares and underlying shares of the Company
Name Type of interests Type and number of shares held by the Company Percentage of the total issued shares of the Company Percentage of the total issued A shares of the Company Percentage of the total issued H shares of the Company Short
positions
CNAHC Beneficial owner 7,421,462,701 A Shares 42.53% 59.41% - -
CNAHC((1)) Equity attributable 1,332,482,920 A Shares 7.64% 10.67% - -
CNAHC((1)) Equity attributable 616,779,308 H Shares 3.54% - 12.45% -
CNACG Beneficial owner 1,332,482,920 A Shares 7.64% 10.67% - -
CNACG Beneficial owner 616,779,308 H Shares 3.54% - 12.45% -
Cathay Pacific Beneficial owner 2,633,725,455 H Shares 15.09% - 53.15% -
Swire Pacific Limited((2)) Equity attributable 2,633,725,455 H Shares 15.09% - 53.15% -
John Swire & Sons (H.K.) Limited((2)) Equity attributable 2,633,725,455 H Shares 15.09% - 53.15% -
John Swire & Sons Limited((2)) Equity attributable 2,633,725,455 H Shares 15.09% - 53.15% -
Notes: Based on the information available to the Directors, Supervisors
and chief executive (including such information as was available on the
website of the Hong Kong Stock Exchange) and to the knowledge of the
Directors, Supervisors and chief executive, as at the end of the Reporting
Period:
1. By virtue of CNAHC's 100% interest in CNACG, CNAHC was
deemed to be interested in the 1,332,482,920 A Shares and 616,779,308 H Shares
directly held by CNACG.
2. By virtue of John Swire & Sons Limited's 100%
interest in John Swire & Sons (H.K.) Limited and their approximately
63.05% equity interest and 70.13% voting rights in Swire Pacific Limited, and
Swire Pacific Limited's approximately 44.98% interest in Cathay Pacific as at
the end of the Reporting Period, John Swire & Sons Limited, John Swire
& Sons (H.K.) Limited and Swire Pacific Limited were deemed to be
interested in the 2,633,725,455 H Shares of the Company directly held by
Cathay Pacific.
Total short positions in the shares and underlying shares of the Company
As at the end of the Reporting Period, the Company was not aware of any
substantial shareholders holding short positions in the shares or underlying
shares of the Company.
Save as disclosed above, as at the end of the Reporting Period, to the
knowledge of the Directors, Supervisors and chief executive of the Company, no
other person had an interest or short position in the Shares or underlying
shares of the Company which were required to be recorded in the register kept
by the Company pursuant to Section 336 of the SFO.
INFORMATION OF SHAREHOLDERS
Total number of shareholders
Total number of holders of ordinary shares as at the end of the 139,671 accounts, of which 2,824 accounts
Reporting Period (account)
are registered holders of H Shares
Total number of holders of ordinary shares as at the end of the 162,730 accounts, of which 2,806 accounts
month preceding to the disclosing date of the annual report (account)
are registered holders of H Shares
Shareholdings of the top 10 shareholders and the top 10 holders of tradable
shares (or shares not subject to selling restrictions) as at the end of the
Reporting Period
Unit: Share
Shareholdings of the top 10 shareholders (excluding shares lent through
securities lending and refinancing)
Name of shareholder (full name) Change(s) during the Reporting Period Number of shares held as at the end of the Reporting Period Shareholding percentage (%) Number of shares held subject to selling restrictions Shares pledged, Nature of shareholder
marked or frozen
Status Number
China National Aviation Holding Corporation Limited 854,700,854 7,421,462,701 42.53 854,700,854 Frozen 127,445,536 State-owned legal person
Cathay Pacific Airways Limited 0 2,633,725,455 15.09 0 Nil 0 Foreign legal person
China National Aviation Corporation (Group) Limited 392,927,308 1,949,262,228 11.18 392,927,308 Frozen 36,454,464 Foreign legal person
HKSCC NOMINEES LIMITED 570,000 1,689,605,335 9.68 0 Nil 0 Foreign legal person
China Securities Finance Corporation Limited 0 311,302,365 1.78 0 Nil 0 Other
Hong Kong Securities Clearing Company Limited 118,798,743 300,355,440 1.72 0 Nil 0 Foreign legal person
China National Aviation Fuel Group Limited 0 238,524,158 1.37 0 Nil 0 State-owned legal person
Industrial and Commercial Bank of China - Huatai-PineBridge CSI 300 30,295,167 64,623,069 0.37 0 Nil 0 Other
Exchange-traded Open-end Index Securities Investment Fund
(中國工商銀行股份有限公司－華泰柏瑞
滬深300交易型開放式指數證券投資基金)
China Structural Reform Fund Co., Ltd. -14,205,400 52,833,706 0.30 0 Nil 0 State-owned legal person
(中國國有企業結構調整基金股份有限公司)
China Merchants Bank Co., Ltd.-Xingquan Herun Hybrid Securities Investment 46,730,827 46,730,827 0.27 0 Nil 0 Other
Fund (招商銀行
股份有限公司－興全合潤混合型證券投資基金)
Shareholdings of the top 10 shareholders (excluding shares lent through
securities lending and refinancing)
not subject to selling restrictions
Name of shareholder Number of Type and number of shares
tradable shares held not subject to selling restrictions
Type Number
China National Aviation Holding Corporation Limited 6,566,761,847 RMB ordinary shares 6,566,761,847
Cathay Pacific Airways Limited 2,633,725,455 Overseas listed 2,633,725,455
foreign shares
HKSCC NOMINEES LIMITED 1,689,605,335 Overseas listed 1,689,605,335
foreign shares
China National Aviation Corporation (Group) Limited 1,556,334,920 RMB ordinary shares 1,332,482,920
Overseas listed 223,852,000
foreign shares
China Securities Finance Corporation Limited 311,302,365 RMB ordinary shares 311,302,365
Hong Kong Securities Clearing Company Limited 300,355,440 RMB ordinary shares 300,355,440
China National Aviation Fuel Group Limited 238,524,158 RMB ordinary shares 238,524,158
Industrial and Commercial Bank of China - 64,623,069 RMB ordinary shares 64,623,069
Huatai-PineBridge CSI 300 Exchange-traded
Open-end Index Securities Investment Fund
(中國工商銀行股份有限公司－華泰柏瑞
滬深300交易型開放式指數證券投資基金)
China Structural Reform Fund Co., Ltd. 52,833,706 RMB ordinary shares 52,833,706
(中國國有企業結構調整基金股份有限公司)
China Merchants Bank Co., Ltd.-Xingquan Herun 46,730,827 RMB ordinary shares 46,730,827
Hybrid Securities Investment Fund (招商銀行
股份有限公司－興全合潤混合型證券投資基金)
Explanation on the repurchase special accounts Nil
among the top 10 shareholders
Explanation on the right to vote by proxy, proxy and abstention from voting Nil
among the above shareholders
Explanation on connected relationship or action in CNACG is a wholly-owned subsidiary of CNAHC. Accordingly, CNAHC is directly
concert among the above shareholders and indirectly interested in 53.71% of the shares of the Company.
Explanation on preference shareholders whose voting rights have been restored Nil
and the number of shares held
Notes:
1. HKSCC NOMINEES LIMITED is a subsidiary of The Stock
Exchange of Hong Kong Limited and its principal business is acting as nominee
for and on behalf of other corporate shareholders or individual shareholders.
The 1,689,605,335 H Shares held by it in the Company do not include the
166,852,000 shares held by it as nominee of CNACG.
2. According to the "Implementation Measures on Partial
Transfer of State-owned Shares to the National Social Security Fund in the
Domestic Securities Market" (Cai Qi 2009 No. 94)
(《境內證券市場轉持部分國有股充實全國社會保障基金實施辦法》(財企 2009 94號))
and the Notice (2009 No. 63) jointly issued by the Ministry of Finance, the
State-owned Assets Supervision and Administration Commission of the State
Council, China Securities Regulatory Commission and the National Council for
Social Security Fund, 127,445,536 and 36,454,464 shares held by CNAHC, the
controlling shareholder of the Company, and CNACG respectively are frozen at
present.
Share lending by shareholders holding more than 5% of the shares, top ten
shareholders and top ten shareholders not subject to selling restrictions
through securities lending and refinancing
Unit: Share
Share lending by shareholders holding more than 5% of the shares, top ten
shareholders and
top ten shareholders not subject to selling restrictions through securities
lending and refinancing
Shareholding of ordinary and credit accounts at the beginning of the Reporting Outstanding shares lent through securities lending and refinancing as at the Shareholding of ordinary and credit accounts at the end of the Reporting Outstanding shares lent through securities lending and refinancing as at the
Period beginning of the Reporting Period Period end of the Reporting Period
Name of shareholder (full name) Aggregate number of shares Percentage (%) Aggregate number of shares Percentage (%) Aggregate number of shares Percentage (%) Aggregate number of shares Percentage (%)
Industrial and Commercial Bank of China - Huatai-PineBridge CSI 300 34,327,902 0.21 322,600 0.002 64,623,069 0.37 0 0
Exchange-traded Open-end Index Securities Investment Fund
(中國工商銀行股份
有限公司－華泰柏瑞滬深300交易型
開放式指數證券投資基金)
Shareholdings of the top 10 shareholders subject to selling restrictions and
conditions of selling restrictions
Unit: Share
Listing and trading status of shares subject to selling restrictions
No Name of shareholder subject to Number of shares held subject to selling restrictions Date of being permitted for listing and trading Number of shares to be listed and traded Selling
selling restrictions
restrictions
1 China National Aviation Holding Corporation Limited 614,525,150 17 July 2024 614,525,150 Lock-up period of 18 months
2 China National Aviation Holding Corporation Limited 854,700,854 10 December 2027 854,700,854 Lock-up period of 36 months
3 China National Aviation Corporation (Group) Limited 392,927,308 8 February 2027 392,927,308 Lock-up period of 36 months
Explanation on connected relationship or action in concert among the above CNACG is a wholly-owned subsidiary of CNAHC.
shareholders
PUBLIC FLOAT
Based on information that is publicly available to the Company and within the
knowledge of the Directors as at the latest practicable date prior to the
issue of this annual report, the Company has maintained a public float as
required by the Listing Rules and agreed by the Hong Kong Stock Exchange.
DIVIDEND POLICY
In accordance with the relevant requirements of the CSRC and the CSRC Beijing
Bureau on the cash dividends of listed companies and the provisions of the
Articles of Association, the Company implements an active dividend
distribution policy and attaches importance to the reasonable return for
investment of investors. The Company maintains a consistent and stable
dividend distribution policy and prioritizes cash dividends when distributing
profits. It is clearly stipulated in the Articles of Association that in the
case that the distributable profits realized for the current year in the
financial statement of the parent company prepared in accordance with
applicable domestic and overseas accounting standards and regulations are
positive, the Company will distribute dividends in cash with the cash
dividends to be distributed each year no less than 15% of the applicable
distributable profits. The applicable distributable profits represent the
profits after tax after making up for the losses and making contributions to
the common reserve fund in accordance with the provisions of the Articles of
Association as well as deducting otherwise approved by the relevant national
departments recognized for the current year in the financial statement of the
parent company prepared in accordance with applicable domestic and overseas
accounting standards and regulations, whichever is lower. The Company should
actively communicate with shareholders, especially minority shareholders,
through various means (including online voting and inviting minority
shareholders to participate in the meetings) to fully understand the opinions
and needs of minority shareholders and timely answer the questions of their
concerns.
Please refer to Article 178, Article 179 and Article 180 of the Articles of
Association for details of the principles and policies of dividend
distribution of the Company.
TAXATION ON DIVIDEND
In accordance with the "Enterprise Income Tax Law of the People's Republic of
China" and the "Rules for the Implementation of the Enterprise Income Tax Law
of the People's Republic of China", both of which came into effect and were
implemented on 1 January 2008 and the "Circular on Issues Concerning
Withholding of Enterprise Income Tax on Dividends Paid by PRC Resident
Enterprises to Offshore Non-resident Enterprise Holders of H Shares" (Guo Shui
Han 2008 No. 897)
(《關於中國居民企業向境外H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》(國稅函 2008 897號))
promulgated by the State Administration of Taxation on 6 November 2008, the
Company is obliged to withhold and pay PRC enterprise income tax on behalf of
non-resident enterprise shareholders at a tax rate of 10% from 2008 onwards
when the Company distributes any dividends to non-resident enterprise
shareholders whose names appear on the register of members of H Shares.
Any H Shares which are not registered in the name(s) of individual(s) (which,
for this purpose, includes shares registered in the name(s) of HKSCC Nominees
Limited, other nominees, trustees, or other organisations or bodies) shall be
deemed to be H Shares held by non-resident enterprise shareholder(s), and
their entitlement to dividends will be subject to deduction of enterprise
income tax. After receiving the dividends, the non-resident enterprise
shareholders may apply for a tax refund (if any) in accordance with the
relevant requirements, such as tax agreements (arrangements).
In accordance with the "Circular on Certain Issues Concerning the Policies of
Individual Income Tax" (Cai Shui Zi 1994 No. 020)
(《關於個人所得稅若干政策問題的通知》(財稅字 1994 020號))
promulgated by the Ministry of Finance of the PRC and the State Administration
of Taxation on 13 May 1994, overseas individuals are, tentatively exempted
from the PRC individual income tax on dividends or bonuses received from
foreign-invested enterprises. As the Company is a foreign-invested enterprise,
the Company will not withhold and pay the PRC individual income tax on behalf
of individual shareholders whose names appear on the register of members of H
Shares of the Company at the time of payment of the final dividends.
Pursuant to the Circular on Tax Policies Concerning the Pilot Programme of the
Shanghai and Hong Kong Stock Market Trading Interconnection Mechanism (Cai
Shui 2014 No. 81)
(《關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知》(財稅 2014 81號))
promulgated on 31 October 2014 and the Circular on the Tax Policies Concerning
the Pilot Programme of the Shenzhen and Hong Kong Stock Market Trading
Interconnection Mechanism (Cai Shui 2016 No. 127)
(《關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》(財稅 2016 127號))
promulgated on 5 November 2016 by the Ministry of Finance of the PRC, the
State Administration of Taxation and the CSRC:
The Company is obliged to withhold PRC individual income tax on behalf of
Mainland individual shareholders at a tax rate of 20% when the Company
distributes the final dividends to Mainland individual investors who invest in
the H Shares of the Company through Shanghai-Hong Kong Stock Connect and
Shenzhen-Hong Kong Stock Connect. Where individual investors have already paid
foreign withholding taxes for such income, investors may apply to the
competent tax authorities of China Securities Depository and Clearing
Corporation Limited for foreign tax credit with valid tax withholding
certificates. The Company is obliged to withhold PRC individual income tax on
behalf of Mainland securities investment funds investing in H Shares of the
Company through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock
Connect in accordance with the aforementioned requirements when the Company
distributes the final dividends; and the Company will not withhold income tax
on behalf of Mainland enterprise investors investing in H Shares of the
Company through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock
Connect when the Company distributes the final dividends. The Mainland
enterprise investors shall report the income and make tax payment by
themselves.
Shareholders are recommended to consult their tax advisors regarding the PRC,
Hong Kong and other tax implications of owning and disposing of the H Shares
of the Company.
DIVIDENDS
According to the audited financial statements of the Company prepared in
accordance with the CASs and the IFRS Accounting Standards, the Company
recorded negative profits available for distribution to shareholders in 2024.
As considered and approved by the 2nd meeting of the seventh session of the
Board of the Company, the Company proposed not to make profit distribution for
the year of 2024.
ANNUAL GENERAL MEETING
The Company proposed to hold the annual general meeting (the "AGM") on
Wednesday, 28 May 2025. The register of members of H Shares will be closed
from Wednesday, 21 May 2025 to Wednesday, 28 May 2025 (both days inclusive),
during which period no transfer of H 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 Tuesday, 20 May 2025. The holders of H Shares whose names appear on the
register of members of the Company at the close of business on Tuesday, 20 May
2025 are entitled to attend and vote at the AGM.
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 (including Treasury Shares)
(the term "securities" has the meaning ascribed to it under Paragraph 1 of
Appendix D2 to the Listing Rules) of the Company.
As at the end of the Reporting Period, the Company did not hold any Treasury
Shares.
PRE-EMPTIVE RIGHTS
The Articles of Association does not provide for any pre-emptive rights
requiring the Company to offer new shares to the existing shareholders in
proportion to their existing shareholdings.
USE OF PROCEEDS RAISED FROM THE ISSUANCE OF H SHARES TO SPECIFIC INVESTOR
In order to enhance fleet strength, consolidate competitive advantages,
accelerate the realization of the Company's strategic planning, replenish
working capital, implement safety production responsibilities, meet the
Company's capital requirement for business development, improve capital
structure, strengthen financial soundness and enhance the Company's
comprehensive risk resistance capability, on 7 February 2024, the Company
issued 392,927,308 H Shares to CNACG (with a total nominal value of
RMB392,927,308) at the issue price of HKD5.09 per share (the "Issuance of H
Shares to Specific Investor"), raising net proceeds of HKD1,998,769,803.79 or
net proceeds of HKD5.0869 per H Share issued to the specific investor. Please
refer to the announcement of the Company dated 7 February 2024 for details. On
22 December 2023 (being the date on which the terms of the issue were fixed),
the closing price of the Company's H Shares was HKD4.70 per share. During the
Reporting Period, the net proceeds from the Issuance of H Shares to Specific
Investor have been utilized according to the plan disclosed by the Company.
The following table shows the use of net proceeds from the Issuance of H
Shares to Specific Investor:
Unit: HKD
Committed investment project Total committed investment of proceeds raised Investment Outstanding amount as at the end of the Reporting Period Expected timeline for the completion of utilisation of proceeds raised
during the Reporting Period
Replenishing working capital 1,998,769,803.79 1,998,769,803.79 Nil N/A
USE OF PROCEEDS RAISED FROM THE ISSUANCE OF A SHARES TO SPECIFIC INVESTOR
In order to enhance fleet strength, consolidate competitive advantages,
accelerate the realization of the Company's strategic planning, replenish
working capital, implement safety production responsibilities, meet the
Company's capital requirement for business development, improve capital
structure, strengthen financial soundness and enhance the Company's
comprehensive risk resistance capability, on 10 December 2024, the Company
issued 854,700,854 A Shares to CNAHC (with a total nominal value of
RMB854,700,854) at the issue price of RMB7.02 per share (the "Issuance of A
Shares to Specific Investor"), raising net proceeds of RMB5,995,841,631.45 or
net proceeds of RMB7.0151 per A Share issued to the specific investor. Please
refer to the announcement of the Company dated 12 December 2024 for details.
On 22 December 2023 (being the date on which the terms of the issue were
fixed), the closing price of the Company's A Shares was RMB7.17 per share.
During the Reporting Period, the net proceeds from the Issuance of A Shares to
Specific Investor have been utilized according to the plan disclosed by the
Company. The following table shows the use of net proceeds from the Issuance
of A Shares to Specific Investor:
Unit: RMB
Committed investment project Total committed investment of proceeds raised Investment Outstanding amount as at the end of the Reporting Period Expected timeline for the completion of utilisation of proceeds raised
during the Reporting Period
Introduction of 4,195,841,631.45 799,601,175.29 3,396,240,456.16 By 31 December 2026(Note)
17 aircraft
Replenishing working capital 1,800,000,000.00 1,800,000,000.00 Nil N/A
Note: The expected timeline for the utilization of the proceeds is
estimated based on the Company's current available information and may be
subject to change depending on the actual delivery schedule of the aircraft.
DIRECTORS AND SUPERVISORS OF THE COMPANY
Directors
Set out below is the list of Directors during the Reporting Period and as at
the date of this annual report (unless otherwise stated).
Name Date of election and if applicable, leaving office as Director
Ma Chongxian (Chairman and Executive Director) Elected as executive Director on 20 July 2021, elected as Vice Chairman on 25
February 2022, elected as Chairman and resigned as Vice Chairman on 27
September 2022. Re-appointed as executive Director and Chairman on 25 February
2025.
Wang Mingyuan (Vice Chairman and Executive Director) Elected on 30 March 2023 and re-appointed as executive Director and Vice
Chairman on 25 February 2025.
Feng Gang (Former Non-executive Director) Elected on 26 May 2020 and ceased to act on 15 July 2024.
Cui Xiaofeng (Non-executive Director) Elected on 9 August 2024 and re-appointed on 25 February 2025.
Patrick Healy (Non-executive Director) Elected on 19 December 2019 and re-appointed on 25 February 2025.
Xiao Peng (Employee Representative Director) Elected on 2 March 2023 and re-appointed on 25 February 2025.
Xu Niansha (Independent Non-executive Director) Elected on 25 February 2025.
He Yun (Independent Non-executive Director) Elected on 25 February 2022 and re-appointed on 25 February 2025.
Winnie Tam Wan-chi (Independent Non-executive Director) Elected on 25 February 2022 and re-appointed on 25 February 2025.
Gao Chunlei (Independent Non-executive Director) Elected on 25 February 2025.
Li Fushen (Former Independent Non-executive Director) Elected on 25 February 2022 and resigned on 30 August 2024.
Xu Junxin (Former Independent Non-executive Director) Elected on 25 February 2022 and ceased to act on 25 February 2025.
Supervisors
Set out below is the list of Supervisors during the Reporting Period and as at
the date of this annual report (unless otherwise stated).
Name Date of election and if applicable, leaving office as Supervisor
Xiao Jian (Chairman of the Supervisory Committee and Shareholder Elected as shareholder representative supervisor on 10 February 2023, elected
Representative Supervisor) as Chairman of the Supervisory Committee on 10 March 2023.
Lyu Yanfang (Shareholder Representative Supervisor) Elected on 18 December 2020.
Guo Lina (Shareholder Representative Supervisor) Elected on 25 February 2022.
Wang Mingzhu (Employee Representative Supervisor) Elected on 2 March 2023.
Li Shuxing (Employee Representative Supervisor) Elected on 2 March 2023.
CHANGES IN THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY
DURING THE REPORTING PERIOD AND UP TO THE DATE OF THIS ANNUAL REPORT
On 5 March 2024, Mr. Yan Fei was appointed as the Vice President of the
Company at the 27th meeting of the sixth session of the Board of the Company.
On 5 March 2024, Mr. Chen Zhiyong ceased to serve as the Vice President of the
Company due to retirement.
On 28 March 2024, Mr. Huang Bin ceased to serve as a secretary to the Board, a
joint company secretary and an assistant to the President of the Company due
to retirement.
On 28 March 2024, Mr. Xiao Feng was appointed as a secretary to the Board of
the Company and a joint company secretary at the 28th meeting of the sixth
session of the Board of the Company.
On 15 July 2024, Mr. Feng Gang ceased to serve as a director of the Company
due to retirement.
On 15 July 2024, at the 31st meeting of the sixth session of the Board of the
Company, the Board considered and agreed to nominate Mr. Cui Xiaofeng as a
candidate for non-executive Director for the sixth session of the Board of the
Company. On 9 August 2024, Mr. Cui Xiaofeng was elected as a non-executive
Director of the Company at the 2024 second extraordinary general meeting of
the Company.
On 30 August 2024, Mr. Li Fushen, by reason of age, resigned as an independent
non-executive Director of the Company, the chairman of the Audit and Risk
Management Committee (the Supervision Committee), and a member of each of the
Strategy and Investment Committee, the Nomination Committee, the Remuneration
and Appraisal Committee, and the Aviation Safety Committee.
On 25 February 2025, Mr. Ma Chongxian, Mr. Wang Mingyuan, Mr. Cui Xiaofeng and
Mr. Patrick Healy were elected as the non-independent Directors of the seventh
session of the Board of the Company, and Mr. Xu Niansha, Mr. He Yun, Ms.
Winnie Tam Wan-chi and Mr. Gao Chunlei were elected as the independent
non-executive Directors of the Company at the 2025 first extraordinary general
meeting of the Company. Mr. Xu Junxin ceased to be an independent
non-executive Director of the Company due to expiry of term of office. The
thirteenth meeting of the third session of the employee representatives
congress elected Mr. Xiao Peng as the employee representative Director of the
seventh session of the Board of the Company.
DIRECTORS AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
At any time during the Reporting Period or as at the end of the Reporting
Period, none of the Company, its holding company, any of the Company's
subsidiaries or fellow subsidiaries was a party to any agreement or
arrangement which enables the Directors and Supervisors of the Company to
acquire benefits by means of the acquisition of Shares in, or debentures, of
the Company or any other body corporate.
INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND THE CHIEF
EXECUTIVE IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY
As at the end of the Reporting Period, none of the Directors, Supervisors or
the chief executive of the Company had interests or short positions in the
shares, underlying shares and/or debentures (as the case may be) held by the
Company or its associated corporations (within the meaning of Part XV of the
SFO) which shall be recorded and maintained in the register pursuant to
section 352 of the SFO, or which shall be notified to the Company and the Hong
Kong Stock Exchange pursuant to the Model Code.
INTERESTS OF DIRECTORS AND SUPERVISORS IN CONTRACTS AND SERVICE CONTRACTS
Each of the Directors has entered into a service contract with the Company.
All Directors shall serve a term of three years.
None of the Directors or Supervisors has any existing or proposed service
contract with any member of the Group which is not terminable by the Group
within one year without payment of compensation (other than statutory
compensation).
Save as disclosed in the section headed "Connected Transactions" set out in
this Report of the Directors, none of the Company, its holding company, or any
of the Company's subsidiaries or fellow subsidiaries has entered into any
significant transactions, arrangements or contracts relating to the Group's
business, in which a Director or Supervisor or his or her connected entity
directly or indirectly had any material interest, and which subsisted at the
end of the Reporting Period or at any time during the Reporting Period.
During the Reporting Period, Mr. Ma Chongxian, Mr. Wang Mingyuan (both are
executive Directors) and Mr. Patrick Healy (non-executive Director) also
served as directors of Cathay Pacific. Cathay Pacific competes or is likely to
compete either directly or indirectly with some aspects of the business of the
Company as it operates airline services to certain destinations, which are
also served by the Company.
Save as disclosed above, during the Reporting Period, none of the Directors
and their respective close associates (as defined in the Listing Rules) has
any competing interests which would be required to be disclosed under Rule
8.10 of the Listing Rules.
PERMITTED INDEMNITY PROVISION
Appropriate directors' liability insurance coverage has been arranged by the
Company to indemnify the Directors for liabilities arising out of corporate
activities. Such directors' liability insurance was valid throughout the
financial year ended 31 December 2024 and remains in effect as at the date of
this annual report.
EMPLOYEES
The Company implements an open, fair and equal employment policy, insists on
equal pay for equal work and is committed to avoiding any discrimination in
respect of gender, race, nationality, physical condition, religion and marital
status of employees. The Company continues to promote the diversity of
employees and protect employees' legitimate rights and interests. The Group
will continue to take measures, including recruiting and treating employees in
accordance with the principle of gender equality, provide gender equality
training and development opportunities, and ensure the rights and interests of
female employees, to promote gender diversity at all levels and focus on
diversified management talent reserves.
As at the end of the Reporting Period, the Group had a total of 104,909
employees (including 64,464 male employees and 40,445 female employees,
accounting for 61.4% and 38.6% of the total employees of the Group
respectively), among which, the Company had 46,812 employees and the
subsidiaries of the Company had 58,097 employees. The differences in employee
background and job requirements are the main factors affecting the gender
diversity of employees.
The categories of employees of the Group are as follows:
Professional Categories As at 31 December 2024
Management personnel 7,097
Functional personnel 5,676
Marketing and sales personnel 5,628
Operation personnel 5,789
Ground handling personnel 13,113
Cabin service personnel 27,271
Logistics and support personnel 6,720
Flight crew 13,550
Engineering and maintenance personnel 17,006
Information technology personnel 1,215
Other personnel 1,844
Total 104,909
REMUNERATION POLICY
In accordance with the requirements for optimizing the income distribution
system and based on the principle of "paying salary with reference to the job
value, personal ability as well as performance appraisal", the Company
established an income distribution mechanism that maintained balance between
incentives and constraints and emphasized both efficiency and fairness, so as
to drive high-quality corporate development. During the Reporting Period, it
stepped up its efforts in performance-based salary distribution, refined
secondary assessment and distribution measures within the organisation, and
made reasonable adjustments to income difference. The Company continued to
prioritize salary distribution towards frontline positions that involved
difficult, dirty, dangerous and labour-intensive work and increased the policy
support for total wages in key sectors. Moreover, it strengthened the salary
control mechanisms for business leaders at all levels, standardised the salary
caps, and reasonably adjusted salary growth rates to promote more rational and
orderly income distribution. In order to reinforce the positive incentives to
core personnel and key talents in technological innovation, it implemented and
improved the incentive and protection system for advancing technological
innovation. It also enhanced the salary management information system to boost
the efficiency and quality of labour cost statistics and analysis.
TRAINING PROGRAMME
In 2024, the Group fully implemented the spirit of the 20th National Congress
of the Communist Party of China. It focused on developing a high-quality cadre
team that is loyal to the Party, eager to innovate, skilled in enterprise
management, effective in driving business forward, and committed to integrity
and discipline. The Group actively collaborated with higher-level units to
offer training in a steady and orderly manner, with 2,843 participants
attending the cadre study sessions on Xi Jinping's thought on socialism with
Chinese characteristics for a new era. It conducted three phases of
centralized rotational training on implementing Xi Jinping's thought on
socialism with Chinese characteristics for a new era and the spirit of the
Third Plenary Session of the 20th Central Committee of the Communist Party of
China, establishing a total of 17 sub-classrooms with 2,484 personnel
participating in the training. The Group actively launched off-job training
programs to improve the job performance of leaders and cadres at all levels.
It organised one basic rotation training session for young cadres, one job
performance enhancement session each for newly appointed senior and mid-level
management members, and three international exchange programs in partnership
with Rolls-Royce Derby, Rolls-Royce Singapore and Airbus France. In addition,
it launched the practical exchange programs with COMAC and Air Macau. In terms
of online training, it further standardised the coordination and management of
online training courses. It uploaded 26 new online courses to the Leadership
Campus of the Online College (網絡學院領導力分院) which included five
series of special programs covering topics such as policy interpretation, new
quality productive forces and artificial intelligence. Regarding the
qualification trainings for pilots, flight attendants, cadet pilots, flight
dispatchers and ground service personnel, the Group offered 551,000
person-hours of online training, delivered 157,467 hours of flight simulator
training and provided 84,414 hours of other trainings to maintain all
operational personnel's valid certifications. The Group also provided training
for dispatchers, cabin crew, aviation safety officers and load planners on the
C919 model, while expanding the onboarding training programs for crew
scheduling specialists and hub operation staff. By improving the training
capacity, enriching the training scope, and enhancing the relevance,
practicality and effectiveness of training programs, the Company provided a
solid foundation for the high-quality development with high-quality training.
In 2025, the Company will further implement the spirit of the National Work
Conference on Cadre Education and Training and effectively follow the
requirements of the Working Rules on Cadre Education and Training
(《幹部教育培訓工作條例》) and the National Cadre Education and
Training Plan (2023-2027) (《全國幹部教育培訓規劃
(2023-2027年)》). It will design special training programs to meet specific
needs based on a tiered and categorized training system. With the launch of
international exchange activities, it will continue to enhance the political
skills, execution capacity, and leadership abilities of the leaders and
cadres. By accelerating the empowerment of cadre talents, the Company will
provide strong talent and intellectual support for the Group to achieve
high-quality development and become a world-class enterprise.
SUPPLIER MANAGEMENT
The Company firmly promoted open procurement with a focus on "compliance,
efficiency and quality", and strived to improve procurement management
capabilities. We facilitated the establishment of procurement system,
comprehensively strengthened procurement risk management and control and
continuously deepened standardized management, which has resulted in better
procurement compliance. The Company also achieved steady improvement in
procurement efficiency through dynamic integration of management optimization
with service refinement. The Company improved the regulations concerning
supplier selection, access management and annual performance appraisal to
ensure the good operation and maintenance of supplier information base, and
established a good cooperative relationship with its suppliers to achieve
sustainable development together.
EMPLOYEES AND EMPLOYEES' PENSION SCHEME
Details of the employees' pension scheme and other welfare are set out in note
9 to the financial statements of this annual report, and retired employees are
entitled to benefits under the social pension scheme approved and provided by
the labour and social security authority of the local governments.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Details of the subsidiaries, associates and joint ventures of the Group as at
the end of the Reporting Period are set out respectively in notes 21, 22 and
23 to the financial statements of this annual report.
BANK LOANS AND OTHER BORROWINGS
Details of the bank loans and other borrowings of the Company and the Group
are set out in note 35 to the financial statements of this annual report.
FIXED ASSETS
Changes in the fixed assets of the Group for the year ended 31 December 2024
are set out in note 17 to the financial statements of this annual report.
AIRCRAFT AND FLIGHT EQUIPMENT
The aggregate net book value of the Group's aircraft, engines and flight
equipment as at the end of the Reporting Period are set out in note 17 to the
financial statements of this annual report. The Group's capital commitment
amounts for aircraft and flight equipment as at the end of the Reporting
Period are set out in note 42 to the financial statements of this annual
report.
CAPITALISED INTERESTS
Details of the capitalised interests of the Group for the year ended 31
December 2024 are set out in note 12 to the financial statements of this
annual report.
RESERVES
Changes in the reserves of the Company and the Group during the year are set
out in note 40 to the financial statements and the consolidated statement of
changes in equity of this annual report.
DONATIONS
During the Reporting Period, the Group made donations for charitable and other
purposes amounting to RMB44.2695 million.
MAJOR CUSTOMERS AND SUPPLIERS
During the Reporting Period, the purchases of the Group from the largest
supplier accounted for 25.08% of the total purchases of the Group, while the
purchases of the Group from the five largest suppliers accounted for 38.55% of
the total purchases of the Group. None of the Directors or Supervisors, their
associates, nor any shareholder of the Company, who to the knowledge of the
Directors owns 5% or more of the Company's share capital, had any interest in
the five largest suppliers of the Company.
During the Reporting Period, the sales to the five largest customers of the
Group accounted for not more than 30% of the total sales of the Group.
PROPERTY TITLE CERTIFICATE
The Company effected the changes of titles of assets (land, buildings and
vehicles), in accordance with its undertakings as disclosed in the Company's
prospectus when shares were issued. The title transfer procedures for the
underlying assets relating to the above undertakings have been completed.
ENVIRONMENTAL POLICY AND PERFORMANCE OF THE GROUP
During the Reporting Period, the Group placed great emphasis on energy
conservation and ecological and environmental protection. With Xi Jinping's
thoughts on ecological civilization as the guiding principle, it thoroughly
implemented the spirits of the 20th National Congress of the Communist Party
of China and the Second and Third Plenary Sessions of the 20th Central
Committee of the Communist Party of China, adopted the major decisions on
carbon peak and carbon neutrality, and followed General Secretary Xi Jinping's
important directives related to civil aviation, which resulted in notable
progress in crucial areas such as energy conservation and emission reductions,
ecological and environmental protection, as well as carbon peak and carbon
neutrality.
The Group continued to enhance the management system and management
capabilities, evidenced by the recertification of the ISO14001 environmental
management system. In line with the national "dual carbon" strategy, it made
active contribution to the collaborative development of sustainable aviation
fuels. It optimized the introduction and phase-out of aircraft, operational
management and ground support to ensure green and low-carbon operations. It
devoted significant efforts in pollution control and maintained strict
compliance with regulations. The Group proactively introduced new energy
vehicles and exercised strict controls over the emission of pollutants. To
promote environmental protection and public welfare, it fulfilled social
responsibilities by launching the "Enjoy Clean Flight (淨享飛行)" green
travel project which encouraged passengers to adopt eco-friendly consumption
and travel habits. In Shanghai, it organized a water deer conservation project
to explore ways to achieve harmonious coexistence between humanity and nature
in the city.
COMPLIANCE OPERATIONS
As a Chinese company listed on the Hong Kong Stock Exchange and the Shanghai
Stock Exchange, the Company shall comply with regulations in relation to
listed companies' securities issue and trading, such as the Company Laws of
the People's Republic of China, the Securities Law of the People's Republic of
China, the SFO of Hong Kong, the Companies Ordinance of Hong Kong, the Stock
Listing Rules of the Shanghai Stock Exchange
(《上海證券交易所股票上市規則》) and the Listing Rules of the
Hong Kong Stock Exchange. CNAF, a non-wholly owned subsidiary of the Company,
as a non-bank financial institution established in Mainland China, shall
comply with rules in respect of financial regulation in Mainland China. The
Group, with civil aviation transportation and related services as its
principal businesses, shall comply with requirements in relation to civil
aviation safety regulations of locations where the Group operates, and laws
and regulations in respect of consumer rights protection, environmental
protection, anti-monopoly, anti-unfair competition and tax, etc.
The Group has the procedure of compliance in place to ensure compliance with
applicable laws, regulations and normative legal documents, and in particular
those having a significant impact on its principal businesses. The Group will
notify the relevant employees and operating teams of any change in applicable
laws, regulations and normative legal documents relating to its principal
businesses from time to time.
During the Reporting Period, so far as the Directors of the Company were
aware, the Group did not commit any violations of laws and regulations in all
material aspects that would have a significant impact on the Group.
As at the end of the Reporting Period, the Company was not involved in any
significant litigation or arbitration and to the knowledge of the Company,
there was no litigation or claim of material importance pending, threatened or
initiated against the Company.
CONNECTED TRANSACTIONS
The Group has entered into several connected transaction agreements with
certain connected persons of the Group as described in the paragraphs below.
The Company has complied with the disclosure requirements of the connected
transactions in accordance with Chapter 14A of the Listing Rules.
For the purpose of this section headed "Connected Transactions" in this Report
of the Directors, "CNAHC Group" refers to CNAHC, its subsidiaries and
associates (as defined under the Listing Rules) excluding the Group, "ACC
Group" refers to Air China Cargo, its subsidiaries and its 30%-controlled
companies (as defined under the Listing Rules), "Cathay Pacific Group" refers
to Cathay Pacific and its subsidiaries (as defined under the Listing Rules).
ONE-OFF CONNECTED TRANSACTIONS
On 7 February 2024, the Company issued 392,927,308 H Shares to CNACG (with a
total nominal value of RMB392,927,308) at the issue price of HKD5.09 per
share, raising net proceeds of HKD1,998,769,803.79 or net proceeds of
HKD5.0869 per H Share issued. For the use of net proceeds and other details of
this transaction, please refer to the section headed "Use of Proceeds Raised
from the Issuance of H Shares to Specific Investor" of this Report of the
Directors.
On 10 December 2024, the Company issued 854,700,854 A Shares to CNAHC (with a
total nominal value of RMB854,700,854) at the issue price of RMB7.02 per
share, raising net proceeds of RMB5,995,841,631.45 or net proceeds of
RMB7.0151 per A Share issued. For the use of net proceeds and other details of
this transaction, please refer to the section headed "Use of Proceeds Raised
from the Issuance of A Shares to Specific Investor" of this Report of the
Directors.
Since CNAHC is a substantial shareholder of the Company and CNACG is a
wholly-owned subsidiary of CNAHC, CNAHC and CNACG are connected persons of the
Company, and each of the issuance of A Shares to CNAHC and the issuance of H
Shares to CNACG constitutes a connected transaction of the Company under
Chapter 14A of the Listing Rules. For details, please refer to the
announcements of the Company dated 7 February 2024 and 12 December 2024.
CONTINUING CONNECTED TRANSACTIONS
During the Reporting Period, the transactions under the following continuing
connected transaction framework agreements constituted non-exempt continuing
connected transactions of the Company:
Agreement Parties and Connected Relationship Execution Date and Term of Agreement Contents of Agreement Pricing Policy
1 Properties Leasing Framework Agreement The Company and CNAHC (a substantial shareholder of the Company and therefore Renewed on 29 October 2021 with a term from 1 January 2022 to 31 December The Group and CNAHC Group agreed to lease from each other certain properties The Group (as lessor) may rent out its own properties (including properties
a connected person of the Company) 2024, and subsequently renewed on 30 October 2024 with a term from 1 January (including ancillary facilities) and land use rights owned by each other for constructed by the Group or customized upon the request of CNAHC Group) or
2025 to 31 December 2027 their respective production and operation, office and storage use. land with legal use rights to CNAHC Group for its production and operation,
office and storage use. The pricing principles and conducting of the
transaction shall be as follows: First, the Group shall provide quotation for
the leased properties or land to CNAHC Group after taking into account the
The details are set out in the announcements of the Company dated 29 October factors including the relevant costs, tax and reasonable profit margin
2021 and 30 October 2024 relating to the properties or land. The related costs include, among others,
construction costs, depreciation costs, funding costs and maintenance costs.
Then, the rent payable for the leased properties or land shall be determined
through arm's length negotiations between the Group and CNAHC Group after
CNAHC Group takes into account the factors such as the location of the leased
properties or land and the service quality. Such rent shall not be lower than
the rent offered by the Group to an independent third party (if any) in
comparable circumstances.
The Group (as lessee) may lease properties owned by CNAHC Group and land with
legal use right from CNAHC Group based on its production and operation, office
and storage needs. The pricing principles and conducting of the transaction
shall be as follows: First, the Group shall conduct market research and
collect, consolidate and analyze information in respect of provision of
leasing services by independent third parties for the same type of properties
or land (if any) in close proximity to the properties or land. Then, (i) if
there is comparable market of the same type found through market research, the
parties shall determine the rental prices for the leased properties or land
through arm's length negotiations with reference to the market price for the
same type of services available from at least two independent third parties
and take into account certain factors; (ii) if there is no comparable market
of the same type found in the neighboring areas through market research, the
price shall be determined by adopting the cost-plus approach: the rental price
of the leased properties or land shall be determined through arm's length
negotiations between the parties based on the relevant costs, tax and
reasonable profit margin of the properties or land offered by CNAHC Group.
When leasing each other's properties or land, the parties may determine the
price for leasing their respective properties or land based on the above
pricing principles, and then exchange the properties or land use right in
accordance with the principle of equivalent exchange.
2 Comprehensive Services Framework Agreement The same as above The same as above (i) The Group accepts CNAHC Group's appointment to provide CNAHC Group For the services mentioned in item (i), the price to be charged by the Group
with products or services including but not limited to retiree management will be determined after arm's length negotiations between the parties on the
services, human resources services (including general, servicing and basis of the costs of the Group adding a reasonable service fee (generally
consulting services in respect of personnel employment, archival information, ranging from 3% to 10% of the costs) and/or with reference to the price for
salaries and benefits, social insurance and employee services), information the same type of products or services provided by the Group to other parties
technology services, procurement services, training services, air passenger under non-related (non-connected) transactions.
transportation agency services and in-flight supplies.
For the services mentioned in item (ii), the parties shall, according to the
(ii) CNAHC Group was appointed by the Group as the provider of ancillary service items and specific needs, determine the relevant service fees through
production services or the administrator of supply services of the Group for arm's length negotiations in accordance with the following principles: (1) the
which CNAHC Group shall provide the following products or services to the final transaction price shall be determined after arm's length negotiations
Group including but not limited to (provided that the provider has obtained between the parties based on the quotations provided by CNAHC Group, with
the relevant qualifications and certifications): (1) on-board catering and reference to the market price (if any) for the same type of services available
food supply management services on global flights; (2) operation and from at least two independent third parties in the market and take into
management services of office buildings; (3) property management services in account factors including the service standard, service scope, business volume
office buildings and the regions at which the office buildings are located; and specific needs of the parties; and/or (2) the service fee shall be
(4) support services for resident group, support services for delayed flights determined after arm's length negotiations between the parties based on the
passengers and scenario mileage payment products; (5) catering support and costs of CNAHC Group adding a reasonable service fee, and offering rewards or
cleaning services for check-in area and lounge for high-end passengers at imposing penalties depending on the management of CNAHC Group, the final
terminals; (6) other commissioned services. settlement of which shall be made on the basis of the actual transaction
amount.
(iii) CNAHC Group was engaged by the Group as one of the providers of
ancillary production or supply services of the Group, which CNAHC Group shall For the services mentioned in item (iii), (1) if government-set or guided
provide the Group with the following products or services including but not price is available, government-set or guided price shall be adopted; (2) in
limited to (provided that the provider has obtained the relevant the absence of government-set or guided price, the final transaction price
qualifications and certifications): (1) hotel accommodation and staff shall be determined after arm's length negotiations between the parties with
recuperation services; (2) air ticket printing services and other printed reference to the market price (if any) for the same type of products or
materials; (3) air passenger transportation agency services; (4) other services available from at least two independent third parties in the market,
services such as airline catering services and provision of all kinds of by taking into account certain factors including the service standard, service
on-board services supplies. scope, business volume and specific needs of the parties; (3) if open market
price is not available or there are no identical or similar business
activities in the market, the parties shall settle the actual transaction
amount based on the costs of CNAHC Group adding a reasonable service fee, and
(iv) The Group and CNAHC Group commission each other for the human offering rewards or imposing penalties depending on the management of CNAHC
resources sharing business within the two groups. Group.
For the services mentioned in item (iv), in principle, the transaction price
shall be determined through arm's length negotiations between the parties
based on the labor costs incurred, and the transaction price shall be fully
borne by the worksite employer.
3 Government Charter Flight Service Framework Agreement The same as above The same as above CNAHC shall use the charter flight services of the Company for fulfilling its The parties will determine the price for the Government Charter Flight
government charter flight assignments. Services through arm's length negotiations based on the cost incurred by the
carrier in providing the Government Charter Flight Services adding a
reasonable profit (the reasonable profit margin generally ranges from 5% to
10%). The costs include direct costs and indirect costs.
4 Media Services Framework Agreement The Company and CNAMC (CNAMC is a wholly- owned subsidiary of CNAHC and The same as above CNAMC has agreed to provide Media Services to the Group. Of which, the Company For the Entrusted Services, the Group will make reference to the service items
therefore a connected person of the Company) grants CNAMC an exclusive right to distribute in-flight reading materials, and specific requirements, and (i) the parties shall determine the final
movies, TV series, music, sound effect and other cultural contents. transaction price through arm's length negotiations based on the quotations
provided by CNAMC with reference to the market price (if any) for the same
type of services available from at least two independent third parties after
taking into account factors including the service standard, service scope,
The Company has commissioned CNAMC as the general service provider with business volume and specific needs of the parties; and/or (ii) the service
respect to the Media Services of the Company which CNAMC shall provide the fees shall be determined after arm's length negotiations between the parties
Company with the following Media Services (the "Entrusted Services"): (1) based on the costs of CNAMC adding a reasonable service fee, and offering
in-flight entertainment system business and in-flight network platform rewards or imposing penalty depending on the management of CNAMC, the final
business; (2) brand communication and product marketing business; (3) news and settlement of which shall be made on the basis of the actual transaction
publicity business, including but not limited to external media operation and amount.
maintenance and internal newspaper production; (4) advertisement management
business and media cooperation and management business; (5) other Media
Services entrusted by the Company.
In respect of the media products or services other than the Entrusted Services
that are purchased by the Company from CNAMC, the Group shall determine and
pay the relevant services fees in accordance with the following principles and
the arm's length negotiations with CNAMC: (1) if government-set or guided
price is available, government-set or guided price shall be adopted; (2) in
the absence of government-set or guided price, the final transaction price
shall be determined after arm's length negotiations between the parties based
on the quotation provided by CNAMC with reference to the market price (if any)
for the same type of services available from at least two independent third
parties in the market after taking into account certain factors including the
service standard, service scope, business volume and specific needs of the
parties; (3) if open market price is not available or there are no identical
or similar business activities in the market, the parties shall settle the
actual transaction amount based on the costs of CNAMC adding a reasonable
service fee, and offering rewards or imposing penalties depending on the
management of CNAMC.
In respect of the Company's media used by CNAMC in operating the Media
Services, CNAMC shall pay the Company an annual media resource fee of
RMB13.8915 million for each of the three years of 2022, 2023 and 2024 as per
the comparable market prices of the media resources.
5 Construction Project Commissioned Management Framework Agreement The Company and CNACD (a wholly- owned subsidiary of CNAHC and therefore a Renewed on 29 October 2021 with a term from 1 January 2022 to 31 December 2024 CNACD Group is commissioned by the Company to serve as a manager of the CNACD Group receives service fees based on the size of or investment in the
connected person of the Company)
construction projects and establish project department. CNACD Group shall projects in accordance with the commissioned management scope, and the service
provide management services for the Company's projects based on project fees shall be calculated as per actual expenses and rewards and
characteristics using its industry expertise and professional skills. The penalties-related expenses on a full labor cost basis (including reward for
The details are set out in the announcement of the Company dated 29 October subsidiaries of the Company may also commission CNACD Group to carry out the labor cost budget surplus, rewards and penalty for construction period
2021 project management work. management and reward and penalty for investment control balance) based on the
human resources invested by CNACD Group as verified by the Company, and the
particulars to be specified in relevant agreements.
6 Financial Services Framework Agreement The Company and CNAF (CNAF is a non-wholly owned subsidiary of the Company Renewed on 30 March 2023 with a term from 1 January 2024 to 31 December 2026 CNAF agreed to provide the Group with a range of financial services including Interest rates applicable to deposits: should (i) comply with the requirements
that CNAHC holds 49% of its equity interest and therefore a connected
deposit services, credit services and other financial services. on the interest rates prescribed by the People's Bank of China for such type
subsidiary of the Company) of deposits; and (ii) not be lower than the interest rates offered by
state-owned commercial banks to the Group for the same type of services under
The details are set out in the announcement of the Company dated 30 March 2023 the same conditions.
Interest rates applicable to credit services: should (i) comply with the
requirements on the interest rates prescribed by the People's Bank of China
for such type of services; and (ii) not be higher than the interest rates
charged by state-owned commercial banks to the Group for the same type of
services under the same conditions.
Fees for other paid financial services: should (i) comply with the relevant
rate standards (if any) prescribed by the People's Bank of China, CBIRC, CSRC,
NAFMII or other regulatory authorities; and (ii) not be higher than those for
the same type of services charged by state-owned commercial banks to the Group
under the same conditions.
7 Financial Services Framework Agreement CNAF (a non-wholly owned subsidiary of the Company), and CNAHC (a substantial The same as above CNAF agreed to provide CNAHC Group with a range of financial services Interest rates applicable to deposits: should (i) comply with the requirements
shareholder of the Company and therefore a connected person of the Company) including deposit services, comprehensive credit line services and other on interest rates prescribed by the People's Bank of China for such type of
financial services. deposits; and (ii) not be higher than the interest rates offered by
state-owned commercial banks to CNAHC Group for the same type of services
under the same conditions.
Interest rates applicable to loan and bill discounting services: should (i) be
in compliance with the requirements on interest rates prescribed by People's
Bank of China for such type of services; and (ii) be not lower than the
interest rates charged by state-owned commercial banks to the CNAHC Group for
the same type of services under the same conditions.
Fees for other paid financial services: should (i) comply with the relevant
rate standards (if any) prescribed by the People's Bank of China, CBIRC, CSRC,
NAFMII or other regulatory authorities; and (ii) not be lower than those for
the same type of services charged by state-owned commercial banks to the CNAHC
Group under the same conditions.
8 ACC Financial Services Agreement CNAF and Air China Cargo Entered into on 30 March 2023 with a term from 1 January 2024 to 31 December CNAF has agreed to provide the ACC Group with a range of financial services Interest rates applicable to deposits: should (i) comply with the requirements
2026 including deposit services, comprehensive credit line services and other on interest rates prescribed by the People's Bank of China for such type of
financial services. deposits; and (ii) not be higher than the interest rates offered by
state-owned commercial banks to ACC Group for the same type of services under
the same conditions.
The details are set out in the announcement of the Company dated 30 March 2023
Interest rates applicable to loan and bill discounting services: should (i) be
in compliance with the requirements on interest rates prescribed by People's
Bank of China for such type of services; and (ii) be not lower than the
interest rates charged by state-owned commercial banks to ACC Group for the
same type of services under the same conditions.
Fees for other paid financial services: should (i) comply with the relevant
rate standards (if any) prescribed by the People's Bank of China, CBIRC, CSRC,
NAFMII or other regulatory authorities; and (ii) not be lower than those for
the same type of services charged by state-owned commercial banks to ACC Group
under the same conditions.
9 Related (Connected) Transaction Framework Agreement The Company and CNACG (CNACG is a substantial shareholder of the Company and Renewed on 20 September 2022 with a term from 1 January 2023 to 31 December Finance and operating lease services: CNACG Group shall provide finance and Finance and operating lease services: the final transaction price will be
therefore a connected person of the Company) 2025 operating lease services in respect of, including but not limited to, determined on arm's length negotiations between both parties with reference to
aircraft, engines, simulators, aircraft-related materials, equipment and the prices for the same type of lease services offered by independent third
vehicles to the Group; the Group shall provide finance and operating lease parties and after taking into account certain factors. Such factors include
services in respect of, including but not limited to, equipment and vehicles purchasing price of the leasing subject, interest rate and arrangement fees
The details are set out in the announcement of the Company dated 20 September to CNACG Group. (if any) (for finance lease), rental fee (for operating lease), the lease
2022
terms, the features of the leasing subject and the comparable market rental
prices. The final transaction price shall not be higher than the transaction
prices offered by at least two independent third parties on the same
Ground support services and other services: including but not limited to the conditions.
following transactions conducted between any member of the Group on the one
hand and any member of CNACG Group on the other hand: ground support services,
aircraft maintenance services, aircraft repair services, property investment
and management services, ticket and tourism services, logistics services, Ground support services and other services:
administrative management services, cleaning and washing services, resident
security services, lounge supplies procurement services and aircraft material
procurement services.
(1) Follow the government pricing or guidance price if it is available;
(2) If no government pricing or guidance price is available, the final
transaction price will be determined on arm's length negotiations between the
parties, with reference to the market prices offered by at least two
independent third parties on the market for the same type of service, and
after taking into account certain factors such as the service standard,
service scope, business volume and specific needs of the parties. If any
service needs of the service recipient change, appropriate adjustment will be
made to the transaction price after negotiation between both parties based on
the extent of variation in the relevant costs, service quality or other
factors;
(3) If neither of the above cases is applicable, the price will be
determined on the basis of costs plus reasonable profit. The costs are mainly
based on the costs and expenses of the service provider, including costs of
human resources and costs of facility, equipment and materials. Reasonable
profit margin will be determined with mainly making reference to the
historical average prices of similar products or services (where possible)
published in the relevant industry, and/or the profit margin of the comparable
products and services disclosed by other listed companies. The profit margin
of CNACG Group shall not exceed 10%. The final transaction prices shall be
determined on terms that, to the Group, are no less favorable than those
provided by independent third parties to the Group or those provided by CNACG
Group to independent third parties (with regards to the receiving of services
by the Group), or no more favorable than those provided by the Group to the
independent third parties (with regards to the rendering of services by the
Group).
10 Framework Agreement The Company and Cathay Pacific (Cathay Pacific is a substantial shareholder of Renewed on 30 August 2022 with a term from 1 January 2023 to 31 December 2025 Providing a framework for the transactions between the Group and Cathay Interline arrangements and codeshare arrangements: revenue is apportioned
the Company and therefore a connected person of the Company)
Pacific Group arising from interline arrangements, code sharing arrangements, between the parties in accordance with bilateral prorate agreements which
joint operating arrangements, aircraft leasing, frequent flyer programmes, the follow the principles in the Multi-lateral Prorate Agreement of International
provision of airline catering, ground support and engineering services and Air Transport Association.
The details are set out in the announcement of the Company dated 30 August other services and transactions agreed.
2022
Joint operating arrangements: revenue is apportioned between the parties
having regard to the fleet capacity of both parties and the values of seats
sold by each party.
Aircraft leasing: rentals payable under aircraft leases are determined after
negotiations at arm's length between the parties having regard to rentals
payable under comparable leases between unconnected parties for comparable
aircraft and comparable periods and prevailing long-term interest rates.
Frequent flyer programmes: frequent flyers of either party can earn mileage
credits by taking the other party's flights. Payments by each party to the
other for mileage values are determined by the parties on an arm's length
basis having regard to comparable mileage values payable by unconnected
airlines to each other.
Airline catering: the parties determine the pricing of airline catering having
regard to quotations provided by unconnected caterers, taking due account of
material and labor costs, quality, assurance of supply, safety and innovation
(including changes in the foregoing matters).
Ground support and engineering services: the pricing is required to be no less
favorable than that offered for comparable services to unconnected parties
taking due account of the quality of services.
Other products and services (including leasing premises and handling customs
clearance): the pricing is determined having regard to relevant market
information (including independent third party quotations for comparable
products and services), costs incurred by the relevant party and the quality
of products and services (including changes in any of the foregoing).
11 Framework Agreement The Company and Air China Cargo (a 45%-owned subsidiary of CNAHC and therefore Renewed on 20 September 2022 with a term from 14 October 2022 to 31 December Exclusive operation of the passenger aircraft cargo business: the Group and Exclusive operation of the passenger aircraft cargo business:
a connected person of the Company) 2024, and subsequently renewed on 30 October 2024 with a term from 1 January the ACC Group have determined to carry out a long-term collaboration for the
2025 to 31 December 2027 passenger aircraft cargo business under an exclusive operating model. The
entire passenger aircraft cargo business of the Group will be operated
exclusively by the ACC Group, and the ACC Group shall undertake the overall During the exclusive operation term, the Group shall charge the ACC Group the
responsibilities for transporting the cargos to the consignors with respect to transportation service fee regularly in each year. Such transportation service
The details are set out in the announcements of the Company dated 20 September the cargos which are transported through the passenger aircraft. fee shall be determined based on the ACC Group's actual cargo revenue
2022 and 30 October 2024
generated from the exclusive operation of the Group's passenger aircraft cargo
business after deducting certain operating fee rate. The specific formulas are
as follows:
Ground support services and other services: the ground support services and
other services provided by the Group to the ACC Group include but are not
limited to operation support services, IT sharing services, comprehensive
support services, engine and aircraft-related materials sharing services, Transportation service fee = actual revenue from the passenger aircraft cargo
retiree management services, training services, human resources services, and business × (1 - operating fee rate)
procurement and maintenance services. The ground support services and other
services provided by the ACC Group to the Group include but are not limited to
ground support services (cargo terminal services and airport apron services),
container and pallet management services, engine and aircraft-related Ground support services and other services:
materials sharing services.
(1) Follow the government and industry pricing or guidance price if it is
available;
(2) If no government pricing or guidance price is available, the final
transaction price shall be determined on arm's length negotiations between the
parties, with reference to the market prices offered by at least two
independent third parties on the market for the same type of service, and
after taking certain factors into account such as the service standard,
service scope, business volume and specific needs of parties. If any service
needs of the service recipient change, appropriate adjustment will be made to
the transaction price after negotiation between both parties based on the
extent of variation in relevant costs, service quality or other factors;
(3) If neither of the above cases is applicable, the price shall be
determined on the basis of costs plus reasonable profit. The costs are mainly
based on the costs and expenses of the service provider, including costs of
human resources and costs of facility, equipment and materials. Reasonable
profit margin will be determined with mainly making reference to the
historical average prices of similar products or services (where possible)
published in the relevant industry, and/or the profit margin of the comparable
products and services disclosed by other listed companies. The reasonable
profit margin of ACC Group shall not exceed 10%. The final transaction prices
shall be determined on terms that, to the Group, are no less favorable than
those provided by independent third parties to the Group or those provided by
ACC Group to independent third parties.
Property leasing: the Group may rent out its own properties or land with legal Property leasing services:
use rights to ACC Group for its production and operation, office and storage
use, and the Group may lease ACC Group's self-owned properties and land with
legal use rights from the ACC Group in the event that its own properties could
not be able to meet its business needs such as production and operation, (1) The Group as lessor: first, the Group shall provide quotation of the
office and storage. leased properties or land to ACC Group after taking into account the factors
including the relevant costs, tax and reasonable profit margin relating to the
properties or land. Then, the rental prices for the leased properties or land
shall be determined through arm's length negotiations between the Group and
ACC Group after ACC Group takes into account the factors such as the location
of the leased properties or land and the service quality. Such rental prices
shall not be lower than the rent offered by the Group to an independent third
party (if any) in comparable circumstances.
(2) The Group as lessee: first, the Group shall conduct market research
and collect, consolidate and analyze information in respect of provision of
leasing services by independent third parties for the same type of properties
or land (if any) in close proximity to the properties or land to be leased.
Then, (a) if there is comparable market of the same type identified through
market research, the parties shall determine the rental prices for the leased
properties or land through arm's length negotiations with reference to the
market price for the same type of services available from at least two
independent third parties after taking into account the relevant factors. The
relevant factors include the geographical location, function and layout,
furnishing, ancillary facilities and property services of the property or land
as well as the specific needs of the lessee; and (b) if there is no comparable
market of the same type found in the neighboring areas through market
research, the price shall be determined by adopting the cost-plus approach:
the rental price of the leased properties or land shall be determined through
arm's length negotiations between the parties based on the relevant costs, tax
and reasonable profit margin of the properties or land offered by ACC Group.
The relevant costs include construction costs, depreciation costs, funding
costs and maintenance costs. Reasonable profit margin will be determined with
mainly making reference to the historical average prices on similar services
(where possible) published regarding the property leasing industry, and/or the
profit margin of the comparable services disclosed by other listed companies,
and the reasonable profit margin of ACC Group shall not exceed 10%. The
abovementioned rental prices shall not be higher than those offered by ACC
Group to the independent third parties (if any) in comparable circumstances.
(3) The Group as lessee and lessor: when leasing each other's properties
or land, as a separate matter, the parties may determine the quotation for the
rental prices of their respective properties or land based on the above
pricing principles, and then exchange the properties and land use right in
accordance with the principle of equivalent exchange.
The Company has confirmed that the execution and implementation of the
specific agreements under the continuing connected transactions set out above
during the Reporting Period has followed the pricing policies of such
continuing connected transactions.
Transaction Caps and Actual Transaction Amounts for the Reporting Period
Actual transaction amounts and transaction caps of the above-mentioned
continuing connected transactions for the Reporting Period are as follows:
Total amount for
the Reporting Period
Currency Annual cap Actual amount
(in millions) (in millions)
Transactions with CNAHC Group:
Revenue from charter flight services RMB 900 472
Revenue from comprehensive services RMB 121 82
Expenditure on comprehensive services RMB 2,780 2,304
Revenue from property leasing RMB 176 18
Total value of right-of-use assets involved in property leasing RMB 390 20
Single rent received from customized properties RMB 330 -
Expenditure on media and advertising services RMB 600 157
Expenditure on construction project management services RMB 90 35
Maximum daily balance of loans granted by CNAF to CNAHC Group RMB 5,500 408
Transactions with CNACG Group:
Expenditure on ground handling and other services RMB 800 540
Total value of right-of-use assets involved in financing and operating leasing RMB 16,500 1,948
Annual rental fee in relation to the operating leases not accounted for as RMB 140 18
right-of-use assets provided by the CNACG Group
Transactions with Cathay Pacific Group:
Aggregate amount payable/paid by the Group to Cathy Pacific Group HKD 800 110
Aggregate amount payable/paid by Cathay Pacific Group to the Group HKD 800 365
Transactions with ACC Group:
Transportation service fee of the passenger aircraft cargo business paid by RMB 18,000 6,849
ACC Group to the Group
Aggregate amount of ground handling and other services paid by ACC Group to RMB 2,700 995
the Group
Aggregate amount of ground handling and other services paid by the Group to RMB 1,600 871
ACC Group
Revenue from property leasing services RMB 250 131
Transactions with CNAF:
Maximum daily balance of deposits placed by the Group with CNAF RMB 22,000 17,808
CONFIRMATION FROM INDEPENDENT NON-EXECUTIVE DIRECTORS
The independent non-executive Directors of the Company have confirmed that
during the Reporting Period, all continuing connected transactions to which
the Company was a party have been entered into in the ordinary and usual
course of business of the Company, on normal commercial terms or better and
have been carried out according to the agreements governing them and that the
terms of them were fair and reasonable and in the interests of the
shareholders of the Company as a whole.
CONFIRMATION FROM THE AUDITOR
Pursuant to Rule 14A.56 of the Listing Rules, the listed issuer must engage
its auditors to report on the continuing connected transactions every year.
The auditor must provide a letter to the listed issuer's board of directors
confirming whether anything has come to their attention that causes them to
believe that the continuing connected transactions:
(1) have not been approved by the listed issuer's board of
directors;
(2) were not, in all material respects, in accordance with the
pricing policies of the listed issuer's group for transactions involving the
provision of goods or services by the listed issuer's group;
(3) were not entered into, in all material respects, in
accordance with the relevant agreements governing the transactions; and
(4) have exceeded the annual cap.
Pursuant to the above requirement under Rule 14A.56 of the Listing Rules, the
Board engaged the auditors of the Company to report on the Group's continuing
connected transactions in accordance with Hong Kong Standard on Assurance
Engagements 3000 (Revised) "Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information" and with reference to Practice Note 740
(Revised) "Auditor's Letter on Continuing Connected Transactions under the
Hong Kong Listing Rules" issued by the Hong Kong Institute of Certified Public
Accountants. The auditors have issued their unmodified letter containing their
conclusion in respect of the continuing connected transactions in accordance
with Rule 14A.56 of the Listing Rules.
RELATED PARTY TRANSACTIONS
Details of the significant related party transactions entered into by the
Group during the Reporting Period are set out in note 46 to the financial
statements of this annual report. None of these related party transactions
constitutes a disclosable connected transaction as defined under the Listing
Rules, except for the transactions described in the section headed "Connected
Transactions" in this Report of the Directors, in respect of which the
disclosure requirements under Chapter 14A of the Listing Rules have been
complied with.
CONTRACT OF SIGNIFICANCE
Save as disclosed in the section headed "Connected Transactions" of this
Report of the Directors, none of the Company or any of its subsidiaries
entered into any contract of significance with the controlling shareholder or
any of its subsidiaries, and there is no contract of significance in relation
to provision of services by the controlling shareholder or any of its
subsidiaries to the Company or any of its subsidiaries.
CORPORATE BONDS AS AT THE END OF THE REPORTING PERIOD
The Group's corporate bonds as at the end of the Reporting Period are
summarised as the followings:
Unit: RMB billion, Currency: RMB
Name of Corporate Bond Abbreviation Code Issue Date Value Date Expiry Date Balance of the Bond Interest Rate Payment of principal and interest Investor suitability arrangement Trading Mechanism
(%)
(if any)
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA01 133201 23 February 2022 25 February 2022 25 February 2025 1.541 3.18 Interest on annual basis Repayment of principal on maturity For not more than 200 institutional investors among professional investors Listed and Transferred on the Integrated Agreement Trading Platform of SZSE
for Professional Investors (First Tranche) only
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA02 133215 17 March 2022 21 March 2022 21 March 2025 1.027 3.43 Interest on annual basis Repayment of principal on maturity For not more than 200 institutional investors among professional investors Listed and Transferred on the Integrated Agreement Trading Platform of SZSE
for Professional Investors (Second Tranche) only
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA03 133229 1 April 2022 7 April 2022 7 April 2025 1.537 3.4 Interest on annual basis Repayment of principal on maturity For not more than 200 institutional investors among professional investors Listed and Transferred on the Integrated Agreement Trading Platform of SZSE
for Professional Investors (Third Tranche) only
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA04 133240 25 April 2022 26 April 2022 26 April 2025 0.716 3.4 Interest on annual basis Repayment of principal on maturity For not more than 200 institutional investors among professional investors Listed and Transferred on the Integrated Agreement Trading Platform of SZSE
for Professional Investors (Fourth Tranche) only
"22SA01", "22SA02", "22SA03" and "22SA04" are traded on the Shenzhen Stock
Exchange (SZSE). The principal underwriter of "22SA01" include Guotai Junan
Securities Co., Ltd., CITIC Securities Co., Ltd., CSC Financial Co., Ltd.,
China International Capital Corporation Limited, Ping An Securities Co., Ltd.
and Shenwan Hongyuan Securities Co., Ltd. The principal underwriter of
"22SA02" include Guotai Junan Securities Co., Ltd., CITIC Securities Co.,
Ltd., CSC Financial Co., Ltd. and Shenwan Hongyuan Securities Co., Ltd. The
principal underwriter of "22SA03" include Guotai Junan Securities Co., Ltd.,
CSC Financial Co., Ltd. and China International Capital Corporation Limited.
The principal underwriter of "22SA04" include Guotai Junan Securities Co.,
Ltd., CITIC Securities Co., Ltd., China International Capital Corporation
Limited and Shenwan Hongyuan Securities Co., Ltd. No bond in the table is
subject to the risk of termination of listing and trading.
The corporate bonds issued by the subsidiary of the Company, namely "22SA01",
"22SA02", "22SA03" and "22SA04", are all unsecured bonds. During the Reporting
Period, the debt repayment plans and debt repayment protective measures for
corporate bonds were in line with the provisions and relevant undertakings
provided in the prospectuses and there was no change. The Company paid
interest to bondholders in strict accordance with the provisions of the
prospectus.
Payment of principal and interest for corporate bonds during the Reporting
Period
Name of Corporate Bond Payment of Principal and Interest
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond On 25 February 2024, the interest payment on the non-public issuance of
for Professional Investors (First Tranche) "22SA01" Corporate Bond was completed.
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond On 21 March 2024, the interest payment on the non-public issuance of "22SA02"
for Professional Investors (Second Tranche) Corporate Bond was completed.
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond On 7 April 2024, the interest payment on the non-public issuance of "22SA03"
for Professional Investors (Third Tranche) Corporate Bond was completed.
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond On 26 April 2024, the interest payment on the non-public issuance of "22SA04"
for Professional Investors (Fourth Tranche) Corporate Bond was completed.
Basic information on debt financing instruments as at the end of the Reporting
Period
Unit: RMB billion, Currency: RMB
Name of Bond Abbreviation Code Issue Date Value Date Expiry Date Balance of the Bond Interest Rate (%) Payment of
principal and interest
Air China Limited 2024 Super Short-term Commercial Paper (Third Tranche) 24ACSCP003 012483169 24 September 2024 25 September 2024 20 June 2025 1.005 2.00 One-off payment of principal and interest on maturity
Air China Limited 2024 Super Short-term Commercial Paper (Fourth Tranche) 24ACSCP004 012483540 8 November 2024 11 November 2024 9 May 2025 1.003 1.96 One-off payment of principal and interest on maturity
Air China Limited 2024 Super Short-term Commercial Paper (Fifth Tranche) 24ACSCP005 012483539 8 November 2024 11 November 2024 9 May 2025 1.003 1.96 One-off payment of principal and interest on maturity
Air China Limited 2022 Medium Term Note (First Tranche) 22ACMTN001 102282150 22 September 2022 23 September 2022 23 September 2025 3.021 2.54 Interest on annual basis Repayment of principal on maturity
Air China Limited 2024 Medium Term Note (First Tranche) 24ACMTN001 102482159 4 June 2024 5 June 2024 5 June 2027 1.013 2.25 Interest on annual basis Repayment of principal on maturity
Air China Limited 2024 Medium Term Note (Second Tranche) 24ACMTN002 102484189 19 September 2024 20 September 2024 20 September 2027 3.017 2.03 Interest on annual basis Repayment of principal on maturity
Air China Limited 2024 Medium Term Note (Third Tranche) 24ACMTN003 102484862 11 November 2024 12 November 2024 12 November 2027 2.006 2.15 Interest on annual basis Repayment of principal on maturity
Shenzhen Airlines Company Limited 2022 Medium Term Note (First Tranche) 22SAMTN001 102280281 16 February 2022 18 February 2022 18 February 2025 1.539 2.99 Interest on annual basis Repayment of principal on maturity
In terms of the place of trading, "24ACSCP003", "24ACSCP004", "24ACSCP005",
"22ACMTN001", "24ACMTN001", "24ACMTN002", "24ACMTN003" and "22SAMTN001" are
all traded on the interbank bond market. In terms of investor suitability
arrangement, they are all issued to institutional investors in the national
interbank bond market. In terms of trading mechanism, they follow the trading
rules of the National Interbank Funding Centre
(全國銀行間同業拆借中心), and are not subject to the risk of
termination of listing and trading.
Payment of principal and interest for corporate bonds during the Reporting
Period
Name of Corporate Bond Payment of Principal and Interest
Air China Limited 2022 Medium Term Note (First Tranche) On 23 September 2024, Air China completed the interest payment on "22ACMTN001"
Medium Term Note.
Shenzhen Airlines Company Limited 2021 Medium Term Note (First Tranche) On 23 August 2024, Shenzhen Airlines completed the interest payment on
"21SAMTN001" Medium Term Note.
Shenzhen Airlines Company Limited 2022 Medium Term Note (First Tranche) On 18 February 2024, Shenzhen Airlines completed the interest payment on
"22SAMTN001" Medium Term Note.
SUBSEQUENT EVENTS
The Company completed the election of the new session of the Board on 25
February 2025. For details, please refer to the announcement of the Company
dated 25 February 2025.
AUDITOR
The Company has appointed Deloitte Touche Tohmatsu and Deloitte Touche
Tohmatsu Certified Public Accountants LLP (collectively, "Deloitte") as the
Company's international auditor and domestic auditor respectively for the year
of 2024. The auditor of the Company has been changed to Deloitte since 2017.
On 27 March 2025, the Board of the Company proposed to appoint KPMG Huazhen
LLP as the Company's domestic auditor and internal control auditor for 2025
and KPMG as the Company's international auditor for 2025, subject to the
consideration and approval of the shareholders of the Company at the AGM. For
details, please refer to the announcement of the Company dated 27 March 2025.
The sections, reports or notes of this annual report mentioned above
constitute a part of this Report of the Directors.
By Order of the Board
Ma Chongxian
Chairman
27 March 2025
Profile of Directors, Supervisors and Senior Management
DIRECTORS
Mr. Ma Chongxian, aged 59, graduated from the department of economics of Inner
Mongolia University majoring in planning and statistics with a bachelor's
degree, and holds a degree of EMBA in Tsinghua University. Mr. Ma started his
career in the civil aviation industry in July 1988. Mr. Ma has been serving as
the Vice President and a member of the Standing Committee of the Party
Committee of Air China from April 2010 to May 2021. From December 2016 to
April 2021, he served as deputy general manager and a member of the Party
Leadership Group of CNAHC. He was the deputy secretary of the Party Leadership
Group of CNAHC from April 2021 to September 2022, as well as the director of
CNAHC from May 2021. He was the general manager of CNAHC, and concurrently the
President and deputy secretary of the Party Committee of the Company from May
2021 to September 2022. He has also served as the vice chairman of the board
of directors of Cathay Pacific since November 2022 and an executive Director
of the Company since July 2021. He served as the Vice Chairman of the Company
from July 2021 to September 2022. He has been serving as the chairman and
secretary of the Party Leadership Group of CNAHC, the Chairman and secretary
of the Party Committee of the Company since September 2022.
Mr. Wang Mingyuan, aged 59, graduated from Xiamen University majoring in
planning and statistics. Mr. Wang started his career in the civil aviation
industry in July 1988. Mr. Wang was appointed as a member of the Standing
Committee of the Party Committee of the Company in February 2011, and served
as the Vice President of the Company from February 2011 to March 2023. He was
appointed as a member of the Party Leadership Group of CNAHC in April 2020,
and served as the deputy general manager of CNAHC from April 2020 to January
2023. He has also served as the vice chairman of Tibet Airlines Co., Ltd.
since June 2020 and the chairman of Air Macau Company Limited from March 2022
to February 2025. He was appointed as a director, the general manager and
deputy secretary of the Party Leadership Group of CNAHC in January 2023, and
was appointed as the deputy secretary of the Party Committee of the Company in
February 2023. He has been serving as the President, Director and Vice
Chairman of the Company since March 2023, and as a non-executive director of
Cathay Pacific Airways Limited since April 2023.
Mr. Cui Xiaofeng, aged 55, graduated from Shaanxi Normal University majoring
in political education with a bachelor's degree, and holds a master's degree
in engineering and a master's degree in business administration. Mr. Cui
started working in the civil aviation industry in July 1992. Mr. Cui served as
the deputy director and a member of the Party Leadership Group of the Civil
Aviation Administration of China from June 2019 to June 2024. He has served as
a director and the deputy secretary of the Party Leadership Group of China
National Aviation Holding Corporation Limited since June 2024, and has served
as the deputy secretary of the Party Committee of the Company since July 2024.
He has been serving as a non-executive Director of the Company since August
2024.
Mr. Patrick Healy, aged 59, graduated from the University of Cambridge with a
master's degree in Modern Languages. He has acted as an executive director of
the beverages division of Swire Pacific Limited since January 2013 and a
director of John Swire & Sons (H.K.) Limited since December 2014. He has
been serving as the chairman of Swire Coca-Cola Limited since October 2019 and
the executive director and chairman of Cathay Pacific Airways Limited since
November 2019. He has been serving as a non-executive Director of the Company
since December 2019, and a director of Swire Pacific Limited since August
2021. He is a member of the International Air Transport Association Board of
Governors and its Chair Committee.
Mr. Xiao Peng, aged 59, graduated from Civil Aviation College of China
majoring in maintenance of aircraft engine under the department of aviation
machinery. He started his career in the civil aviation industry in August
1988. He has been serving as the chairman of the labor union of CNAHC and the
chairman of the labor union and Chief Engineer of the Company since November
2022, as well as the employee representative Director of CNAHC and the
employee representative Director of the Company since March 2023.
Mr. Xu Niansha, aged 67, holds a doctorate degree in economics from Peking
University and a doctorate degree in law from China University of Political
Science and Law. He has acted as the chairman of CITIC Offshore Helicopter
Co., Ltd., the chairman of China Ocean Aviation Group Limited, and the
secretary of the Party Committee and the vice chairman of China National
Machinery Industry Corporation. He served as the secretary of the Party
Committee and the chairman of China Poly Group Corporation Limited from May
2013 to March 2021, and an outside director of COFCO Corporation from July
2021 to December 2024. He has been serving as the secretary of the Party
Committee of the China Machinery Industry Federation since August 2021 and as
the chairman of the China Machinery Industry Federation since August 2022. He
has been an independent non-executive Director of the Company since February
2025. He is concurrently the chairman of the ICC China Commission on Corporate
Responsibility and Anti-Corruption, the vice president of China National Light
Industry Council and the president of the China Arts and Crafts Association.
Mr. He Yun, aged 63, holds a postgraduate diploma in software engineering from
Beijing Institute of Technology. He served as the head of the fourth corporate
audit office of the National Audit Office from April 2018 to March 2021. He
has been serving as an independent non-executive Director of the Company since
February 2022.
Ms. Winnie Tam Wan-chi, aged 63, graduated from the Faculty of Law of The
University of Hong Kong, a barrister, international arbitrator and mediator.
She was appointed as a "Senior Counsel" in 2006, and was awarded the Justice
of the Peace and the Silver Bauhinia Star for her contributions to public
service. She is currently the head of Chambers of Des Voeux Chambers, the
chairman of the Hong Kong Communications Authority, a member of the Chief
Executive's Advisory Council (Innovation and Entrepreneurship), a member of
the Law Reform Commission, a member of the Independent Commission on
Remuneration for Members of the Executive Council and the Legislature and
Officials under the Political Appointment System of the Hong Kong Special
Administrative Region appointed by the government and a member of the board of
governors of Hong Kong Philharmonic Society Limited. She has been serving as
an independent non-executive Director of the Company since February 2022.
Mr. Gao Chunlei, aged 58, holds a doctorate degree in business administration
and is a senior economist. Mr. Gao served as the chief accountant of China
Tower Corporation Limited from August 2014 to February 2022, and served as a
director and the deputy secretary of the Party Committee of China Tower
Corporation Limited from February 2022 to November 2024. He has been a
full-time outside director for state-owned enterprises since November 2024. He
has been serving as an independent non-executive Director of the Company since
February 2025.
SUPERVISORS
Mr. Xiao Jian, aged 61, graduated from the Graduate School of the Party School
of the Central Committee of Communist Party of China majoring in economics and
holds a postgraduate diploma. Mr. Xiao started his career in the civil
aviation industry in 1983. He has been serving as a director and a member of
the Party Committee of CNACG from March 2016 to August 2023. From March 2016
to October 2022, he was the secretary of the Party Committee, vice president
and secretary of the Committee for Discipline Inspection of CNACG. Between
October 2022 and August 2023, he was the president of CNACG. He has been
serving as a Supervisor of the Company since February 2023 and the Chairman of
the Supervisory Committee of the Company since March 2023.
Ms. Lyu Yanfang, aged 53, graduated from Northwest Institute of Politics and
Law majoring in law and holds a bachelor's degree in law. She joined Air China
in 1996 and served as the general manager of the legal department of CNAHC
(Air China) since August 2017. From April 2018 to November 2024, she has been
serving as the supervisor of China National Aviation Capital Holding Co., Ltd.
From August 2018, she has served as the chairwoman of the supervisory
committee of China National Aviation Finance Co., Ltd. She has been serving as
the Supervisor of the Company since December 2020. She has been a supervisor
of Shenzhen Airlines Company Limited from June 2021 to December 2024.
Ms. Guo Lina, aged 54, graduated from Chinese Academy of Fiscal Sciences of
the Ministry of Finance majoring in finance and obtained a master degree in
economics. She also graduated from the School of Economics and Management of
Tsinghua University majoring in executive business administration and obtained
a master's degree in business administration, and is a senior accountant. She
started her career in the civil aviation industry in October 2001. From April
2017 to December 2024, she has served as the supervisor of Air China Inner
Mongolia Co., Ltd. She has also served as a supervisor of Dalian Airlines
Company Limited from July 2020 to December 2024. Since February 2022, she has
been serving as a Supervisor of the Company. From February 2022 to March 2024,
she was the general manager of the audit department of CNAHC. From March 2022
to March 2024, she served as the general manager of the audit department of
the Company. Since March 2024, she has been serving as the vice president and
chief accountant of Shenzhen Airlines Company Limited.
Mr. Wang Mingzhu, aged 57, graduated from Hebei University majoring in
philosophy. He is a senior political work specialist. He started his career in
the civil aviation industry in July 1991. He has been serving as the secretary
of the Party Committee and deputy general manager of the Company's general
fleet since December 2022, and the Supervisor of the Company since March 2023.
Mr. Li Shuxing, aged 57, holds a bachelor's degree in agronomy from Inner
Mongolia Agricultural College. He started his career in the civil aviation
industry in July 1991. He has been serving as the secretary of the Party
Committee, deputy director and chairman of the labor union of the Company's
commercial committee from October 2022 to July 2024, and the Supervisor of the
Company since March 2023. He has been the director and chairman of Shenzhen
Airlines Company Limited since July 2024.
SENIOR MANAGEMENT
Mr. Wang Mingyuan: Please refer to "Directors" for his biographies.
Mr. Tan Huanmin, aged 60, graduated from Jilin University School of Law
majoring in constitutional law and holds a postgraduate diploma. Mr. Tan is a
senior political work specialist. From December 2016 to January 2019, Mr. Tan
was a member of the Party Leadership Group and team leader of the Discipline
Inspection Group of Party Leadership Group of China Aerospace Science &
Technology Corporation. Since January 2019, Mr. Tan has been serving as team
leader of the Discipline Inspection and Supervision Group and a member of the
Party Leadership Group of CNAHC, and in January 2019, he was appointed as a
standing member of the Party Committee and the secretary of Committee for
Discipline Inspection of the Company.
Mr. Zhang Sheng, aged 52, graduated from the Renmin University of
China/American City University with a bachelor's degree in business
administration and a master's degree in business administration. Mr. Zhang
started his career in the civil aviation industry in July 1992. In May 2020,
he was appointed as the deputy general manager and a member of the Party
Leadership Group of CNAHC as well as a member of the Standing Committee of the
Party Committee of the Company. In June 2020, he was appointed as the Vice
President of the Company.
Mr. Sun Yuquan, aged 51, graduated from Nanjing University of Science &
Technology majoring in accounting. He is a professional senior engineer and a
senior accountant. He served as the general manager of the finance department
of China Rong Tong Asset Management Group Corporation Limited from July 2019
to February 2022. He has been serving as the chief accountant and a member of
the Party Leadership Group of CNAHC since February 2022. Since March 2022, he
has been serving as a member of the Standing Committee of the Party Committee
of the Company, and concurrently as the non-executive director of Cathay
Pacific Airways Limited, the chairman of China National Aviation Capital
Holding Co., Ltd. and the chairman of China National Aviation Media Co., Ltd.
He became the Chief Accountant of the Company in March 2023. He has also been
serving as the chairman of China National Aviation Finance Co., Ltd. since
November 2023. He has been the director of Travelsky Technology Limited since
January 2024. Concurrently, he has been serving as the chairman of China
National Aviation Corporation (Group) Limited since April 2024.
Mr. Ni Jiliang, aged 58, graduated from Civil Aviation College of China
majoring in maintenance of aircraft, engines and equipment under the
department of aviation machinery. He joined Air China in July 1988. He has
been the chief executive officer and the deputy secretary of the Party
Committee of Aircraft Maintenance and Engineering Corporation between
September 2017 and April 2020, and the Chief Engineer of the Company from
January 2020 to November 2022. Since April 2020, he has served as the chairman
and secretary of the Party Committee of AMECO. He has been serving as the
deputy general manager and a member of the Party Leadership Group of CNAHC
since April 2022, and the Vice President and a member of the Standing
Committee of the Party Committee of the Company since May 2022. He was also
appointed as the chairman of Beijing Aero-Engine Services Co., Ltd. in August
2022, and the chairman of Sichuan Services Aero-Engine Maintenance Co., Ltd.
in September 2022.
Mr. Zheng Weimin, aged 59, graduated from the First Aviation Academy of Air
Force majoring in aviation and holds a postgraduate diploma. Mr. Zheng is a
senior pilot. He started his career in civil aviation industry in 1987 and
served as the chief captain of the general fleet and deputy secretary of the
Party Committee of the Company from December 2014 to March 2021. Between March
2021 to July 2023, he served as an assistant to the general manager of CNAHC.
He was also appointed as the chairman of Air China Inner Mongolia Co., Ltd.
from March 2023 to December 2024, and was appointed as the deputy general
manager and a member of the Party Leadership Group of CNAHC, as well as a
standing member of the Party Committee of the Company in July 2023. He has
been serving as the Vice President of the Company since August 2023.
Mr. Yan Fei, aged 56, graduated from Tianjin University majoring in business
administration and holds a master's degree in business administration. Mr. Yan
started his career in civil aviation industry in July 1992. From December 2018
to September 2021, he served as the general manager of the ground service
department and the deputy secretary of the Party Committee of the Company.
Between September 2021 and June 2022, he was the deputy general manager of
Tianjin Branch of the Company, being responsible for overseeing the works of
the branch. He served as the general manager and the deputy secretary of the
Party Committee of Tianjin Branch of the Company from June 2022 to January
2024. He has been serving as the deputy general manager and a member of the
Party Leadership Group of CNAHC since January 2024. He has also been serving
as the Vice President and a member of the Party Committee of the Company since
March 2024. Since May 2024, he has concurrently served as the chairman of Air
China Development Corporation (Hong Kong) Limited. Since June 2024, he has
also been serving as the chairman of Air China Cargo Co., Ltd.
Mr. Zhang Hua, aged 59, graduated from Zhongnan University of Finance and
Economics majoring in industrial economics and is an on-job postgraduate of
the Party School of the Central Committee of the Communist Party of China
majoring in economics and management. He was appointed as the general legal
counsel of CNAHC and of the Company in August 2016 and August 2017,
respectively. He has been a chairman of Dalian Airlines Company Limited since
March 2020 and chairman of Beijing Airlines Company Limited from September
2022 to August 2024. Since December 2022, he has concurrently served as the
Chief Compliance Officer of CNAHC and the Company.
Mr. Xiao Peng: Please refer to "Directors" for his biographies.
Mr. Xiao Feng, aged 56, graduated from the Management Engineering Department
of Harbin Civil Engineering & Architectural Institute majoring in
accounting. He holds a master's degree in business administration from China
Europe International Business School and is a senior accountant. He joined Air
China in July 1990. He served as the Chief Accountant of the Company from July
2014 to March 2023. Since November 2015, he has been serving as the chairman
of China National Aviation Company Limited, and from February 2016 to November
2023, he became the chairman of China National Aviation Finance Co., Ltd. He
served as a non-executive director of Cathay Pacific Airways Limited since
January 2017. He became the Chief Economist of the Company in March 2023. He
has concurrently served as the secretary to the Board of the Company since
March 2024.
Mr. Yan Simeng, aged 42, graduated from the Department of Physics of Peking
University and obtained his doctorate in theoretical and computational physics
from the University of California, Irvine. Mr. Yan has been serving as Chief
Information Officer of the Company since September 2021.
Mr. Shen Jianming, aged 57, graduated from the First Flying Academy of China
Air Force with a bachelor's degree in airplane piloting. Mr. Shen is a
first-class pilot. He started his career in the civil aviation industry in
1987. He has been serving as the Chief Safety Officer of the Company since
October 2022.
Mr. Li Yunchuan, aged 57, graduated from Civil Aviation Flight University of
China majoring in flight technology and holds a postgraduate diploma. Mr. Li
is a senior pilot. He started his career in the civil aviation industry in
1988. He has been serving as the Chief Pilot of the Company since October 2023
and the director of Beijing Airlines since March 2024.
JOINT COMPANY SECRETARIES
Mr. Xiao Feng: Please refer to "Senior Management" for his biographies.
Mr. Huen Ho Yin, aged 63, holds a Bachelor of Laws (Hons) Degree from the
University of Leicester in the United Kingdom and a Postgraduate Certificate
in Laws from the University of Hong Kong. Mr. Huen has been practicing as a
solicitor of the High Court of Hong Kong. He is currently a partner of Huen
& Partners Solicitors. From August 1994 to April 2003, he served as a
partner of Richard Tai & Co., Solicitors. Since April 2003, he has been
serving as a partner of Huen & Partners Solicitors. From June 2018 to
February 2020, he served as an independent non-executive director of Grand
Peace Group Holdings Limited. From April 2020 to August 2020, Mr. Huen served
as joint company secretary of the Company. Mr. Huen has been serving as joint
company secretary of the Company since September 2021.
Independent Auditor's Report
TO THE SHAREHOLDERS OF AIR CHINA LIMITED
(中國國際航空股份有限公司)
(Incorporated in the People's Republic of China with limited liability)
Opinion
We have audited the consolidated financial statements of Air China Limited
(the "Company") and its subsidiaries (collectively referred to as the "Group")
set out on pages 89 to 194, which comprise the consolidated statement of
financial position as at 31 December 2024, and the consolidated statement of
profit or loss and the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including material accounting policy
information and other explanatory information.
In our opinion, the consolidated financial statements give a true and fair
view of the consolidated financial position of the Group as at 31 December
2024, and of its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board ("IASB") and have been
properly prepared in compliance with the disclosure requirements of the Hong
Kong Companies Ordinance.
Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing
("HKSAs") issued by the Hong Kong Institute of Certified Public Accountants
("HKICPA"). Our responsibilities under those standards are further described
in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in
accordance with the HKICPA's Code of Ethics for Professional Accountants (the
"Code"), and we have fulfilled our other ethical responsibilities in
accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements for
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters (continued)
Key audit matter How our audit addressed the key audit matter
Provision for major overhauls
As at 31 December 2024, the provision for major overhauls of RMB15,939 million Our procedures in relation to provision for major overhauls to fulfil the
was recorded in the consolidated statement of financial position. return condition of aircraft under leases included:
The Group held certain aircraft under leases at 31 December 2024. Under the • Testing and evaluating the design and operating
terms of the lease arrangements, the Group is contractually committed to effectiveness of the key internal controls relevant to the audit of provision
return the aircraft to the lessors in a certain condition agreed with the for major overhauls to fulfil the return condition of aircraft under leases;
lessors at the inception of each lease. In order to fulfil these return
conditions, major overhauls are required to be conducted on a regular basis.
• Evaluating the appropriateness of the methodology and
key assumptions adopted by management in estimating the provision for these
Management estimates the maintenance costs of major overhauls for aircraft major overhauls. This evaluation based on the terms of the leases and the
held under leases at the end of each reporting period and accrues such costs Group's maintenance cost experience;
over the lease terms. The calculation of such costs includes a number of
variable factors and assumptions, including the anticipated utilisation of the
aircraft and the expected costs of maintenance.
• Performing a retrospective review of the provision for
major overhauls to evaluate the appropriateness of the assumptions adopted by
management by comparing the assumptions adopted by management in prior years
We identified provision for major overhauls to fulfil the return condition of with actual maintenance costs incurred;
aircraft under leases as a key audit matter because of the significant
management estimation and judgement required in assessing the variable factors
and assumptions in order to quantify the amount of provision required at each
reporting date. • Discussing with managers in the engineering department
responsible for aircraft engineering about the utilisation pattern of
aircraft, obtaining relevant operating data, performing recalculation, and
checking the assumptions adopted by management and the mathematical accuracy
Details of the related estimation uncertainty are set out in Notes 4, 5 and 36 of the calculation of provision for major overhauls prepared by management for
to the consolidated financial statements. those aircraft under leases.
Other Information
The directors of the Company are responsible for the other information. The
other information comprises the information included in the annual report, but
does not include the consolidated financial statements and our auditor's
report thereon.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors and Those Charged with Governance for the
Consolidated Financial Statements
The directors of the Company are responsible for the preparation of the
consolidated financial statements that give a true and fair view in accordance
with IFRS Accounting Standards issued by the IASB and the disclosure
requirements of the Hong Kong Companies Ordinance, and for such internal
control as the directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Group's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion solely to you, as a body, in accordance with our
agreed terms of engagement, and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the
contents of this report. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with HKSAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements (continued)
As part of an audit in accordance with HKSAs, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates and related disclosures
made by the directors.
• Conclude on the appropriateness of the directors' use
of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures
in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and
content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient
appropriate audit evidence regarding the financial information of the entities
or business units within the group as a basis for forming an opinion on the
group financial statements. We are responsible for the direction, supervision
and review of the audit work performed for purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements (continued)
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements for the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's
report is Ng Kwok Ho.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 March 2025
Consolidated Statement of
Profit or Loss
For the Year Ended 31 December 2024
2024 2023
NOTES RMB'000 RMB'000
Revenue 6 166,698,880 141,100,234
Other income and gains 8 7,319,912 7,401,756
174,018,792 148,501,990
Operating expenses
Jet fuel costs (53,720,436) (46,725,219)
Employee compensation costs 9 (34,268,745) (29,300,310)
Depreciation and amortisation 11 (29,102,968) (27,110,507)
Take-off, landing and depot charges (20,915,459) (15,554,795)
Aircraft maintenance, repair and overhaul costs (12,848,288) (9,921,853)
Air catering charges (4,165,874) (3,002,720)
Aircraft and engine lease expense (358,885) (237,319)
Other lease expenses (598,621) (602,403)
Other flight operation expenses (9,119,619) (7,838,908)
Selling and marketing expenses (4,695,760) (3,423,478)
General and administrative expenses (1,872,201) (1,683,284)
Impairment loss recognised on non-current assets 11 (143,240) (187,054)
Net impairment loss reversed/(recognised) under 10 9,507 (24,617)
expected credit loss model
(171,800,589) (145,612,467)
Profit from operations 11 2,218,203 2,889,523
Finance income 521,356 605,004
Finance costs 12 (6,398,748) (6,943,087)
Share of results of associates 2,610,723 2,554,412
Share of results of joint ventures 209,121 279,566
Exchange losses, net (759,523) (1,035,197)
Loss before taxation (1,598,868) (1,649,779)
Income tax (expense)/credit 14 (846,474) 88,531
Loss for the year (2,445,342) (1,561,248)
Attributable to:
- Equity shareholders of the Company (232,557) (1,038,411)
- Non-controlling interests (2,212,785) (522,837)
(2,445,342) (1,561,248)
Loss per share
- Basic and diluted 15 RMB(1.47) cents RMB(6.74) cents
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 31 December 2024
2024 2023
RMB'000 RMB'000
Loss for the year (2,445,342) (1,561,248)
Other comprehensive (expense)/income for the year
Items that will not be reclassified to profit or loss:
- Fair value (losses)/gains on investments in equity instruments at fair value (79,126) 149,253
through other comprehensive income
- Remeasurement of net defined benefit liability (15,130) (912)
- Share of other comprehensive (expense)/income of associates and joint (31,632) 43,458
ventures
- Income tax credit/(expense) relating to items that will not be reclassified 19,782 (37,313)
to profit or loss
Items that may be reclassified subsequently to profit or loss:
- Fair value gains on investments in debt instruments at fair value through 27,772 9,138
other comprehensive income
- Impairment loss reversed/(recognised) on investments in debt instruments at 394 (6,688)
fair value through other comprehensive income
- Share of other comprehensive expense of associates and joint ventures (28,272) (472,484)
- Exchange differences on translation of foreign operations 434,021 250,817
- Income tax relating to items that may be reclassified subsequently to (7,042) (613)
profit or loss
Other comprehensive income/(expense) for the year (net of tax) 320,767 (65,344)
Total comprehensive expense for the year (2,124,575) (1,626,592)
2023
Attributable to:
- Equity shareholders of the Company 114,293 (1,097,758)
- Non-controlling interests (2,238,868) (528,834)
(2,124,575) (1,626,592)
Consolidated Statement
of Financial Position
At 31 December 2024
31 December 31 December
2024 2023
NOTES RMB'000 RMB'000
Non-current assets
Property, plant and equipment 17 122,180,871 117,728,498
Right-of-use assets 18 118,832,142 120,971,059
Investment properties 19 693,059 726,594
Intangible assets 106,563 106,580
Goodwill 20 4,095,732 4,095,732
Interests in associates 22 14,632,923 12,863,023
Interests in joint ventures 23 2,423,853 2,413,799
Advance payments for aircraft and flight equipment 24,689,737 26,114,064
Deposits for aircraft under leases 526,004 525,463
Equity instruments at fair value through other comprehensive income 24 1,791,273 1,547,986
Debt instruments at fair value through other comprehensive income 25 1,426,851 1,397,310
Deferred tax assets 26 12,959,766 13,757,180
Other non-current assets 704,196 696,685
305,062,970 302,943,973
Current assets
Inventories 27 4,224,992 3,682,821
Accounts receivable 28 3,670,252 3,182,797
Bills receivable 7,785 3,601
Prepayments, deposits and other receivables 29 5,223,257 5,852,345
Financial assets at fair value through profit or loss 37,559 2,505
Restricted bank deposits 30 1,428,429 611,692
Cash and cash equivalents 30 21,039,472 15,016,804
Assets held for sale 94,829 108,527
Other current assets 31 4,960,628 3,873,629
40,687,203 32,334,721
Total assets 345,750,173 335,278,694
Current liabilities
Air traffic liabilities (11,098,740) (8,366,222)
Accounts payable 32 (18,869,784) (17,954,298)
Bills payable - (500,160)
Dividends payable (98,000) (98,000)
Other payables and accruals 33 (13,437,502) (15,701,546)
Advance (36,270) -
Current taxation (130,653) (76,662)
Lease liabilities 34 (17,464,654) (18,175,349)
Interest-bearing borrowings 35 (74,544,705) (47,271,768)
Provision for return condition checks 36 (758,575) (650,777)
Contract liabilities 37 (1,171,172) (1,522,492)
(137,610,055) (110,317,274)
Net current liabilities (96,922,852) (77,982,553)
Total assets less current liabilities 208,140,118 224,961,420
Non-current liabilities
Lease liabilities 34 (59,134,187) (64,053,967)
Interest-bearing borrowings 35 (84,836,960) (104,759,631)
Provision for return condition checks 36 (19,228,054) (17,196,982)
Provision for early retirement benefit obligations (359) (720)
Long-term payables (727,741) (1,082,301)
Contract liabilities 37 (2,565,188) (1,663,987)
Defined benefit obligations 38 (186,700) (187,810)
Deferred income 39 (406,943) (404,103)
Deferred tax liabilities 26 (128,016) (347,910)
(167,214,148) (189,697,411)
NET ASSETS 40,925,970 35,264,009
CAPITAL AND RESERVES
Issued capital 40 17,448,421 16,200,793
Treasury shares 40 (3,047,564) (3,047,564)
Reserves 30,727,315 24,052,746
Total equity attributable to equity shareholders of the Company 45,128,172 37,205,975
Non-controlling interests (4,202,202) (1,941,966)
TOTAL EQUITY 40,925,970 35,264,009
The consolidated financial statements on pages 89 to 194 were approved and
authorised for issue by the board of directors on 27 March 2025 and signed on
its behalf by:
Ma Chongxian Wang Mingyuan
DIRECTOR DIRECTOR
Consolidated Statement of
Changes in Equity
For the Year Ended 31 December 2024
Attributable to equity shareholders of the Company
NOTE Issued Treasury Capital Reserve General Foreign exchange accumulated losses Total Non- Total
capital
shares
reserve and revaluation reserve
funds
reserve
translation
controlling
equity
and safety
reserve
interests
fund
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January 2023 14,524,815 (3,047,564) 30,552,858 11,564,287 137,138 (1,424,734) (28,729,624) 23,577,176 (2,048,948) 21,528,228
Changes in equity for 2023
Loss for the year - - - - - - (1,038,411) (1,038,411) (522,837) (1,561,248)
Other comprehensive (expense)/income - - (307,841) - - 248,494 - (59,347) (5,997) (65,344)
Total comprehensive (expense)/income - - (307,841) - - 248,494 (1,038,411) (1,097,758) (528,834) (1,626,592)
Issue of new shares 1,675,978 - 13,317,039 - - - - 14,993,017 - 14,993,017
Acquisition of a subsidiary - - (146,162) - 3,047 - 146,162 3,047 405,039 408,086
Equity transaction with non-controlling shareholders - - (133) - - - - (133) 120 (13)
Dissolution of a subsidiary - - - - - - - - (5,282) (5,282)
Capital reduction by a non-controlling shareholder - - - - - - (268,952) (268,952) 252,952 (16,000)
Dividends paid to non-controlling shareholders - - - - - - - - (16,734) (16,734)
Appropriation of discretionary reserve funds and others - - - - - - (335) (335) (224) (559)
Appropriation of general reserve - - - - 16,609 - (16,609) - - -
Others - - 20 - (107) - - (87) (55) (142)
As at 31 December 2023 and 16,200,793 (3,047,564) 43,415,781 11,564,287 156,687 (1,176,240) (29,907,769) 37,205,975 (1,941,966) 35,264,009
1 January 2024
Changes in equity for 2024
Loss for the year - - - - - - (232,557) (232,557) (2,212,785) (2,445,342)
Other comprehensive (expense)/income - - (86,365) - - 433,215 - 346,850 (26,083) 320,767
Total comprehensive (expense)/income - - (86,365) - - 433,215 (232,557) 114,293 (2,238,868) (2,124,575)
Issue of new shares 40 1,247,628 - 6,563,956 - - - - 7,811,584 - 7,811,584
Disposal of equity instruments at fair value through other comprehensive - - (12,082) - - - 12,082 - - -
income
Equity transaction with non-controlling shareholders - - (360) - - - - (360) (362) (722)
Dividends paid to non-controlling shareholders - - - - - - - - (19,491) (19,491)
Appropriation of general reserve - - - - 23,759 - (23,759) - - -
Others - - (380) - (2,940) - - (3,320) (1,515) (4,835)
As at 31 December 2024 17,448,421 (3,047,564) 49,880,550 11,564,287 177,506 (743,025) (30,152,003) 45,128,172 (4,202,202) 40,925,970
Consolidated Statement
of Cash Flows
For the Year Ended 31 December 2024
2024 2023
RMB'000 RMB'000
Operating activities
Loss before taxation (1,598,868) (1,649,779)
Adjustments for:
Share of results of associates and joint ventures (2,819,844) (2,833,978)
Exchange losses, net 759,523 1,035,197
Finance income (521,356) (605,004)
Finance costs 6,398,748 6,943,087
Fair value changes of financial assets at fair value through profit or loss (54) 893
Gain on disposal of property, plant and equipment,right-of-use assets (994,891) (900,086)
and investment properties
Gain/(loss) on disposal of assets held for sale 17,527 (18,519)
Depreciation of property, plant and equipment 13,439,898 11,611,121
Depreciation of right-of-use assets 15,629,518 15,468,124
Depreciation of investment properties 33,535 31,256
Amortisation of intangible assets 17 6
Impairment loss recognised on property, plant and equipment 143,240 184,166
Impairment losses recognised on inventories 12,760 35,049
Impairment losses recognised on interests in associates - 2,888
Impairment loss recognised on accounts receivable, net 4,000 22,785
Impairment losses recognised in financial assets include in 2,918 5,211
other current assets, net
Impairment losses (reversed)/recognised on deposits and other receivables, net (18,960) 3,309
Impairment loss recognised (reversed) on debt instruments at fair value 394 (6,688)
through
other comprehensive income, net
Dividend income (36,740) (14,286)
Operating cash flows before movements in working capital 30,451,365 29,314,752
(Increase)/decrease in deposits for aircraft under leases (541) 14,161
Decrease/(increase) in other non-current assets 306 (445,289)
Increase in inventories (432,413) (623,648)
Increase in accounts receivable (565,195) (740,308)
(Increase)/decrease in bills receivable (4,184) 9,854
Decrease/(increase) in prepayments, deposits and other receivables 4,564,222 (1,004,702)
Increase in other current assets (948,131) (323,580)
Increase in air traffic liabilities 2,372,236 5,248,339
Increase in accounts payable 504,009 3,986,902
(Decrease)/increase in bills payable (500,160) 322,204
Decrease in other payables and accruals (2,264,047) (2,058,569)
Increase in provision for return condition checks 1,423,711 1,121,382
Decrease in provision for early retirement benefit obligations (361) (87)
Decrease in defined benefit obligations (22,951) (23,194)
Increase/(decrease) in in deferred income 2,840 (14,097)
Increase in contract liabilities 549,881 581,839
Decrease in advance (36,270) (58,970)
(Decrease)/increase in long-term payables (354,560) 272,549
Cash generated from operations 34,739,757 35,579,538
Income tax paid (194,050) (161,068)
Interest paid (6,561,686) (7,513,966)
Net cash from operating activities 27,984,021 27,904,504
2024 2023
NOTE RMB'000 RMB'000
Investing activities
Advance payments for aircraft and flight equipment (10,948,426) (13,118,593)
Payments for the purchase of property, plant and equipment (9,155,889) (9,650,751)
Payments for the purchase of debt instruments and equity instruments at fair (752,861) (1,354,692)
value through other comprehensive income
Placement of term deposits (627,763) -
Purchase of debt instruments at amortised cost (500,000) -
Payments for the interest in a joint venture (148,991) (61,838)
Decrease in restricted bank deposits against aircraft leases and others (917) (4,456)
Proceeds from disposal of property, plant and equipment, 1,673,765 1,323,832
and assets held for sale
Dividends received from associates and joint ventures 1,514,842 141,907
Interest received 521,356 605,004
Proceeds from disposal of debt instruments and equity instruments at fair 476,033 1,408,988
value through other comprehensive income
Interests received from debt instruments at fair value through other 43,644 59,343
comprehensive income
Dividends received from equity instruments at fair value through 36,740 13,440
other comprehensive income
Disposal of interest in joint venture 5,915 -
Net cash inflows arising on acquisition of a subsidiary - 5,392,113
Net cash used in investing activities (17,862,552) (15,245,703)
Financing activities
Repayments of bank loans and other borrowings (53,977,115) (42,035,455)
Repayments of lease liabilities (19,121,281) (25,400,182)
Repayments of corporate bonds and short-term commercial papers (6,000,000) (10,500,000)
Dividends paid (19,491) (16,734)
Transaction costs attributable to issue of new shares (5,276) (6,983)
Payments for acquisition of non-controlling interests (722) (13)
Proceeds from new bank loans and other borrowings 54,310,833 51,226,029
Proceeds from issuance of corporate bonds 13,000,000 -
Proceeds from issue of new shares 7,816,860 15,000,000
Capital contribution from a non-controlling shareholder of a subsidiary - 3,400,000
Net cash used in financing activities (3,996,192) (8,333,338)
Net increase in cash and cash equivalents 6,125,277 4,325,463
Cash and cash equivalents at 1 January 30 15,016,804 10,607,711
Effect of foreign exchange rate changes (102,609) 83,630
Cash and cash equivalents at 31 December 30 21,039,472 15,016,804
Notes to the Consolidated
Financial Statements
For the Year Ended 31 December 2024
1. CORPORATE INFORMATION
Air China Limited (the "Company") was established as a joint stock limited
company in Beijing, the People's Republic of China (the "PRC"), on 30
September 2004. The Company's H shares are listed on The Stock Exchange of
Hong Kong Limited (the "HKSE") and the London Stock Exchange (the "LSE") while
the Company's A shares are listed on the Shanghai Stock Exchange. In the
opinion of the directors of the Company (the "Directors"), the Company's
parent and ultimate holding company is China National Aviation Holding
Corporation Limited ("CNAHC"), a PRC state-owned enterprise under the
supervision of the State Council.
The principal activities of the Company and its subsidiaries (together
referred to as the "Group") are provision of airline and airline-related
services, including aircraft engineering services and airport ground handling
services.
The registered office of the Company is located at 1st Floor - 9th Floor 101,
Building 1, 30 Tianzhu Road, Shunyi District, Beijing, the PRC.
The consolidated financial statements are presented in Renminbi ("RMB"), the
currency of the primary economic environment in which most of the group
entities operate (the functional currency of the Company and most of the
entities comprising the Group), and all values are rounded to the nearest
thousand ('000) unless otherwise indicated.
2. BASIS OF PREPARATION
As at 31 December 2024, the Group's current liabilities exceeded its current
assets by approximately RMB96,923 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 RMB144,106 million as at 31 December 2024, 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 2024.
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
IFRS Accounting Standards as issued by the International Accounting Standards
Board ("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 Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited ("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, as explained in the accounting
policies set out below. Historical cost is generally based on the fair value
of the consideration given in exchange for goods and services.
2. BASIS OF PREPARATION (continued)
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value
of an asset or a liability, the Group takes into account the characteristics
of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure purposes in
these consolidated financial statements is determined on such a basis, except
for leasing transactions that are accounted for in accordance with IFRS 16
Leases, and measurements that have some similarities to fair value but are not
fair value, such as net realisable value in IAS 2 Inventories or value in use
in IAS 36 Impairment of Assets.
For financial instruments which are transacted at fair value and a valuation
technique that unobservable inputs is to be used to measure fair value in
subsequent periods, the valuation technique is calibrated so that at initial
recognition the results of the valuation technique equals the transaction
price.
In addition, for financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which the inputs to
the fair value measurements are observable and the significance of the inputs
to the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that the entity can access
at the measurement date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability.
3. APPLICATION OF NEW AND AMENDMENTS TO IFRS ACCOUNTING
STANDARDS
Amendments to IFRS Accounting Standards that are mandatorily effective for the
current year
In the current year, the Group has applied the following new and amendments to
IFRS Accounting Standards issued by the IASB for the first time, which are
mandatorily effective for the Group's annual period beginning on 1 January
2024 for the preparation of the consolidated financial statements:
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
Amendments to IAS 1 Non-current Liabilities with Covenants
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
3. APPLICATION OF NEW AND AMENDMENTS TO IFRS ACCOUNTING
STANDARDS (continued)
Amendments to IFRS Accounting Standards in issue but not yet effective
The Group has not early applied the following amendments to IFRS Accounting
Standards that have been issued but are not yet effective:
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and Measurement of
Financial Instruments(3)
Amendments to IFRS 9 and IFRS 7 Contracts Referencing Nature- dependent Electricity(3)
Amendments to IFRS 10 and IFRS 28 Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture(1)
Amendments to IFRS Accounting Standards Annual Improvements to IFRS Accounting Standards- Volume 11(3)
Amendments to IAS 21 Lack of Exchangeability(2)
IFRS 18 Presentation and Disclosure in Financial Statements(4)
(1) Effective for annual periods beginning on or after a
date to be determined.
(2) Effective for annual periods beginning on or 1 January
2025.
(3) Effective for annual periods beginning on or 1 January
2026.
(4) Effective for annual periods beginning on or 1 January
2027.
Except for the new IFRS Accounting Standard mentioned below, the Directors
anticipate that the application of all other amendments to IFRS Accounting
Standards will have no material impact on the consolidated financial
statements in the foreseeable future.
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 Presentation and Disclosure in Financial Statements, which sets out
requirements on presentation and disclosures in financial statements, will
replace IAS 1 Presentation of Financial Statements. This new IFRS Accounting
Standard, while carrying forward many of the requirements in IAS 1, introduces
new requirements to present specified categories and defined subtotals in the
statement of profit or loss; provide disclosures on management-defined
performance measures in the notes to the financial statements and improve
aggregation and disaggregation of information to be disclosed in the financial
statements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and
IFRS 7. Minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings
per Share are also made.
IFRS 18, and amendments to other standards, will be effective for annual
periods beginning on or after 1 January 2027, with early application
permitted. The application of the new standard is expected to affect the
presentation of the statement of profit or loss and disclosures in the future
financial statements. The Group is in the process of assessing the detailed
impact of IFRS 18 on the Group's consolidated financial statements.
4. MATERIAL ACCOUNTING POLICY INFORMATION
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from
its involvement with the investee; and
• has the ability to use its power to affect its
returns.
The Group reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss
from the date the Group gains control until the date when the Group ceases to
control the subsidiary.
Profit or loss and each item of other comprehensive income are attributed to
the owners of the Company and to the non-controlling interests ("NCI"). Total
comprehensive income of subsidiaries is attributed to the owners of the
Company and to the NCI even if this results in the NCI having a deficit
balance.
When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies in line with the Group's
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full
on consolidation.
NCI in subsidiaries are presented separately from the Group's equity therein,
which represent present ownership interests entitling their holders to a
proportionate share of net assets of the relevant subsidiaries upon
liquidation.
Business combinations
Acquisitions of businesses, other than business combination under common
control are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is
calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are generally
recognised in profit or loss as incurred.
The identifiable assets acquired and liabilities assumed must meet the
definitions of an asset and a liability in the Conceptual Framework for
Financial Reporting (the "Conceptual Framework") except for transactions and
events within the scope of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets or IFRIC-Int 21 Levies, in which the Group applies IAS 37 or
IFRIC-Int 21 instead of the Conceptual Framework to identify the liabilities
it has assumed in a business combination. Contingent assets are not
recognised.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Business combinations (continued)
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value, except that:
• deferred tax assets or liabilities, and assets or
liabilities related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits
respectively;
• liabilities or equity instruments related to
share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with IFRS2 Share-based
Payment at the acquisition date (see the accounting policy below);
• assets (or disposal groups) that are classified as
held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that standard; and
• lease liabilities are recognised and measured at the
present value of the remaining lease payments (as defined in IFRS 16 Leases)
as if the acquired leases were new leases at the acquisition date, except for
leases for which (a) the lease term ends within 12 months of the acquisition
date; or (b) the underlying asset is of low value. Right-of-use assets are
recognised and measured at the same amount as the relevant lease liabilities,
adjusted to reflect favourable or unfavourable terms of the lease when
compared with market terms.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any NCI in the acquiree, and the fair value of the
acquirer's previously held equity interest in the acquiree over the net amount
of the identifiable assets acquired and the liabilities assumed as at
acquisition date. If, after re-assessment, the net amount of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any NCI in the acquiree and the fair value of the
acquirer's previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase gain.
NCI that are present ownership interests and entitle their holders to a
proportionate share of the relevant subsidiary's net assets in the event of
liquidation are initially measured at the NCIs' proportionate share of the
recognised amounts of the acquiree's identifiable net assets or at fair value.
When a business combination is achieved in stages, the Group's previously held
equity interest in the acquiree is remeasured to fair value at the acquisition
date (i.e. the date when the Group obtains control), and the resulting gain or
loss, if any, is recognised in profit or loss or other comprehensive income,
as appropriate. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive
income and measured under IFRS 9 would be accounted for on the same basis as
would be required if the Group had disposed directly of the previously held
equity interest.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as
established at the date of acquisition of the business (see the accounting
policy above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the
Group's cash-generating units (or group of cash-generating units) that is
expected to benefit from the synergies of the combination, which represent the
lowest level at which the goodwill is monitored for internal management
purposes and not larger than an operating segment.
A cash-generating unit (or group of cash-generating units) to which goodwill
has been allocated is tested for impairment annually or more frequently when
there is indication that the unit may be impaired. For goodwill arising on an
acquisition in a reporting period, the cash-generating unit (or group of
cash-generating units) to which goodwill has been allocated is tested for
impairment before the end of that reporting period. If the recoverable amount
is less than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill and then to the other assets on a
pro-rata basis based on the carrying amount of each asset in the unit (or
group of cash-generating units).
The Group's policy for goodwill arising on the acquisition of an associate and
a joint venture is described below.
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control
over those policies.
A joint venture is a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are
incorporated in these consolidated financial statements using the equity
method of accounting. Under the equity method, an investment in an associate
or a joint venture is initially recognised in the consolidated statement of
financial position at cost and adjusted thereafter to recognise the Group's
share of the profit or loss and other comprehensive income of the associate or
joint venture. When the Group's share of losses of an associate or a joint
venture exceeds the Group's interest in that associate or joint venture (which
includes any long-term interests that, in substance, form part of the Group's
net investment in the associate or joint venture), the Group discontinues
recognising its share of further losses. Additional losses are recognised only
to the extent that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate or joint venture.
An investment in an associate or a joint venture is accounted for using the
equity method from the date on which the investee becomes an associate or a
joint venture. On acquisition of the investment in an associate or a joint
venture, any excess of the cost of the investment over the Group's share of
the net fair value of the identifiable assets and liabilities of the investee
is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group's share of the net fair value of the
identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in the period in
which the investment is acquired.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Investments in associates and joint ventures (continued)
The Group assesses whether there is an objective evidence that the interest in
an associate or a joint venture may be impaired. When any objective evidence
exists, the entire carrying amount of the investment (including goodwill) is
tested for impairment in accordance with IAS 36 as a single asset by comparing
its recoverable amount (higher of value in use and fair value less costs of
disposal) with its carrying amount. Any impairment loss recognised is not
allocated to any asset, including goodwill, that forms part of the carrying
amount of the investment. Any reversal of that impairment loss is recognised
in accordance with IAS 36 to the extent that the recoverable amount of the
investment subsequently increases.
When the Group ceases to have significant influence over an associate or joint
control over a joint venture, it is accounted for as a disposal of the entire
interest in the investee with a resulting gain or loss being recognised in
profit or loss. When the Group retains an interest in the former associate or
joint venture and the retained interest is a financial asset within the scope
of IFRS 9 Financial instruments, the Group measures the retained interest at
fair value at that date and the fair value is regarded as its fair value on
initial recognition. The difference between the carrying amount of the
associate or joint venture and the fair value of any retained interest and any
proceeds from disposing relevant interest in the associate or joint venture is
included in the determination of the gain or loss on disposal of the associate
or joint venture. In addition, the Group accounts for all amounts previously
recognised in other comprehensive income in relation to that associate or
joint venture on the same basis as would be required if that associate or
joint venture had directly disposed of the related assets or liabilities.
Therefore, if a gain or loss previously recognised in other comprehensive
income by that associate or joint venture would be reclassified to profit or
loss on the disposal of the related assets or liabilities, the Group
reclassifies the gain or loss from equity to profit or loss (as a
reclassification adjustment) upon disposal/partial disposal of the relevant
associate or joint venture.
When a group entity transacts with an associate or a joint venture of the
Group, profits and losses resulting from the transactions with the associate
or joint venture are recognised in the Group's consolidated financial
statements only to the extent of interests in the associate or joint venture
that are not related to the Group.
Revenue from contracts with customers
Information about the Group's accounting policies relating to revenue from
contracts with customers is provided in Notes 5, 6 and 37.
Maintenance and overhaul costs
In respect of aircraft and engines, costs of major overhauls are recognised in
the carrying amount of the property, plant and equipment or right-of-use
assets as a replacement if the recognition criteria are satisfied. Overhaul
components subject to replacement during major overhauls are depreciated over
the expected life between major overhauls.
The Group has the responsibility to fulfil certain return conditions under the
relevant leases agreements. In order to fulfil these return conditions, major
overhauls are required to be conducted. Accordingly, estimated overhaul costs
for aircraft under leases are accrued and charged to the profit or loss over
the lease terms using the ratios per flying hours/cycles. Differences between
the estimated costs and the actual costs of overhauls are included in the
profit or loss in the period of overhaul.
All other routine repair and maintenance costs incurred in restoring such
property, plant and equipment and leased assets to their normal working
condition are charged to the profit or loss as and when incurred.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Leases
The Group assesses whether a contract is or contains a lease based on the
definition under IFRS 16 at inception of the contract. Such contract will not
be reassessed unless the terms and conditions of the contract are subsequently
changed.
Definition of a lease
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration.
For contracts entered into or modified on or after the date of initial
application or arising from business combinations, the Group assesses whether
a contract is or contains a lease based on the definition under IFRS 16 at
inception, modification date or acquisition date, as appropriate. Such
contract will not be reassessed unless the terms and conditions of the
contract are subsequently changed.
The Group as a lessee
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to leases of
buildings and other equipment that have a lease term of 12 months or less from
the commencement date and do not contain a purchase option. It also applies
the recognition exemption for lease of low-value assets. Lease payments on
short-term leases and leases of low-value assets are recognised as expense on
a straight-line basis or another systematic basis over the lease term.
Right-of-use assets
The cost of right-of-use assets includes:
• the amount of the initial measurement of the lease
liability;
• any lease payments made at or before the commencement
date, less any lease incentives received;
• any initial direct costs incurred by the Group; and
• an estimate of costs to be incurred by the Group in
dismantling and removing the underlying assets, restoring the site on which it
is located or restoring the underlying asset to the condition required by the
terms and conditions of the lease.
Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease
liabilities.
Right-of-use assets in which the Group is reasonably certain to obtain
ownership of the underlying leased assets at the end of the lease term are
depreciated from commencement date to the end of the useful life. Otherwise,
right-of-use assets are depreciated on a straight-line basis over the shorter
of its estimated useful life and the lease term.
When the Group obtains ownership of the underlying leased assets at the end of
the lease term, upon exercising purchase options, the cost of the relevant
right-of-use assets and the related accumulated depreciation and impairment
loss are transferred to property, plant and equipment.
The Group presents right-of-use assets as a separate line item on the
consolidated statement of financial position.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Leases (continued)
The Group as a lessee (continued)
Lease liabilities
At the commencement date of a lease, the Group recognises and measures the
lease liability at the present value of lease payments that are unpaid at that
date. In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable.
The lease payments include:
• fixed payments (including in-substance fixed payments)
less any lease incentives receivable;
• variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable by the Group under
residual value guarantees;
• the exercise price of a purchase option if the Group
is reasonably certain to exercise the option; and
• payments of penalties for terminating a lease, if the
lease term reflects the Group exercising an option to terminate the lease.
Variable lease payments that reflect changes in market rental rates are
initially measured using the market rental rates as at the commencement date.
Variable lease payments that do not depend on an index or a rate are not
included in the measurement of lease liabilities and right-of-use assets, and
are recognised as expense in the period on which the event or condition that
triggers the payment occurs.
After the commencement date, lease liabilities are adjusted by interest
accretion and lease payments.
The Group remeasures lease liabilities (and makes a corresponding adjustment
to the related right-of-use assets) whenever:
• the lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case the related lease
liability is remeasured by discounting the revised lease payments using a
revised discount rate at the date of reassessment.
• the lease payments change due to changes in market
rental rates following a market rent review/expected payment under a
guaranteed residual value, in which cases the related lease liability is
remeasured by discounting the revised lease payments using the initial
discount rate.
• a lease contract is modified and the lease
modification is not accounted for as a separate lease.
The Group presents lease liabilities as a separate line item on the
consolidated statement of financial position.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Leases (continued)
The Group as a lessee (continued)
Lease modifications
The Group accounts for a lease modification as a separate lease if:
• the modification increases the scope of the lease by
adding the right to use one or more underlying assets; and
• the consideration for the leases increases by an
amount commensurate with the stand-alone price for the increase in scope and
any appropriate adjustments to that stand-alone price to reflect the
circumstances of the particular contract.
For a lease modification that is not accounted for as a separate lease, the
Group remeasures the lease liability based on the lease term of the modified
lease by discounting the revised lease payments using a revised discount rate
at the effective date of the modification.
The Group accounts for the remeasurement of lease liabilities by making
corresponding adjustments to the relevant right-of-use assets.
When the modified contract contains a lease component and one or more
additional lease or non-lease components, the Group allocates the
consideration in the modified contract to each lease component on the basis of
the relative stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components.
The Group as a lessor
Classification and measurement of leases
Leases for which the Group is a lessor are classified as finance or operating
leases. Whenever the terms of the lease transfer substantially all the risks
and rewards incidental to ownership of an underlying asset to the lessee, the
contract is classified as a finance lease. All other leases are classified as
operating leases.
Rental income from operating leases is recognised in profit or loss on a
straight-line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset, and such costs are recognised as an
expense on a straight-line basis over the lease term.
Sale and leaseback transactions
The Group applies the requirements of IFRS 15 Revenue from Contracts with
Customers to assess whether sale and leaseback transaction constitutes a sale
by the Group.
The Group acts as a seller-lessee
For a transfer that does not satisfy the requirements as a sale, the Group as
a seller-lessee continues to recognise the assets and accounts for the
transfer proceeds as borrowings within the scope of IFRS 9.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Foreign currencies
In preparing the financial statements of each individual group entity,
transactions in currencies other than the functional currency of that entity
(foreign currencies) are recognised at the rates of exchanges prevailing on
the dates of the transactions.
At the end of the reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined. When a fair value gain or loss on a non-monetary item is
recognised in profit or loss, any exchange component of that gain or loss is
also recognised in profit or loss. When a fair value gain or loss on a
non-monetary item is recognised in other comprehensive income, any exchange
component of that gain or loss is also recognised in other comprehensive
income. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting the consolidated financial statements, the
assets and liabilities of the Group's foreign operations are translated into
the presentation currency of the Group (i.e. RMB) at the rate of exchange
prevailing at the end of the reporting period. Income and expenses are
translated at the average exchange rates for the year, unless exchange rates
fluctuate significantly during the year, in which case, the exchange rates
prevailing at the dates of transactions are used. Exchange differences
arising, if any, are recognised in other comprehensive income and accumulated
in equity under the heading of foreign exchange translation reserve
(attributed to NCI as appropriate).
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Any specific borrowing that remain outstanding after the related asset is
ready for its intended use or sale is included in the general borrowing pool
for calculation of capitalisation rate on general borrowings. Investment
income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible
for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in
which they are incurred.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Government grants
Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received.
Government grants are recognised in profit or loss on a systematic basis over
the periods in which the Group recognises as expenses the related costs for
which the grants are intended to compensate. Specifically, government grants
whose primary condition is that the Group should purchase, construct or
otherwise acquire non-current assets are recognised as deferred income in the
consolidated statement of financial position and transferred to profit or loss
on a systematic and rational basis over the useful lives of the related
assets.
Government grants related to income that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs are recognised in
profit or loss in the periods in which they become receivable.
Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are recognised as an
expense when employees have rendered service entitling them to the
contributions.
For defined benefit retirement benefit plans, the cost of providing benefits
is determined using the projected unit credit method, with actuarial
valuations being carried out at the end of each annual reporting period. In
determining the present value of the Group's defined benefit obligations and
the related current service cost and, where applicable, past service cost, the
Group attributes benefit to periods of service under the plan's benefit
formula. However, if an employee's service in later years will lead to a
materially higher level of benefit than earlier years, the Group attributes
the benefit on a straight-line basis from:
(a) the date when service by the employee first leads to
benefits under the plan (whether or not the benefits are conditional on
further service); until
(b) the date when further service by the employee will lead to
no material amount of further benefits under the plan, other than from further
salary increases.
Remeasurement, comprising actuarial gains and losses, the effect of the
changes to the asset ceiling (if applicable) and the return on plan assets
(excluding interest), is reflected immediately in the consolidated statement
of financial position with a charge or credit recognised in other
comprehensive income in the period in which they occur. Remeasurement
recognised in other comprehensive income will not be reclassified to profit or
loss.
Past service cost is recognised in profit or loss in the period of a plan
amendment or curtailment and a gain or loss on settlement is recognised when
settlement occurs. When determining past service cost, or a gain or loss on
settlement, an entity shall remeasure the net defined benefit liability or
asset using the current fair value of plan assets and current actuarial
assumptions, reflecting the benefits offered under the plan and the plan
assets before and after the plan amendment, curtailment or settlement, without
considering the effect of asset ceiling (i.e. the present value of any
economic benefits available in the form of refunds from the plan or reductions
in future contributions to the plan).
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Employee benefits (continued)
Retirement benefit costs (continued)
Net interest is calculated by applying the discount rate at the beginning of
the period to the net defined benefit liability or asset. However, if the
Group remeasures the net defined benefit liability or asset before plan
amendment, curtailment or settlement, the Group determines net interest for
the remainder of the annual reporting period after the plan amendment,
curtailment or settlement using the benefits offered under the plan and the
plan assets after the plan amendment, curtailment or settlement and the
discount rate used to remeasure such net defined benefit liability or asset,
taking into account any changes in the net defined benefit liability or asset
during the period resulting from contributions or benefit payments.
Defined benefit costs are categorised as follows:
• service cost (including current service cost, past
service cost, as well as gains and losses on curtailments and settlements);
• net interest expense or income; and
• remeasurement.
The retirement benefit obligation recognised in the consolidated statement of
financial position represents the actual deficit or surplus in the Group's
defined benefit plans. Any surplus resulting from this calculation is limited
to the present value of any economic benefits available in the form of refunds
from the plans or reductions in future contributions to the plans.
Termination benefits
A liability for a termination benefit is recognised at the earlier of when the
Group entity can no longer withdraw the offer of the termination benefit and
when it recognises any related restructuring costs.
Short-term and other long-term employee benefits
Short-term employee benefits are recognised at the undiscounted amount of the
benefits expected to be paid as and when employees rendered the services. All
short-term employee benefits are recognised as an expense unless another IFRS
requires or permits the inclusion of the benefit in the cost of an asset.
A liability is recognised for benefits accruing to employees (such as wages
and salaries, annual leave and sick leave) after deducting any amount already
paid.
Liabilities recognised in respect of other long-term employee benefits are
measured at the present value of the estimated future cash outflows expected
to be made by the Group in respect of services provided by employees up to the
reporting date. Any changes in the liabilities' carrying amounts resulting
from service cost, interest and remeasurements are recognised in profit or
loss except to the extent that another IFRS requires or permits their
inclusion in the cost of an asset.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Taxation
Income tax expense represents the sum of current and deferred income tax
expense
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit/loss before tax because of income or expense that
are taxable or deductible in other years and items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the
reporting period.
Deferred tax is recognised on temporary differences between the carrying
amounts of assets and liabilities in the consolidated financial statements and
the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit and at the time of the
transaction does not give rise to equal taxable and deductible temporary
differences. In addition, deferred tax liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences
associated with investments in subsidiaries and associates, and interests in
joint ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of the
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the periods in which the liability is settled or the
asset is realised, based on tax rate (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
For the purposes of measuring deferred tax for leasing transactions in which
the Group recognises the right-of-use assets and the related lease
liabilities, the Group first determines whether the tax deductions are
attributable to the right-of-use assets or the lease liabilities.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Taxation (continued)
For leasing transactions in which the tax deductions are attributable to the
lease liabilities, the Group applies IAS 12 Income Taxes requirements to the
lease liabilities, the provision for return condition checks, the provision
for major overhauls and the related assets separately. The Group recognises a
deferred tax asset related to lease liabilities 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
taxable temporary differences.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied to the same taxable
entity by the same taxation authority.
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case, the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for business
combination.
Property, plant and equipment
Property, plant and equipment including buildings held for use in the
production or supply of goods or services, or for administrative purposes
(other than construction in progress), are stated in the consolidated
statement of financial position at cost, less subsequent accumulated
depreciation and subsequent accumulated impairment losses, if any.
Properties in the course of construction for production, supply or
administrative purposes are carried at cost, less recognised impairment loss,
if any. Costs include any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable of operating in the
manner intended by management, including costs of testing whether the related
assets are functioning properly, and, for qualifying assets, borrowing costs
capitalised in accordance with the Group's accounting policy. Depreciation of
these assets, on the same basis as other property assets, commences when the
assets are ready for their intended use.
Depreciation of overhaul components of engines is calculated using the units
of production method based on the estimated flying hours. Depreciation for
other property, plant and equipment is recognised so as to write off the cost
of items of property, plant and equipment less their residual values over
their estimated useful lives, using the straight-line method. The estimated
useful lives as well as the estimated flying hours, residual values and
depreciation method are reviewed at the end of the reporting period, with the
effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. Any gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in
profit or loss.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Impairment of tangible and intangible assets (other than goodwill)
At the end of the reporting period, the Group reviews the carrying amounts of
its tangible and intangible assets with finite useful lives to determine
whether there is any indication that these assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the relevant
asset is estimated in order to determine the extent of the impairment loss (if
any). Intangible assets with indefinite useful lives are tested for impairment
at least annually, and whenever there is an indication that they may be
impaired.
The recoverable amount of tangible and intangible assets are estimated
individually. When it is not possible to estimate the recoverable amount of an
asset individually, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
In testing a cash-generating unit for impairment, corporate assets are
allocated to the relevant cash-generating unit when a reasonable and
consistent basis of allocation can be established, or otherwise they are
allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be established. The recoverable
amount is determined for the cash-generating unit or group of cash-generating
units to which the corporate asset belongs, and is compared with the carrying
amount of the relevant cash-generating unit or group of cash-generating units.
Recoverable amount is the higher of fair value less costs of disposal and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset (or a cash-generating unit) for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or a cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or a
cash-generating unit) is reduced to its recoverable amount.
For corporate assets or portion of corporate assets which cannot be allocated
on a reasonable and consistent basis to a cash-generating unit, the Group
compares the carrying amount of a group of cash-generating units, including
the carrying amounts of the corporate assets or portion of corporate assets
allocated to that group of cash-generating units, with the recoverable amount
of the group of cash-generating units. In allocating the impairment loss, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill (if applicable) and then to the other assets on a pro-rata basis
based on the carrying amount of each asset in the unit or the group of
cash-generating units. The carrying amount of an asset is not reduced below
the highest of its fair value less costs of disposal (if measurable), its
value in use (if determinable) and zero. The amount of the impairment loss
that would otherwise have been allocated to the asset is allocated pro rata to
the other assets of the unit or the group of cash-generating units. An
impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or a cash-generating unit or a group of cash-generating units) is
increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset (or a
cash- generating unit or a group of cash-generating units) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of
inventories are determined on a weighted average method. Net realisable value
represents the estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale.
Costs necessary to make the sale include incremental costs directly
attributable to the sale and non-incremental costs which the Group must incur
to make the sale.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
Present obligations arising under onerous contracts are recognised and
measured as provisions. An onerous contract is considered to exist where the
Group has a contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits expected to be
received from the contract. The unavoidable costs under a contract reflect the
least net cost of exiting from the contract, which is the lower of the net
cost of fulfilling it and any compensation or penalties arising from failure
to fulfil it.
When assessing whether a contract is onerous or loss-making, the Group
includes costs that relate directly to the contract, consisting of both the
incremental costs and an allocation of other costs that relate directly to
fulfilling contracts.
Provisions for the costs to restore leased assets to their original condition,
as required by the terms and conditions of the lease, are recognised at the
date of inception of the lease at the Directors' best estimate of the
expenditure that would be required to restore the assets. Estimates are
regularly reviewed and adjusted as appropriate for new circumstances.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity
becomes a party to the contractual provisions of the instrument. All regular
way purchases or sales of financial assets are recognised and derecognised on
a trade date basis. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the time frame
established by regulation or convention in the market place.
Financial assets and financial liabilities are initially measured at fair
value except for accounts receivable arising from contracts with customers
which are initially measured in accordance with IFRS 15. Transaction costs
that are directly attributable to the acquisition or issue of financial assets
and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss ("FVTPL")) are added to or
deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities
at FVTPL are recognised immediately in profit or loss.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
The effective interest method is a method of calculating the amortised cost of
a financial asset or financial liability and of allocating interest income and
interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated
future cash receipts and payments (including all fees and points paid or
received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life
of the financial asset or financial liability, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition.
Financial assets
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently measured
at amortised cost:
• the financial asset is held within a business model
whose objective is to collect contractual cash flows; and
• the contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Financial assets that meet the following conditions are subsequently measured
at fair value through other comprehensive income ("FVTOCI"):
• the financial asset is held within a business model
whose objective is achieved by both collecting contractual cash flows and
selling the financial assets; and
• the contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
All other financial assets are subsequently measured at FVTPL, except that at
initial recognition of a financial asset the Group may irrevocably elect to
present subsequent changes in fair value of an equity investment in other
comprehensive income if that equity investment is neither held for trading nor
contingent consideration recognised by an acquirer in a business combination
to which IFRS 3 Business Combinations applies.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of
selling in the near term; or
• on initial recognition it is a part of a portfolio of
identified financial instruments that the Group manages together and has a
recent actual pattern of short-term profit-taking; or
• it is a derivative that is not a designated and
effective hedging instrument.
In addition, the Group may irrevocably designate a financial asset that are
required to be measured at the amortised cost or FVTOCI as measured at FVTPL
if doing so eliminates or significantly reduces an accounting mismatch.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets (continued)
Classification and subsequent measurement of financial assets (continued)
(i) Amortised cost and interest income
Interest income is recognised using the effective interest method for debt
instruments measured subsequently at amortised cost and at FVTOCI. Interest
income is calculated by applying the effective interest rate to the gross
carrying amount of a financial asset, except for financial assets that have
subsequently become credit-impaired (see below). For financial assets that
have subsequently become credit-impaired, interest income is recognised by
applying the effective interest rate to the amortised cost of the financial
assets from the next reporting period. If the credit risk on the
credit-impaired financial instrument improves so that the financial asset is
no longer credit-impaired, interest income is recognised by applying the
effective interest rate to the gross carrying amount of the financial asset
from the beginning of the reporting period following the determination that
the asset is no longer credit impaired.
(ii) Debt instruments classified as at FVTOCI
Subsequent changes in the carrying amounts for debt instruments classified as
at FVTOCI as a result of interest income calculated using the effective
interest method are recognised in profit or loss. All other changes in the
carrying amount of these debt instruments are recognised in other
comprehensive income and accumulated under the heading of capital reserve and
revaluation reserve. Impairment allowances are recognised in profit or loss
with corresponding adjustment to other comprehensive income without reducing
the carrying amount of these debt instruments. When these debt instruments are
derecognised, the cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss.
(iii) Equity instruments designated as at FVTOCI
Investments in equity instruments at FVTOCI are subsequently measured at fair
value with gains and losses arising from changes in fair value recognised in
other comprehensive income and accumulated in the capital reserve and
revaluation reserve; and are not subject to impairment assessment. The
cumulative gain or loss is not reclassified to profit or loss on disposal of
the equity investments, and is transferred to retained earnings/(accumulated
losses).
Dividends from these investments in equity instruments are recognised in
profit or loss when the Group's right to receive the dividends is established,
unless the dividends clearly represent a recovery of part of the cost of the
investment. Dividends are included in the "other income and gains" line item
in profit or loss.
(iv) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised
cost or FVTOCI or designated as FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each
reporting period, with any fair value gains or losses recognised in profit or
loss. The net gain or loss recognised in profit or loss excludes any dividend
or interest earned on the financial asset and is included in the "other income
and gains" line item.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment
assessment under IFRS 9
The Group performs impairment assessment under expected credit loss ("ECL")
model on financial assets (including accounts receivable, bills receivable,
deposits and other receivables, deposits for aircraft under leases, restricted
bank deposits, cash and cash equivalents, financial assets included in other
current assets and other non-current assets, and debt instruments at FVTOCI)
which are subject to impairment assessment under IFRS 9. The amount of ECL is
updated at each reporting date to reflect changes in credit risk since initial
recognition.
Lifetime ECL represents the ECL that will result from all possible default
events over the expected life of the relevant instrument. In contrast,
12-month ECL ("12m ECL") represents the portion of lifetime ECL that is
expected to result from default events that are possible within 12 months
after the reporting date. Assessment is done based on the Group's historical
credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current conditions
at the reporting date as well as the forecast of future conditions.
The Group always recognises lifetime ECL for accounts receivable.
For all other instruments, the Group measures the loss allowance equal to 12m
ECL, unless there has been a significant increase in credit risk since initial
recognition, in which case the Group recognises lifetime ECL. The assessment
of whether lifetime ECL should be recognised is based on significant increases
in the likelihood or risk of a default occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial
recognition, the Group compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition.
In making this assessment, the Group considers both quantitative and
qualitative information that is reasonable and supportable, including
historical experience and forward-looking information that is available
without undue cost or effort.
In particular, the following information is taken into account when assessing
whether credit risk has increased significantly:
• an actual or expected significant deterioration in the
financial instrument's external (if available) or internal credit rating;
• significant deterioration in external market
indicators of credit risk, e.g., a significant increase in the credit spread,
the credit default swap prices for the debtor;
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment
assessment under IFRS 9 (continued)
(i) Significant increase in credit risk (continued)
• existing or forecast adverse changes in business,
financial or economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the
operating results of the debtor;
• an actual or expected significant adverse change in
the regulatory, economic, or technological environment of the debtor that
results in a significant decrease in the debtor's ability to meet its debt
obligations.
Irrespective of the outcome of the above assessment, the Group presumes that
the credit risk has increased significantly since initial recognition when
contractual payments are more than 30 days past due, unless the Group has
reasonable and supportable information that demonstrates otherwise.
Despite the aforegoing, the Group assumes that the credit risk on a debt
instrument has not increased significantly since initial recognition if the
debt instrument is determined to have low credit risk at the reporting date. A
debt instrument is determined to have low credit risk if i) it has a low risk
of default, ii) the borrower has a strong capacity to meet its contractual
cash flow obligations in the near term and iii) adverse changes in economic
and business conditions in the longer term may, but will not necessarily,
reduce the ability of the borrower to fulfil its contractual cash flow
obligations. The Group considers a debt instrument to have low credit risk
when it has an internal or external credit rating of 'investment grade' as per
globally understood definitions.
The Group regularly monitors the effectiveness of the criteria used to
identify whether there has been a significant increase in credit risk and
revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past
due.
(ii) Definition of default
For internal credit risk management, the Group considers an event of default
occurs when information developed internally or obtained from external sources
indicates that the debtor is unlikely to pay its creditors, including the
Group, in full (without taking into account any collaterals held by the
Group).
Irrespective of the above, the Group considers that default has occurred when
a financial asset is more than 90 days past due unless the Group has
reasonable and supportable information to demonstrate that a more lagging
default criterion is more appropriate.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment
assessment under IFRS 9 (continued)
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of that financial asset
have occurred. Evidence that a financial asset is credit-impaired includes
observable data about the following events:
(a) significant financial difficulty of the issuer or the
borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower's financial difficulty, having granted to the
borrower a concession(s) that the lender(s) would not otherwise consider;
(d) it is becoming probable that the borrower will enter
bankruptcy or other financial reorganisation; or
(e) the disappearance of an active market for that financial
asset because of financial difficulties.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating
that the counterparty is in severe financial difficulty and there is no
realistic prospect of recovery, for example, when the counterparty has been
placed under liquidation or has entered into bankruptcy proceedings. Financial
assets written off may still be subject to enforcement activities under the
Group's recovery procedures, taking into account legal advice where
appropriate. A write-off constitutes a derecognition event. Any subsequent
recoveries are recognised in profit or loss.
(v) Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given
default (i.e., the magnitude of the loss if there is a default) and the
exposure at default. The assessment of the probability of default and loss
given default is based on historical data and forward-looking information.
Estimation of ECL reflects an unbiased and probability-weighted amount that is
determined with the respective risks of default occurring as the weights. The
Group uses a practical expedient in estimating ECL on accounts receivable
using a provision matrix taking into consideration historical credit loss
experience and forward-looking information that is available without undue
cost or effort.
Generally, the ECL is the difference between all contractual cash flows that
are due to the Group in accordance with the contract and the cash flows that
the Group expects to receive, discounted at the effective interest rate
determined at initial recognition.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment
assessment under IFRS 9 (continued)
(v) Measurement and recognition of ECL (continued)
For a lease receivable, the cash flows used for determining the ECL is
consistent with the cash flows used in measuring the lease receivable in
accordance with IFRS 16.
For collective assessment, the Group takes into consideration the following
characteristics when formulating the grouping:
• Past-due status;
• Nature, size and industry of debtors; and
• External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of
each group continue to share similar credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the
financial asset unless the financial asset is credit impaired, in which case
interest income is calculated based on amortised cost of the financial asset.
Except for investments in debt instruments that are measured at FVTOCI, the
Group recognises an impairment gain or loss in profit or loss for all
financial instruments by adjusting their carrying amount through a loss
allowance account. For investments in debt instruments that are measured at
FVTOCI, the loss allowance is recognised in other comprehensive income and
accumulated in the capital reserve and revaluation reserve without reducing
the carrying amounts of these debt instruments. Such amount represents the
changes in the capital reserve and revaluation reserve in relation to
accumulated loss allowance.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified either as financial liabilities or
as equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of the group entities after deducting all of its liabilities. Equity
instruments issued by the Group are recognised at the proceeds received, net
of direct issue costs.
Repurchase of the Company's own equity instruments (treasury shares) is
recognised and deducted directly in equity. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the Group's own
equity instruments.
4. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial liabilities and equity (continued)
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using
the effective interest method or at FVTPL.
Financial liabilities at amortised cost
Financial liabilities (including accounts payable, bills payable, dividends
payables, other payables, interest-bearing borrowings and financial
liabilities included in long-term payables) are subsequently measured at
amortised cost using the effective interest method.
Derecognition/modification of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or have expired. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
For non-substantial modifications of financial liabilities that do not result
in derecognition, the carrying amount of the relevant financial liabilities
will be calculated at the present value of the modified contractual cash flows
discounted at the financial liabilities' original effective interest rate.
Transaction costs or fees incurred are adjusted to the carrying amount of the
modified financial liabilities and are amortised over the remaining term. Any
adjustment to the carrying amount of the financial liability is recognised in
profit or loss at the date of modification.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are described in
Note 4, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and underlying assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The following are the key assumptions concerning the future, and other key
sources of estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY (continued)
Impairment test on goodwill
Determining whether goodwill is impaired requires an estimation of the
recoverable amount of the cash-generating unit (or group of cash-generating
units) to which goodwill has been allocated, which is the higher of the value
in use or fair value less costs of disposal. The value in use calculation
requires the Group to estimate the future cash flows expected to arise from
the cash-generating unit (or group of cash-generating units) and a suitable
discount rate in order to calculate the present value. Where the actual future
cash flows are less than expected, or change in facts and circumstances which
results in downward revision of the future cash flows or upward revision of
discount rate, a further impairment loss may rise.
As at 31 December 2024, the carrying amount of goodwill was RMB4,096 million
(2023: RMB4,096 million) (net of impairment). Details of the recoverable
amount calculation are disclosed in Note 20.
Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all
non-financial assets at the end of each reporting period. Intangible assets
with indefinite life are tested for impairment annually and at other times
when such indicator exists. Other non-financial assets are tested for
impairment when there are indicators that the carrying amounts may not be
fully recoverable. If any such indication exists, the recoverable amount of
the individual asset or the cash-generating unit to which the asset belongs is
estimated in order to determine the extent of the impairment loss (if any).
The recoverable amount of the individual asset or the cash-generating unit is
determined based on the higher of fair value less costs of disposal and value
in use.
In estimating the aforesaid recoverable amount of the individual asset or the
cash-generating unit, management consider all relevant factors, including but
not limited to the future cash flows and discount rate with reasonable and
supportable assumptions to make significant accounting estimations and
judgement.
The calculation of the fair value less costs of disposal is based on available
data from binding sales transactions in an arm's length transaction of similar
assets or observable market prices less incremental costs for disposal of the
asset.
When value in use calculations are undertaken, management must estimate the
expected future cash flows from the asset or cash-generating unit and choose a
suitable discount rate in order to calculate the present value of those cash
flows.
During the year, the Group recognised impairment loss of approximately RMB143
million (2023: RMB178 million) for certain aircrafts that are about to retire
from service in advance. As at 31 December 2024, the aggregate carrying amount
of property, plant and equipment, right-of-use assets, investment properties,
intangible assets, interests in associates and interests in joint ventures was
RMB258,869 million (2023: RMB254,810 million). Details of related items are
disclosed in Notes 17, 18, 19, 22 and 23.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY (continued)
Overhaul provisions
Overhaul provisions for aircraft under leases are accrued using the estimated
maintenance costs for aircraft to fulfil these return conditions. Management
estimates the maintenance costs of major overhauls for aircraft held under
leases at the end of each reporting period and accrues such costs over the
lease term. The calculation of such costs includes a number of variable
factors and assumptions, including the anticipated utilisation of the aircraft
and the expected costs of maintenance. Different estimates could significantly
affect the estimated overhaul provision and the results of operations.
As at 31 December 2024, provision for major overhauls of the Group amounted to
RMB15,939 million (2023: RMB13,739 million) and details are disclosed in Note
36.
Frequent-flyer programme
The transaction price allocated to the miles earned by the members of the
Group's frequent-flyer programme is estimated based on the stand-alone selling
price of the miles awarded. The stand-alone selling price of the miles awarded
is estimated based on expected redemption rate. The expected redemption rate
was estimated considering expected future redemption activities, including the
number of the miles that will be available for redemption in the future after
allowing for miles which are not expected to be redeemed. Any change in
estimate would affect profit or loss in future years.
As at 31 December 2024, the contract liabilities related to frequent-flyer
programme was RMB2,757 million (2023: RMB2,172 million) and details are
disclosed in Note 37.
Expected breakage
For those passenger flight tickets the Group expects to be entitled to
breakage because the passenger has not required the Group to perform and is
unlikely to do so, the Group recognises the expected breakage amount as
revenue in proportion to the pattern of rights exercised by the passenger (or
flown revenue) based on historical experience. The air traffic liabilities
recorded in the consolidated statement of financial position is after
adjusting the effect of expected breakage.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and deductible
temporary differences to the extent that it is probable that taxable profit
will be available against which the losses and deductible temporary
differences can be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and level of future taxable profits together with future tax
planning strategies. In cases where the actual future profits generated are
less or more than expected, or effective tax rate is changed, or change in
facts and circumstances which result in revision of future taxable profits
estimation, a material reversal or further recognition of deferred tax assets
may arise, which would be recognised in profit or loss for the period in which
such change takes places.
As at 31 December 2024, deferred tax assets of RMB21,991 million (2023:
RMB23,182 million) in relation to deductible temporary differences and tax
losses have been recognised. No deferred tax asset has been recognised on the
deductible tax losses of RMB66,710 million (2023: RMB59,113 million) and other
deductible temporary differences of RMB268 million (2023: RMB327 million) due
to the unpredictability of the future streams and details are disclosed in
Note 26.
6. REVENUE
2024 2023
RMB'000 RMB'000
Revenue from contracts with customers 166,390,725 140,721,730
Rental income (included in revenue of airline operations segment) 308,155 378,504
Total revenue 166,698,880 141,100,234
Disaggregation of revenue from contracts with customers
2024 2023
Segments Airline Other Airline Other
operations
operations
operations
operations
RMB'000 RMB'000 RMB'000 RMB'000
Type of goods or services
Airline operations
Passenger 151,788,672 - 130,516,558 -
Cargo and mail 7,413,855 - 4,164,743 -
Others 1,876,406 - 1,704,339 -
161,078,933 - 136,385,640 -
Other operations
Aircraft engineering income - 5,179,776 - 4,238,926
Others - 132,016 - 97,164
- 5,311,792 - 4,336,090
Total 161,078,933 5,311,792 136,385,640 4,336,090
Geographical markets
Mainland China 112,871,422 5,311,792 108,050,710 4,336,090
Hong Kong Special Administrative
Region ("SAR"), Macau SAR and 5,118,889 - 4,126,997 -
Taiwan, China
International 43,088,622 - 24,207,933 -
Total 161,078,933 5,311,792 136,385,640 4,336,090
6. REVENUE (continued)
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 RMB1,351 million (2023: RMB1,455 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.
7. 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.
7. SEGMENT INFORMATION (continued)
Operating segments
The following tables present the Group's consolidated revenue and loss before
taxation regarding the Group's operating segments in accordance with the
Accounting Standards for Business Enterprises of the PRC ("CASs") for the
years ended 31 December 2024 and 2023, and the reconciliations of reportable
segment revenue and loss before taxation to the Group's consolidated amounts
under IFRS Accounting Standards:
Year ended 31 December 2024
Airline operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 161,387,088 5,311,792 - 166,698,880
Inter-segment sales 229,651 9,268,619 (9,498,270) -
Revenue for reportable segments under CASs and IFRS Accounting Standards 161,616,739 14,580,411 (9,498,270) 166,698,880
Segment (loss)/profit before taxation
(Loss)/profit before taxation for reportable segments under CASs (2,239,127) 795,124 (161,195) (1,605,198)
Effect of differences between IFRS Accounting Standards and CASs 6,330
Loss before taxation for the year (1,598,868)
under IFRS Accounting Standards
7. SEGMENT INFORMATION (continued)
Operating segments (continued)
Year ended 31 December 2023
Airline operations Other Elimination Total
operations
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 IFRS Accounting Standards 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 IFRS Accounting Standards and CASs 10,628
Loss before taxation for the year under IFRS Accounting Standards (1,649,779)
7. SEGMENT INFORMATION (continued)
Operating segments (continued)
The following tables present the assets, liabilities and other information of
the Group's operating segments under CASs as at 31 December 2024 and 2023 and
the reconciliations of reportable segment assets, segment liabilities and
other segment information to the Group's consolidated amounts under IFRS
Accounting Standards:
Airline operations Other Elimination Total
operations
RMB'000 RMB'000 RMB'000 RMB'000
Segment assets
Total assets for reportable segments as at 31 December 2024 under CASs 335,387,462 35,068,041 (24,686,091) 345,769,412
Effect of differences between IFRS Accounting Standards and CASs (19,239)
Total assets under IFRS Accounting Standards 345,750,173
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 IFRS Accounting Standards and CASs (23,987)
Total assets under IFRS Accounting Standards 335,278,694
Segment liabilities
Total liabilities for reportable segments as at 31 December 2024 under CASs 301,829,477 27,135,795 (24,141,069) 304,824,203
and IFRS Accounting Standards
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 IFRS Accounting Standards
7. SEGMENT INFORMATION (continued)
Operating segments (continued)
Year ended 31 December 2024
Airline operations Other operations Elimination Total Effect of differences between IFRS Amounts under IFRS Accounting Standards
Accounting Standards and CASs
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Other segment information
Share of profit of associates and joint ventures 2,535,142 284,702 - 2,819,844 - 2,819,844
Net impairment losses (reversed)/recognised on financial assets (11,792) 27,985 (25,700) (9,507) - (9,507)
Impairment losses recognised on non-financial assets 145,588 10,412 - 156,000 - 156,000
Depreciation and amortisation 28,827,562 448,312 (166,617) 29,109,257 (6,289) 29,102,968
Income tax expense (656,490) (211,035) 22,633 (844,892) (1,582) (846,474)
Interests in associates and joint ventures 14,310,136 2,693,530 (86,809) 16,916,857 139,919 17,056,776
Additions to non-current assets 34,264,696 401,343 (442,547) 34,223,492 - 34,223,492
7. SEGMENT INFORMATION (continued)
Operating segments (continued)
Year ended 31 December 2023
Airline operations Other operations Elimination Total Effect of differences between IFRS Amounts under IFRS Accounting Standards
Accounting Standards
and CASs
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
7. SEGMENT INFORMATION (continued)
Geographical information
The following table presents the Group's consolidated revenue under IFRS
Accounting Standards by geographical location for the years ended 31 December
2024 and 2023, respectively:
Year ended 31 December 2024
Mainland Hong Kong SAR, Macau SAR and Taiwan, China International Total
China
RMB'000 RMB'000 RMB'000 RMB'000
Sales to external customers and 118,491,369 5,118,889 43,088,622 166,698,880
total revenue
Year ended 31 December 2023
Mainland Hong Kong International Total
China
SAR, Macau
SAR and
Taiwan, China
RMB'000 RMB'000 RMB'000 RMB'000
Sales to external customers and 112,765,304 4,126,997 24,207,933 141,100,234
total revenue
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.
8. OTHER INCOME AND GAINS
2024 2023
RMB'000 RMB'000
Co-operation routes income and subsidy income 4,295,552 4,450,650
Dividend income 36,740 14,286
Gains/(losses) on disposal of:
- Property, plant and equipment and right-of-use assets 1,029,912 934,614
- Asset held for sale (17,527) 18,519
- Investment properties - (315)
Gain/(loss) arising on financial assets at FVTPL 54 (893)
Others (Note) 1,975,181 1,984,895
7,319,912 7,401,756
Note: These mainly include engines and flight operation remedies.
9. EMPLOYEE COMPENSATION COSTS
An analysis of the Group's employee compensation costs, including the
emoluments of Directors and supervisors, is as follows:
2024 2023
RMB'000 RMB'000
Wages, salaries and other benefits 29,898,033 25,769,065
Retirement benefit costs:
- Contributions to defined contribution retirement scheme 4,360,431 3,530,426
- Early retirement benefits 10,281 819
34,268,745 29,300,310
The employees of the Group in the PRC are members of a state-managed
retirement benefits scheme operated by the PRC government. The Group is
required to contribute a specific percentage of the total monthly basic
salaries of its current employees to the retirement benefits scheme to fund
the benefits.
In addition to the above benefits scheme, the Group also provides annuity
schemes for certain qualified employees in the PRC. The employees' and the
Group's contributions for the annuity schemes are calculated based on certain
percentage of the Group's salaries and recognised in profit or loss as expense
in profit or loss when incurred.
There were no forfeited contributions in respect of the Group's defined
contribution plan as mentioned above.
10. NET IMPAIRMENT LOSS REVERSED/(RECOGNISED) UNDER EXPECTED
CREDIT LOSSMODEL
2024 2023
RMB'000 RMB'000
Impairment losses reversed/(recognised) on financial assets:
- Deposits and other receivables 18,960 (3,309)
- Accounts receivable (4,000) (22,785)
- Financial assets included in other current assets (2,918) (5,211)
- Debt instruments at FVTOCI (394) 6,688
- Others (2,141) -
9,507 (24,617)
Details of impairment assessment are set out in Note 43.
11. PROFIT FROM OPERATIONS
The Group's profit from operations is arrived at after charging:
2024 2023
RMB'000 RMB'000
Depreciation of property, plant and equipment 13,439,898 11,611,121
Depreciation of right-of-use assets 15,629,518 15,468,124
Depreciation of investment properties 33,535 31,256
Amortisation of intangible assets 17 6
Total depreciation and amortisation 29,102,968 27,110,507
Impairment losses recognised on property, plant and equipment 143,240 184,166
Impairment losses recognised on inventories 12,760 35,049
Impairment losses recognised on interests in associates - 2,888
Auditors' remuneration:
- Audit related services 21,847 19,395
- Other services 1,540 1,088
12. FINANCE COSTS
2024 2023
RMB'000 RMB'000
Interest on interest-bearing borrowings 4,025,619 3,872,746
Interest on lease liabilities 2,683,519 3,328,563
Imputed interest expenses on defined benefit obligations 5,147 6,204
6,714,285 7,207,513
Less: Interest capitalised (Note) (315,537) (264,426)
6,398,748 6,943,087
Note: The interest capitalisation rates ranged from 2.40% to 4.00% per
annum (2023: 2.40% to 4.45% per annum) relating to the costs of related
borrowings during the year.
13. DIRECTORS', CHIEF EXECUTIVE'S, SUPERVISORS' AND EMPLOYEES'
EMOLUMENTS
Directors', chief executive's and supervisors' remuneration for the year,
disclosed pursuant to the applicable Listing Rules and Companies Ordinance,
was as follows:
2024 2023
RMB'000 RMB'000
Directors' fee 107 113
Salaries and other allowances 2,393 1,973
Discretionary bonus 2,610 1,781
Retirement benefit scheme contributions 617 503
5,727 4,370
13. DIRECTORS', CHIEF EXECUTIVE'S, SUPERVISORS' AND EMPLOYEES'
EMOLUMENTS (continued)
For the year ended 31 December 2024
Directors' Salaries and Discretionary Retirement benefit scheme Total
fee
other
bonus
contributions
allowances
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Executive directors
Ma Chongxian (Notes (a)) - - - - -
Wang Mingyuan (Note (a) and (e)) - - - - -
Non-executive directors
Feng Gang (Note (a)) - - - - -
(Resigned on 15 July 2024)
Cui Xiaofeng (Note(a)) - - - - -
(Appointed on 9 August 2024)
Patrick Healy (Note (b)) - - - - -
Xiao Peng - 585 248 137 970
- 585 248 137 970
Independent non-executive directors
Li Fushen - - - - -
(Resigned on 30 August 2024)
He Yun - - - - -
Xu Junxin - - - - -
Winnie Tam Wan-chi 107 - - - 107
107 - - - 107
Supervisors
Xiao Jian (Note (a)) - - - - -
Lyu Yanfang - 383 483 122 988
Guo Lina - 539 585 100 1,224
Wang Mingzhu - 354 682 133 1,169
Li Shuxing - 532 612 125 1,269
- 1,808 2,362 480 4,650
107 2,393 2,610 617 5,727
13. DIRECTORS', CHIEF EXECUTIVE'S, SUPERVISORS' AND EMPLOYEES'
EMOLUMENTS (continued)
For the year ended 31 December 2023
Directors' Salaries and Discretionary Retirement benefit scheme Total
fee
other
bonus
contributions
allowances
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Executive directors
Ma Chongxian (Notes (a)) - - - - -
Wang Mingyuan (Note (a) and (e)) (Appointed on 30 March 2023) - - - - -
Non-executive directors
Feng Gang (Note (a)) - - - - -
Patrick Healy (Note (b)) - - - - -
Xiao Peng - 580 241 102 923
(Appointed on 2 March 2023)
- 580 241 102 923
Independent non-executive directors
Li Fushen - - - - -
He Yun - - - - -
Xu Junxin - - - - -
Winnie Tam Wan-chi 113 - - - 113
113 - - - 113
Supervisors
He Chaofan (Note (a)) - - - - -
(Resigned on 13 January 2023)
Wang Jie (Note (a)) - - - - -
(Resigned on 2 March 2023)
Qin Hao - 83 367 50 500
(Resigned on 2 March 2023)
Xiao Jian (Note (a)) - - - - -
(Appointed on 10 February 2023)
Lyu Yanfang - 379 350 106 835
Guo Lina - 394 340 96 830
Wang Mingzhu - 263 238 75 576
(Appointed on 2 March 2023)
Li Shuxing - 274 245 74 593
(Appointed on 2 March 2023)
- 1,393 1,540 401 3,334
113 1,973 1,781 503 4,370
13. DIRECTORS', CHIEF EXECUTIVE'S, SUPERVISORS' AND EMPLOYEES'
EMOLUMENTS (continued)
Notes:
(a) These directors or supervisors did not receive any
remuneration for their services in the capacity of the directors or
supervisors of the Company. They also held management positions in CNAHC and
their remuneration were borne by CNAHC.
(b) These directors did not receive any remuneration for their
services in the capacity of the directors. They also held management positions
in Cathay Pacific Airways Limited ("Cathay Pacific"), the associate of the
Group, and their remuneration were borne by Cathay Pacific.
(c) None of the directors, supervisors and chief executive has
waived any emoluments during the years ended 31 December 2024 and 2023.
(d) For the year ended 31 December 2024, the Group received
service fee of Hong Kong Dollar ("HKD") 2,672,000 (2023: HKD2,351,000) from
Cathay Pacific for the directors' services provided by certain directors and
management to Cathay Pacific.
(e) Being the chief executive of the Company.
Five highest paid individuals
For both 2024 and 2023, the five highest paid employees were not directors,
supervisors nor chief executive of the Group.
Details of the remuneration of the five highest paid individuals during the
year were as follows:
2024 2023
RMB'000 RMB'000
Salaries and other allowances 11,493 11,566
Discretionary bonuses 125 51
Retirement benefit scheme contributions 246 238
11,864 11,855
Discretionary bonuses are calculated based on the Group's or respective
employee's performance for such financial year.
The number of the five highest paid individuals whose remuneration fell within
the following bands is as follows:
2024 2023
HKD2,000,001 to HKD2,500,000 - -
HKD2,500,001 to HKD3,000,000 5 5
5 5
During both years, no emoluments were paid by the Group to any of the
directors, supervisors, chief executive, or the five highest paid individuals
as an inducement to join or upon joining the Group or as compensation for loss
of office.
14. INCOME TAX EXPENSE/(CREDIT)
2024 2023
RMB'000 RMB'000
Current income tax:
- Mainland China 247,162 214,771
- Hong Kong SAR and Macau SAR, China - -
Under provision in respect of prior years 879 13,600
Deferred tax (Note 26) 598,433 (316,902)
846,474 (88,531)
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and
Implementation Regulation of the EIT Law, except for three (2023: three)
branches and five (2023: five) subsidiaries of the Company, and some branches
of two (2023: two) subsidiaries of the Company which are taxed at a
preferential rate of 15% (2023: 15%), all group companies located in Mainland
China are subject to a income tax rate of 25% during the year (2023: 25%).
Subsidiaries in Hong Kong SAR, China are taxed at profits tax rate of 16.5%
(2023: 16.5%) and subsidiaries in Macau SAR, China are taxed at profits tax
rate of 12% (2023: 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:
2024 2023
RMB'000 RMB'000
Loss before taxation (1,598,868) (1,649,779)
Tax at the applicable tax rate of 25% (399,717) (412,445)
Preferential tax rates on income of group entities 111,747 85,063
Tax effect of share of results of associates and joint ventures (713,367) (703,457)
Tax effect of non-deductible expenses 190,830 139,600
Tax effect of non-taxable income (16,259) (18,395)
Reversal of tax losses recognised as deferred tax assets in prior years 907,589 -
Tax effect of deductible temporary differences and tax losses not recognised 1,058,113 1,005,444
Utilisation of tax losses and deductible temporary differences not recognised (17,067) (197,941)
in prior years
Under provision in respect of prior years 879 13,600
Reversal of unrealised equity investment income recognised as deferred tax (276,274) -
liabilities in prior years
Income tax expense/(credit) 846,474 (88,531)
15. 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:
2024 2023
RMB'000 RMB'000
Loss
Loss for the purpose of basic and diluted loss per share (232,557) (1,038,411)
2024 2023
'000 '000
Number of shares
Number of ordinary shares for the purpose of basic 15,864,560 15,401,755
and diluted loss per share
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 (Note 40(c)).
The Group had no potential dilutive ordinary shares in issue during both
years.
16. DIVIDENDS
No dividend was paid or proposed for ordinary shareholders of the Company
during the years ended 31 December 2023 and 2024, nor has any dividend been
proposed since the end of both reporting periods.
17. PROPERTY, PLANT AND EQUIPMENT
Aircraft, engines Buildings Other Construction Total
and flight
equipment
in progress
equipment
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Cost
At 1 January 2023 161,639,964 15,810,388 13,230,846 12,813,818 203,495,016
Additions 1,474,811 - 345,048 19,095,961 20,915,820
Acquired on the acquisition of a subsidiary 3,984,723 2,250,124 378,651 581,635 7,195,133
Transfer from construction in progress 14,198,998 2,351,893 1,077,561 (17,628,452) -
Transfer from right-of-use assets upon obtaining ownership of the underlying 8,230,018 - 147,229 - 8,377,247
leased assets
Transfer from investment properties - 72 - - 72
Transfer to right-of-use assets - - - (2,562,597) (2,562,597)
Transfer to assets held for sale (1,745,995) - - - (1,745,995)
Disposals (3,590,606) (501,950) (662,077) - (4,754,633)
Exchange realignment 34,773 - 3,315 - 38,088
At 31 December 2023 184,226,686 19,910,527 14,520,573 12,300,365 230,958,151
Additions 3,267,965 615,283 394,283 18,668,581 22,946,112
Transfer from construction in progress 9,627,710 831,228 711,792 (11,170,730) -
Transfer from right-of-use assets upon obtaining ownership of the underlying 6,635,654 - - - 6,635,654
leased assets
Transfer to right-of-use assets - - - (7,714,233) (7,714,233)
Transfer to assets held for sale (1,626,634) - - - (1,626,634)
Disposals (5,321,996) (423,722) (382,317) - (6,128,035)
Exchange realignment 34,011 - 3,294 - 37,305
At 31 December 2024 196,843,396 20,933,316 15,247,625 12,083,983 245,108,320
Accumulated depreciation
At 1 January 2023 (87,808,408) (6,476,434) (9,076,599) - (103,361,441)
Depreciation charge for the year (9,977,790) (656,050) (977,281) - (11,611,121)
Transfer from right-of-use assets upon obtaining ownership of the underlying (3,085,065) - (34,099) - (3,119,164)
leased assets
Transfer from investment properties - (58) - - (58)
Transfer to assets held for sale 1,484,763 - - - 1,484,763
Eliminated on disposals 3,086,662 269,509 566,823 - 3,922,994
Exchange realignment (14,373) - (2,868) - (17,241)
At 31 December 2023 (96,314,211) (6,863,033) (9,524,024) - (112,701,268)
Depreciation charge for the year (11,791,655) (711,380) (936,863) - (13,439,898)
Transfer from right-of-use assets upon obtaining ownership of the underlying (2,897,676) - - - (2,897,676)
leased assets
Transfer to assets held for sale 1,445,651 - - - 1,445,651
Eliminated on disposals 4,783,102 56,354 357,765 - 5,197,221
Exchange realignment (14,984) - (2,879) - (17,863)
At 31 December 2024 (104,789,773) (7,518,059) (10,106,001) - (122,413,833)
Impairment
At 1 January 2023 (559,516) - - - (559,516)
Recognised for the year (177,726) - - (6,440) (184,166)
Transfer to assets held for sale 152,705 - - - 152,705
Eliminated on disposals 62,592 - - - 62,592
At 31 December 2023 (521,945) - - (6,440) (528,385)
Recognised for the year (143,240) - - - (143,240)
Transfer to assets held for sale 93,798 - - - 93,798
Eliminated on disposals 64,211 - - - 64,211
At 31 December 2024 (507,176) - - (6,440) (513,616)
Net book value
At 31 December 2024 91,546,447 13,415,257 5,141,624 12,077,543 122,180,871
At 31 December 2023 87,390,530 13,047,494 4,996,549 12,293,925 117,728,498
17. PROPERTY, PLANT AND EQUIPMENT (continued)
During the year, the Group recognised impairment losses amounting to
approximately RMB143 million (2023: RMB178 million) for certain aircrafts that
are about to retire from service in advance. The impairment provisions refer
to the difference between the recoverable amounts of RMB139 million and the
carrying amounts of the assets, approximately RMB282 million. The recoverable
amounts are based on the fair value of the assets less disposal expenses.
Among them, the fair value refers to agreed price of the contractual
agreements or the evaluation values of the assets by independent valuers.
In addition, the Company and its subsidiaries, primarily operating as airline
operators, performed impairment assessments on their airline operation related
assets other than those mentioned above. The airline operation related assets
include aircrafts and other operating non-current assets (including property,
plant and equipment, right-of-use assets, investment properties and intangible
assets) and are grouped as separate cash-generating unit. The recoverable
amounts for each of these cash-generating units were determined based on value
in use calculations. The calculations used cash flow projections based on
financial budgets approved by managements covering a five-year period. Key
assumptions for the value in use calculations include budgeted sales and gross
margins which are based on each of these cash-generating units' past
performances and managements' market development expectations. The discount
rates used are pre-tax rates that reflect the risks specific to each unit,
ranging from 9% to 10.5% (2023: 9% to 11.5%). The cash flows beyond the
five-year period were extrapolated using a 2.5% (2023: 2.5%). As the
recoverable amounts are above the carrying amounts of respective
cash-generating unit, no further impairment loss was recognised during the
year.
Depreciation of overhaul components of engines is calculated using the units
of production method based on the estimated flying hours. The items of other
property, plant and equipment, less their estimated residual value, if any,
except for construction in progress, are depreciated on a straight-line basis
at the following rates per annum.
Estimated Residual Depreciation rate
useful life/flying
value
per annum/per
hours
thousand hours
Aircraft, engines and flight equipment:
Core parts of airframe and engines 15 to 30 years 5% 3.17% - 6.33%
Overhaul of airframe and cabin refurbishment 5 to 12 years Nil 8.33% - 20.00%
Overhaul components of engines 9 to 43 thousand hours Nil 2.33% - 11.11%
Rotable 3 to 15 years Nil 6.67% - 33.33%
Buildings 5 to 50 years 3%-5% 1.90% - 19.40%
Other equipment 3 to 20 years Nil-5% 4.75% - 33.33%
As at 31 December 2024, the Group's aircraft and flight equipment, buildings
and other equipment with an aggregate net book value of approximately RMB3,825
million (2023: RMB838 million) were pledged to secure certain bank loans of
the Group (Note 35).
As at 31 December 2024, the Group was in the process of applying for the title
certificates of certain buildings with an aggregate net book value of
approximately RMB6,906 million (2023: RMB7,390 million). The Directors are of
the opinion that the Group is entitled to lawfully and validly occupy and use
the above-mentioned buildings, and the aforesaid matter did not have any
significant impact on the Group's consolidated financial position as at 31
December 2024.
18. RIGHT-OF-USE ASSETS
Aircraft and engines Land Buildings Others Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Cost
At 1 January 2023 197,636,294 4,106,134 3,291,541 476,004 205,509,973
Additions 1,253,435 215,003 346,015 54,089 1,868,542
Acquired on the acquisition of a subsidiary subsidiary 10,631,781 863,396 62,158 - 11,557,335
Transfer from property, plant and equipment 2,061,865 500,732 - - 2,562,597
Transfer to property, plant and equipment upon obtaining ownership of the (8,230,018) - - (147,229) (8,377,247)
underlying leased assets
Reduction upon completion/early termination of leases (4,576,768) (87,864) (260,804) (22,183) (4,947,619)
Exchange adjustments 84,700 - 2,481 - 87,181
At 31 December 2023 198,861,289 5,597,401 3,441,391 360,681 208,260,762
Additions 8,271,333 390,704 1,185,888 269,428 10,117,353
Transfer from property, plant and equipment 7,419,413 294,820 - - 7,714,233
Transfer to property, plant and equipment upon obtaining ownership of the (6,635,654) - - - (6,635,654)
underlying leased assets
Reduction upon completion/early termination of leases (3,079,755) (419,710) (664,737) (10,205) (4,174,407)
Exchange adjustments 79,551 - 3,071 - 82,622
At 31 December 2024 204,916,177 5,863,215 3,965,613 619,904 215,364,909
Accumulated depreciation
At 1 January 2023 (76,801,110) (879,326) (1,856,483) (154,453) (79,691,372)
Depreciation charged for the year (14,419,495) (106,817) (835,601) (106,211) (15,468,124)
Transfer to property, plant and equipment upon obtaining ownership of the 3,085,065 - - 34,099 3,119,164
underlying leased assets
Reduction upon completion/early termination of leases 4,490,941 16,898 257,657 22,126 4,787,622
Exchange adjustments (35,715) - (1,278) - (36,993)
At 31 December 2023 (83,680,314) (969,245) (2,435,705) (204,439) (87,289,703)
Depreciation charged for the year (14,541,088) (122,276) (850,246) (115,908) (15,629,518)
Transfer to property, plant and equipment upon obtaining ownership of the 2,897,676 - - - 2,897,676
underlying leased assets
Reduction upon completion/early termination of leases 2,851,654 17,983 650,757 9,203 3,529,597
Exchange adjustments (38,961) - (1,858) - (40,819)
At 31 December 2024 (92,511,033) (1,073,538) (2,637,052) (311,144) (96,532,767)
Net book value
At 31 December 2024 112,405,144 4,789,677 1,328,561 308,760 118,832,142
At 31 December 2023 115,180,975 4,628,156 1,005,686 156,242 120,971,059
During the year, expense relating to short-term leases amounted to
approximately RMB956 million (2023: RMB832 million), expense relating to
leases of low-value assets, excluding short-term leases of low value assets,
amounted to approximately RMB1,799,000 (2023: RMB7,261,000).
Leases committed
As at 31 December 2024, the Group had future undiscounted lease payments under
non-cancellable period of RMB188 million (2023: RMB2 million), which was not
recognised as lease liabilities since leases have yet to be commenced.
During the year, total cash outflow for leases was RMB20,079 million (2023:
RMB26,240 million).
Details of the lease maturity analysis of lease liabilities are set out in
Notes 34 and 43.
As at 31 December 2024, all the Group's land use rights, which are recorded as
part of right-of-use assets are located in Mainland China, with an aggregate
net book value of approximately RMB23 million (2023 RMB24 million) were
pledged to secure certain bank loans and other borrowings of the Group (Note
35).
19. INVESTMENT PROPERTIES
2024 2023
RMB'000 RMB'000
Cost
As at 1 January 948,150 722,215
Acquired on the acquisition of a subsidiary - 227,669
Disposals - (1,662)
Transfer to property, plant and equipment - (72)
As at 31 December 948,150 948,150
Accumulated depreciation
As at 1 January (221,556) (191,705)
Depreciation for the year (33,535) (31,257)
Disposals - 1,348
Transfer to property, plant and equipment - 58
As at 31 December (255,091) (221,556)
Net carrying amount
As at 31 December 693,059 726,594
20. GOODWILL
2024 2023
RMB'000 RMB'000
Cost
As at 1 January 4,225,467 1,229,710
Arising on acquisition of a subsidiary - 2,995,757
At 31 December 4,225,467 4,225,467
Impairment
As at 1 January and 31 December (129,735) (129,735)
Carrying amount
As at 31 December 4,095,732 4,095,732
For the purposes of impairment testing, goodwill acquired through these
business combinations has been allocated to the cash-generating units of
Shenzhen Airlines and Shandong Aviation respectively.
The recoverable amounts for both Shenzhen Airlines and Shandong Aviation
cash-generating units were determined based on value in use calculations.
These calculations used cash flow projections based on financial budgets
approved by the managements covering a five-year period and discount rates of
10% and 10.5% for Shenzhen Airlines and Shandong Aviation, respectively (2023:
11% and 11.5% for Shenzhen Airlines and Shandong Aviation, respectively). The
discount rates used are pre-tax rates that reflect the risks specific to each
unit. The cash flows beyond the five-year period were extrapolated using a
2.5% growth rate for both Shenzhen Airlines and Shandong Aviation (2023: 2.5%
for both Shenzhen Airlines and Shandong Aviation). Other key assumptions for
value in use calculations include budgeted sales and gross margins which are
based on the cash-generating units' past performances and managements' market
development expectations.
As the recoverable amounts are significantly above the carrying amounts of
Shenzhen Airlines and Shandong Aviation cash-generating units respectively,
the management believes that any reasonably possible change in any of these
assumptions would not result in impairment.
21. INTERESTS IN SUBSIDIARIES
Details of the subsidiaries directly and indirectly held by the Company at the
end of the reporting period are set out below:
Name of Subsidiaries Place of incorporation/registration/operations Legal status Paid up issued/registered capital Proportion of ownership Principal activities
interest and voting power
held by the Company
Direct Indirect
2024 2023 2024 2023
100% 100% 100% 100%
China National Aviation Company Limited ("CNAC") Hong Kong SAR, China Limited liability company HKD331,268,000 69 69 31 31 Investment holding
(中航興業有限公司)
Air China Import and Export Co., Ltd. PRC/Mainland China Limited liability company RMB95,080,786 100 100 - - Import and export trading
(國航進出口有限公司) (Note (a))
Zhejiang Aviation Service Co., Ltd. PRC/Mainland China Limited liability company RMB20,000,000 100 100 - - Provision of cabin service and airline catering
(浙江航空服務有限公司) (Note (a))
Air China Development Corporation Hong Kong SAR, China Limited liability company HKD9,379,010 100 95 - - Provision of air ticketing services
(Hong Kong) Limited
(國航香港發展有限公司)
Air China Shantou Industrial PRC/Mainland China Limited liability company RMB18,000,000 51 51 - - Airline related service
Development Co., Ltd.
(中國國際航空汕頭實業發展公司) (#)
Beijing Golden Phoenix Human PRC/Mainland China Limited liability company RMB2,000,000 100 100 - - Provision of human resources services
Resource Co., Ltd.
(北京金鳳凰人力資源服務有限公司) (Note (a))
Total Transform Group Ltd. British Virgin Islands("BVI") Limited liability company HKD13,765,440,000 99.94 99.94 0.06 0.06 Investment holding
(國航海外控股有限公司)
Air Macau Company Limited Macau SAR, China Limited liability company Macau Pataca ("MOP") - - 66.9 66.9 Airline operator
(澳門航空股份有限公司)
842,042,000
Beijing Airlines Co., Ltd. PRC/Mainland China Limited liability company RMB1,000,000,000 51 51 - - Airline operator
(北京航空有限責任公司) (Note (a))
Dalian Airlines Co., Ltd. (#) PRC/Mainland China Limited liability company RMB3,000,000,000 80 80 - - Airline operator
(大連航空有限責任公司) (Note (a))
Air China Inner Mongolia Co., Ltd. PRC/Mainland China Limited liability company RMB1,000,000,000 80 80 - - Airline operator
(中國國際航空內蒙古有限公司)
(Note (a))
China National Aviation Finance Co., Ltd. ("CNAF") PRC/Mainland China Limited liability company RMB1,127,961,864 51 51 - - Provision of financial services
(中國航空集團財務有限責任公司)
(Note (a))
Chengdu Falcon Aircraft Engineering Service Co., Ltd. PRC/Mainland China Limited liability company RMB80,000,000 30 30 30 30 Provision of aircraft overhaul and maintenance services
(成都富凱飛機工程服務有限公司)
(Note (b))
Shenzhen Airlines PRC/Mainland China Limited liability company RMB5,360,000,000 51 51 - - Airline operator
(深圳航空有限責任公司) (Note (b))
Kunming Airlines Co., Ltd. PRC/Mainland China Limited liability company RMB1,064,000,000 - - 100 100 Airline operator
("Kunming Airlines")
(昆明航空有限公司) (Notes (a))
Aircraft Maintenance and Engineering Corporation ("AMECO") PRC/Mainland China Limited liability company United State Dollar ("USD") 300,052,800 75 75 - - Provision of aircraft overhaul and maintenance services
(北京飛機維修工程有限公司)
(Note (b))
Shandong Aviation PRC/Mainland China Limited liability company RMB10,454,489,846.24 66 66 - - Airline related service
(山東航空集團有限公司) (Note (a))
Shandong Airline PRC/Mainland China Limited liability company RMB400,000,000 22.8 22.8 42 42 Airline operator
(山東航空股份有限公司) (Note (a))
(#) The English name of the company is direct translations
of their Chinese names.
21. INTERESTS IN SUBSIDIARIES (continued)
Notes:
(a) These companies are wholly-domestic owned enterprises.
(b) These companies are sino-foreign equity joint ventures.
The above table lists the subsidiaries of the Company which, in the opinion of
the Directors, principally affected the results or assets of the Group. To
give details of other subsidiaries would, in the opinion of the Directors,
result in particulars of excessive length.
Information of debt securities, representing corporate bonds and short-term
commercial papers, issued by a subsidiary of the Group:
As at 31 December 2024, the Company had a subsidiary which had outstanding
issued debt securities as follows:
Name Face value of Carrying value of Maturity date
debt securities
debt securities
RMB'000 RMB'000
Shenzhen Airlines:
1,500,000 1,538,968 18/02/2025
1,500,000 1,540,584 25/02/2025
1,000,000 1,026,821 21/03/2025
1,500,000 1,537,481 07/04/2025
700,000 716,241 26/04/2025
6,360,095
As at 31 December 2023, the Company had a subsidiary which had outstanding
issued debt securities as follows:
Name Face value of Carrying value of Maturity date
debt securities
debt securities
RMB'000 RMB'000
Shenzhen Airlines:
2,000,000 2,022,242 23/08/2024
1,500,000 1,538,030 18/02/2025
1,500,000 1,540,063 25/02/2025
1,000,000 1,026,566 21/03/2025
1,500,000 1,537,082 07/04/2025
700,000 716,048 26/04/2025
8,380,031
21. INTERESTS IN SUBSIDIARIES (continued)
Composition of the Group
Principal activities Place of incorporation/registration Number of principal
subsidiaries
and operations
2024 2023
Airline operator PRC/Macau SAR 7 7
Investment holding Hong Kong SAR/BVI 2 2
Import and export trading PRC 1 1
Provision of cabin service and airline catering PRC 1 1
Provision of air ticketing service Hong Kong SAR 1 1
Provision of human resources services PRC 1 1
Provision of aircraft overhaul and PRC 2 2
maintenance services
Provision of airline related services PRC 2 2
Provision of financial services PRC 1 1
18 18
Details of non-wholly owned subsidiaries that have material NCI
The table below shows details of non-wholly owned subsidiaries of the Company
that have material NCI:
Name of subsidiaries Place of Proportion of (Loss)/profit allocated Accumulated NCI
registration
ownership interest and
to NCI year ended
at 31 December
and operations
voting power held by NCI
31 December
at 31 December
2024 2023 2024 2023 2024 2023
RMB'000 RMB'000 RMB'000 RMB'000
Shenzhen Airlines PRC 49% 49% (1,376,394) (855,954) (6,547,851) (5,155,650)
Shandong Aviation PRC 34% 34% (662,362) 326,024 15,581 710,618
Individually immaterial subsidiaries with NCI (174,029) 7,093 2,330,068 2,503,066
Total (2,212,785) (522,837) (4,202,202) (1,941,966)
Summarised financial information in respect of the Company's subsidiaries that
have material NCI is set out below. The summarised financial information below
represents amounts before intra-group elimination. The summarised financial
information below represents amounts shown in the subsidiaries' financial
statements prepared in accordance with IFRS Accounting Standards.
21. INTERESTS IN SUBSIDIARIES (continued)
Details of non-wholly owned subsidiaries that have material NCI (continued)
Shenzhen Airlines
2024 2023
RMB'000 RMB'000
Current assets 11,897,107 5,121,868
Non-current assets 57,295,324 58,049,688
Current liabilities (37,233,895) (27,502,925)
Non-current liabilities (45,336,096) (46,202,653)
Net liabilities (13,377,560) (10,534,022)
- Equity contributed to equity shareholders of Shenzhen Airlines (13,391,586) (10,545,827)
- Equity contributed to the NCI of Shenzhen Airlines' subsidiaries 14,026 11,805
Carrying amount of NCI (6,547,851) (5,155,650)
Revenue 33,069,720 29,988,128
Loss for the year (2,811,279) (1,734,168)
Total comprehensive expense (2,843,537) (1,741,959)
- attributable to equity shareholders of Shenzhen Airlines (2,845,758) (1,729,779)
- attributable to NCI of Shenzhen Airlines' subsidiaries 2,221 (12,180)
Dividend paid to NCI - -
Cash from operating activities 6,897,524 7,535,277
Cash used in investing activities (1,803,852) (3,184,482)
Cash from/(used in) financing activities 1,400,496 (4,486,825)
21. INTERESTS IN SUBSIDIARIES (continued)
Details of non-wholly owned subsidiaries that have material NCI (continued)
Shandong Aviation
2024 2023
RMB'000 RMB'000
Current assets 5,919,023 4,962,693
Non-current assets 27,566,976 26,812,919
Current liabilities (6,945,388) (9,207,792)
Non-current liabilities (23,259,019) (17,650,278)
Net assets 3,281,592 4,917,542
- Equity contributed to equity shareholders of Shandong Aviation 8,420,192 8,946,512
- Equity contributed to the NCI of Shandong Aviation' subsidiaries (5,138,600) (4,028,970)
Carrying amount of NCI 15,581 710,618
Revenue 20,446,285 15,674,953
(Loss)/profit for the year (1,580,837) 906,335
Total comprehensive (expense)/income (1,619,505) 879,751
- attributable to equity shareholders of Shandong Aviation (544,435) 575,816
- attributable to NCI of Shandong Aviation' subsidiaries (1,075,070) 303,935
Dividend paid to NCI 11,990 7,339
Cash from operating activities 3,936,596 2,363,998
Cash used in investing activities (1,867,814) (1,190,298)
Cash used in financing activities (1,752,279) (4,177,576)
22. INTERESTS IN ASSOCIATES
2024 2023
RMB'000 RMB'000
Share of net assets
- Listed shares in Hong Kong SAR, China 11,682,645 10,024,259
- Unlisted investments 322,205 266,939
Goodwill 2,628,073 2,571,825
As at 31 December 14,632,923 12,863,023
Market value of listed shares 17,054,995 14,275,696
22. INTERESTS IN ASSOCIATES (continued)
Details of each of the Group's associates at the end of the reporting period
are as follows:
Company name Place of incorporation/registration and operations Paid up issued/ Percentage of equity interests attributable to the Group Principal activities
registered capital
as at 31 December
2024 2023
% %
Cathay Pacific* (國泰航空有限公司) Hong Kong SAR, China HKD28,822,000,000 29.98 29.99 Airline operator
Menzies Macau Airport Services Limited* Macau SAR, China MOP10,000,000 41 41 Provision of airport ground handling services
(明捷澳門機場服務有限公司)
Chongqing Civil Aviation Cares Information Technology Co., Ltd. PRC/Mainland China RMB14,800,000 24.5 24.5 Provision of airline-related information system services
(重慶民航凱亞信息技術有限公司)
Chengdu Civil Aviation Southwest Cares Co., Ltd. PRC/Mainland China RMB10,000,000 35 35 Provision of airline-related information system services
(成都民航西南凱亞有限責任公司)
Tibet Airlines Co., Ltd. (西藏航空有限公司) PRC/Mainland China RMB280,000,000 31 31 Airline operator
ZhengZhou Aircraft Maintenance and PRC/Mainland China RMB150,000,000 30 30 Provision of overhaul and maintenance services
Engineering Co.,Ltd.(#)
(鄭州飛機維修工程有限公司)
Staeco (Beijing) Business Jet Maintenance Co.,Ltd.* PRC/Mainland China RMB5,000,000 40 40 Provision of overhaul and maintenance services
(北京山太公務機維修技術有限公司)
("Staeco Business Jet Maintenance")
Shandong Airlines Rainbow Jet Co.,Ltd.* PRC/Mainland China RMB50,000,000 51 51 Airline operator
(山東航空彩虹公務機有限公司)
("Shandong Airlines Rainbow")
* The equity interests of these associates are held
indirectly through certain subsidiaries of the Company.
(#) The English names of these companies are direct
translations of their Chinese names.
The above table lists the associates of the Group which, in the opinion of the
Directors, principally affected the results or assets of the Group. To give
details of other associates would, in the opinion of the Directors, result in
particulars of excessive length.
22. INTERESTS IN ASSOCIATES (continued)
Summarised financial information in respect of Cathay Pacific, the only
individually material associate of the Group, and a reconciliation to the
carrying amount in the consolidated financial statements, are set out below.
The summarised financial information below represents amounts shown in the
associate's financial statements.
Cathay Pacific
2024 2023
RMB'000 RMB'000
Gross amounts of the associate's
Current assets 17,822,566 20,615,599
Non-current assets 140,756,228 137,170,897
Current liabilities (46,523,324) (41,226,666)
Non-current liabilities (63,431,888) (62,156,724)
Equity 48,623,582 54,403,106
- Equity contributed to equity shareholders of the associate 48,130,929 44,911,357
- Equity contributed to preferred shareholders of the associate - 9,008,733
- Equity contributed to NCI of the associate 6,482 6,344
- Equity contributed to convertible bond holders of the associate 486,171 476,672
Revenue 95,617,404 85,012,406
Profit for the year 9,058,693 8,741,428
Other comprehensive expense (420,504) (1,667,227)
Total comprehensive income 8,638,189 7,074,201
Dividend received from the associate 1,114,220 -
Reconciled to the Group's interests in the associate
Gross amounts of net assets of the associate attributable to 48,130,929 44,911,357
equity shareholders
Group's effective interest 29.98% 29.99%
Group's share of net assets of the associate 14,429,653 13,468,916
Elimination of reciprocal shareholding (2,747,008) (3,444,657)
Goodwill 2,628,073 2,571,825
Carrying amount in the consolidated financial statements 14,310,718 12,596,084
22. INTERESTS IN ASSOCIATES (continued)
Aggregate information of associates that are not individually material:
2024 2023
RMB'000 RMB'000
Aggregate carrying amounts of individually immaterial associates 322,205 266,939
in the consolidated financial statements
Aggregate amounts of the Group's share of those associates'
- Profit for the year 111,957 122,300
- Other comprehensive income for the year 1,482 698
- Total comprehensive income for the year 113,439 122,998
23. INTERESTS IN JOINT VENTURES
2024 2023
RMB'000 RMB'000
Share of net assets 2,417,358 2,407,304
Goodwill 6,495 6,495
2,423,853 2,413,799
23. INTERESTS IN JOINT VENTURES (continued)
Details of each of the Group's joint ventures at the end of the reporting
period are as follows:
Company name Place of incorporation/registration and operations Paid up issued/ Percentage of equity interests attributable to the Group Principal activities
registered capital
as at 31 December
2024 2023
% %
Shanghai Pudong International Airport Cargo Terminal Co., Ltd. (#) PRC/Mainland China RMB680,000,000 39 39 Provision of cargo carriage services
(上海浦東國機場西區公共貨運站有限公司)
Sichuan Services Aero-Engine Maintenance Co., Ltd. PRC/Mainland China USD88,000,000 60 60 Provision of engine overhaul and maintenance services
(四川國際航空發動機維修有限公司)
GA Innovation China PRC/Mainland China USD10,000,000 50 50 Wholesale and import of aircraft and components
(北京集安航空資產管理有限公司)
Shanghai International Airport Ground Services Ltd. PRC/Mainland China RMB360,000,000 24 24 Provision of airport ground handling services
(上海國際機場地面服務有限公司)
Wuxi Xiangyi Development Co., Ltd.(#) PRC/Mainland China RMB20,000,000 46.3 46.3 Property development
(無錫市祥翼發展有限公司)
Beijing Aero-Engine Services Co., Ltd.(#) PRC/Mainland China USD190,000,000 50 50 Provision of engine overhaul and maintenance services
(北京航空發動機維修有限公司)
(#) The English names of these companies are the direct
translations of their Chinese names.
The decisions about the relevant activities of the above investees require
unanimous consent of the Group and other investors pursuant to the articles of
association of these investees.
23. INTERESTS IN JOINT VENTURES (continued)
The Directors are of the opinion that no joint ventures are individually
material to the Group. Aggregate information of joint ventures that are not
individually material are listed as follows:
2024 2023
RMB'000 RMB'000
Aggregate carrying amounts of individually immaterial joint 2,423,853 2,413,799
ventures in the consolidated financial statements
Aggregate amounts of the Group's share of those joint ventures'
- Profit for the year 209,121 279,566
- Total comprehensive income for the year 209,121 279,566
24. EQUITY INSTRUMENTS AT FVTOCI
2024 2023
RMB'000 RMB'000
Unlisted investments:
- Equity securities 1,791,273 1,547,986
The above unlisted equity investments represent the Group's equity interests
in a number of private entities established in the PRC and certain interest in
unlisted securities of a listed company. The Directors have elected to
designate these investments in equity instruments at FVTOCI as they believe
that these equity instruments are not held for trading and not expected to be
sold in the foreseeable future.
25. DEBT INSTRUMENTS AT FVTOCI
2024 2023
RMB'000 RMB'000
Investments in listed bonds 1,426,851 1,397,310
The above investments are held by the Group within a business model whose
objective is both to collect their contractual cash flows which are solely
payments of principal and interest on the principal amount outstanding and to
sell these financial assets. Hence, these investments are classified as at
debt instruments at FVTOCI.
Details of impairment assessment are set out in Note 43.
26. DEFERRED TAXATION
The movements in deferred tax assets and liabilities during the year were as
follows:
2024 2023
RMB'000 RMB'000
Deferred tax assets:
As at 1 January 23,181,579 18,679,375
Charged to profit or loss (Note 14) (1,191,161) (1,194,005)
Acquisition of a subsidiary - 5,695,801
Exchange realignment 275 408
Gross deferred tax assets as at 31 December 21,990,693 23,181,579
Deferred tax liabilities:
As at 1 January 9,772,309 8,529,345
Acquisition of a subsidiary - 2,715,945
Credited to profit or loss (Note 14) (592,728) (1,510,907)
Charged to other comprehensive income (20,638) 37,926
Gross deferred tax liabilities as at 31 December 9,158,943 9,772,309
Net deferred tax assets as at 31 December 12,831,750 13,409,270
26. DEFERRED TAXATION (continued)
The principal components of the Group's deferred tax assets and liabilities
were as follows:
2024 2023
RMB'000 RMB'000
Deferred tax assets:
Deductible tax losses 6,305,985 7,452,665
Provisions and accruals 6,251,603 5,562,188
Lease liabilities 8,750,652 9,498,934
Impairment 363,866 375,037
Unrealised profit of intra-group transactions 266,152 238,823
Differences in value of property, plant and equipment 51,636 53,218
Impairment of investments in debt instruments at FVTOCI 586 487
Unrealised loss on derivative financial instruments 213 227
Gross deferred tax assets 21,990,693 23,181,579
Deferred tax liabilities:
Right-of-use assets (7,545,854) (7,748,228)
Depreciation allowances in excess of the related depreciation (1,221,173) (1,372,469)
Changes in fair value of equity instruments at FVTOCI (177,748) (205,426)
Unrealised equity investment income (113,878) (122,284)
Changes in fair value of debt instruments at FVTOCI (11,005) (4,064)
Impairment of investments in debt instruments at FVTOCI (586) (487)
Others (88,699) (319,351)
Gross deferred tax liabilities (9,158,943) (9,772,309)
Net deferred tax assets 12,831,750 13,409,270
The following amounts, determined after appropriate offsetting, are shown
separately on the consolidated statement of financial position:
2024 2023
RMB'000 RMB'000
Net deferred tax assets 12,959,766 13,757,180
Net deferred tax liabilities (128,016) (347,910)
12,831,750 13,409,270
26. DEFERRED TAXATION (continued)
Details of tax losses and other deductible temporary differences not
recognised are set out below:
2024 2023
RMB'000 RMB'000
Deductible tax losses 66,710,308 59,112,856
Other unrecognised deductible temporary differences 268,117 326,651
66,978,425 59,439,507
At the end of the reporting period, the Group has unused tax losses of
approximately RMB93,101 million (2023: RMB90,173 million) available for offset
against future profits. Deferred tax asset has been recognised in respect of
approximately RMB26,390 million (2023: RMB31,060 million) of such losses. No
deferred tax asset has been recognised in respect of the remaining tax losses
of approximately RMB66,710 million (2023: RMB59,113 million) which relate to
subsidiaries that have been loss-making for some years and it is not
considered probable that sufficient taxable profits will be available in the
near future against which the tax losses can be utilised. Included in
unrecognised tax losses are losses of approximately RMB66,678 million (2023:
RMB59,085 million) with expiry dates as disclosed in the following table.
Other tax losses may be carried forward indefinitely.
2024 2023
RMB'000 RMB'000
2024 - 302,295
2025 450,281 450,281
2026 16,685,095 9,696,642
2027 38,534,790 39,300,103
2028 6,779,635 9,335,472
2029 4,227,979 -
66,677,780 59,084,793
27. INVENTORIES
An analysis of inventories as at the end of the reporting period is as
follows:
2024 2023
RMB'000 RMB'000
Spare parts of flight equipment 2,175,766 2,184,056
Work in progress 1,704,509 1,297,067
Catering supplies 95,489 101,531
Equipment 8,028 7,653
Others 241,200 92,514
4,224,992 3,682,821
28. ACCOUNTS RECEIVABLE
2024 2023
RMB'000 RMB'000
Accounts receivable 3,834,983 3,357,916
Less: Allowance for expected credit losses (164,731) (175,119)
3,670,252 3,182,797
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:
2024 2023
RMB'000 RMB'000
Within 30 days 2,963,962 2,349,927
31 to 60 days 147,934 265,953
61 to 90 days 139,120 155,337
Over 90 days 419,236 411,580
3,670,252 3,182,797
Details of impairment assessment of accounts receivable are set out in Note
43.
29. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
An analysis of prepayments, deposits and other receivables as at the end of
the reporting period, net of allowance for expected credit losses, was as
follows:
2024 2023
RMB'000 RMB'000
Manufacturers' credits 1,311,700 567,759
Prepayments of jet fuel 116,961 99,925
Other prepayments 345,284 314,506
1,773,945 982,190
Deposits and other receivables 3,449,312 4,870,155
5,223,257 5,852,345
As at 31 December 2024, the allowance at lifetime ECL recognised on
credit-impaired debtor mainly consisted of the full provision for the amount
due from Shenzhen Airlines Property Development Co., Ltd. of RMB225,416,000
(2023: RMB293,685,000).
Details of impairment assessment of deposits and other receivables are set out
in Note 43.
30. RESTRICTED BANK DEPOSITS, CASH AND CASH EQUIVALENTS
2024 2023
RMB'000 RMB'000
Time deposits with banks 956,572 439,195
Bank and cash 21,511,329 15,189,301
Less: Restricted bank deposits (Note) (1,428,429) (611,692)
Cash and cash equivalents 21,039,472 15,016,804
Note: As at 31 December 2024 and 2023, the Group's restricted bank
deposits mainly contains deposits with the People's Bank of China by CNAF,
security deposits and bank deposits with an original maturity of more than
three months.
31. OTHER CURRENT ASSETS
2024 2023
RMB'000 RMB'000
The value added tax credit 4,107,817 3,503,185
Debt instruments at amortised cost 500,000 -
Loans to related parties 288,223 265,217
Debt instruments at FVTOCI 49,862 99,365
Others 28,955 17,173
4,974,857 3,884,940
Impairment (14,229) (11,311)
4,960,628 3,873,629
Loans to related parties mainly represented loans to CNAHC and its
subsidiaries by CNAF at a rate of 2.20%-3.00% (2023: 2.50%-3.30%) per annum
and the loans are repayable within one year.
Details of impairment assessment of other current assets are set out in Note
43.
32. 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:
2024 2023
RMB'000 RMB'000
Within 30 days 8,354,764 7,517,749
31 to 60 days 2,009,755 2,479,368
61 to 90 days 4,806,725 3,411,397
Over 90 days 3,698,540 4,545,784
18,869,784 17,954,298
The accounts payable are non-interest-bearing and have normal credit terms up
to 90 days.
33. OTHER PAYABLES AND ACCRUALS
An analysis of other payables and accruals as at the end of the reporting
period was as follows:
2024 2023
RMB'000 RMB'000
Accrued salaries, wages and benefits 3,507,037 3,154,495
Payables for construction in progress 1,365,753 1,715,427
Deposits received from sales agents 593,809 512,378
Other tax payables 524,754 495,176
Current portion of long-term payables 2,377 4,233
Deposits received by CNAF from related parties 4,891,502 7,088,514
Others 2,552,270 2,731,323
13,437,502 15,701,546
34. LEASE LIABILITIES
The Group has obligations under lease agreements expiring during the years
from 2025 to 2033 (2023: from 2024 to 2033). An analysis of the lease payments
as at the end of the reporting period, together with the present values of the
lease payments, is as follows:
At 31 December 2024 At 31 December 2023
Lease Present Lease Present
payments
values of
payments
values of
lease payments
lease payments
RMB'000 RMB'000 RMB'000 RMB'000
Amounts repayable
- Within 1 year 19,536,185 17,464,654 20,663,819 18,175,349
- After 1 year but within 2 years 16,251,571 14,744,586 17,712,432 15,840,293
- After 2 years but within 5 years 31,277,456 28,948,310 35,082,619 32,158,689
- After 5 years 16,181,484 15,441,291 16,889,125 16,054,985
Total 83,246,696 76,598,841 90,347,995 82,229,316
Less: Amounts representing future (6,647,855) (8,118,679)
finance costs
Present values of lease payments 76,598,841 82,229,316
Less: Portion classified as current liabilities (17,464,654) (18,175,349)
Non-current portion 59,134,187 64,053,967
The weighted average incremental borrowing rates applied to lease liabilities
ranged from 0.64% to 7.16% per annum at 31 December 2024 (2023: from 0.37% to
8.31%).
Under the terms of certain lease agreements, the Group has the option to
purchase the aircraft at the end of or during the lease term, at the price as
stipulated in those lease agreements.
35. INTEREST-BEARING BORROWINGS
2024 2023
RMB'000 RMB'000
Bank loans and other borrowings:
- Secured 3,583,562 748,462
- Unsecured 137,370,418 139,882,030
140,953,980 140,630,492
Corporate bonds and short-term commercial papers:
- Unsecured 18,427,685 11,400,907
159,381,665 152,031,399
2024 2023
RMB'000 RMB'000
Bank loans and other borrowings repayable:
- Within 1 year 62,117,020 45,067,693
- After 1 year but within 2 years 30,458,552 57,883,821
- After 2 years but within 5 years 43,561,628 33,414,939
- After 5 years 4,816,780 4,264,039
140,953,980 140,630,492
Corporate bonds and short-term commercial papers repayable:
- Within 1 year 12,427,685 2,204,075
- After 1 year but within 2 years - 9,196,832
- After 2 years but within 5 years 6,000,000 -
18,427,685 11,400,907
Total interest-bearing borrowings 159,381,665 152,031,399
Less: Portion classified as current liabilities (74,544,705) (47,271,768)
Non-current portion 84,836,960 104,759,631
35. INTEREST-BEARING BORROWINGS (continued)
Bank and other borrowings denominated in currencies other than the functional
currencies of respective entities are set out below:
2024 2023
RMB'000 RMB'000
MOP - 487,814
European Dollar ("EURO") 116,451 121,611
116,451 609,425
The carrying amount of the bank and other borrowings and the range of interest
rates are as below:
2024 2023
RMB'000 % RMB'000 %
Fixed rate bank loans and 69,595,812 1.95-4.38 91,804,188 2.00-4.38
other borrowings
Fixed rate corporate bonds and 18,427,685 2.03-3.46 11,400,907 2.54-3.46
short-term commercial papers
Floating rate bank loans and 71,358,168 1.60-4.20 48,826,304 2.30-4.45
other borrowings
159,381,665 152,031,399
The floating rate bank and other borrowings are arranged at the interest rate
based on benchmark interest rates of The People's Bank of China.
The Group's interest-bearing borrowings had been secured by the Group's assets
and the carrying amounts of the respective assets at the end of the reporting
period are as follows:
2024 2023
RMB'000 RMB'000
Aircraft and flight equipment, buildings and other equipment 3,825,292 837,673
Land use rights 23,433 24,221
Intangible assets - 6,105
3,848,725 867,999
As at 31 December 2024, corporate bonds with carrying amount of RMB6,360
million (2023: corporate bonds with carrying amount of RMB8,380 million) were
issued by Shenzhen Airlines, a subsidiary of the Company.
36. PROVISION FOR RETURN CONDITION CHECKS
Details of the movements in provision for return condition checks in respect
of aircraft under leases at the end of the reporting period are as follows:
2024 2023
RMB'000 RMB'000
As at 1 January 17,847,759 9,542,222
Acquisition of a subsidiary - 6,951,253
Provision for the year 2,831,892 2,659,165
Utilisation during the year (693,022) (1,304,881)
As at 31 December 19,986,629 17,847,759
Less: Portion classified as current liabilities (758,575) (650,777)
Non-current portion 19,228,054 17,196,982
As at 31 December 2024, provision for major overhauls was RMB15,939 million
(2023: RMB13,739 million). Provision for major overhauls is calculated based
on a number of variable factors and assumptions, including the anticipated
utilisation of the aircraft and the expected costs of maintenance. The
estimates are reviewed on an ongoing basis and revised whenever appropriate.
37. CONTRACT LIABILITIES
2024 2023
RMB'000 RMB'000
Frequent-flyer programme (Note) 2,757,040 2,172,125
Others 979,320 1,014,354
3,736,360 3,186,479
Analysed as:
Current portion 1,171,172 1,522,492
Non-current portion 2,565,188 1,663,987
3,736,360 3,186,479
37. CONTRACT LIABILITIES (continued)
Note:
The movements of the Group's frequent-flyer programme during the year were as
follows:
2024 2023
RMB'000 RMB'000
As at 1 January 2,172,125 2,028,222
Additions during the year 1,936,051 1,598,477
Recognised as revenue during the year (1,351,136) (1,454,574)
As at 31 December 2,757,040 2,172,125
Less: Portion classified as current liabilities (191,852) (508,138)
Non-current portion 2,565,188 1,663,987
The Group operates frequent-flyer programme and provides free services or
products to the customers according to the miles they earn. The Group
maintains IT systems in order to track the point of service provision for each
sale and also to track the issuance and subsequent redemption and utilisation
and expiry of frequent-flyer programme awards. The amount allocated to the
miles earned by the frequent-flyer programme members is deferred until the
miles are redeemed when the Group fulfils its obligations to supply services
or products or when the miles expire.
38. DEFINED BENEFIT OBLIGATIONS
The liabilities recognised in the consolidated statement of financial position
represent:
2024 2023
RMB'000 RMB'000
Post-retirement benefit obligations 208,098 210,054
Less: current portion (21,398) (22,244)
Long-term portion 186,700 187,810
AMECO, a subsidiary of the Company, provides monthly retirement benefits for
those staff who were retired before AMECO adopted its own enterprise annuity
plan (the "Plan"). These retirement benefits are recognised as defined benefit
obligations.
38. DEFINED BENEFIT OBLIGATIONS (continued)
Movements of the defined benefit obligations were set out as follows:
2024 2023
RMB'000 RMB'000
At 1 January 210,054 225,824
Remeasurement loss 15,130 912
Past service cost - 308
Interest cost 5,147 6,204
Payments (22,233) (23,194)
At 31 December 208,098 210,054
Less: current portion (21,398) (22,244)
Long-term portion 186,700 187,810
Expenses recognised in the consolidated statement of profit or loss and other
comprehensive income are as follows:
2024 2023
RMB'000 RMB'000
Finance costs
- Interest cost 5,147 6,204
Past service cost - 308
Other comprehensive expense
- Remeasurement loss 15,130 912
Total defined benefit costs 20,277 7,424
The Plan exposes the Group to actuarial risks such as interest rate risk and
longevity risk.
Interest rate risk The present value of the defined
benefit plan obligation is calculated using a discount rate determined by
reference to government bond yields. A decrease in the bond interest rate will
increase the plan liability.
Longevity risk The present value of the defined
benefit plan obligation is calculated by reference to the best estimate of the
mortality of plan participants after their employment. An increase in the life
expectancy of the plan participants will increase the plan liability.
The most recent actuarial valuations of the present value of the defined
benefit obligations as at 31 December 2024 and 2023 were carried out by an
independent firm of actuaries, Ernst & Young (China) Advisory Limited. The
present value of the defined benefit obligations, and the related past cost
were measured using the projected unit credit method.
38. DEFINED BENEFIT OBLIGATIONS (continued)
Significant actuarial assumptions (expressed as weighted averages) are as
follows:
2024 2023
Discount rate 1.65% 2.60%
Average expected remaining life of eligible participants 10.8 years 11.0 years
Significant actuarial assumptions for the determination of the defined benefit
obligation are discount rate and mortality. The sensitivity analyses below
have been determined based on reasonably possible changes of the respective
assumptions occurring at the end of the reporting period, while holding all
other assumptions constant.
• If the discount rate on benefit obligation decreases
by 0.5%, the defined benefit obligations would increase by RMB7.77 million
(2023: increase by RMB7.64 million).
• If the mortality changes to 95% of original
assumption, the defined benefit obligations would increase by RMB5.12 million
(2023: increase by RMB4.76 million).
39. DEFERRED INCOME
2024 2023
RMB'000 RMB'000
Government grants 315,573 308,315
Others 91,370 95,788
406,943 404,103
40. CAPITAL AND RESERVES
(a) Movements in components of equity
The reconciliation between the opening and closing balances of each component
of the Group's consolidated equity is set out in the consolidated statement of
changes in equity. Details of the changes in the Company's individual
components of equity between the beginning and the end of the year are set out
below:
Issued Capital Reserve Accumulated losses Total
capital
reserve and revaluation reserve
funds
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January 2023 14,524,815 27,536,676 11,527,181 (23,901,993) 29,686,679
Total comprehensive expense for the year - - - (3,070,996) (3,070,996)
Issue new shares 1,675,978 13,317,039 - - 14,993,017
As at 31 December 2023 16,200,793 40,853,715 11,527,181 (26,972,989) 41,608,700
Total comprehensive expense for the year - - - (227,112) (227,112)
Issue new shares 1,247,628 6,563,956 - - 7,811,584
As at 31 December 2024 17,448,421 47,417,671 11,527,181 (27,200,101) 49,193,172
Under the PRC Company Law and the Company's articles of association, profit
after taxation as reported in the PRC statutory financial statements can only
be distributed as dividends after allowances have been made for the following:
(i) making up prior years' cumulative losses, if any;
(ii) allocations to the statutory reserve fund of at least 10%
of the after-tax profit, until the fund reaches 50% of the Company's
registered capital (for the purpose of calculating transfers to reserves,
profit after taxation would be the amount determined under CASs). The
transfers to reserves should be made before any distribution of dividends to
shareholders. The statutory reserve fund can be used to offset previous years'
losses, if any, and part of the statutory reserve fund can be capitalised as
the Company's share capital provided that the amount of such reserve remaining
after the capitalisation shall not be less than 25% of the share capital of
the Company; and
(iii) allocations to the discretionary reserve fund approved by
the shareholders.
40. CAPITAL AND RESERVES (continued)
(a) Movements in components of equity (continued)
The above reserves cannot be used for purposes other than those for which they
are created and are not distributable as cash dividends. As at 31 December
2024, in accordance with the PRC Company Law, amount of approximately
RMB11,527 million (2023: RMB11,527 million) standing to the credit of the
Company's reserve funds, as determined in accordance with CASs, were available
for distribution by way of future capitalisation issue. In addition, the
Company had accumulated losses of approximately RMB28,596 million as at 31
December 2024 (2023: RMB28,356 million), as determined in accordance with
CASs.
(b) Share capital
The number of shares of the Company and their nominal values as at 31 December
2024 and 31 December 2023 are as follows:
Number of Nominal Number of Nominal
shares
value
shares
value
2024
2024
2023
2023
RMB'000 RMB'000
Registered, issued and fully paid:
H shares of RMB1.00 each:
- Tradable 4,562,683,364 4,562,683 4,562,683,364 4,562,683
- Trade-restricted (Note1) 392,927,308 392,927 - -
A shares of RMB1.00 each:
- Tradable 11,638,109,474 11,638,109 11,023,584,324 11,023,584
- Tradable-restricted (Note2) 854,700,854 854,701 614,525,150 614,525
17,448,421,000 17,448,421 16,200,792,838 16,200,793
A shares rank pari passu, in all material respects, with H shares of the
Company.
Note 1: On 7 February 2024, the Company issued 392,927,308 new H shares to
China National Aviation Corporation (Group) Limited ("CNACG", a wholly-owned
subsidiary of CNAHC) at the price of HKD5.09 per share with par value of RMB1.
Total proceeds of the issuance was HKD2,000 million and the net proceed was
RMB1,816 million, after deducting issue cost of RMB1 million (excluding
value-added tax), of which RMB393 million was recognised as issued capital and
RMB1,423 million was recognised as capital reserve. Upon completion of the
issuance, the new H shares are subject to a lock-up period of 36 months. The
new H shares issued rank pari passu with the existing A shares and H shares in
all respects.
Note 2: On 17 July 2024, 614,525,150 A share subscribed by CNAHC were released
from restriction.
On 19 November, 2024, the Company issued 854,700,854 new A shares to CNAHC at
the price of RMB7.02 per share with par value of RMB1. Total proceeds of the
issuance was RMB6,000 million and the net proceed was 5,996 million, after
deducting issuance cost of RMB4 million (excluding value-added tax), of which
RMB855 million was recognised as issued capital and RMB5,141 million was
recognised as capital reserve. Upon completion of the issuance, the new A
shares are subject to a lock-up period of 36 months. The new A shares issued
rank pari passu with the existing A shares and H shares in all respects.
40. CAPITAL AND RESERVES (continued)
(c) Treasury shares
As at 31 December 2024, the Group owned 29.98% equity interest in Cathay
Pacific (2023: 29.99%), which in turn owned 15.09% (2023: 16.26%) equity
interest in the Company. Accordingly, the 29.98% of Cathay Pacific's
shareholding in the Company was recorded in the Group's consolidated financial
statements as treasury shares through deduction from equity.
(d) Capital management
The primary objectives of the Group's capital management are to safeguard the
Group's ability to continue as a going concern and to maintain healthy capital
ratios in order to support its business and maximise shareholders' value.
The Group manages its capital structure and makes adjustments to it in light
of changes in economic conditions. To maintain or adjust the capital
structure, the Group may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares. No changes were made in the
objectives, policies, or processes for managing capital during the years ended
31 December 2024 and 2023.
The Group monitors capital structure by reference to the gearing ratio, which
represents total liabilities divided by total assets. The gearing ratio as at
the end of the reporting periods was as follows:
2024 2023
RMB'000 RMB'000
Total liabilities 304,824,203 300,014,685
Total assets 345,750,173 335,278,694
Gearing ratio 88.16% 89.48%
41. CONTINGENT LIABILITIES
As at 31 December 2024, the Group had the following contingent liabilities:
Pursuant to the restructuring of CNAHC in preparation for the listing of the
Company's H shares on the HKSE and the LSE, the Company entered into a
restructuring agreement (the "Restructuring Agreement") with CNAHC and China
National Aviation Corporation (Group) Limited ("CNACG", a wholly-owned
subsidiary of CNAHC) on 20 November 2004. According to the Restructuring
Agreement, except for liabilities constituting or arising out of or relating
to business undertaken by the Company after the restructuring, no liabilities
would be assumed by the Company and the Company would not be liable, whether
severally, or jointly and severally, for debts and obligations incurred prior
to the restructuring by CNAHC and CNACG. The Company has also undertaken to
indemnify CNAHC and CNACG against any damage suffered or incurred by CNAHC and
CNACG as a result of any breach by the Company of any provision of the
Restructuring Agreement.
42. COMMITMENTS
(a) Capital commitments
The Group had the following amounts of contractual commitments for the
acquisition and construction of property, plant and equipment as at the end of
the reporting period:
2024 2023
RMB'000 RMB'000
Contracted for but not provided in the 95,175,219 72,078,516
consolidated financial statements
(b) Investment commitments
The Group had the following amount of investment commitments as at the end of
the reporting period:
2024 2023
RMB'000 RMB'000
Contracted, but not provided for:
- investment commitment to joint ventures 312,695 456,834
In 2012, the Company entered into an agreement with a joint venture as its 50%
shareholder, with a total investment commitment of USD5 million. As at 31
December 2024 and 2023, the Company has invested USD1.5 million and committed
to invest USD3.5 million in the future.
In 2022, the Company entered into an agreement with a joint venture as its 50%
shareholder, with a total investment commitment of USD95 million. As at 31
December 2024, the Company has invested USD55 million (2023: USD34 million)
and committed to further invest USD40 million (2023: USD61 million) in the
future.
43. FINANCIAL INSTRUMENTS
a. Categories of financial instruments
2024 2023
RMB'000 RMB'000
Financial assets
Amortised cost:
Accounts receivable 3,670,252 3,182,797
Bills receivable 7,785 3,601
Deposits and other receivables 3,449,312 4,870,155
Deposits for aircraft under leases 526,004 525,463
Restricted bank deposits 1,428,429 611,692
Cash and cash equivalents 21,039,472 15,016,804
Debt instruments at amortised cost 500,000 -
Loans to related parties 273,994 253,906
Long-term receivables from a related party included in 315,936 328,886
other non-current assets
31,211,184 24,793,304
Financial assets at FVTPL 37,559 2,505
Equity instruments at FVTOCI 1,791,273 1,547,986
Debt instruments at FVTOCI (including debt instruments at FVTOCI included in 1,476,713 1,496,675
other current assets)
Financial liabilities
Amortised cost:
Accounts payable 18,869,784 17,954,298
Bills payable - 500,160
Dividends payable 98,000 98,000
Other payables 8,819,894 11,569,341
Interest-bearing borrowings 159,381,665 152,031,399
Deposits received by CNAF from a related party 3,000 -
include in long-term payables
187,172,343 182,153,198
Lease liabilities 76,598,841 82,229,316
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies
The above table lists the Group's major financial instruments. Details of
these financial instruments are disclosed in the respective notes. The risks
associated with these financial instruments include market risks (interest
rate risk and foreign currency risk), credit risk, and liquidity risk. The
policies on how to mitigate these risks are set out below. The management
manages and monitors these exposures to ensure appropriate measures are
implemented on a timely and effective manner.
Market risk
(i) Interest rate risk
The Group is exposed to fair value interest rate risk which arises from fixed
rate lease liabilities, fixed rate bank loans and other borrowings (see Notes
34 and 35 for details), fixed rate corporate bonds, loans to related parties
include in other current assets.
In addition, the Group is exposed to cash flow interest rate risk which arises
from floating rate bank loans and other borrowings, lease liabilities,
restricted bank deposits, bank balances, debt instruments at amortised cost
and loans to related parties include in other current assets. The Group's
exposures to interest rates on financial liabilities are detailed in the
liquidity risk management section of this note.
Sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to
interest rates for bank balances, restricted bank deposits, floating rate
loans to related parties include in other current assets, floating rate bank
loans and other borrowings and floating rate lease liabilities at the end of
the reporting period. The analysis is prepared assuming the financial
instruments outstanding at the end of reporting period were outstanding for
the whole year. A 50 basis points increase or decrease in interest rate are
used which represent management's assessment of the reasonably possible
changes in interest rates.
If interest rates had been 50 basis points (2023: 50 basis points)
higher/lower with all other variables held constant, the Group's post-tax loss
for the year ended 31 December 2024 would increase/decrease and equity as at
31 December 2024 would decrease/increase by approximately RMB336 million
(2023: RMB288 million) taking into account the capitalisation of borrowing
costs.
In management's opinion, the sensitivity analysis is unrepresentative of the
inherent interest rate risk as exposure at the end of the reporting period
does not reflect the exposure during the year.
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Market risk (continued)
(ii) Currency risk
The Group's exposure to currency risk is attributable to cash and cash
equivalents, accounts receivable, deposits and other receivables, accounts
payable, other payables, lease liabilities and interest-bearing borrowings
which are denominated in the currencies other than the functional currency of
the relevant group entities. The management manages and monitors this exposure
to ensure appropriate measures are implemented on a timely and effective
manner.
The carrying amounts of the Group's major foreign currency denominated
monetary assets and monetary liabilities other than the functional currency of
the relevant group entities at the end of the reporting period are as follows:
Assets Liabilities
2024 2023 2024 2023
RMB'000 RMB'000 RMB'000 RMB'000
USD 8,626,870 7,331,898 32,300,488 37,869,554
EURO 119,132 152,202 1,841,172 1,081,917
HKD 45,929 75,215 230,341 181,287
JPY 59,065 50,836 1,085,962 594,172
Sensitivity analysis
The sensitivity analysis below has been determined based on a 1% (2023: 1%)
increase/decrease in functional currency of respective group entities against
USD. 1% (2023: 1%) is the sensitivity rate used and represents management's
assessment of the reasonably possible change in exchange rate. The sensitivity
analysis includes only outstanding USD denominated monetary items and adjusts
their translation at the end of the reporting period for a 1% (2023: 1%)
change in foreign currency rates. A positive number below indicates a decrease
in the Group's post-tax loss, where functional currency of respective group
entities had strengthened 1% (2023: 1%) against USD. For a 1% (2023: 1%)
weakening of functional currency of respective group entities against USD,
there would be an equal and opposite impact on the post-tax loss for the year.
Decrease Decrease
in the Group's in the Group's
post-tax loss/ post-tax loss/
increase increase
in the Group's in the Group's
equity equity
2024 2023
RMB'000 RMB'000
- if RMB strengthens against USD 177,552 229,032
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Credit risk and impairment assessment
Credit risk refers to the risk that counterparty will default on its
contractual obligations resulting in financial loss to the Group. At the end
of the reporting period, the Group's maximum exposure is arising from the
carrying amount of the respective recognised financial assets as stated in the
consolidated statement of financial position.
Accounts receivable of the Group mainly include receivables of transportation
service fee on the passenger aircraft cargo business, receivables of aircraft
overhaul and maintenance services from International Aero Engines AG, and
receivables from BSP agents (a clearing system between airlines and sales
agents organised by the International Air Transportation Association). The
balance due from above customers respectively amounted to approximately RMB869
million or 23% of accounts receivable, RMB405 million or 10% of accounts
receivable, and RMB350 million or 9% of accounts receivable as at 31 December
2024 (2023: RMB568 million or 17% of accounts receivable, RMB180 million or 5%
of accounts receivable and RMB430 million or 13% of accounts receivable). The
credit risk exposure to above customers and the remaining accounts receivable
balance are monitored by the Group on an ongoing basis. In addition, the Group
performs impairment assessment under ECL model on accounts receivable
individually or based on provision matrix. The Group continues to pay
attention to the credit risk and the balance of the above amounts.
In the opinion of management, the Group has no significant credit risk with
above customers as the Group maintains long-term and stable business
relationships with the customers with healthy repayment history.
The credit risk on bank deposits is limited because the counterparties are
banks and financial institutions with good reputation.
Other than the above mentioned concentration of credit risk, the Group does
not have any other significant concentration of credit risk associated with
financial assets.
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Credit risk and impairment assessment (continued)
The tables below detail the credit risk exposures of the Group's financial
assets, which are subject to ECL assessment:
2024 2023
Notes External credit 12m or Gross carrying Subtotal Gross carrying Subtotal
rating
lifetime ECL
amount
amount
RMB'000 RMB'000 RMB'000 RMB'000
Financial assets at FVTOCI
Investments in listed bonds 25 AAA 12m ECL 1,426,851 - 1,397,310 -
Debt instruments at FVTOCI 31 AAA 12m ECL 49,862 1,476,713 99,365 1,496,675
Financial assets at amortised costs
Accounts receivable 28 N/A Lifetime ECL (provision matrix) 3,722,179 - 3,226,410 -
Credit-impaired 112,804 3,834,983 131,506 3,357,916
Deposits and other receivables 29 N/A 12m ECL 3,167,790 - 3,142,033 -
Lifetime ECL - - -
(not credit-impaired) 353,675 - 1,779,571 -
Credit-impaired 671,905 4,193,370 740,186 5,661,790
Bills receivable N/A 12m ECL 7,785 7,785 3,601 3,601
Deposits for aircraft under leases N/A 12m ECL 526,004 526,004 525,463 525,463
Restricted bank deposits 30 N/A 12m ECL 1,428,429 1,428,429 611,692 611,692
Cash and cash equivalents 30 N/A 12m ECL 21,037,479 21,037,479 15,014,189 15,014,189
Debt instruments at amortised cost 31 N/A 12m ECL 500,000 500,000 - -
Loans to related parties 31 N/A 12m ECL 288,223 288,223 265,217 265,217
Long-term receivables N/A 12m ECL 315,936 315,936 328,886 328,886
For accounts receivable, the Group has applied the simplified approach in IFRS
9 to measure the loss allowance at lifetime ECL. Except for debtors which are
credit-impaired, the Group determines the ECL on these items by using a
provision matrix. The following table provides information about the exposure
to credit risk for accounts receivable which are assessed based on provision
matrix as at 31 December 2024. Debtors with credit-impaired with gross
carrying amounts of RMB113 million as at 31 December 2024 (2023: RMB132
million) were assessed individually.
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Credit risk and impairment assessment (continued)
For deposits and other receivables, deposits for aircraft under leases,
restricted bank deposits, cash and cash equivalents, financial assets included
in other current assets and other non-current assets, the Group measures the
loss allowance equal to 12m ECL, unless when these has been a significant
increase in credit risk since initial recognition, the Group recognises
lifetime ECL.
Gross carrying amount of accounts receivable using a provision matrix
2024 2023
Customer group Loss rate Accounts receivable Loss rate Accounts receivable
RMB'000 RMB'000
Ground service receivable 1% 54,591 1% 32,551
BSP agents 1% 124,738 1% 110,617
Others 0.05% - 4% 3,542,850 0.05% - 4% 3,083,242
3,722,179 3,226,410
The estimated loss rates are estimated based on historical loss rates of the
debtors and are adjusted for forward-looking information that is available
without undue cost or effort.
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Gross carrying amount of accounts receivable using a provision matrix
(continued)
The following table shows the movements in lifetime ECL that has been
recognised for accounts receivable under the simplified approach.
Lifetime ECL Lifetime ECL Total
(not credit-impaired)
(credit-
impaired)
RMB'000 RMB'000 RMB'000
As at 1 January 2023 18,783 126,325 145,108
Acquisition of a subsidiary 15,712 2,766 18,478
Transfer to credit-impaired (4,236) 4,236 -
Impairment losses recognised 13,339 13,007 26,346
Impairment losses reversed - (3,561) (3,561)
Write-offs - (11,314) (11,314)
Exchange adjustments 15 47 62
As at 31 December 2023 43,613 131,506 175,119
Transfer to credit-impaired (101) 101 -
Impairment losses recognised 8,390 4,476 12,866
Impairment losses reversed - (8,866) (8,866)
Write-offs - (14,457) (14,457)
Exchange adjustments 25 44 69
As at 31 December 2024 51,927 112,804 164,731
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Gross carrying amount of accounts receivable using a provision matrix
(continued)
The following table shows reconciliation of loss allowances that has been
recognised for deposits and other receivables.
12m ECL Lifetime ECL (not credit-impaired) Lifetime ECL Total
(credit-impaired)
RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January 2023 10,069 5,073 636,749 651,891
Acquisition of a subsidiary 14,887 18,117 103,451 136,455
Impairment losses recognised - 4,510 10 4,520
Impairment losses reversed (1,211) - - (1,211)
Write-offs - - (24) (24)
Exchange adjustments 4 - - 4
As at 31 December 2023 23,749 27,700 740,186 791,635
Impairment losses recognised 22,674 7 711 23,392
Impairment losses reversed - (1,981) (40,371) (42,352)
Write-offs - - (28,621) (28,621)
Exchange adjustments 4 - - 4
As at 31 December 2024 46,427 25,726 671,905 744,058
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a
level of cash and cash equivalents as well as undrawn banking facilities
deemed adequate by the management to finance the Group's operations and
mitigate the effects of fluctuations in cash flows. The management monitors
the utilisation of bank borrowings to ensure compliance with loan covenants.
The liquidity of the Group is primarily dependent on its ability to maintain
adequate cash inflows from operations to meet its financial obligations as and
when they fall due, and its ability to obtain external financing to meet its
committed future capital expenditure. With regard to its future capital
commitments and other financing requirements, the Company has already obtained
banking facilities with several PRC banks of up to an aggregate amount of
RMB232,246 million as at 31 December 2024 (2023: RMB217,683 million), of which
an amount of approximately RMB144,106 million was utilised (2023: RMB125,153
million).
The Directors had carried out a detailed review of the cash flow forecast of
the Group for the year ended 31 December 2024. Based on such forecast, the
Directors had determined that adequate liquidity existed to finance the
working capital and capital expenditure requirements of the Group. In
preparing the cash flow forecast, the Directors had considered historical cash
requirements of the Group as well as other key factors, including the
availability of the above-mentioned loans financing which may impact the
operations of the Group. The Directors are of the opinion that the assumptions
and sensitivities which are included in the cash flow forecast are reasonable.
However, these are subject to inherent limitations and uncertainties and some
or all of these assumptions may not be realised.
The following tables detail the Group's remaining contractual maturities for
its non-derivative financial liabilities. The tables have been drawn up based
on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group can be required to pay. The maturity dates for other
non-derivative financial liabilities are based on the agreed repayment dates.
43. FINANCIAL INSTRUMENTS (continued)
b. Financial risk management objectives and policies (continued)
Liquidity risk (continued)
The table includes both interest and principal cash flows. To the extent that
interest flows are floating rate, the undiscounted amount is derived from
interest rate at the end of the reporting period.
Repayable on demand or within In the In the In the In the After Total undiscounted Carrying
one year
second year
third year
fourth year
fifth year
five years
cash flows
amount
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 31 December 2024
Accounts payable 18,869,784 - - - - - 18,869,784 18,869,784
Dividends payable 98,000 - - - - - 98,000 98,000
Other payables 8,819,894 - - - - - 8,819,894 8,819,894
Interest-bearing borrowings 77,491,875 32,237,324 47,456,762 2,742,806 716,818 4,944,738 165,590,323 159,381,665
Lease liabilities 19,536,185 16,251,571 13,228,337 10,453,416 7,595,703 16,181,484 83,246,696 76,598,841
Long-term payables - 3,063 - - - - 3,063 3,000
124,815,738 48,491,958 60,685,099 13,196,222 8,312,521 21,126,222 276,627,760 263,771,184
Repayable on demand or within In the In the In the In the After Total undiscounted Carrying
one year
second year
third year
fourth year
fifth year
five years
cash flows
amount
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 31 December 2023
Accounts payable 17,954,298 - - - - - 17,954,298 17,954,298
Bills payable 500,160 - - - - - 500,160 500,160
Other payables 11,569,341 - - - - - 11,569,341 11,569,341
Interest-bearing borrowings 50,231,667 69,430,545 27,741,092 4,473,986 2,236,734 4,483,142 158,597,166 152,031,399
Dividends payable 98,000 - - - - - 98,000 98,000
Lease liabilities 20,663,819 17,712,432 14,434,039 11,675,095 8,973,485 16,889,125 90,347,995 82,229,316
101,017,285 87,142,977 42,175,131 16,149,081 11,210,219 21,372,267 279,066,960 264,382,514
43. FINANCIAL INSTRUMENTS (continued)
c. Fair value measurements of financial instruments
Fair value measurements for financial instruments measured at fair value on a
recurring basis
The following table presents the fair value of the Group's financial
instruments measured at the end of the reporting period on a recurring basis,
categorised into the three-level fair value hierarchy as defined in IFRS 13
Fair value measurement. The level into which a fair value measurement is
classified is determined with reference to the observability and significance
of the inputs used in the valuation technique.
Fair value at Fair value measurements
31 December
as at 31 December 2024 categorised into
2024
Level 1 Level 2 Level 3
RMB'000 RMB'000 RMB'000 RMB'000
Financial assets at FVTPL 37,559 37,559 - -
Equity instruments at FVTOCI 1,791,273 - - 1,791,273
Debt instruments at FVTOCI (including debt instruments at FVTOCI included in 1,476,713 - 1,476,713 -
other current assets)
Total financial assets at fair value 3,305,545 37,559 1,476,713 1,791,273
Fair value at Fair value measurements
31 December
as at 31 December 2023 categorised into
2023
Level 1 Level 2 Level 3
RMB'000 RMB'000 RMB'000 RMB'000
Financial assets at FVTPL 2,505 2,505 - -
Equity instruments at FVTOCI 1,547,986 - - 1,547,986
Debt instruments at FVTOCI (including debt instruments at FVTOCI included in 1,496,675 - 1,496,675 -
other current assets)
Total financial assets at fair value 3,047,166 2,505 1,496,675 1,547,986
During the year ended 31 December 2024 and 2023, there were no transfers
between Level 1 and Level 2, or transfers into or out of Level 3. The Group's
policy is to recognise transfers between levels of fair value hierarchy as at
the end of the reporting period in which they occur.
43. FINANCIAL INSTRUMENTS (continued)
c. Fair value measurements of financial instruments (continued)
Fair value measurements for financial instruments measured at fair value on a
recurring basis (continued)
Valuation techniques and inputs used in Level 2 fair value measurements
All financial instruments classified within Level 2 of the fair value
hierarchy are debt investments the fair value of which were determined based
upon the valuation conducted by the China Central Depository & Clearing
Co., Ltd.
Valuation techniques and inputs used in Level 3 fair value measurements
As at 31 December 2024, the fair value of the equity interest in unlisted
securities of a listed company amounting to approximately RMB253,991,000 (as
at 31 December 2023: RMB330,508,000) was estimated by reference to the quoted
prices in an active market with an adjustment of discount for lack of
marketability.
As at 31 December 2024, the fair value of private equity instruments at FVTOCI
amounting to approximately RMB1,537,282,000 (as at 31 December 2023:
RMB1,217,478,000) have been estimated using a market-based valuation
technique, which is derived by reference to observable valuation measures for
comparable companies, and with the main adjustment of discount for lack of
marketability.
43. FINANCIAL INSTRUMENTS (continued)
c. Fair value measurements of financial instruments (continued)
Fair values of financial assets and liabilities carried at other than fair
value
Except as detailed in the following table, the Directors consider that the
carrying amounts of financial assets and financial liabilities measured at
amortised cost in these consolidated financial statements approximate their
fair values.
Carrying amounts Fair values
As at As at As at As at
31 December 31 December 31 December 31 December
2024 2023 2024 2023
RMB'000 RMB'000 RMB'000 RMB'000
Financial liabilities
- corporate bonds (fixed rate) 15,416,838 11,400,907 15,283,291 11,183,499
Fair value hierarchy as at 31 December 2024
Level 1 Level 2 Level 3 Total
RMB'000 RMB'000 RMB'000 RMB'000
Financial liabilities
- corporate bonds (fixed rate) - 15,283,291 - 15,283,291
Fair value hierarchy as at 31 December 2023
Level 1 Level 2 Level 3 Total
RMB'000 RMB'000 RMB'000 RMB'000
Financial liabilities
- corporate bonds (fixed rate) - 11,183,499 - 11,183,499
44. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITIES
The table below details major changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be, classified in the Group's consolidated statement of
cash flows as cash flows from financing activities.
Borrowings Corporate bonds and short-term commercial papers Lease liabilities
Note 35 Note 35 Note 34 Total
RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 2023 114,602,801 21,201,485 93,983,176 229,787,462
Acquisition of subsidiary 16,892,454 1,027,106 9,876,072 27,795,632
Financing cash flows 9,190,574 (10,500,000) (25,400,182) (26,709,608)
Foreign exchange translation 26,552 - 705,222 731,774
New leases entered/lease modified - - 3,215,087 3,215,087
Reduction upon completion/early termination of lease - - (89,031) (89,031)
Decrease in accrued interest (81,889) (327,684) - (409,573)
Debt restructuring - - (61,028) (61,028)
At 31 December 2023 140,630,492 11,400,907 82,229,316 234,260,715
Financing cash flows 333,718 7,000,000 (19,121,281) (11,787,563)
Foreign exchange translation (7,711) - 407,687 399,976
New leases entered/lease modified - - 13,132,106 13,132,106
Reduction upon completion/early termination of lease - - (48,987) (48,987)
(Decrease)/increase in accrued interest (2,519) 26,778 - 24,259
At 31 December 2024 140,953,980 18,427,685 76,598,841 235,980,506
45. MAJOR NON-CASH TRANSACTIONS
During the year, the Group entered into new lease agreements for the use of
aircraft and engines, land, buildings and others and recognised right-of-use
assets of RMB17,146 million (2023: RMB3,715 million) and lease liabilities of
RMB13,132 million (2023: RMB3,215 million).
46. RELATED PARTY TRANSACTIONS
(a) During the year, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures; and (iii) its associates:
(i) Transactions with related parties
2024 2023
RMB'000 RMB'000
Service provided to the CNAHC Group
Transportation service fees on the passenger aircraft cargo business 6,848,921 3,411,895
Aircraft maintenance income 494,195 300,836
Government charter flight services 471,564 382,960
Ground services income 170,999 121,679
Transfer of pilots income 168,180 189,610
Land and buildings rental income 148,904 185,073
Air catering income 62,994 50,335
Aviation communication expenses 21,460 21,460
Income from advertising media business 13,429 13,881
Sales commission income 10,918 9,608
Trademark licensing income 9,320 9,320
Others 203,305 295,529
8,624,189 4,992,186
Service provided by the CNAHC Group
Air catering charges 1,580,584 1,271,030
Airport ground services, take-off, landing and 1,521,068 1,228,412
depot expenses
Aviation communication expenses 815,724 673,840
Other procurement and maintenance 736,800 586,547
Interest expenses 367,305 392,291
Management fees 367,017 360,827
Media advertisement expenses 161,501 128,148
Repair and maintenance costs 74,321 55,707
Expense relating to short-term leases and 25,499 64,569
leases of low-value assets
Construction management expenses 10,846 8,367
Sales commission expenses 620 865
Others 41,525 49,838
5,702,810 4,820,441
46. RELATED PARTY TRANSACTIONS (continued)
(a) During the year, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures; and (iii) its associates: (continued)
(i) Transactions with related parties (continued)
2024 2023
RMB'000 RMB'000
Loans to the CNAHC Group by CNAF:
Advances of loans 23,000 145,000
Interest income 9,231 5,440
Deposits from the CNAHC Group received by CNAF:
Decrease in deposits received (2,158,891) (573,910)
Interest expenses 74,373 63,708
As a lessee with CNAHC Group:
Additions to right-of-use assets and 2,083,035 980,919
lease liabilities on new leases
Lease payments paid 2,703,407 2,578,096
Interest on lease liabilities 489,490 464,896
Service provided to joint ventures and associates
Aircraft maintenance income 195,187 106,702
Ground services income 53,177 61,181
Frequent-flyer programme expenses 4,805 4,886
Air catering income 4,034 3,935
Rental income 2,586 2,189
Sales commission income 469 551
Others 1,508 546
261,766 179,990
46. RELATED PARTY TRANSACTIONS (continued)
(a) During the year, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures; and (iii) its associates: (continued)
(i) Transactions with related parties (continued)
2024 2023
RMB'000 RMB'000
Service provided by joint ventures and associates
Repair and maintenance costs 3,632,375 2,400,112
Airport ground services, take-off, landing 442,520 334,691
and depot expenses
Other procurement and maintenance 69,844 29,528
Air catering charges 29,019 12,446
Aviation communication expenses 4,306 4,620
Expense relating to short-term leases and 4,040 2,990
leases of low value assets
Frequent-flyer programme expenses 2,697 1,459
Sales commission expenses 401 381
4,185,202 2,786,227
Deposits from joint ventures and
associates received by CNAF:
Decrease in deposits received (38,449) (131,239)
Interest expenses 524 982
The Directors are of the opinion that the above transactions were conducted in
the ordinary course of business of the Group.
Part of the related transactions above also constitute connected transactions
or continuing connected transactions as defined in Chapter 14A of Listing
Rules.
46. RELATED PARTY TRANSACTIONS (continued)
(a) During the year, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures; and (iii) its associates: (continued)
(ii) Balances with related parties
2024 2023
RMB'000 RMB'000
Outstanding balances with related parties*
Amount due from the ultimate holding company 152,422 353,478
Amounts due from associates 48,660 56,710
Amounts due from joint ventures 8,717 536
Amounts due from other related companies 1,295,098 1,193,322
Amount due to the ultimate holding company 6,515 22,240
Amounts due to associates 64,354 43,354
Amounts due to joint ventures 985,757 957,807
Amounts due to other related companies 16,040,882 17,140,447
* Outstanding balances with related parties exclude
borrowing balances with related parties and outstanding balances between CNAF
and related parties.
Except for lease liabilities, the above outstanding balances with related
parties are unsecured, interest-free and repayable within one year or have no
fixed terms of repayment.
2024 2023
RMB'000 RMB'000
Outstanding borrowing balances with related parties:
Interest-bearing borrowings:
- Due to the ultimate holding company 10,792,957 17,297,166
- Due to other related companies - 1,361,917
46. RELATED PARTY TRANSACTIONS (continued)
(a) During the year, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures; and (iii) its associates: (continued)
(ii) Balances with related parties (continued)
2024 2023
RMB'000 RMB'000
Outstanding balances between CNAF and related parties:
(1) Outstanding balances between CNAF
and CNAHC Group
Loans granted 288,000 265,000
Deposits received 4,879,173 7,038,063
Interest payable to related parties 11,815 8,487
Interest receivable from related parties 223 217
(2) Outstanding balances between CNAF and
joint ventures and associates of the Group
Deposits received 3,487 41,937
Interest payable to related parties 27 27
The outstanding balances between CNAF and related parties represent loans to
related parties or deposits received by CNAF from related parties. The
applicable interest rates are determined in accordance with the prevailing
borrowing rates/deposit saving rates published by The People's Bank of China.
(b) An analysis of the compensation of key management personnel of the
Group is as follows:
2024 2023
RMB'000 RMB'000
Short term employee benefits 12,328 10,849
Retirement benefits 1,289 1,309
Total emoluments for key management personnel 13,617 12,158
46. RELATED PARTY TRANSACTIONS (continued)
(b) An analysis of the compensation of key management personnel of the
Group is as follows: (continued)
The breakdown of emoluments for key management personal are as follows:
2024 2023
RMB'000 RMB'000
Directors and supervisors 5,727 4,370
Senior management 7,890 7,788
13,617 12,158
Further details of the remuneration of the directors and supervisors are
included in Note 13 to the consolidated financial statements.
(c) Asset transfers with the CNAHC Group:
2024 2023
RMB'000 RMB'000
Sales of aircraft 209,172 108,434
Purchase of property, plant and equipment - 332,104
(d) Transactions with other government-related entities in the PRC
The Company is ultimately controlled by the PRC government and the Group
operates in an economic environment currently predominated by entities
controlled, jointly controlled or significantly influenced by the PRC
government ("government-related entities").
Apart from above transactions with CNAHC Group, the Group has collectively,
but not individually significant transactions with other government-related
entities, which include but are not limited to the following:
• Rendering and receiving services
• Sales and purchases of goods, properties, and other
assets
• Lease of assets
• Depositing and borrowing money
• Use of public utilities
The transactions between the Group and other government-related entities are
conducted in the ordinary course of the Group's business within normal
business operations. The Group has established its approval process for
providing of services, purchase of products, properties and services, purchase
of lease service and its financing policy for borrowing. Such approval
processes and financing policy do not depend on whether the counterparties are
government-related entities or not.
47. INFORMATION ABOUT THE STATEMENT OF FINANCIAL POSITION OF THE
COMPANY
Information about the statement of financial position of the Company at the
end of the reporting period included:
31 December 31 December
2024 2023
RMB'000 RMB'000
Non-current assets
Property, plant and equipment 87,574,992 84,568,476
Right-of-use assets 75,905,599 79,748,959
Intangible assets 11,015 11,015
Interests in subsidiaries 26,786,865 26,786,144
Interests in associates 240,945 197,012
Interests in joint ventures 2,178,847 1,933,838
Advance payments for aircraft and flight equipment 14,475,009 13,080,703
Deposits for aircraft under leases 344,063 367,511
Equity instruments at fair value through other comprehensive income 206,742 195,437
Deferred tax assets 7,908,297 7,991,836
Other non-current assets 649,361 716,168
216,281,735 215,597,099
Current assets
Inventories 49,485 75,541
Accounts receivable 2,378,402 2,190,617
Prepayments, deposits and other receivables 3,576,092 3,256,871
Financial assets at FVTPL 2,559 2,505
Restricted bank deposits 30,963 30,853
Cash and cash equivalents 8,774,956 6,842,157
Assets held for sale 94,829 108,527
Other current assets 2,446,893 2,270,689
17,354,179 14,777,760
Total assets 233,635,914 230,374,859
47. INFORMATION ABOUT THE STATEMENT OF FINANCIAL POSITION OF THE
COMPANY (continued)
Information about the statement of financial position of the Company at the
end of the reporting period included: (continued)
31 December 31 December
2024 2023
RMB'000 RMB'000
Current liabilities
Air traffic liabilities (8,549,886) (6,530,022)
Accounts payable (11,816,709) (11,529,019)
Other payables and accruals (6,908,676) (5,485,133)
Lease liabilities (10,288,671) (11,192,725)
Interest-bearing borrowings (52,657,077) (31,796,215)
Provision for return condition checks (56,862) (397,148)
Contract liabilities (563,310) (903,374)
(90,841,191) (67,833,636)
Net current liabilities (73,487,012) (53,055,876)
Total assets less current liabilities 142,794,723 162,541,223
Non-current liabilities
Lease liabilities (34,995,009) (40,444,416)
Interest-bearing borrowings (49,720,579) (73,107,211)
Provision for return condition checks (6,172,879) (5,623,509)
Provision for early retirement benefit obligations (359) (720)
Contract liabilities (2,559,301) (1,565,882)
Deferred income (153,424) (190,785)
(93,601,551) (120,932,523)
NET ASSETS 49,193,172 41,608,700
CAPITAL AND RESERVES
Issued capital 17,448,421 16,200,793
Reserves 31,744,751 25,407,907
TOTAL EQUITY 49,193,172 41,608,700
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF AIR CHINA LIMITED
(中國國際航空股份有限公司)
(Incorporated in the People's Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of Air China Limited
(the "Company") and its subsidiaries (collectively referred to as the "Group")
set out on pages 89 to 194, which comprise the consolidated statement of
financial position as at 31 December 2024, and the consolidated statement of
profit or loss and the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including material accounting policy
information and other explanatory information.
In our opinion, the consolidated financial statements give a true and fair
view of the consolidated financial position of the Group as at 31 December
2024, and of its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board ("IASB") and have been
properly prepared in compliance with the disclosure requirements of the Hong
Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing
("ISAs"). Our responsibilities under those standards are further described
in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in
accordance with the International Ethics Standards Board for Accountants' Code
of Ethics for Professional Accountants (including International Independence
Standards) (the "Code"), and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements for
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters - continued
Key audit matter How our audit addressed the key audit matter
Provision for major overhauls
As at 31 December 2024, the provision for major overhauls of RMB15,939 million Our procedures in relation to provision for major overhauls to fulfil the
was recorded in the consolidated statement of financial position. return condition of aircraft under leases included:
The Group held certain aircraft under leases at 31 December 2024. Under the · Testing and evaluating the design and operating effectiveness of the
terms of the lease arrangements, the Group is contractually committed to key internal controls relevant to the audit of provision for major overhauls
return the aircraft to the lessors in a certain condition agreed with the to fulfil the return condition of aircraft under leases;
lessors at the inception of each lease. In order to fulfil these return
conditions, major overhauls are required to be conducted on a regular basis.
· Evaluating the appropriateness of the methodology and key assumptions
adopted by management in estimating the provision for these major overhauls.
Management estimates the maintenance costs of major overhauls for aircraft This evaluation based on the terms of the leases and the Group's maintenance
held under leases at the end of each reporting period and accrues such costs cost experience;
over the lease terms. The calculation of such costs includes a number of
variable factors and assumptions, including the anticipated utilisation of the
aircraft and the expected costs of maintenance.
· Performing a retrospective review of the provision for major
overhauls to evaluate the appropriateness of the assumptions adopted by
management by comparing the assumptions adopted by management in prior years
We identified provision for major overhauls to fulfil the return condition of with actual maintenance costs incurred;
aircraft under leases as a key audit matter because of the significant
management estimation and judgement required in assessing the variable factors
and assumptions in order to quantify the amount of provision required at each
reporting date. · Discussing with managers in the engineering department responsible
for aircraft engineering about the utilisation pattern of aircraft, obtaining
relevant operating data, performing recalculation, and checking the
assumptions adopted by management and the mathematical accuracy of the
Details of the related estimation uncertainty are set out in Notes 4, 5 and 36 calculation of provision for major overhauls prepared by management for those
to the consolidated financial statements. aircraft under leases.
OTHER INFORMATION
The directors of the Company are responsible for the other information. The
other information comprises the information included in the annual report, but
does not include the consolidated financial statements and our auditor's
report thereon.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE
CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of the
consolidated financial statements that give a true and fair view in accordance
with IFRS Accounting Standards issued by the IASB and the disclosure
requirements of the Hong Kong Companies Ordinance, and for such internal
control as the directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Group's
financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion solely to you, as a body, in accordance with our
agreed terms of engagement, and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the
contents of this report. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
· Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group's internal control.
· Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related disclosures made by
the directors.
· Conclude on the appropriateness of the directors' use of
the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures
in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to continue as a going
concern.
· Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
· Plan and perform the group audit to obtain sufficient
appropriate audit evidence regarding the financial information of the entities
or business units within the group as a basis for forming an opinion on the
group financial statements. We are responsible for the direction, supervision
and review of the audit work performed for purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements for the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's
report is Yin Lili.
Deloitte Touche Tohmatsu Certified Public Accountants LLP
Certified Public Accountants
(Registered as a Third Country Auditor with the UK Financial Reporting
Council)
Shanghai, China
27 March 2025
Supplementary Information
EFFECTS OF DIFFERENCES BETWEEN IFRS ACCOUNTING STANDARDS AND CASs
The effects of differences between the consolidated financial statements of
the Group prepared under IFRS Accounting Standards and CASs are as follows:
2024 2023
Notes RMB'000 RMB'000
Net loss attributable to shareholders of the Company under CASs (237,305) (1,046,382)
Deferred taxation (i) (1,582) (2,657)
Differences in value of fixed assets and certain non-current assets (ii) 6,330 10,628
Net loss attributable to shareholders of the Company (232,557) (1,038,411)
under IFRS Accounting Standards
31 December 31 December
2024 2023
Notes RMB'000 RMB'000
Equity attributable to shareholders of the Company under CASs 45,147,411 37,229,962
Deferred taxation (i) 51,636 53,218
Differences in value of fixed assets and certain non-current assets (ii) (210,794) (217,124)
Unrealised profit on the disposal of Hong Kong (iii) 139,919 139,919
Dragon Airlines Limited
Equity attributable to shareholders of the Company 45,128,172 37,205,975
under IFRS Accounting Standards
Notes:
(i) The differences in deferred taxation were mainly caused by
the differences under IFRS Accounting Standards and CASs as explained below.
(ii) The differences in the value of fixed assets and certain
non-current assets mainly consist of the following: in accordance with the
accounting policies under IFRS Accounting Standards, all assets are recorded
at historical cost. Therefore, the revaluation surplus or deficit (and the
related depreciation/amortisation or impairment) recorded under CASs should be
reversed in the financial statements prepared under IFRS Accounting Standards.
(iii) The difference was caused by the disposal of Hong Kong
Dragon Airlines Limited to Cathay Pacific and is expected to be eliminated
when the Group's interest in Cathay Pacific is disposed of.
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 "RPK(s)" the number of revenue passengers carried multiplied by the kilometres flown
"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
EFFICIENCY MEASUREMENTS
"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" the total time from the removal of wheel chocks before the aircraft begins to
move until the placement of wheel chocks after the aircraft has landed and
come to a complete stop
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 annual report, 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
"Beijing Air Catering" Beijing Air Catering Co., Ltd., a subsidiary of CNAHC
"Board" the board of directors of the Company
"Boeing" The Boeing Company
"CASs" China Accounting Standards for Business Enterprises
"CAAC" Civil Aviation Administration of China
"Capital Holding" China National Aviation Capital Holding Co., Ltd., a wholly-owned subsidiary
of CNAHC
"Cathay Pacific" Cathay Pacific Airways Limited, an associate of the Company
"CBIRC" China Banking and Insurance Regulatory Commission
"CNACD" China National Aviation Construction and Development Company, a wholly-owned
subsidiary of CNAHC
"CNACG" China National Aviation Corporation (Group) Limited, a wholly-owned subsidiary
of CNAHC
"CNACG Group" CNACG and its subsidiaries
"CNAF" China National Aviation Finance Co., Ltd, a non-wholly owned subsidiary of the
Company
"CNAHC" China National Aviation Holding Corporation Limited
"CNAHC Group" CNAHC and its subsidiaries
"COMAC" Commercial Aircraft Corporation of China, Ltd.
"CNAMC" China National Aviation Media Co., Ltd, a wholly-owned subsidiary of CNAHC
"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
"IFRS Accounting Standards" IFRS Accounting Standards as issued by the International Accounting Standards
Board (IASB)
"Kunming Airlines" Kunming Airlines Company Limited, a subsidiary of Shenzhen Airlines
"Listing Rules" or "Hong Kong Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited
"NAFMII" National Association of Financial Market Institutional Investors
"Reporting Period" from 1 January 2024 to 31 December 2024
"Date of this Annual Report" 27 March 2025
"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
"Supervisor(s)" The supervisor(s) of the Company
"Supervisory Committee" The supervisory committee of the Company
"US dollars" United States dollars, the lawful currency of the United States
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. END FR IIMITMTJTMJARecent news on Air China
See all newsREG - Air China Ld - FIRST QUARTERLY REPORT OF 2025
AnnouncementREG - Air China Ld - Letter to Non-Registered Shareholders
AnnouncementREG - Air China Ld - Letter to Registered Shareholders
AnnouncementREG - Air China Ld - 2024 Sustainability & ESG Report
AnnouncementREG - Air China Ld - ANNUAL REPORT 2024
Announcement