REG - Air China Ld - Interim Report 2024
24/09/2024 07:00
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RNS Number : 3955F Air China Ld 24 September 2024
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, China
National Aviation Finance Co., Ltd.; 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 member
airlines have been consolidated into the brand of "Phoenix Miles".
TABLE OF CONTENTS
Corporate Information 2
Summary of Financial Information 3
Summary of Operating Data 4
Development of Fleet 6
Business Overview 7
Management Discussion and Analysis 12
Corporate Governance and Other Information 20
Report on Review of Condensed Consolidated Financial Statements 29
Condensed Consolidated Financial Statements
- Condensed Consolidated Statement of Profit or Loss 30
- Condensed Consolidated Statement of Profit or Loss and 31
Other Comprehensive Income
- Condensed Consolidated Statement of Financial Position 32
- Condensed Consolidated Statement of Changes in Equity 34
- Condensed Consolidated Statement of Cash Flows 35
- Notes to the Condensed Consolidated Financial Statements 36
Glossary of Technical Terms 64
Definitions 65
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. He Yun*
Mr. Xu Junxin*
Ms. Winnie Tam Wan-chi*
SUPERVISORS:(1)
Mr. Xiao Jian
Mr. Wang Mingzhu
Mr. Li Shuxing
Ms. Lyu Yanfang
Ms. Guo Lina
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
* Independent Non-executive Director
1 For details of changes in Directors and Supervisors of
the Company during the Reporting Period, please refer to page 20 of this
report.
Summary of Financial Information
(RMB'000) Six months ended 30 June 2024 Six months ended
30 June 2023
Revenue 79,520,332 59,613,193
Loss from operations (1,081,972) (898,200)
Loss before taxation (3,286,075) (4,360,170)
Loss after taxation (3,538,611) (4,043,954)
Loss attributable to non-controlling interests (759,658) (597,140)
Loss attributable to equity shareholders of the Company (2,778,953) (3,446,814)
EBITDA((1)) 12,943,313 11,806,583
EBITDAR((2)) 13,551,345 12,195,306
Loss per share attributable to equity shareholders of the Company (RMB) (0.1767) (0.2239)
Return on equity attributable to equity shareholders (%) (7.60) (9.87)
(1) EBITDA represents earnings before finance income and finance
costs, net exchange gains/losses, income tax, share of profits or losses of
associates and joint ventures, depreciation and amortisation as computed under
IFRSs.
(2) EBITDAR represents EBITDA before deducting lease expenses on
aircraft and engines as well as other lease expenses.
(RMB'000) 30 June 2024 31 December 2023
Total assets 345,400,348 335,278,694
Total liabilities 311,551,672 300,014,685
Non-controlling interests (2,739,134) (1,941,966)
Equity attributable to equity shareholders of the Company 36,587,810 37,205,975
Equity attributable to equity shareholders of the Company per share (RMB) 2.33 2.30
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.
January to January to Increase/(decrease)
June 2024
June 2023
Capacity
ASK (million) 171,790.89 128,799.56 33.38%
International 44,082.60 14,201.46 210.41%
Mainland China 122,675.40 111,479.91 10.04%
Hong Kong SAR, Macau SAR and Taiwan, China 5,032.90 3,118.19 61.40%
AFTK (million) 6,122.03 4,090.64 49.66%
International 2,577.25 925.60 178.44%
Mainland China 3,409.83 3,078.23 10.77%
Hong Kong SAR, Macau SAR and Taiwan, China 134.96 86.79 55.50%
ATK (million) 21,606.69 15,697.06 37.65%
Traffic
RPK (million) 136,213.57 90,835.35 49.96%
International 33,625.02 8,652.06 288.64%
Mainland China 98,966.23 80,191.99 23.41%
Hong Kong SAR, Macau SAR and Taiwan, China 3,622.31 1,991.29 81.91%
RFTK (million) 2,237.13 1,088.96 105.44%
International 1,409.88 497.15 183.59%
Mainland China 795.51 575.51 38.23%
Hong Kong SAR, Macau SAR and Taiwan, China 31.74 16.31 94.63%
Passengers carried (thousand) 74,959.47 55,544.89 34.95%
International 7,535.97 1,740.62 332.95%
Mainland China 65,161.14 52,566.97 23.96%
Hong Kong SAR, Macau SAR and Taiwan, China 2,262.37 1,237.31 82.85%
Cargo and mail carried (tonnes) 701,598.29 429,444.60 63.37%
Kilometres flown (million) 896.88 705.70 27.09%
Block hours (thousand) 1,438.31 1,151.46 24.91%
Number of flights 498,613 417,396 19.46%
International 47,201 13,715 244.16%
Mainland China 434,608 393,420 10.47%
Hong Kong SAR, Macau SAR and Taiwan, China 16,804 10,261 63.77%
RTK (million) 14,229.30 9,128.30 55.88%
Load factor
Passenger load factor (RPK/ASK) 79.29% 70.52% 8.77 ppt
International 76.28% 60.92% 15.35 ppt
Mainland China 80.67% 71.93% 8.74 ppt
Hong Kong SAR, Macau SAR and Taiwan, China 71.97% 63.86% 8.11 ppt
Cargo and mail load factor (RFTK/AFTK) 36.54% 26.62% 9.92 ppt
International 54.70% 53.71% 0.99 ppt
Mainland China 23.33% 18.70% 4.63 ppt
Hong Kong SAR, Macau SAR and Taiwan, China 23.52% 18.79% 4.73 ppt
Overall load factor (RTK/ATK) 65.86% 58.15% 7.70 ppt
Utilisation
Daily utilisation of aircraft 8.79 7.75 1.04 hours
(block hours per day per aircraft)
Yield
Yield per RPK (RMB) 0.5369 0.6107 (12.08%)
International 0.4927 0.7772 (36.61%)
Mainland China 0.5475 0.5873 (6.78%)
Hong Kong SAR, Macau SAR and Taiwan, China 0.6578 0.8275 (20.51%)
Yield per RFTK (RMB) 1.4878 1.2947 14.91%
International 1.7792 1.6404 8.46%
Mainland China 0.9035 0.8886 1.68%
Hong Kong SAR, Macau SAR and Taiwan, China 3.1906 5.0857 (37.26%)
Unit cost
Cost of operation per ASK (RMB) 0.4881 0.5014 (2.65%)
Cost of operation per ATK (RMB) 3.8809 4.1142 (5.67%)
Development of Fleet
During the Reporting Period, the Group introduced a total of 16 aircraft,
including three A321NEO aircraft, one A320NEO aircraft, nine B737 series
aircraft and three ARJ21-700 aircraft, and phased out a total of six aircraft,
including one A330-200 aircraft, four A320 aircraft and one B737 series
aircraft. As at the end of the Reporting Period, the Group had a total of 915
aircraft with an average age of 9.64 years, of which the Company operated a
fleet of 496 aircraft in total, with an average age of 9.38 years. The Company
introduced 9 aircraft and phased out 8 aircraft during the Reporting Period.
Details of the fleet of the Group are set out in the table below:
30 June 2024
Sub-total Self-owned Finance leases Operating leases Average age (year)
Airbus 437 199 119 119 9.29
A320 351 165 94 92 9.47
A330 56 24 5 27 11.48
A350 30 10 20 - 3.13
Boeing 447 192 81 174 10.46
B737 395 157 72 166 10.48
B747 10 8 2 - 14.97
B777 28 15 7 6 10.21
B787 14 12 - 2 7.36
COMAC 27 15 12 - 1.66
ARJ21 27 15 12 - 1.66
Business jets 4 1 - 3 10.78
Total 915 407 212 296 9.64
Introduction Plan Phase-out Plan
2024 2025 2026 2024 2025 2026
Airbus 4 26 33 13 6 11
A320 4 26 33 8 4 11
A330 - - - 5 2 -
Boeing 32 2 33 1 - 1
B737 32 - 23 1 - 1
B787 - 2 10 - - -
COMAC 12 12 10 - - -
ARJ21 9 2 - - - -
C919 3 10 10 - - -
Total 48 40 76 14 6 12
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 is committed to implementing the comprehensive national security
concept and embracing a "General Safety" mindset. During the Reporting Period,
the Group meticulously addressed safety production-related rectifications
following central inspections, and successfully meeting the "halfway through
the year, more than halfway through the tasks" requirement. The Group actively
carried out a three-year action plan to tackle safety production at its root,
formulated an action implementation plan and advanced the work on schedule.
Major hidden safety hazards investigations and rectifications were thoroughly
conducted, with the Company's core management regularly leading teams to
supervise and inspect these efforts, ensuring strict adherence to dynamic
clearance. The Group continued to improve five major systems: safety
management, flight training, operation management, aircraft maintenance, risk
identification and hidden hazard investigation, accelerating its progress
toward becoming a world-class enterprise. Persisting with collaboration and
joint management across various sectors, the Group deepened its commitment to
building a strong safety culture and continuously improved employees' safety
awareness. By focusing on operational characteristics, the Group ensured
meticulous control of flight production and operations, optimizing flight
production management. During the Reporting Period, the Group recorded 1.438
million safe flight hours, and successfully completed key transport security
tasks, including the Spring Festival travel rush, the "Two Sessions" and
special charter flights, fully ensuring "two absolute safeties".
Maximising Operating Performance
The Group is making solid progress in enhancing quality and efficiency, with a
clear focus on achieving its annual business objectives. By leveraging the
domestic circulation, the Group has significantly increased fleet capacity in
the domestic market and meticulously developed domestic express routes to
enhance its competitive edges. On international routes, the Group continued to
promote the resumption of international flights and the opening of new routes,
steadily increased the fleet capacity to expand the scale of international
route operations and continuously improved the international fare product
system. Marketing strategies have been refined to seize opportunities for
yield growth, with a strong focus on enhancing yield quality. By implementing
scientific pricing for connecting flight products, the Group has increased
revenue from these services. Adjustments to the pricing structure for premium
cabins have ensured a steady improvement in the yield level from these
segments. The frequent flyer program has been optimized with a focus on
long-term customer value to increase member loyalty. The integration of
passenger and cargo services has been strengthened, leveraging the
supplementary capacity of passenger aircraft bellyhold to boost passenger
flight revenue. The Group advanced cost control, identified and leveraged
cost-saving opportunities, continually optimized labor costs, thereby
expanding the contribution to overall profitability. Unified management of
funds has been consistently reinforced, with enhanced debt risk management and
control and improved capital utilization efficiency, all while ensuring safety
of funds and reducing financial expenses.
Enhancing Services
The Group is committed to a people-centered development philosophy, with the
overarching goal of becoming a world-class air transport group. Focusing on
passenger needs, the Group continuously improves service standards and
quality, cultivates high-quality service product brands, and accelerates
service digitalization and upgrade. This commitment ensures that passengers
enjoy superior aviation services, thereby contributing to the high-quality
development of civil aviation services.
The Group is focused on addressing passengers' concerns by optimizing key
service standards, particularly for special passenger services and
compensation policies. Targeted improvements have been made in handling
irregular flights and ticketing services to enhance the overall passenger
experience. To strengthen its service brand, the Group has introduced cultural
initiatives such as the "Phoenix Pavilion" (「鳳庭薈」) exhibitions and
the "Dragon Boat Festival Themed Journey" (「情寄端午粽享旅途」),
further boosting passenger recognition of Air China's self-operated lounge
services. New express routes, including the "Chengdu-Shenzhen" express route
and the "Beijing-Guangzhou" Air China-Shenzhen Airlines joint express route,
have been launched to provide passengers with the ultimate "quick and
effortless travel" (「快人一步隨到隨走」) experience. The Group is
actively adapting to changing passenger needs by refining in-flight dining
standards and enhancing the user interface for in-flight entertainment.
Additionally, the Group has, developed a series of care products and
introduced proprietary boarding and disembarking music to further enrich the
in-flight product and service experience. Through the development of service
systems, the Group is driving the digital transformation of its services. This
includes accelerating the implementation of Air China's global ground flight
support platform, advancing the development of the full-process service
information notification system for passengers, building Air China's in-flight
catering reservation management system, and updating and iterating basic
service management systems such as the passenger service compensation system.
These initiatives are continuously enhancing the Group's digital service
capabilities.
Brand Value
The Group is making steady progress in brand leadership initiative,
contributing to the Company's high-quality development. Actively supporting
national strategies, the Group has utilized major exhibitions such as the
China Brand Expo (中國品牌博覽會), the Western China International Fair
for Investment and Trade (中國西部國際投資貿易洽談會) and the
China-Eurasia Expo (中國－亞歐博覽會) as platforms to showcase the
Company's commitment to social responsibility as a state-owned enterprise and
its role as a leader in product innovation. The Group also strengthened its
brand internationalization through collaborations with Star Alliance and
overseas industry associations, as well as theme flights on international
routes, aiming at enhancing Air China's global brand influence. According to
the World Brand Lab rankings, Air China ranked 25(th) on the 2024 list of
China's 500 Most Valuable Brands with a brand value of RMB259.695 billion,
representing a year-on-year increase of RMB24.533 billion. Both its ranking
and brand value remain a leading position in the domestic aviation service
industry.
Synergetic Development
Positioning itself at the new development stage, the Group has established a
clear development model focused on intensification, coordination, refinement
and risk prevention. By fully leveraging the deepened collaboration
mechanisms, the Group aims to enhance passenger service experiences, improve
efficiency and profitability, and strengthen competitive synergy. The Group
has outlined a coordinated approach and implementation path, formulated 32 key
tasks across three major sectors to advance comprehensive and in-depth
collaboration. The Group is particularly focused on deepening coordination in
key areas of passenger transportation to further solidify collaborative
outcomes. During the first half of the year, the Group strengthened the
integrated planning of Air China family airlines' route network, optimizing
the concentration of scattered external capacity towards hubs and main bases.
The Group also advanced the implementation of integrated interline operations
within the Air China family, resulting in a year-on-year increase of 216% in
the volume of interline flight segments. In addition, the Group gradually
achieved one-stop mutual ticket sales and streamlined refund and change
processes for flights of the Air China family airlines via mobile platforms,
thereby providing passengers with a more convenient service experience.
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 51.32% 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 Inner Mongolia Air Macau Ameco CNAF Cathay Pacific
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 air cargo services 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
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 6,438,146,624 shares in issue
Percentage of shareholding by the Company 51% 66% 51% 80% 80% 66.92% 75% 51% 29.99%
Revenue (RMB100 million) 160.18 97.81 2.32 9.47 8.62 14.73 57.18 0.73 451.12
(on a consolidated basis)
(on a consolidated basis)
(on a consolidated basis)
Year-on-year changes (%) 14.23 88.97 24.73 11.02 12.53 20.64 20.73 (3.95) 14.02
Total assets (RMB100 million) 689.98 358.70 9.12 35.41 22.46 54.28 82.47 245.41 1,602.94
Profit/(loss) attributable to parent company (RMB100 million) (13.74) 0.26 (0.40) (1.21) (0.59) (3.78) 2.66 0.26 30.67
Profit/(loss) attributable to parent company in the corresponding period of (14.20) 3.57 (0.64) (0.70) (0.04) (1.73) 1.34 0.26 35.93
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/During the Reporting Period Shenzhen Airlines Shandong Airlines Beijing Airlines* Dalian Airlines Air China Inner Mongolia Air Macau Cathay Pacific
Fleet size (unit) 230 135 3 13 11 23 231
(on a consolidated basis)
(on a consolidated basis)
Average age (year) 9.68 10.43 14.58 10.73 11.17 8.04 11.2
ASK (100 million) 369.19 227.28 4.69 20.80 17.66 34.74 528.81
Year-on-year changes (%) 11.88 61.44 40.17 7.26 4.74 68.56 42.7
RPK (100 million) 302.48 188.06 3.11 16.05 13.61 25.56 435.83
Year-on-year changes (%) 23.99 71.22 50.44 16.35 15.22 85.22 34.9
Passengers carried (10 thousand) 1,902.91 1,283.97 22.54 113.97 102.97 147.91 1,066.0
Year-on-year changes (%) 20.37 72.03 44.68 19.00 15.51 78.14 36.4
Average passenger load factor (%) 81.93 82.7 66.21 77.16 77.03 73.59 82.4
Year-on-year changes (ppt) 8.01 4.72 4.52 6.03 7.00 6.62 (4.8)
*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 10.79 years. During the Reporting Period, in terms of business
charter service, Beijing Airlines completed 123 flights, representing a
year-on-year decrease of 32.04%; it completed 465.23 flying hours,
representing a year-on-year decrease of 21.36%; it carried a total of 966
passengers, representing a year-on-year decrease of 14.36%.
EMPLOYEES
As at the end of the Reporting Period, the Company had a total of 46,656
employe, and the subsidiaries of the Company had a total of 56,503 employees.
REMUNERATION POLICY AND TRAINING
Upholding the concept of "paying salary with reference to the job value,
personal ability as well as performance appraisal", the Company prioritizes
the promotion of differentiated salary distribution as its primary focus in
order to stimulate the vitality and motivation of its employees. During the
Reporting Period, the Company continued to deepen the reform of the salary
distribution system and further optimized the value creation-oriented
distribution mechanism of gross payroll to enhance the preciseness and
effectiveness of the distribution. It has also strengthened the standardized
management of salary distribution and exercised reasonable control over
salaries of staff at all levels to optimize the internal distribution
structure. In addition, the Company perfected the incentive and restraint
mechanism to strengthen the orientation towards results contribution and
promote the distribution of salary resources to key talents and front-line
staff, so as to fully mobilize the enthusiasm, initiative and creativity of
employees.
The training programs of the Company are the same as those disclosed in the
2023 annual report of the Company published on 25 April 2024.
Management Discussion and Analysis
The following discussion and analysis are based on the Group's interim
condensed consolidated financial statements and notes thereto which were
prepared in accordance with the IAS 34 as well as the applicable disclosure
requirements under Appendix D2 to the Listing Rules and are designed to assist
the readers in further understanding the information provided in this report
so as to better understand the financial conditions and results of operations
of the Group as a whole.
Revenue
During the Reporting Period, the Group's revenue was RMB79,520 million,
representing a year-on-year increase of RMB19,907 million or 33.39%. Among the
revenues, air traffic revenue was RMB76,466 million, representing a
year-on-year increase of RMB19,586 million or 34.43%. Other operating revenue
was RMB3,054 million, representing a year-on-year increase of RMB321 million
or 11.74%.
Revenue Contributed by Geographical Segments
For the six months ended 30 June
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
International 19,075,627 23.99% 7,539,708 12.65% 153.00%
Mainland China 57,960,673 72.89% 50,342,825 84.45% 15.13%
Hong Kong SAR, Macau SAR 2,484,032 3.12% 1,730,660 2.90% 43.53%
and Taiwan, China
Total 79,520,332 100.00% 59,613,193 100.00% 33.39%
Air Passenger Revenue
During the Reporting Period, the Group recorded an air passenger revenue of
RMB73,137 million, representing a year-on-year increase of RMB17,668 million.
Among the air passenger revenue, the increase of capacity resulted in an
increase in revenue of RMB18,515 million, and the increase of passenger load
factor resulted in an increase in revenue of RMB9,196 million, while the
decrease of passenger yield resulted in a decrease in revenue of RMB10,043
million. The capacity, passenger load factor and yield per RPK of air
passenger business during the Reporting Period are as follows:
For the six months ended 30 June
2024 2023 Change
Available seat kilometres (million) 171,790.89 128,799.56 33.38%
Passenger load factor (%) 79.29 70.52 8.77 ppt
Yield per RPK (RMB) 0.5369 0.6107 (12.08%)
Air Passenger Revenue Contributed by Geographical Segments
For the six months ended 30 June
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
International 16,567,178 22.65% 6,724,163 12.12% 146.38%
Mainland China 54,187,183 74.09% 47,097,647 84.91% 15.05%
Hong Kong SAR, Macau SAR and Taiwan, China 2,382,755 3.26% 1,647,720 2.97% 44.61%
Total 73,137,116 100.00% 55,469,530 100.00% 31.85%
Air Cargo and Mail Revenue
During the Reporting Period, the Group's air cargo and mail revenue was
RMB3,328 million, representing a year-on-year increase of RMB1,919 million.
Among which, the increase of capacity resulted in an increase in revenue of
RMB700 million, and the increase of cargo and mail load factor resulted in an
increase in revenue of RMB786 million, while the increase of yield of cargo
and mail business contributed to an increase in revenue of RMB432 million. The
capacity, cargo and mail load factor and yield per RFTK of air cargo and mail
business during the Reporting Period are as follows:
For the six months ended 30 June
2024 2023 Change
Available freight tonne kilometres (million) 6,122.03 4,090.64 49.66%
Cargo and mail load factor (%) 36.54 26.62 9.92 ppt
Yield per RFTK (RMB) 1.4878 1.2947 14.91%
Air Cargo and Mail Revenue Contributed by Geographical Segments
For the six months ended 30 June
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
International 2,508,449 75.36% 815,545 57.85% 207.58%
Mainland China 718,726 21.59% 511,377 36.27% 40.55%
Hong Kong SAR, Macau SAR and Taiwan, China 101,277 3.05% 82,940 5.88% 22.11%
Total 3,328,452 100.00% 1,409,862 100.00% 136.08%
Operating Expenses
During the Reporting Period, the Group's operating expenses increased by
RMB19,272 million on a year-on-year basis to RMB83,853 million, representing
an increase of 29.84%. The breakdown of the operating expenses is set out
below:
For the six months ended 30 June
2024 2023
(in RMB'000) Amount Percentage Amount Percentage Change
Jet fuel costs 27,132,269 32.36% 19,346,786 29.96% 40.24%
Take-off, landing and depot charges 9,963,482 11.88% 6,635,703 10.27% 50.15%
Depreciation and amortisation 14,025,285 16.73% 12,704,783 19.67% 10.39%
Aircraft maintenance, repair and overhaul costs 6,862,447 8.18% 4,972,590 7.70% 38.01%
Employee compensation costs 16,953,921 20.22% 13,594,872 21.05% 24.71%
Air catering charges 1,973,435 2.35% 1,167,220 1.81% 69.07%
Selling and marketing expenses 2,275,875 2.71% 1,542,326 2.39% 47.56%
General and administrative expenses 780,314 0.93% 706,174 1.09% 10.50%
Others 3,886,126 4.64% 3,910,815 6.06% (0.63%)
Total 83,853,154 100.00% 64,581,269 100.00% 29.84%
• Jet fuel costs increased by RMB7,785 million on a year-on-year
basis, mainly due to the effect of the increase in the consumption of jet fuel
and increase in the prices of jet fuel.
• Take-off, landing and depot charges increased by
RMB3,328 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 increased by RMB1,321
million on a year-on-year basis, mainly due to the expansion of fleet and the
year-on-year increase in flying hours.
• Aircraft maintenance, repair and overhaul costs
increased by RMB1,890 million on a year-on-year basis, mainly due to the
year-on-year increase in flying hours.
• Employee compensation costs increased by RMB3,359
million on a year-on-year basis, mainly due to the inclusion of Shandong
Aviation Group Corporation in the consolidation scope since 21 March 2023 and
the year-on-year increase in flight hour fees.
• Air catering charges increased by RMB806 million on a
year-on-year basis, mainly due to the increase in the number of passengers.
• Selling and marketing expenses increased by RMB734
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 RMB74
million on a year-on-year basis, mainly due to the effect of the inclusion of
Shandong Aviation Group Corporation in the consolidation scope since 21 March
2023.
• Other operating expenses mainly included civil
aviation development fund and ordinary expenses arising from the core air
traffic business other than those mentioned above, which decreased by RMB25
million on a year-on-year basis, mainly due to the year-on-year decrease in
impairment loss recognised on long-term assets.
Net Exchange Loss and Finance Costs
During the Reporting Period, the Group recorded a net exchange loss of RMB360
million, representing a year-on-year decrease of RMB1,205 million. The Group
incurred finance costs of RMB3,265 million (excluding those capitalised)
during the Reporting Period, representing a year-on-year decrease of RMB277
million.
Share of Results of Associates and Joint Ventures
During the Reporting Period, the Group's share of profits of its associates
was RMB1,085 million, representing a year-on-year decrease of RMB181 million.
The Group recorded a share of profits of Cathay Pacific of RMB1,067 million
during the Reporting Period, representing a year-on-year decrease of RMB212
million.
During the Reporting Period, the Group's share of profits of its joint
ventures was RMB91 million, representing a year-on-year increase of RMB3
million.
Assets Structure Analysis
At the end of the Reporting Period, the total assets of the Group were
RMB345,400 million, representing an increase of 3.02% from that as at 31
December 2023. Among them, the current assets accounted for RMB42,895 million
or 12.42% of the total assets, while the non-current assets accounted for
RMB302,505 million or 87.58% of the total assets.
Among the current assets, cash and cash equivalents were RMB19,964 million,
representing an increase of 32.94% from that as at 31 December 2023, which was
mainly due to the Company's flexible adjustment of its funds according to its
capital arrangements.
Among the non-current assets, the aggregate carrying amount of property, plant
and equipment and right-of-use assets as at the end of the Reporting Period
was RMB238,376 million, representing a decrease of 0.14% from that as at 31
December 2023.
Asset Pledged
At the end of the Reporting Period, the Group's certain bank loans and finance
leasing agreements were secured by aircraft and buildings with an aggregate
book value of approximately RMB84,750 million (31 December 2023: RMB84,599
million) and land use rights with book value of approximately RMB24 million
(31 December 2023: RMB24 million). In addition, the Group had restricted bank
deposits of approximately RMB2,409 million (31 December 2023: approximately
RMB612 million), which were mainly statutory reserves deposited in the
People's Bank of China and time deposits with a maturity of more than 3
months.
Capital Expenditure
During the Reporting Period, the Group's capital expenditure amounted to a
total of RMB5,921 million, of which the total investment in aircraft and
engines was RMB4,047 million. Other capital expenditure investment amounted to
RMB1,874 million, mainly including investment in high-value rotables, flight
simulators, infrastructure construction, IT system construction, ground
equipment procurement and cash component of the long-term investments.
Equity Investment
At the end of the Reporting Period, the Group's equity investment in its
associates amounted to RMB13,521 million, representing an increase of 5.11%
from that as at 31 December 2023, among which, the balance of the equity
investment of the Group in Cathay Pacific amounted to RMB13,263 million.
At the end of the Reporting Period, the Group's equity investment in its joint
ventures was RMB2,566 million, representing an increase of 6.31% from that as
at 31 December 2023.
Debt Structure Analysis
At the end of the Reporting Period, the Group's total liabilities amounted to
RMB311,552 million, representing an increase of 3.85% from those as at 31
December 2023. Among them, current liabilities amounted to RMB141,332 million,
accounting for 45.36% of the total liabilities; and non-current liabilities
amounted to RMB170,220 million, accounting for 54.64% of the total
liabilities.
Among the current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB89,769
million, representing an increase of 37.16% as compared with that as at 31
December 2023.
Among the non-current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to RMB147,966
million, representing a decrease of 12.35% from that as at 31 December 2023.
Details of interest-bearing liabilities of the Group by currency are set out
below:
30 June 2024 31 December 2023 Change
(in RMB'000) Amount Percentage Amount Percentage
RMB 202,359,124 85.12% 197,161,354 84.16% 2.64%
US dollars 34,356,310 14.45% 36,018,880 15.38% (4.62%)
Others 1,019,958 0.43% 1,080,481 0.46% (5.60%)
Total 237,735,392 100.00% 234,260,715 100.00% 1.48%
Commitments and Contingent Liabilities
The Group's capital commitments, which mainly consisted of the expenditure in
the next few years for purchasing certain aircraft and related equipment,
increased by 58.67% from RMB72,079 million as at 31 December 2023 to
RMB114,365 million as at the end of the Reporting Period. The Group's
investment commitments, which were mainly used for the investment agreements
that have been signed and come into effect, amounted to RMB310 million as at
the end of the Reporting Period, as compared with RMB457 million as at 31
December 2023.
Details of the Group's contingent liabilities are set out in note 20 to the
condensed consolidated financial statements included in this interim report.
Gearing Ratio
At the end of the Reporting Period, the Group's gearing ratio (total
liabilities divided by total assets) was 90.20%, representing an increase of
0.72 percentage points from that as at 31 December 2023.
Working Capital and its Sources
At the end of the Reporting Period, the Group's net current liabilities
(current liabilities less current assets) were RMB98,437 million, representing
an increase of RMB20,455 million from that as at 31 December 2023. 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 RMB14,253 million,
representing a decrease of 11.70% from RMB16,142 million for the corresponding
period in 2023, which was mainly due to the effect of changes in operating
payable items. Net cash outflow from investing activities was RMB8,177
million, representing an increase of 302.52% from RMB2,032 million for the
corresponding period in 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 inflow arising on acquisition
of a subsidiary of RMB5,392 million (presented as net cash inflow arising on
acquisition of a subsidiary). Net cash outflow from financing activities
amounted to RMB1,154 million, as compared to the cash inflow of RMB1,046
million for the corresponding period in 2023.
At the end of the Reporting Period, the Company has obtained bank facilities
of up to RMB230,587 million granted by several banks in the PRC, among which
approximately RMB92,922 million has been utilised and approximately RMB137,665
million remained unutilised. The remaining amount is sufficient to meet its
demands on liquidity and future capital commitments.
POTENTIAL RISKS
1. Risks of External Environment
Market Fluctuation
During the Reporting Period, the transportation production of civil aviation
resumed its natural growth. Leveraging the super large-scale domestic demand
market, the domestic aviation market achieved stable and relatively fast
growth. The international air passenger transportation market continued its
rapid recovery trend, with the number of passengers surpassing 80% of the same
period in 2019, while the resumption pace of the North American routes, the
traditional advantageous market of the Company, was slow. Based on the
characteristics of the new development stage, the Group will fully, precisely
and comprehensively implement the new development philosophy, proactively
support and integrate into the new development pattern, adhere to the focus on
domestic circulation and promote the rational allocation of resources, in a
bid to develop its core competitiveness in the market. Furthermore, the Group
will optimize and improve the international fleet capacity structure and
promote the opening and resumption of flights to "Belt and Road" partner
countries, and to accelerate the recovery of profitability.
Oil Price Fluctuation
Jet fuel is one of the main operating costs of the Group. The results of the
Group are relatively more affected by the changes in jet fuel price. During
the Reporting Period, with other variables remaining unchanged, if the average
price of the jet fuel rises or falls by 5%, the Group's jet fuel costs will
rise or fall by approximately RMB1.357 billion.
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
30 June 2024 by approximately RMB227 million.
2. Risks of Competition
Industry competition
During the Reporting Period, there was no significant reduction in the number
of operating entities in the market, hence the Company still faced relatively
huge industry competition pressure. In respect of the domestic market, as the
international market has not yet fully recovered, wide-body aircraft were used
in the domestic market, which intensified the imbalance between supply and
demand in the domestic market. In respect of the international market, the
newly resumed and increased routes of domestic airlines were mainly
concentrated in destinations such as Europe, Central Asia and the Middle East,
resulting in an intense competition in certain regions. Adhering to its
strategy for hub network, the Company spared no efforts in building Beijing
Capital International Airport into a world-class hub and Chengdu Tianfu
International Airport into an international hub, realising differentiated
development from other market competitors. Main routes and express routes were
launched centering on hubs as well as principal bases and markets with a view
to strengthening core market competitiveness with high-quality products.
Alternative competition
As the world's largest high-speed railway network further expanded, there are
ongoing risks relating to diversion of customers in terms of short- and
medium-distance transportation. In the long run, the high-speed railway will
change China's geographic pattern of the economy and, as a result of its
cooperation and competition with civil aviation, the air-rail interlink
operation will provide strong support to the development of aviation hubs. The
civil aviation sector will give full play to its comparative advantages in the
comprehensive transportation system and promote international exchanges. It
will "link main routes and branch routes and connect the whole network" to
offer easily accessible and quality transportation services to the general
public.
Corporate Governance and Other Information
CHANGES IN THE INFORMATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF
THE COMPANY
1. On 5 March 2024, Mr. Yan Fei was appointed as the Vice
President of the Company at the twenty-seventh meeting of the sixth session of
the Board of the Company.
2. On 5 March 2024, Mr. Chen Zhiyong ceased to serve as the
Vice President of the Company due to retirement.
3. On 28 March 2024, Mr. Huang Bin ceased to serve as the
secretary to the Board, a joint company secretary and the assistant to the
President of the Company due to retirement.
4. On 28 March 2024, Mr. Xiao Feng was appointed as the
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.
5. On 15 July 2024, Mr. Feng Gang ceased to serve as a
director of the Company due to retirement.
6. On 15 July 2024, at the 31st meeting of the sixth session
of the Board of the Company, the Board considered and passed the ''Proposal
relating to the Nomination of Mr. Cui Xiaofeng as a Candidate for Director".
Upon preliminary examination and approval of the Nomination Committee of the
Board of the Company, the Board 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.
7. On 30 August 2024, Mr. Li Fushen, by reason of age,
ceased to act as an independent non-executive Director, 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. The Company will appoint a new independent
non-executive Director and/or the chairman/member of special committees of the
Board in due course, and fulfill its relevant disclosure obligation in a
timely manner.
CORPORATE GOVERNANCE AND OTHER INFORMATION
SHAREHOLDINGS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE
AND SUBSTANTIAL SHAREHOLDERS OF THE COMPANY
DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE
As at the end of the Reporting Period, none of the Directors, Supervisors or
the chief executive of the Company had interests or short positions in the
shares, underlying shares and/or debentures (as the case may be) of the
Company or its associated corporations (within the meaning of Part XV of the
SFO) which shall be recorded and maintained in the register kept by the
Company 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.
Mr. Patrick Healy (non-executive Director of the Company) also served as the
chairman and executive director of Cathay Pacific. Cathay Pacific is currently
a substantial shareholder of the Company holding 2,633,725,455 H Shares of the
Company as at the end of the Reporting Period. Such interests are required to
be disclosed to the Company in accordance with Divisions 2 and 3 under Part XV
of the SFO. During the Reporting Period, Mr. Ma Chongxian, Mr. Wang Mingyuan
(executive Directors of the Company) and Mr. Patrick Healy (non-executive
Director of the Company) 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, none of the Directors of the Company and their
respective close associates (as defined in the Listing Rules) has any
competing interests which shall be disclosed under Rule 8.10 of the Listing
Rules.
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN THE COMPANY
As at the end of the Reporting Period, to the knowledge of the Directors,
Supervisors and chief executive of the Company, the following persons (other
than the Directors, Supervisors or chief executive of the Company) had
interests or short positions in the shares or underlying shares of the Company
as recorded in the register required to be kept pursuant to Section 336 of the
SFO:
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 6,566,761,847 A Shares 39.57% 56.42% - -
CNAHC ((1)) Equity attributable 1,332,482,920 A Shares 8.03% 11.45% - -
CNAHC ((1)) Equity attributable 616,779,308 H Shares 3.72% - 12.45% -
CNACG Beneficial owner 1,332,482,920 A Shares 8.03% 11.45% - -
CNACG Beneficial owner 616,779,308 H Shares 3.72% - 12.45% -
Cathay Pacific Beneficial owner 2,633,725,455 H Shares 15.87% - 53.15% -
Swire Pacific Limited ((2)) Equity attributable 2,633,725,455 H Shares 15.87% - 53.15% -
John Swire & Sons (H.K.) Limited ((2)) Equity attributable 2,633,725,455 H Shares 15.87% - 53.15% -
John Swire & Sons Limited ((2)) Equity attributable 2,633,725,455 H Shares 15.87% - 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
61.73% equity interest and 69.19% voting rights in Swire Pacific Limited, and
Swire Pacific Limited's approximately 44.99% interest in Cathay Pacific as at
the end of the Reporting Period, John Swire & Sons Limited, John Swire
& Sons (H.K.) Limited and Swire Pacific Limited were deemed to be
interested in the 2,633,725,455 H Shares of the Company directly held by
Cathay Pacific.
Save as disclosed above, as 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 as recorded in the register required to be kept pursuant
to Section 336 of the SFO.
TOTAL NUMBER OF SHAREHOLDERS
Total number of holders of ordinary shares as at the end of the Reporting 158,726 accounts, of which 2,879 accounts are registered holders of H Shares
Period (account)
INFORMATION OF SHAREHOLDERS
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
(%)
marked or frozen
shareholder
Status Number
China National Aviation Holding Corporation Limited 0 6,566,761,847 39.57 614,525,150 Frozen 127,445,536 State-owned legal person
Cathay Pacific Airways Limited 0 2,633,725,455 15.87 0 Nil 0 Foreign legal person
China National Aviation Corporation (Group) Limited 392,927,308 1,949,262,228 11.75 392,927,308 Frozen 36,454,464 Foreign legal person
HKSCC NOMINEES LIMITED 346,000 1,689,381,335 10.18 0 Nil 0 Foreign legal person
China Securities Finance Corporation Limited 0 311,302,365 1.88 0 Nil 0 Other
China National Aviation Fuel Group Corporation 0 238,524,158 1.44 0 Nil 0 State-owned legal person
Hong Kong Securities Clearing Company Limited -5,290,266 176,266,431 1.06 0 Nil 0 Foreign legal person
China Structural Reform Fund Co., Ltd. 0 67,039,106 0.40 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)
Industrial and Commercial Bank of China - Huatai-PineBridge CSI 300 20,494,400 54,822,302 0.33 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)
Huatai Premium Commingled No. 5 Pension Product - Bank of China Limited 53,780,077 53,780,077 0.32 0 Nil 0 Other
(華泰優逸五號混合型養老金產品－中國銀行股份有限公司)
Unit: Share
Shareholdings of the top 10 shareholders
(excluding shares lent through securities lending and refinancing, and lock-up
shares of senior management officers)
Name of shareholder Number of tradable shares held not subject to selling restrictions Type and number of shares
Type Number
China National Aviation Holding Corporation Limited 5,952,236,697 RMB ordinary shares 5,952,236,697
Cathay Pacific Airways Limited 2,633,725,455 Overseas listed foreign shares 2,633,725,455
HKSCC NOMINEES LIMITED 1,689,381,335 Overseas listed foreign shares 1,689,381,335
China National Aviation Corporation (Group) Limited 1,556,334,920 RMB ordinary shares 1,332,482,920
Overseas listed foreign shares 223,852,000
China Securities Finance Corporation Limited 311,302,365 RMB ordinary shares 311,302,365
China National Aviation Fuel Group Corporation 238,524,158 RMB ordinary shares 238,524,158
Hong Kong Securities Clearing Company Limited 176,266,431 RMB ordinary shares 176,266,431
China Structural Reform Fund Co., Ltd. 67,039,106 RMB ordinary shares 67,039,106
(中國國有企業結構調整基金股份有限公司)
Industrial and Commercial Bank of China - Huatai-PineBridge CSI 300 54,822,302 RMB ordinary shares 54,822,302
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)
Huatai Premium Commingled No. 5 Pension Product - Bank of China Limited 53,780,077 RMB ordinary shares 53,780,077
(華泰優逸五號混合型養老金產品－中國銀行股份有限公司)
Explanation on the repurchase special accounts among the top 10 shareholders Nil
Explanation on the right to vote by proxy, proxy and abstention from voting Nil
among the above shareholders
Explanation on related relationship or action in concert among the above CNACG is a wholly-owned subsidiary of CNAHC.
shareholders
Accordingly, CNAHC is directly and indirectly interested in 51.32% of the
shares of the Company.
Explanation on preference shareholders whose voting rights have been restored Nil
and the number of shares held
1. HKSCC NOMINEES LIMITED is a subsidiary of The Stock
Exchange of Hong Kong Limited and its principal business is acting as nominee
for and on behalf of other corporate shareholders or individual shareholders.
The 1,689,381,335 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.
Unit: Share
Shareholdings of the top 10 shareholders subject to selling restrictions and
conditions of selling restrictions
No. Name of shareholder subject to selling restrictions Number of Listing and trading status of Selling restrictions
shares held subject to
shares subject to selling restrictions
selling restrictions
Date of being permitted for listing and trading Number of shares to be listed and traded
1 China National Aviation Holding Corporation Limited 614,525,150 17 July 2024 614,525,150 Non-public issuance of shares subject to selling restrictions
2 China National Aviation Corporation (Group) Limited 392,927,308 8 February 2027 392,927,308 Non-public issuance of shares subject to selling restrictions
CORPORATE GOVERNANCE
Compliance with the Corporate Governance Code
The Company has complied with the code provisions in Part 2 of the Corporate
Governance Code as set out in Appendix C1 to the Listing Rules throughout the
Reporting Period.
Compliance with the Model Code
The Company has adopted and formulated a code of conduct on terms no less
stringent than the required standards of the Model Code. After making specific
enquiries, the Company confirmed that each Director and each Supervisor have
complied with the required standards of the Model Code and the Company's code
of conduct throughout the Reporting Period.
OTHER SIGNIFICANT MATTERS
The Company convened the 25th meeting of the sixth session of the Board on 22
December 2023 and convened the 2024 first extraordinary general meeting on 26
January 2024, at which relevant resolutions, including the proposal in
relation to issuance of A Shares and H Shares to specific investors by the
Company in 2023, were considered and passed. On 7 February 2024, the Company
completed the issuance of H Shares to the specific investor, CNACG.
392,927,308 H Shares were issued at the issue price of HKD5.09 per H Share.
Upon completion of the issue of new H Shares to CNACG, the total share capital
of the Company increased to 16,593,720,146 shares, comprising 11,638,109,474 A
Shares and 4,955,610,672 H Shares. Please refer to the announcements of the
Company dated 7 February 2024, 26 January 2024 and 22 December 2023 for
details. As the total number of issued shares and the registered capital of
the Company are changed to 16,593,720,146 shares and RMB16,593,720,146
respectively following the completion of the issuance of H Shares to specific
investor by the Company, 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.
On 26 April 2024, as approved by the 29th meeting of the sixth session of the
Board of the Company, the Company entered into an agreement with COMAC to
purchase 100 C919 aircraft from COMAC at a basic price (comprising the prices
of airframe, add-on features and engine) of approximately USD10,800 million in
aggregate. The transaction was approved by the shareholders at the 2024 second
extraordinary general meeting of the Company held on 9 August 2024. Please
refer to the announcements of the Company dated 26 April 2024 and 9 August
2024 for details.
USE OF PROCEEDS RAISED FROM THE ISSUANCE OF H SHARES TO SPECIFIC INVESTOR
The Company convened the 25th meeting of the sixth session of the Board on 22
December 2023 and convened the 2024 first extraordinary general meeting on 26
January 2024, at which relevant resolutions, including the proposal in
relation to issuance of A Shares and H Shares to specific investors by the
Company in 2023, were considered and passed. On 30 January 2024, the Company
entered into the H share subscription agreement with CNACG, pursuant to which
the Company issued 392,927,308 H Shares (with an aggregate nominal value of
RMB392,927,308) to specific investor, CNACG, by way of non-public issuance at
an issue price of HKD5.09 per share (the "Issuance of H Shares to Specific
Investor") for net proceeds of HKD1,998,769,803.79 or net proceeds of
approximately HKD5.087 per H Share issued to the specific investor. On 7
February 2024, the Company completed the issuance of H Shares to specific
investor. Please refer to the announcements of the Company dated 22 December
2023 and 7 February 2024 for details. On 22 December 2023, 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 Expected timeline
during the
amount as at
for the completion
Reporting Period
the end of the
of utilisation of
Reporting Period
proceeds raised
Replenishing working capital 1,998,769,803.79 1,997,999,997.72 769,806.07 Before 30 June 2025
CORPORATE BONDS
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 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
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA01 133201 23 February 2022 25 February 2022 25 February 2025 1.516 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 1.009 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 7 April 7 April 1.512 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)
2022
2022
2025 only
Shenzhen Airlines Company Limited 2022 Non-public Issuance of Corporate Bond 22SA04 133240 25 April 26 April 26 April 2025 0.704 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)
2022
2022 only
"22SA01", "22SA02", "22SA03" and "22SA04" are traded on the Shenzhen Stock
Exchange (SZSE). The principal underwriter is Guotai Junan Securities Co.,
Ltd. and the trustee is CSC Financial Co., Ltd. No bond set out in the table
is subject to the risk of termination of listing and trading.
Basic Information of Non-financial Corporate Debt Financing Instruments
The following is the basic information of the Group's non-financial corporate
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 (First Tranche) 24ACSCP001 012481115 27 March 2024 27 March 2024 23 October 2024 1.005 2.03 One-off payment of principal and interest on maturity
Air China Limited 2024 Super Short-term Commercial Paper (Second Tranche) 24ACSCP002 012481123 27 March 2024 28 March 2024 24 October 2024 1.005 2.04 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 3.059 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 1.002 2.25 Interest on annual basis Repayment of principal on maturity
Shenzhen Airlines Company Limited 2021 Medium Term Note (First Tranche) 21SAMTN001 102101631 19 August 2021 23 August 2021 23 August 2024 2.055 3.20 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 1.516 2.99 Interest on annual basis Repayment of principal on maturity
The bonds set out in the table, namely "24ACSCP001", "24ACSCP002",
"22ACMTN001", "24ACMTN001", "21SAMTN001" and "22SAMTN001" are all traded on
the interbank bond market, issued to institutional investors in the national
interbank bond market, performed in accordance with 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.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the Reporting Period, neither the Company nor any of its subsidiaries
have purchased, sold or redeemed any listed securities of the Company
(including the sale of Treasury Shares) (the term "securities" has the meaning
ascribed to it under paragraph 1 of Appendix D2 to the Listing Rules).
As at the end of the Reporting Period, the Company did not hold any Treasury
Shares.
INTERIM DIVIDEND
No interim dividend will be paid by the Company for the six months ended 30
June 2024.
REVIEW BY THE AUDIT AND RISK MANAGEMENT COMMITTEE (SUPERVISION COMMITTEE)
The audit and risk control committee (supervision committee) of the Company
has reviewed the Company's interim report for the six months ended 30 June
2024, the Company's unaudited interim condensed consolidated financial
statements and the accounting policies and practices adopted by the Group.
OTHER INFORMATION
In order to comply with paragraph 40 of Appendix D2 to the Listing Rules, save
as disclosed herein, the Company confirmed that there are no material changes
in the current information of the Company in relation to matters as set out in
paragraph 32 of Appendix D2 to the Listing Rules as compared with the relevant
disclosures in the 2023 annual report of the Company.
SUBSEQUENT EVENTS
For subsequent events, please refer to the sections headed "Changes in the
Information of Directors, Supervisors and Senior Management of the Company"
and "Other Significant Matters" of this report.
Report on Review of Condensed Consolidated
Financial Statements
TO THE BOARD OF DIRECTORS 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)
INTRODUCTION
We have reviewed the condensed consolidated financial statements of Air China
Limited (the "Company") and its subsidiaries (collectively referred to as the
"Group") set out on pages 30 to 63 which comprise the condensed consolidated
statement of financial position as of 30 June 2024 and the related condensed
consolidated statement of profit or loss, condensed consolidated statement of
profit or loss and other comprehensive income, condensed consolidated
statement of changes in equity and condensed consolidated statement of cash
flows for the six-month period then ended, and notes to the condensed
consolidated financial statements. The Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited require the preparation
of a report on interim financial information to be in compliance with the
relevant provisions thereof and International Accounting Standard 34 "Interim
Financial Reporting" ("IAS 34") issued by the International Accounting
Standards Board. The directors of the Company are responsible for the
preparation and presentation of these condensed consolidated financial
statements in accordance with IAS 34. Our responsibility is to express a
conclusion on these condensed consolidated financial statements based on our
review, and to report our conclusion solely to you, as a body, in accordance
with our agreed terms of engagement, and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the
contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review
Engagements 2410 "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Hong Kong Institute of
Certified Public Accountants. A review of these condensed consolidated
financial statements consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Hong Kong Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated financial statements are not prepared,
in all material respects, in accordance with IAS 34.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
29 August 2024
Condensed Consolidated Statement of Profit or Loss
For the Six Months Ended 30 June 2024
Six months ended 30 June
2024 2023
NOTES RMB'000 RMB'000
(Unaudited) (Unaudited)
Revenue 4A 79,520,332 59,613,193
Other income and gains 5 3,250,850 4,069,876
82,771,182 63,683,069
Operating expenses
Jet fuel costs (27,132,269) (19,346,786)
Employee compensation costs (16,953,921) (13,594,872)
Depreciation and amortisation (14,025,285) (12,704,783)
Take-off, landing and depot charges (9,963,482) (6,635,703)
Aircraft maintenance, repair and overhaul costs (6,862,447) (4,972,590)
Air catering charges (1,973,435) (1,167,220)
Aircraft and engine lease expenses (261,132) (146,086)
Other lease expenses (346,900) (242,637)
Other flight operation expenses (3,263,760) (3,419,424)
Selling and marketing expenses (2,275,875) (1,542,326)
General and administrative expenses (780,314) (706,174)
Impairment loss recognised on non-current assets - (91,160)
Net impairment loss recognised under expected credit loss model (14,334) (11,508)
(83,853,154) (64,581,269)
Loss from operations 6 (1,081,972) (898,200)
Finance income 245,615 291,375
Finance costs 7 (3,265,473) (3,542,402)
Share of results of associates 1,084,817 1,265,560
Share of results of joint ventures 91,360 88,817
Exchange losses, net (360,422) (1,565,320)
Loss before taxation (3,286,075) (4,360,170)
Income tax (expense)/credit 8 (252,536) 316,216
Loss for the period (3,538,611) (4,043,954)
Attributable to:
- Equity shareholders of the Company (2,778,953) (3,446,814)
- Non-controlling interests (759,658) (597,140)
(3,538,611) (4,043,954)
Loss per share
- Basic and diluted 10 RMB(17.67) cents RMB(22.39) cents
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the Six Months Ended 30 June 2024
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Loss for the period (3,538,611) (4,043,954)
Other comprehensive (expense)/income for the period
Items that will not be reclassified to profit or loss:
- Fair value losses on investments in equity instruments (86,078) (67,769)
at fair value through other comprehensive income
- Remeasurement of net defined benefit liability (5,741) 44
- Share of other comprehensive expense of an associate (361) -
- Income tax credit relating to items that will not be 21,519 16,942
reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
- Fair value gains on investments in debt instruments 14,619 5,530
at fair value through other comprehensive income
- Share of other comprehensive income/(expense) of associates 232,792 (474,687)
and joint ventures
- Exchange differences on translation of foreign operations 137,205 561,877
- Impairment loss recognised on investments in debt instruments (236) (2,505)
at fair value through other comprehensive income
- Income tax expense relating to items that may be (3,597) (756)
reclassified subsequently to profit or loss, net
Other comprehensive income for the period, net of tax 310,122 38,676
Total comprehensive expense for the period (3,228,489) (4,005,278)
Attributable to:
- Equity shareholders of the Company (2,433,924) (3,389,356)
- Non-controlling interests (794,565) (615,922)
(3,228,489) (4,005,278)
Condensed Consolidated Statement of
Financial Position
At 30 June 2024
At 30 June At 31 December
NOTES 2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Non-current assets
Property, plant and equipment 11 119,636,097 117,728,498
Right-of-use assets 11 118,740,307 120,971,059
Investment properties 709,827 726,594
Intangible assets 106,576 106,580
Goodwill 4,095,732 4,095,732
Interests in associates 12 13,520,651 12,863,023
Interests in joint ventures 2,566,091 2,413,799
Advance payments for aircraft and flight equipment 25,129,965 26,114,064
Deposits for aircraft under leases 535,239 525,463
Equity instruments at fair value through other comprehensive income 1,821,908 1,547,986
Debt instruments at fair value through other comprehensive income 1,311,348 1,397,310
Deferred tax assets 13,704,304 13,757,180
Other non-current assets 627,191 696,685
302,505,236 302,943,973
Current assets
Inventories 4,853,666 3,682,821
Accounts receivable 13 5,478,674 3,182,797
Bills receivable 6,203 3,601
Prepayments, deposits and other receivables 14 5,253,415 5,852,345
Financial assets at fair value through profit or loss 2,125 2,505
Restricted bank deposits 2,409,176 611,692
Cash and cash equivalents 19,963,866 15,016,804
Assets held for sale 107,359 108,527
Other current assets 4,820,628 3,873,629
42,895,112 32,334,721
Total assets 345,400,348 335,278,694
Current liabilities
Air traffic liabilities (10,648,694) (8,366,222)
Accounts payable 15 (22,020,724) (17,954,298)
Bills payable (102,727) (500,160)
Dividends payable (99,856) (98,000)
Other payables and accruals 16 (17,009,346) (15,701,546)
Current taxation (187,243) (76,662)
Lease liabilities 17 (17,618,030) (18,175,349)
Interest-bearing borrowings 18 (72,150,988) (47,271,768)
Provision for return condition checks (224,318) (650,777)
Contract liabilities (1,270,386) (1,522,492)
(141,332,312) (110,317,274)
Net current liabilities (98,437,200) (77,982,553)
Total assets less current liabilities 204,068,036 224,961,420
Non-current liabilities
Lease liabilities 17 (61,803,418) (64,053,967)
Interest-bearing borrowings 18 (86,162,955) (104,759,631)
Provision for return condition checks (18,402,780) (17,196,982)
Provision for early retirement benefit obligations (546) (720)
Long-term payables (764,985) (1,082,301)
Contract liabilities (2,143,187) (1,663,987)
Defined benefit obligations (185,489) (187,810)
Deferred income (428,738) (404,103)
Deferred tax liabilities (327,262) (347,910)
(170,219,360) (189,697,411)
NET ASSETS 33,848,676 35,264,009
CAPITAL AND RESERVES
Issued capital 19 16,593,720 16,200,793
Treasury shares (3,047,564) (3,047,564)
Reserves 23,041,654 24,052,746
Total equity attributable to equity shareholders of the Company 36,587,810 37,205,975
Non-controlling interests (2,739,134) (1,941,966)
TOTAL EQUITY 33,848,676 35,264,009
Condensed Consolidated Statement of
Changes in Equity
For the Six Months Ended 30 June 2024
Attributable to equity shareholders of the Company
Notes Issued Treasury Capital Reserve General reserve Foreign exchange translation (Accumulated losses) Subtotal Non- controlling Total
capital
shares
reserve
funds
and safety fund
reserve
/retained earnings
interests
equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
As at 1 January 2024 (Audited) 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
Changes in equity for the
six months ended 30 June 2024
Loss for the period - - - - - - (2,778,953) (2,778,953) (759,658) (3,538,611)
Other comprehensive income/(expense) - - 208,333 - - 136,696 - 345,029 (34,907) 310,122
Total comprehensive income/(expense) - - 208,333 - - 136,696 (2,778,953) (2,433,924) (794,565) (3,228,489)
Issue of new shares 19 392,927 - 1,422,815 - - - - 1,815,742 - 1,815,742
Dividends paid to non-controlling shareholders - - - - - - - - (2,603) (2,603)
Others - - 17 - - - - 17 - 17
As at 30 June 2024 (Unaudited) 16,593,720 (3,047,564) 45,046,946 11,564,287 156,687 (1,039,544) (32,686,722) 36,587,810 (2,739,134) 33,848,676
As at 1 January 2023 (Audited) 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 the
six months ended 30 June 2023
Loss for the period - - - - - - (3,446,814) (3,446,814) (597,140) (4,043,954)
Other comprehensive (expense)/income - - (499,338) - - 556,796 - 57,458 (18,782) 38,676
Total comprehensive (expense)/income - - (499,338) - - 556,796 (3,446,814) (3,389,356) (615,922) (4,005,278)
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 - - (133) - - - - (133) 120 (13)
non-controlling shareholders
Dissolution of a subsidiary - - - - - - - - (5,282) (5,282)
Capital reduction by a - - - - - - (268,952) (268,952) 252,952 (16,000)
non-controlling shareholder
Dividends paid to non-controlling - - - - - - - - (8,449) (8,449)
shareholders
As at 30 June 2023 (Unaudited) 16,200,793 (3,047,564) 43,224,264 11,564,287 140,185 (867,938) (32,299,228) 34,914,799 (2,020,490) 32,894,309
Condensed Consolidated Statement of
Cash Flows
For the Six Months Ended 30 June 2024
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Operating activities
Cash generated from operations 17,747,919 20,056,651
Income tax paid (91,754) (25,127)
Interest paid (3,403,093) (3,889,763)
Net cash from operating activities 14,253,072 16,141,761
Investing activities
Proceeds from disposal of property, plant and equipment, right-of-use 775,072 738,118
assets and assets held for sale
Dividends received 807,696 20,782
Proceed from disposal of debt instruments at fair value through other 374,465 1,071,896
comprehensive income
Net cash inflows arising on acquisition of a subsidiary - 5,392,113
Purchase of debt instruments at amortised cost (1,000,000) -
Purchase of property, plant and equipment (4,779,369) (3,856,430)
Advance payments for aircraft and flight equipment (2,702,445) (5,086,944)
Placement of term deposits (1,172,268) -
Investment in a joint venture (148,991) (61,838)
Purchase of debt instruments and equity instruments at fair value through (229,639) (470,676)
other comprehensive income
Net cash flows arising from other investing activities (101,865) 221,446
Net cash used in investing activities (8,177,344) (2,031,533)
Financing activities
Proceeds from new bank loans and other borrowings 18,984,932 30,333,986
Proceeds from issue of new shares 1,816,860 15,000,000
Proceeds from issuance of corporate bonds and short-term commercial papers 3,000,000 -
Capital contribution from a non-controlling shareholder of a subsidiary - 3,400,000
Repayments of bank loans and other borrowing (15,678,403) (29,441,130)
Repayments of leases liabilities (9,275,056) (11,231,302)
Transaction costs attributable to issue of new shares (1,118) (6,983)
Dividends paid to non-controlling shareholders (747) (8,449)
Repayments of corporate bonds - (7,000,000)
Payments for acquisition of non-controlling interests - (13)
Net cash (used in)/from financing activities (1,153,532) 1,046,109
Net increase in cash and cash equivalents 4,922,196 15,156,337
Cash and cash equivalents at 1 January 15,016,804 10,607,711
Effect of foreign exchanges rates changes 24,866 205,882
Cash and cash equivalents at 30 June 19,963,866 25,969,930
Notes to the Condensed Consolidated
Financial Statements
For the Six Months Ended 30 June 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 address of the Company is at 1st Floor - 9th Floor 101,
Building 1, 30 Tianzhu Road, Airport Industrial Zone, Shunyi District,
Beijing, the PRC.
The condensed consolidated financial statements are presented in Renminbi
("RMB"), the currency of the primary economic environment in which most of the
group entities operate (the functional currency of the Company and most of the
entities comprising the Group), and all values are rounded to the nearest
thousand ('000) unless otherwise indicated.
2. BASIS OF PREPARATION
The condensed consolidated financial statements for the six months ended 30
June 2024 have been prepared in accordance with International Accounting
Standard 34 "Interim Financial Reporting" ("IAS 34") issued by the
International Accounting Standards Board (the "IASB") as well as the
applicable disclosure requirements of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules")
The condensed consolidated financial statements do not include all the
information and disclosures required in the annual consolidated financial
statements, and should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2023.
As at 30 June 2024, the Group's current liabilities exceeded its current
assets by approximately RMB98,437 million. The liquidity of the Group is
primarily dependent on its ability to maintain cash inflows from operations
and sufficient financing to meet its financial obligations as and when they
fall due. Considering the Company's sources of liquidity and the unutilised
bank facilities of RMB137,665 million as at 30 June 2024, the Directors
believe that adequate funding is available to fulfil the Group's debt
obligations and capital expenditure requirements to enable the Group to
continue in operational existence for the foreseeable future when preparing
these condensed consolidated financial statements for the six months ended 30
June 2024. Accordingly, these condensed consolidated financial statements have
been prepared on a basis that the Group will be able to continue as a going
concern.
3. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the
historical cost basis except for certain financial instruments, which are
measured at fair values.
Other than change in accounting policies resulting from application of
amendments to International Financial Reporting Standards ("IFRSs"), the
accounting policies and methods of computation used in the condensed
consolidated financial statements for the six months ended 30 June 2024 are
the same as those presented in the Group's annual consolidated financial
statements for the year ended 31 December 2023.
Application of amendments to IFRSs
In the current interim period, the Group has applied the following amendments
to IFRSs issued by the IASB, for the first time, which are mandatorily
effective for the Group's annual period beginning on 1 January 2024 for the
preparation of the Group's condensed 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
The application of the amendments to IFRSs in the current interim period has
had no material impact on the Group's financial positions and performance for
the current and prior periods and/or on the disclosures set out in these
condensed consolidated financial statements.
4A. REVENUE
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Revenue from contracts with customers 79,406,709 59,482,882
Rental income (included in revenue of airline operations segment) 113,623 130,311
Total revenue 79,520,332 59,613,193
4A. REVENUE (continued)
Disaggregation of revenue from contracts with customers
Six months ended 30 June 2024 Six months ended 30 June 2023
Segments Airline Other Airline Other
operations
operations
operations
operations
RMB'000 RMB'000 RMB'000 RMB'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Type of goods or services
Airline operations
Passenger 73,137,116 - 55,469,530 -
Cargo and mail 3,328,452 - 1,409,862 -
Others 859,569 - 695,501 -
77,325,137 - 57,574,893 -
Other operations
Aircraft engineering income - 2,023,821 - 1,872,556
Others - 57,751 - 35,433
- 2,081,572 - 1,907,989
Total 77,325,137 2,081,572 57,574,893 1,907,989
Geographical markets
Mainland China 55,765,478 2,081,572 48,304,525 1,907,989
Hong Kong Special Administrative
Region ("SAR"), Macau SAR and 2,484,032 - 1,730,660 -
Taiwan, China
International 19,075,627 - 7,539,708 -
Total 77,325,137 2,081,572 57,574,893 1,907,989
4B. SEGMENT INFORMATION
The Group's operating businesses are structured and managed separately,
according to the nature of their operations and the services they provide. The
Group has the following reportable operating segments:
(a) the "airline operations" segment which mainly comprises the
provision of air passenger and air cargo services; and
(b) the "other operations" segment which comprises the provision
of aircraft engineering and other airline-related services.
Inter-segment sales and transfers are transacted with reference to the selling
prices used for sales made to third parties at the then prevailing market
prices.
Operating segments
The following tables present the Group's consolidated revenue and loss before
taxation regarding the Group's operating segments in accordance with the
Accounting Standards for Business Enterprises of the PRC ("CASs") for the six
months ended 30 June 2024 and 2023 and the reconciliations of reportable
segment revenue and loss before taxation to the Group's consolidated amounts
under IFRSs:
For the six months ended 30 June 2024 (Unaudited)
Airline operations Other operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 77,438,760 2,081,572 - 79,520,332
Inter-segment sales 106,388 4,343,972 (4,450,360) -
Revenue for reportable segments under CASs and IFRSs 77,545,148 6,425,544 (4,450,360) 79,520,332
Segment (loss)/profit before taxation
(Loss)/profit before taxation for reportable segments under CASs (3,715,694) 502,625 (77,722) (3,290,791)
Effect of differences between IFRSs 4,716
and CASs
Loss before taxation for the period (3,286,075)
under IFRSs
4B. SEGMENT INFORMATION (continued)
Operating segments (continued)
For the six months ended 30 June 2023 (Unaudited)
Airline Other Elimination Total
operations
operations
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 57,705,204 1,907,989 - 59,613,193
Inter-segment sales 62,176 3,359,869 (3,422,045) -
Revenue for reportable segments under CASs and IFRSs 57,767,380 5,267,858 (3,422,045) 59,613,193
Segment (loss)/profit before taxation
(Loss)/profit before taxation for reportable segments under CASs (4,584,441) 263,523 (44,471) (4,365,389)
Effect of differences between IFRSs 5,219
and CASs
Loss before taxation for the period (4,360,170)
under IFRSs
4B. SEGMENT INFORMATION (continued)
Operating segments (continued)
The following table presents the segment assets of the Group's operating
segments under CASs as at 30 June 2024 and 31 December 2023, and the
reconciliations of reportable segment assets to the Group's consolidated
amounts under IFRSs:
Airline Other Elimination Total
operations
operations
RMB'000 RMB'000 RMB'000 RMB'000
Segment assets
Total assets for reportable segments as at 30 June 2024 under CASs (unaudited) 330,660,668 36,776,800 (22,016,670) 345,420,798
Effect of differences between IFRSs and CASs (20,450)
Total assets as at 30 June 2024 under IFRSs (unaudited) 345,400,348
Total assets for reportable segments as at 31 December 2023 under CASs 323,324,926 30,250,454 (18,272,699) 335,302,681
(audited)
Effect of differences between IFRSs (23,987)
and CASs
Total assets as at 31 December 2023 under IFRSs (audited) 335,278,694
4B. SEGMENT INFORMATION (continued)
Geographical information
The following tables present the Group's consolidated revenue under IFRSs by
geographical location for the six months ended 30 June 2024 and 2023,
respectively:
For the six months ended 30 June 2024 (Unaudited)
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 total revenue 57,960,673 2,484,032 19,075,627 79,520,332
For the six months ended 30 June 2023 (Unaudited)
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 total revenue 50,342,825 1,730,660 7,539,708 59,613,193
In determining the Group's geographical information, revenue is attributed to
the segments based on the origin or destination of each flight. Assets, which
consist principally of aircraft and ground equipment, supporting the Group's
worldwide transportation network, are mainly registered/located in Mainland
China. According to the business demand, the Group needs to flexibly allocate
different aircraft to match the need of the route network. An analysis of the
assets of the Group by geographical distribution has therefore not been
included.
There was no individual customer that contributed 10% or more of the Group's
revenue, for both periods.
5. OTHER INCOME AND GAINS
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Co-operation routes income and subsidy income 2,232,415 1,985,078
Gains on disposal of property, plant and equipment and 775,226 669,898
right-of-use assets
(Loss)/gains on disposal of assets held for sale (7,907) 18,519
Dividend income 5,935 9,557
Others 245,181 1,386,824
3,250,850 4,069,876
6. LOSS FROM OPERATIONS
The Group's loss from operations is arrived at after charging:
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Depreciation of property, plant and equipment 6,505,225 5,350,122
Depreciation of right-of-use assets 7,503,289 7,340,150
Depreciation of investment properties 16,767 14,511
Amortisation of intangible assets 4 -
7. FINANCE COSTS
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Interest on interest-bearing borrowings 2,215,565 1,988,148
Interest on lease liabilities 1,192,838 1,677,935
Imputed interest expenses on defined benefit obligations 2,628 3,188
3,411,031 3,669,271
Less: Interest capitalised (145,558) (126,869)
3,265,473 3,542,402
The interest capitalisation rates during the period ranged from 2.40% to 4.45%
(six months ended 30 June 2023: 2.50% to 3.06%) per annum relating to the
costs of related borrowings during the period.
8. INCOME TAX EXPENSE/(CREDIT)
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Current income tax:
- Mainland China 201,017 126,521
- Hong Kong SAR and Macau SAR, China 887 833
Under provision in respect of prior years 431 11,920
Deferred tax 50,201 (455,490)
252,536 (316,216)
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and
Implementation Regulation of the EIT Law, except for three (six months ended
30 June 2023: three) branches and five (six months ended 30 June 2023: five)
subsidiaries of the Company, and certain branches of two subsidiaries of the
Company which are taxed at a preferential rate of 15%, all group companies
located in Mainland China are subject to a income tax rate of 25% (six months
ended 30 June 2023: 25%). Subsidiaries in Hong Kong SAR, China are taxed at
profits tax rate of 16.5%, and subsidiaries in Macau SAR, China are taxed at
profits tax rate of 12%, for both periods.
In respect of majority of the Group's overseas airline activities, the Group
has either obtained exemptions from overseas taxation pursuant to the
bilateral aviation agreements between the overseas governments and the PRC
government, or has sustained tax losses in these overseas jurisdictions.
Accordingly, no provision for overseas tax has been made for overseas airlines
activities in the current and prior periods.
9. DIVIDENDS
(a) Dividends payable to equity shareholders attributable to the
interim period
In accordance with the Company's articles of association, the profit after tax
of the Company for the purpose of dividend distribution is based on the lesser
of (i) the profit determined in accordance with CASs; and (ii) the profit
determined in accordance with IFRSs.
No interim dividend has been declared by the Directors for the six months
ended 30 June 2024 (six months ended 30 June 2023: Nil).
(b) Dividends payable to equity shareholders attributable to the
previous financial year, approved during the current interim period
No dividend has been declared by the Directors for the financial year of 2023
during the six months ended 30 June 2024 (six months ended 30 June 2023: Nil).
10. LOSS PER SHARE
The calculation of the basic loss per share is based on the loss attributable
to ordinary equity shareholders of the Company of RMB2,779 million (six months
ended 30 June 2023: RMB3,447 million) and the weighted average number of
15,723,985,056 (six months ended 30 June 2023: 15,392,419,484) ordinary shares
in issue during the period, as adjusted to reflect the number of treasury
shares held by Cathay Pacific Airways Limited ("Cathay Pacific") through
reciprocal shareholding (Note 12).
The Group had no potential ordinary shares in issue during both periods.
11. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
During the six months ended 30 June 2024, additions to the cost of property,
plant and equipment were RMB6,879 million (six months ended 30 June 2023:
RMB15,932 million). Property, plant and equipment with carrying amount of
RMB306 million were disposed of during the six months ended 30 June 2024 (six
months ended 30 June 2023: RMB532 million).
As at 30 June 2024, the Group's aircraft and flight equipment, buildings and
other equipment with an aggregate net book value of approximately RMB925
million (31 December 2023: RMB838 million) were pledged to secure certain bank
loans of the Group (Note 18).
As at 30 June 2024, the Group was in the process of applying for the title
certificates of certain buildings with an aggregate net book value of
approximately RMB7,546 million (31 December 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.
During the six months ended 30 June 2024, additions to the right-of-use assets
were RMB4,970 million (six months ended 30 June 2023: RMB12,404 million).
As at 30 June 2024, the Group had future undiscounted lease payments under
non-cancellable leases of RMB463 million (31 December 2023: RMB2 million),
which was not recognised as lease liabilities since leases have yet to be
commenced
As at 30 June 2024, 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 RMB24 million (31 December 2023: RMB24 million) were
pledged to secure certain bank loans of the Group (Note 18).
As at 30 June 2024, the Group was in the process of applying for the title
certificates of certain land use rights acquired by the Group with an
aggregate net book value of approximately RMB457 million (31 December 2023:
RMB595 million). The Directors are of the opinion that the Group is entitled
to lawfully and validly occupy and use the above-mentioned land.
12. INTERESTS IN ASSOCIATES
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Share of net assets
- Listed shares in Hong Kong SAR, China 10,673,115 10,024,259
- Unlisted investments 229,660 239,221
Goodwill 2,617,876 2,599,543
13,520,651 12,863,023
Market value of listed shares 14,077,930 14,275,696
Summarised financial information in respect of Cathay Pacific, the only
individually material associate of the Group, and a reconciliation to the
carrying amount in the condensed consolidated financial statements, are set
out below. The summarised financial information below represents amounts shown
in the associate's condensed consolidated financial statements.
Cathay Pacific
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
Gross amounts of the associate's
Current assets 25,171,714 20,615,599
Non-current assets 135,122,274 137,170,897
Current liabilities (43,638,881) (41,226,666)
Non-current liabilities (60,604,690) (62,156,724)
Equity 56,050,417 54,403,106
- Equity attributable to equity shareholders of the associate 46,494,657 44,911,357
- Equity contributed to preferred shareholders of the associate 9,070,214 9,008,733
- Equity contributed to the non-controlling interests of the associate 6,389 6,344
- Equity attributable to convertible bond holders of the associate 479,157 476,672
12. INTERESTS IN ASSOCIATES (continued)
Cathay Pacific (continued)
Six months ended 30 June
2024 2023
RMB'000 RMB'000
Revenue 45,112,358 39,566,097
Profit for the period 3,285,843 3,873,744
Other comprehensive income/(expense) 706,643 (1,935,057)
Total comprehensive income 3,992,486 1,938,687
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
Reconciled to the Group's interests in the associate
Gross amounts of net assets of the associate attributable to 46,494,657 44,911,357
equity shareholders
Group's effective interest 29.99% 29.99%
Group's share of net assets of the associate 13,943,748 13,468,916
Elimination of reciprocal shareholding (3,270,633) (3,444,657)
Goodwill 2,590,158 2,571,825
Carrying amount in the condensed consolidated financial statements 13,263,273 12,596,084
Aggregate information of associates that are not individually material:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
Aggregate carrying amounts of individually immaterial associates in the 257,378 266,939
condensed consolidated financial statements
Six months ended 30 June
2024 2023
RMB'000 RMB'000
Aggregate amounts of the Group's share of those associates'
- Profit/(loss) for the period 17,448 (13,678)
- Other comprehensive income for the period 440 1,465
Total comprehensive income/(expense) for the period 17,888 (12,213)
13. ACCOUNTS RECEIVABLE
The ageing analysis of the accounts receivable as at the end of the reporting
period, based on the transaction date, net of allowance for expected credit
losses, was as follows:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Within 30 days 4,116,692 2,349,927
31 to 60 days 628,333 265,953
61 to 90 days 192,085 155,337
Over 90 days 541,564 411,580
5,478,674 3,182,797
14. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
An analysis of prepayments, deposits and other receivables as at the end of
the reporting period, net of allowance for expected credit losses, was as
follows:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Manufacturers' credits 540,017 567,759
Prepayments of jet fuel 215,419 99,925
Other prepayments 283,459 314,506
1,038,895 982,190
Deposits and other receivables 4,214,520 4,870,155
5,253,415 5,852,345
As at 30 June 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 approximately
RMB293,685,000 (31 December 2023: RMB293,685,000).
15. ACCOUNTS PAYABLE
The ageing analysis of the accounts payable, based on the transaction date, as
at the end of the reporting period was as follows:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Within 30 days 9,767,376 7,517,749
31 to 60 days 2,918,389 2,479,368
61 to 90 days 3,482,204 3,411,397
Over 90 days 5,852,755 4,545,784
22,020,724 17,954,298
16. OTHER PAYABLES AND ACCRUALS
An analysis of other payables and accruals as at the end of the reporting
period was as follows:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Accrued salaries, wages and benefits 3,474,144 3,154,495
Payables for construction in progress 1,533,655 1,715,427
Other tax payable 377,987 495,176
Deposits received from sales agents 739,559 512,378
Current portion of long-term payables 3,618 4,233
Deposits received by China National Aviation 7,829,999 7,088,514
Finance Co., Ltd. ("CNAF"), a subsidiary
of the Company, from related parties
Others 3,050,384 2,731,323
17,009,346 15,701,546
17. LEASE LIABILITIES
The Group has obligations under lease agreements expiring from the second half
of 2024 to 2034 (31 December 2023: 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 which are principally denominated in foreign
currencies, is as follows:
At 30 June 2024 At 31 December 2023
Lease Present values Lease Present values
payments
of
payments
of
lease payments
lease payments
RMB'000 RMB'000 RMB'000 RMB'000
(Unaudited) (Unaudited) (Audited) (Audited)
Amounts repayable
- Within 1 year 19,910,140 17,618,030 20,663,819 18,175,349
- After 1 year but within 2 years 16,546,044 14,810,525 17,712,432 15,840,293
- After 2 years but within 5 years 32,139,526 29,499,422 35,082,619 32,158,689
- After 5 years 18,340,863 17,493,471 16,889,125 16,054,985
Total 86,936,573 79,421,448 90,347,995 82,229,316
Less: Amounts representing future finance costs (7,515,125) (8,118,679)
Present values of lease payments 79,421,448 82,229,316
Less: Portion classified as current liabilities (17,618,030) (18,175,349)
Non-current portion 61,803,418 64,053,967
18. INTEREST-BEARING BORROWINGS
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Bank loans and other borrowings:
- Secured 750,954 748,462
- Unsecured 143,179,903 139,882,030
143,930,857 140,630,492
Corporate bonds and short-term commercial papers:
- Unsecured 14,383,086 11,400,907
158,313,943 152,031,399
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Bank loans and other borrowings repayable:
- Within 1 year 61,767,902 45,067,693
- After 1 year but within 2 years 48,586,584 57,883,821
- After 2 years but within 5 years 28,908,570 33,414,939
- After 5 years 4,667,801 4,264,039
143,930,857 140,630,492
Corporate bonds and short-term commercial papers repayable:
- Within 1 year 10,383,086 2,204,075
- After 1 year but within 2 years 3,000,000 9,196,832
- After 2 years but within 5 years 1,000,000 -
14,383,086 11,400,907
Total interest-bearing borrowings 158,313,943 152,031,399
Less: portion classified as current liabilities (72,150,988) (47,271,768)
Non-current portion 86,162,955 104,759,631
18. INTEREST-BEARING BORROWINGS (continued)
As at 30 June 2024, the interest rates of the Group's bank loans and other
borrowings ranged from 2.00% to 4.45% (31 December 2023: 2.00% to 4.45%) per
annum.
As at 30 June 2024, the interest rates of the Group's corporate bonds and
short-term commercial papers ranged from 2.03% to 3.46% (31 December 2023:
2.54% to 3.46%) per annum.
As at 30 June 2024, the Group's bank loans of approximately RMB751 million (31
December 2023: RMB748 million) were secured by:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Aircraft and flight equipment, buildings and other equipment 924,776 837,673
Land use rights 23,827 24,221
Intangible assets 6,030 6,105
954,633 867,999
As at 30 June 2024, corporate bonds with carrying amount of RMB8,312 million
(31 December 2023: RMB8,380 million) were issued by Shenzhen Airlines Company
Limited, a subsidiary of the Company.
19. ISSUED CAPITAL
The numbers of shares of the Company and their nominal values as at 30 June
2024 and 31 December 2023 are as follows:
30 June 2024 31 December 2023
Number Nominal Number Nominal
of shares
value
of shares
value
RMB'000 RMB'000
(Unaudited) (Audited)
Registered, issued and fully paid:
- H shares of RMB1.00 each: 4,562,683,364 4,562,683 4,562,683,364 4,562,683
Tradable
Tradable-restricted (Note 1) 392,927,308 392,927 - -
- A shares of RMB1.00 each: Tradable 11,023,584,324 11,023,585 11,023,584,324 11,023,585
Tradable-restricted (Note 2) 614,525,150 614,525 614,525,150 614,525
16,593,720,146 16,593,720 16,200,792,838 16,200,793
19. ISSUED CAPITAL (continued)
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 proceed 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.
20. CONTINGENT LIABILITIES
As at 30 June 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 to a
restructuring agreement (the "Restructuring Agreement") with CNAHC and CNAHC
on 20 November 2004. According to the Restructuring Agreement, except for
liabilities constituting or arising out of or relating to business undertaken
by the Company after the restructuring, no liabilities would be assumed by the
Company and the Company would not be liable, whether severally, or jointly and
severally, for debts and obligations incurred prior to the restructuring by
CNAHC and CNACG. The Company has also undertaken to indemnify CNAHC and CNACG
against any damage suffered or incurred by CNAHC and CNACG as a result of any
breach by the Company of any provision of the Restructuring Agreement.
21. FINANCIAL INSTRUMENTS
(a) Financial assets measured at fair value
(i) Fair value hierarchy
The following table presents the fair value of the Group's financial
instruments measured at the end of the reporting period on a recurring basis,
categorised into the three-level fair value hierarchy as defined in IFRS 13
Fair value measurement. The level into which a fair value measurement is
classified is determined with reference to the observability and significance
of the inputs used in the valuation technique as follows:
• Level 1 fair value measurements are based on quoted
prices (unadjusted) in active market for identical assets or liabilities;
• Level 2 fair value measurements are those derived from
inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
• Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
21. FINANCIAL INSTRUMENTS (continued)
(a) Financial assets measured at fair value (continued)
(i) Fair value hierarchy (continued)
Fair value at Fair value measurements
30 June as at 30 June 2024 categorised into
2024 Level 1 Level 2 Level 3
RMB'000 RMB'000 RMB'000 RMB'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Equity instruments at fair value through other comprehensive income ("FVTOCI") 1,821,908 - - 1,821,908
Debt instruments at FVTOCI (including debt instruments at FVTOCI included in 1,360,682 - 1,360,682 -
other current assets)
Financial assets at fair value through profit or loss 2,125 2,125 - -
Total financial assets at fair value 3,184,715 2,125 1,360,682 1,821,908
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
(Audited) (Audited) (Audited) (Audited)
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)
Financial assets at fair value through profit or loss 2,505 2,505 - -
Total financial assets at fair value 3,047,166 2,505 1,496,675 1,547,986
During the six months ended 30 June 2024, there were no transfers between
Level 1 and Level 2, or transfers into or out of Level 3. The Group's policy
is to recognise transfers between levels of fair value hierarchy as at the end
of the reporting period in which they occur.
(ii) Valuation techniques and inputs used in Level 2 fair value
measurements
All financial instruments classified within Level 2 of the fair value
hierarchy are debt investments, the fair value of which were determined based
upon the valuation conducted by the China Central Depository & Clearing
Co., Ltd.
21. FINANCIAL INSTRUMENTS (continued)
(a) Financial assets measured at fair value (continued)
(iii) Valuation techniques and inputs used in Level 3 fair value
measurements
As at 30 June 2024, the fair value of the equity interest in unlisted
securities of a listed company amounting to approximately RMB224,154,000 (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 30 June 2024, the fair value of private equity instruments at FVTOCI
amounting to approximately RMB1,597,754,000 (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.
(b) Fair values of financial assets and liabilities carried at other
than fair value
Except as detailed in the following table, the Directors consider that the
carrying amounts of financial assets and liabilities measured at amortised
cost in these condensed consolidated financial statements approximate their
fair values.
Carrying amounts Fair values
As at As at As at As at
30 June 31 December 30 June 31 December
2024 2023 2024 2023
RMB'000 RMB'000 RMB'000 RMB'000
(Unaudited) (Audited)
Financial liabilities
- Corporate bonds (fixed rate) 12,372,437 11,400,907 12,241,928 11,183,499
Fair value hierarchy as at 30 June 2024
Level 1 Level 2 Level 3 Total
RMB'000 RMB'000 RMB'000 RMB'000
Financial liabilities
- Corporate bonds (fixed rate) - 12,241,928 - 12,241,928
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 bond (fixed rate) - 11,183,499 - 11,183,499
22. COMMITMENTS
(a) Capital commitments
The Group had the following amounts of contractual commitments for the
acquisition and construction of property, plant and equipment as at the end of
the reporting period:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Contracted, but not provided in the consolidated 114,365,222 72,078,516
financial statements
(b) Investment commitments
The Group had the following amounts of investment commitments as at the end of
the reporting period:
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Contracted, but not provided for:
- investment commitment to joint ventures 310,016 456,834
In 2012, the Company entered into an agreement with a joint venture as its 50%
shareholder. As at 30 June 2024, the Company has invested United State Dollar
("USD") 1.5 million (31 December 2023: USD1.5 million) and committed to invest
USD3.5 million (31 December 2023: USD3.5 million) in the future.
In 2023, the Company entered into an agreement with a joint venture as its 50%
shareholder. As at 30 June 2024, the Company has invested USD55 million (31
December 2023: USD34 million) and committed to invest USD40 million (31
December 2023: USD61 million) in the future.
23. RELATED PARTY TRANSACTIONS
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures and its associates:
(i) Transactions with related parties
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Service provided to the CNAHC Group:
Transportation service fee on the passenger aircraft cargo business 3,009,102 1,091,066
Aircraft maintenance income 150,046 90,290
Land and buildings rental income 81,322 67,164
Ground services income 71,872 54,435
Pilot transfer income 49,220 -
Government charter flights services 36,906 60,659
Air catering income 30,060 20,230
Income from advertising media business 6,786 6,778
Sales commission income 5,972 3,103
Trademark licensing income 4,660 4,660
Aviation communication income 1,185 1,185
Others 55,025 142,369
3,502,156 1,541,939
23. RELATED PARTY TRANSACTIONS (continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures and its associates: (continued)
(i) Transactions with related parties (continued)
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Service provided by the CNAHC Group:
Airport ground services, take-off, landing and 757,051 553,989
depot expenses
Air catering charges 739,499 523,400
Aviation communication expenses 407,196 306,505
Other procurement and maintenance 291,220 211,827
Interest expenses 196,418 185,811
Management fees 173,226 149,430
Media advertisement expenses 64,056 48,704
Repair and maintenance costs 25,093 24,745
Expense relating to short-term leases and leases of 15,644 43,453
low-value assets
Sales commission expenses 193 616
Others 14,524 14,250
2,684,120 2,062,730
Loans to the CNAHC Group by CNAF:
Advances of loans 105,000 40,000
Interest income 4,413 2,406
Deposits from the CNAHC Group received by CNAF:
Increase in deposits received 730,815 1,380,536
Interest expenses 30,327 27,477
As a lessee with CNAHC Group:
Additions to right-of-use assets and lease liabilities 1,665,731 62,259
on new leases
Lease payments paid 1,331,248 1,321,734
Interest on lease liabilities 292,543 225,966
23. RELATED PARTY TRANSACTIONS (continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures and its associates: (continued)
(i) Transactions with related parties (continued)
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Service provided to joint ventures and associates:
Aircraft maintenance income 109,020 36,353
Ground services income 29,286 36,079
Air catering income 4,182 3,842
Frequent-flyer programme income 1,562 2,343
Land and buildings rental income 797 1,255
Sales commission income 157 283
Others 702 134
145,706 80,289
Service provided by joint ventures and associates:
Repair and maintenance costs 1,507,998 783,106
Airport ground services, take-off, landing and 215,333 135,354
depot expenses
Other procurement and maintenance 17,319 3,874
Aviation communication expenses 2,153 2,310
Frequent-flyer programme expenses 1,958 310
Sales commission expenses 216 231
Air catering charges 8 920
Expenses relating to short-term leases and leases of low-value assets 5 211
1,744,990 926,316
Deposits from joint ventures and
associates received by CNAF:
(Decrease)/increase in deposits received (3,229) 2,270
Interest expenses 327 807
The Directors are of the opinion that the above transactions were conducted in
the ordinary course of business of the Group.
Part of the related transactions above also constitute connected transactions
or continuing connected transactions as defined in Chapter 14A of the Listing
Rules.
23. RELATED PARTY TRANSACTIONS (continued)
(a) During the period, the Group had the following significant
transactions with (i) CNAHC, its subsidiaries (other than the Group), joint
ventures and associates (collectively, the "CNAHC Group"); (ii) its joint
ventures and its associates: (continued)
(ii) Balances with related parties
At 30 June At 31 December
2024
2023
RMB'000 RMB'000
(Unaudited) (Audited)
Outstanding balances with related parties*
Amount due from the ultimate holding company 390,660 353,478
Amounts due from associates 67,554 56,710
Amounts due from joint ventures 16,036 536
Amounts due from other related companies 1,249,070 1,193,322
Amount due to the ultimate holding company 25,025 22,240
Amounts due to associates 77,340 43,354
Amounts due to joint ventures 982,114 957,807
Amounts due to other related companies 17,844,972 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.
At 30 June At 31 December
2024 2023
RMB'000 RMB'000
(Unaudited) (Audited)
Outstanding borrowing balances with related parties
Interest-bearing borrowings
- Due to the ultimate holding company 14,794,456 17,297,166
- Due to other related companies 300,183 1,361,917
Outstanding balances between CNAF and
related parties
(1) Outstanding balances between CNAF and
CNAHC Group
Loans granted 370,000 265,000
Deposits received 7,768,879 7,038,063
Interest payable to related parties 25,397 8,487
Interest receivable from related parties 262 217
(2) Outstanding balances between CNAF and joint ventures and associates of the
Group
Deposits received 38,708 41,937
Interest payable to related parties 15 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.
23. RELATED PARTY TRANSACTIONS (continued)
(b) An analysis of the compensation of key management personnel of the
Group is as follows:
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Short term employee benefits 4,292 4,749
Retirement scheme contributions 807 945
Total emoluments for key management personnel 5,099 5,694
The breakdown of emoluments for key management personal are as follows:
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Directors and supervisors 1,840 1,720
Senior management 3,259 3,974
5,099 5,694
(c) Asset transfers with related parties:
Six months ended 30 June
2024 2023
RMB'000 RMB'000
(Unaudited) (Unaudited)
Sales of aircraft 66,481 108,434
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").
23. RELATED PARTY TRANSACTIONS (continued)
(d) Transactions with other government-related entities in the PRC
(continued)
Apart from above transactions with CNAHC Group, the Group has collectively,
but not individually significant transactions with other government-related
entities, which include but are not limited to the following:
• Rendering and receiving services
• Sales and purchases of goods, properties and other
assets
• Lease of assets
• Depositing and borrowing money
• Use of public utilities
The transactions between the Group and other government-related entities are
conducted in the ordinary course of the Group's business within normal
business operations. The Group has established its approval process for
providing of services, purchase of products, properties and services, purchase
of lease service and its financing policy for borrowing. Such approval
processes and financing policy do not depend on whether the counterparties are
government-related entities or not.
REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF AIR CHINA LIMITED
(中國國際航空股份有限公司)
(Incorporated in the People's Republic of China with limited liability)
INTRODUCTION
We have reviewed the condensed consolidated financial statements of Air China
Limited (the "Company") and its subsidiaries (collectively referred to as the
"Group") set out on pages 30 to 63, which comprise the condensed consolidated
statement of financial position as of 30 June 2024 and the related condensed
consolidated statement of profit or loss, condensed consolidated statement of
profit or loss and other comprehensive income, condensed consolidated
statement of changes in equity and condensed consolidated statement of cash
flows for the six-month period then ended, and notes to the condensed
consolidated financial statements. The Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited require the preparation
of a report on interim financial information to be in compliance with the
relevant provisions thereof and International Accounting Standard 34 "Interim
Financial Reporting" ("IAS 34") issued by the International Accounting
Standards Board. The directors of the Company are responsible for the
preparation and presentation of these condensed consolidated financial
statements in accordance with IAS 34. Our responsibility is to express a
conclusion on these condensed consolidated financial statements based on our
review, and to report our conclusion solely to you, as a body, in accordance
with our agreed terms of engagement, and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the
contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements 2410 "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the International Auditing and
Assurance Standards Board. A review of these condensed consolidated financial
statements consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated financial statements are not prepared,
in all material respects, in accordance with IAS 34.
Deloitte Touche Tohmatsu Certified Public Accountants LLP
Certified Public Accountants
(Registered as a Third Country Auditor with the UK Financial Reporting
Council)
Shanghai, China
29 August 2024
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
"passenger load factor" RPK expressed as a percentage of ASK
"cargo and mail load factor" RFTK expressed as a percentage of AFTK
"overall load factor" RTK expressed as a percentage of ATK
"Block hours" each whole and/or partial hour elapsing from the moment the chocks are removed
from the wheels of the aircraft for flights until the chocks are next again
returned to the wheels of the aircraft
YIELD MEASUREMENTS
"passenger yield"/"yield per RPK" revenues from passenger operations divided by RPKs
"cargo yield"/"yield per RFTK" revenues from cargo operations divided by RFTKs
Definitions
In this interim 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 Inner Mongolia" Air China Inner Mongolia Co., Ltd., a non-wholly owned subsidiary of the
Company
"Air Macau" Air Macau Company Limited, a non-wholly owned subsidiary of the Company
"Ameco" Aircraft Maintenance and Engineering Corporation, a non-wholly owned
subsidiary of the Company
"Articles of Association" the articles of association of the Company, as amended from time to time
"A Share(s)" ordinary share(s) in the share capital of the Company, with a nominal value of
RMB1.00 each, which are subscribed for and traded in Renminbi and listed on
Shanghai Stock Exchange
"Beijing Airlines" Beijing Airlines Company Limited, a non-wholly owned subsidiary of the Company
"Board" the board of directors of the Company
"Boeing" The Boeing Company
"CASs" China Accounting Standards for Business Enterprises
"Cathay Pacific" Cathay Pacific Airways Limited, an associate of the Company
"CNACG" China National Aviation Corporation (Group) Limited, a wholly-owned subsidiary
of CNAHC
"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.
"Company, "We", or "Air China" Air China Limited, a company incorporated in the PRC, whose H Shares are
listed on the Hong Kong Stock Exchange as its primary listing venue and on the
Official List of the UK Listing Authority as its secondary listing venue, and
whose A Shares are listed on the Shanghai Stock Exchange
"CSRC" China Securities Regulatory Commission
"Dalian Airlines" Dalian Airlines Company Limited, a 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 is/are listed on the Hong Kong Stock Exchange (as primary
listing venue) and has/have been admitted into the Official List of the UK
Listing Authority (as secondary listing venue)
"International Financial Reporting Standards" or "IFRSs" International Financial Reporting Standards
"Kunming Airlines" Kunming Airlines Company Limited, a subsidiary of Shenzhen Airlines
"Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited
"Model Code" the Model Code for Securities Transactions by Directors of Listed Issuers as
set out in Appendix C3 to the Listing Rules
"Reporting Period" from 1 January 2024 to 30 June 2024
"RMB" Renminbi, the lawful currency of the PRC
"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 Shandong
Aviation Group Corporation
"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
"Treasury Share(s)" has the meaning ascribed thereto under the Listing Rules
"US dollars" United States dollars, the lawful currency of the United States
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