Spring Airlines Communication Materials

May 2020 Contents

1. Company Overview 2. Fleet and Network 3. Operation Statistics and Financials

1 1. Company Overview Company Overview

CAPSE 2019 Best Low-Cost Strategic goal: "Become a competitive Low-Cost Carrier Airline that is internationalized, offers good value for the 2018 Most potential money, and offers passengers a safe, low cost, on-time, development of Airline Employer convenient and pleasant flying experience." CAPSE 2017 Best Airline  Established in in 2004, Spring Airlines launched its first flight in 2005. 2016 Skytrax Best LCC in After restructuring 首家低成本into a joint-stock limited航线网络分 liability company in December 2010, 航空公司 布广泛 the company went public on 21 January 2015 in A-share market. It currently has 2016 CAPA Best LCC in Asia 916.73mn shares after IPO in Jan. 2015 and placement in Feb. 2018. Pacific Region  Since that first flight in 2005, the company has launched more than 100 domestic routes providing round-trip service between Shanghai, Shenyang, Shijiazhuang, 2014-2015 Shanghai Shenzhen, Yangzhou, Ningbo, Kityall, Lanzhou base and all of China's major Advanced Enterprises cities except Beijing. In 2010, the company began openning international and regional routes. It has now launched above持续扩大机 60 international and regional routes linking Shanghai and other main bases as队规模 well as tier 2/3 cities to , No. 2 ranking in CAA's , Taiwan, and main cities in Northeast and Southeast Asia. safety and financial assessment (2014)  As the end ot 1Q-2020 , total assets reached Rmb30.0bn.Net profit was RMB 1.84bn and -0.23bn at the end of 2010 and 1Q-2020.

China Tourism Awards (Best  The company currently operates a fleet of 96 A320 aircrafts at the end of 1Q- Low-cost Airline) (2015) 2020, the biggest all-Airbus fleet among China's private sector airlines.

3 Development History

Spring Airlines Japan launches 18 July − 10-year A-share Placement two non-stop anniversary of inaugural Rmb 3.5 bn routes between flight; onboard local China and Japan: area network Wi-Fi -Wuhan and Spring Airlines' flight system successfully Tokyo-Chongqing simulator is put into rolled out on operation, further Xiamen/Shenzhen/Gua Feb 2018 Introduces its first improving flight safety ngzhou flights departing Feb 2016 Airbus A320 jet to and quality from Shanghai Spring Airlines is be bought outright established Aug 2014 July 2015 March 2009 Nov 2004

Jun 2016 Oct 2015

Sept 2011 Jan 2015 Share capital is Issued RMB 2.3 bn increased to 800m corporate bonds, July 2005 listing in SSE Spring Airlines Japan is 21 January − Spring shares through established, with Spring Airlines stages A-share conversion of the Makes inaugural Airlines holding a 33% IPO, celebrates by capital reserve fund flight, marking the stake ringing the opening bell official start of at the Shanghai Stock operations for China's Exchange first low-cost carrier

4 Shareholding Structure

A-share shareholding diagram（By the end of 1Q-2020）

Wang Zhenghua, 23 Wang Employee Employee Stock other individuals and Zhenghua and Investment Investment Public Incentive Tianshan Asset 23 other Platform 1 Platform 2 Plan Management individuals

Shanghai Spring Shanghai Spring Chartered Shanghai Shanghai International Travel Flight Travel Chunxiang Chunyi Service (Group) Service Investment Investment

54.98% 3.74% 2.61% 1.55% 37.09% 0.03%

Spring Airlines Co., Ltd. Stock Incentive Plan Acting in concert

Zhenghua Wang, who is the actual controller of the company, holds 21.46% shares indirectly through 2 legal entities. 5 Operational Model

 One aircraft model − the Airbus A320 – Using just one aircraft model and engine type lets Spring Airlines lower costs for aircraft and supplies through centralized procurement; also lower inventories. – Makes maintenance work easier to manage; simplifies training of pilots, Simplicity aircraft crew and cabin crew.  One cabin section − Economy class – This can result in 15-20% more passenger seats compared to an A320

Two "ones" Two with a typical two-classes configuration, which means a lower cost per available seat kilometer (CASK). – Since Sept 2015, Spring Airlines introduced A320 with new cabin configuration amounting to 61 aircrafts currently that increases the LCC number of seats to 186 from 180 without reducing the space between rows, driving further efficiency gains.

 High Passenger Load Factor – Passenger load factor (PLF) has been averaged above 90.8%, around Efficiency 880bps above Big3 SOEs average of 82.0% for regular flights in 2019. – For local airports, high PLF means substantial amounts of extra passenger traffic, which contributes to rapid growth in airport throughput. This has prompted local airports and governments to offer many types of support,

such as landing fee reductions/exemptions, route subsidies, etc. Two "highs" Two  High aircraft utilization – The company maintained a daily aircraft utilization hours above 11.2 hours in 2019, significantly higher than the industry average. 6 Operational Model

 Low marketing overhead: independent information systems – The company has distribution and booking systems that are independent from Travel Sky, which minimizes sales expenses and other related cost incurred during the ticket sales process. It also strengthens the Simplicity independence of the company's sales activities and its control over sales channels. – Except for chartered flights/block space, e-commerce channel mixed had an 91.9% contribution in 2019 including 33.1% from APP on mobile terminal, of which WeChat mini program became the channel with the highest growth rate. LCC – The company continuously upgrades the loyalty membership program. The number of senior members increased by 66 times yoy. – In 2019, Spring Airlines‘ sales expenses was Rmb0.0060 per available seat kilometer (ASK), declined by 10.4% yoy− much lower than the Two "lows" Two average for A-share listed airlines.  Low administrative overhead – The company has significantly reduced labor costs and routine expenses Efficiency for administrative staff through strict budget management, scientific performance assessments and rational limits on the ratio of employees to aircraft. – In 2019, Spring Airlines' administrative expenses was Rmb0.0042 per ASK, decreased by 19.7% yoy, much lower than the average for A-share listed airlines.

7 Operational Model

 Differentiated service

Simplicity – Unlike full service airlines, Spring Airlines adopts a differentiated service policy whereby passengers can pay extra for additional services, such as inflight food and beverages, overweight baggage, express boarding (including seat selection) and insurance, which gives customers more autonomy and convenience throughout the entire service process, from ticket booking to payment, boarding and flying. LCC – In the field of aviation media, the company continued to actively explore the advertising media service business, and the overall aircraft spraying

business achieved rapid growth in 2019 Ancillary revenue Ancillary – In 2019, vigorously developed the retail business and gradually transfer from Efficiency the main cabin scene to the online scene to realize the two-way conversion between high-frequency and low-frequency consumption. Cooperated with Chunqiu payment, Tencent, Jingdong and other online payment platforms to break through mobile payment without internet in the air.

8 2. Fleet and Network Fleet Expansion

Fleet scale and structure of last 3 years 3-year Fleet scale and expansion plan 120 The company signed 150 aircraft purchase 100 80 agreement with Airbus on 120 49 50 Dec. 3, 2015 to purchase 60 35 40 30 1 40 1 1 1 90 60 aircrafts of A320NEO 1 45 Family, including 15 20 35 40 40 43 132 60 120 A321NEO and 45 0 105 2016 2017 2018 2019 2020Q1 A320NEO with rights to 30 convert into A321 NEO. Purchase Financial leasing Operational leasing The aircrafts are  The company owns A320 fleet of 96 aircrafts, 61 of 0 expected to be delivered which have 186seats each and the others have 180 2020 2021 2022 during 2019 to 2023 seats each at the end of Q1-2020  The average age of the planes 5.2 years 2020 2021 2022  The aircrafts delivered in the future are all 186 seats A321NEO, single economy Delivered 12 A320 15 A320 12 A320 Expense of aircraft purchase class with 240 seats, will be Lease expire 2 7 11 (USD 100m) delivered from 2020. The 10 Total 12 15 12 company will also consider 8.3 8 to convert more A320NEO 6.4 into A321NEO 6  The company has submitted aircraft delivery 4 plan to NDRC and CAAC, 4  The actual number and progress of aircraft 2 delivery will be adjusted continuously according to the approval of the NDRC and 0 CAAC, combined with the actual delivery 2020 2021 2022 capacity of Airbus as well as the development  The catalogue price of A320CEO is USD 106 of the Covid-19 epidemic. million each and the price of A320NEO is USD 115million, according to Airbus website 10 Operation Bases

The hub of East China is based in the Lanzhou Shanghai base, Yangzhou in Jiangsu Airport Province and Ningbo in Zhejiang Province, serving the Yangtze River Delta regional economic integration Shijiazhuang Heilongjiang Shenyang construction. Airport Jilin Airport The hub of South China is based in Shenzhen and Jieyang serving GBA. Xinjiang Liaoning The hub of North China is based in Inner Mongolia Beijing Yangzhou Shijiazhuang serving the integration Tianjin Hebei Airport Ningxia Shanxi construction of Beijing, Tianjin and Shandong Hebei. The hub of Northeast China is Qinghai Gansu Jiangsu based in Shenyang. Lanzhou and Shanxi Henan Shanghai Hongqiao Tibet Xi'an airports with new capacity Anhui Shanghai Airport, Shanghai deployment in 2019 becomes the Chongqing Hubei Pudong Airport Sichuan Zhejiang milestone of developing the northwest Hunan region, meanwhile, the company will Jiangxi Guizhou Fujian Ningbo also gradually increase the capacity Airport Yunnan Guangdong Taiwan in Southwest China. Guangxi New Base Hong Kong For international routes, the company Regional Base Jieyang Airport has set Bangkok, Osaka and Jeju as Province where Base located Hainan overnight bases. Backed by the Shenzhen Airport domestic network, the company targets and keeps expanding in southeast Asia and northeast Asia  The company will continue to construct network under current bases distribution, decrease routes deviation from bases, increase the frequency of routes to/from the bases, enhance the market. maintenance and operation capability at the bases, keep the balanced deployment between the domestic and overseas market.

11 Routes Network（by the end of 2019）

The overall structure of the company has been relatively stable in 2019, and the domestic and 哈尔滨 international capacity is more balanced. More additional 长春 长白山 domestic capacity was deployed in 乌鲁木齐 承德 沈阳 张家口 札幌 new bases in the last 3 years 敦煌 呼和浩特 大连 包头 石家庄 烟台 because of the limited additional 天津 威海 东营 太原 青岛 东京 济南 茨城 resources in the high-tier markets, 邯郸 徐 济州岛 兰州 名古屋 延安 州 南 大阪 which is expected to be improved 郑州 淮安 盐城 高松 洛阳 扬州 通 西安 南阳 合肥 上海浦东 佐贺 with more and more opportunities 广元 十堰 武汉 上海虹桥 绵阳 恩施 南京 成都 杭州 宁波 released in the next few years. 重庆 黔江 常德 南昌 温州 遵义 长沙 井冈山 福州 贵阳 怀化 晋江 安顺 邵阳 台北 桂林 厦门 Thailand, Japan and South Korea 昆明 广州 揭阳 深圳 南宁 珠海 高雄 are still the three largest 北海 香港 西双版纳 湛江澳门 destination countries as always, 清迈 仰光 Shanghai&Shenzhen domestic routes 三亚 among which, Thailand route still Shijiazhuang,Shenyang&Lanzhou contributes most capacity with 泰国曼谷 金边 domestic routes 素叻他尼 柬埔寨暹粒 Yangzhou,Ningbo&Jieyang domestic lower growth rate however. Japan 普吉岛 routes 甲米 Bangkok,Osaka & Jeju Other domestic and international routes and Korea routes enjoy fast growth 沙巴州 because of relationship improvement and Jeju routes 新加坡 contribution.

13 Routes Network

Routes Structure Capacity by region (passenger-kilometer hundred millions) 240 60,000 210 13 3 180 43,707 8 69 150 7 20 40,000 38,965 39,691 52 33,400 34,683 120 52 30,248 90 20,000 144 60 128 10,1569,362 100 113 7,905 5,731 30 0 0 2017 2018 2019 2019Q1 2020Q1 2017 2018 2019 2020Q1

国内航线Domestic 国际航线Int’l 港澳台航线HK, Macao & Domestic Int'l Regional Taiwan  As of 2019, the company operated 210 routes,128  In 2019, total ASK increased by 12.2% yoy, with domestic, international and domestic, 69 international and 13 regional routes. regional increasing by 10.0%, 16.5% and 14.7%, accounting for 64.1%, 32.6% and 3.3% respectively.

International Routes Structure Domestic Routes Structure (passenger-kilometer hundred millions) 10,000 8,682  In 2019, ASK of Thailand, Japan and Korea, increased by 7,522 18.2% yoy, accounting for 82.8% of the total international 8,000 ASK of Shijiazhuang 石家庄正定机场Airport ,Shenyang+沈阳桃仙机场 Airport and + capacity. nd 6,000 兰州中川机场可用座位公里（百Lanzhou Airport (2 tier bases)  The capacity in Japan increased rapidly because of the 4,425 万人公里） 4,000 3,737 扬州扬泰机场ASK of Yangzhou+宁波栎社机场 Airport, +揭 relationship improvement and Tokyo Olympic Games so Ningbo Airport & Jieyang Airport 阳潮汕机场可用座位公里（百万(new bases) that ASK increased by more than 60% yoy. 2,000 人公里）  Cambodian routes were optimized and Phnom Penh 0 capacity increased. 2018 2019  There were 28 domestic cities of departure and 18  In 2019, ASK increased by 15.4% and 18.4% yoy in second-tier bases and overseas destinations by the end of 2019. new bases, accounting for 31.2% and 15.9% comparing with 29.9% and 14.8% in 2018. 13 3. Operational Statistics and Financials Operational Statistics

Fleet and Passenger Number ASK & RPK

(# of aircraft, Pax in millions) (Unit in millions)

120 60,000 96 100 93 81 83 43,707 76 38,965 39,691 80 40,000 33,400 34,683 60 30,248

40 20,000 17 20 22 20 10,156 9,362 7,905 5 3 5,731 0 0 2017 2018 2019 2019Q1 2020Q1 2017 2018 2019 2019Q1 2020Q1 Fleet Number Passenger Number Domestic Int'l Regional

Daily Utilization Hours (Available) Passenger Load Factor (Hours) 12.4 100% 92.7% 92.7% 92.4% 90.8% 92.2% 11.48 11.57 91.5% 11.6 11.27 90% 90.6% 89.0% 92.0% 11.05 87.6% 88.0% 88.… 91.2% 10.8 86.2% 88.0% 84.0% 80% 72.6% 10.0 72.5% 70% 72.5% 9.2 8.98 70.0%

60% 8.4 2017 2018 2019 2019Q1 2020Q1 2017 2018 2019 2019Q1 2020Q1 Overall Domestic Int'l Regional 15 Revenue and Profit

Operating Revenue Other revenue

(RMB in millions) (RMB in millions,) 24000 15 12 2.49 16000 13,114 14,804 2.69 10,971 9 1.83 6 8000 10.34 11.05 3,640 8.44 2,384 3 0.30 0.82 0 0 1.59 0.54 2017 2018 2019 2019Q1 2020Q1 2017 2018 2019 2019Q1 2020Q1

Passenger Revenue Cargo Revenue Others Routes Subsidy Government Subsidy

Net Profit & Net Margin Revenue and Net Profit per Aircraft

(RMB in millions, %) (RMB in millions)

2,000 17.2% 20% 180 166.0 172.0 154.3 12.1% 12.4% 9.7% 11.4% 11.5% 11.5% 13.0% 10% 1,200 120 1,838 1,503 1,689 0% 1,262 1,332 -9.6% 400 627 60 1,270 475 -13.0% -10% 17.7 19.0 21.4 -309 -228 (400) -20% 0 2017 2018 2019 2019Q1 2020Q1 2017 2018 2019

Reported Gross Profit Reported Net Profit Revenue per aircraft Net Profit per aircraft

16 Yield & Unit Cost and Expenses

Passenger Yield Unit Cost (RMB in Yuan) (RMB in Yuan)

0.350 0.341 0.60 0.36 0.52 0.304 0.37 0.38 0.41 0.300 0.297 0.297 0.50 0.46 0.46 0.289 0.41 0.38 0.300 0.41 0.40 0.269 0.40 0.35 0.38 0.34 0.37 0.36 0.39 0.32 0.35 0.252 0.30 0.250 0.30 0.203 0.204 0.20 0.201 0.205 0.200 0.10 0.00 0.150 Overall Domestic Int'l Regional 2016 2017 2018 2019 2019Q1 2020Q1

2016 2017 2018 2019Q1 2020Q1 unit cost unit cost ex-fuel

Structure of COGS Selling & G&A & R&D Expenses per ASK (%) (RMB in Yuan)

0.012 2019 32.6 15.8 18.8 19.0 3.9 2.4 6.3 0.009

0.008 0.007 0.006 0.007 0.006 0.006 0.004 2018 34.0 15.4 18.8 16.8 4.3 2.9 6.1 0.005 0.005 0.004 0.004 0.004 0.003 0.003 0.002 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0.002 Jet duel Lease & Depreciation Payroll Landing fee 0.000 Maintainings Crew training and cmpensation fee 2017 2018 2019 2019Q1 2020Q1 Civil aviation construction fund Others Selling expenses G&A expenses R&D expenses

17 Solvency & Foreign Currency Exchange Analysis

Current Ratio & Quick Ratio Asset Liability Ratio (RMB in Yuan) (%) 1.42 1.50 1.40 70.00 1.32 1.30 1.22 1.20 1.12 1.10 1.10 1.08 60.00 1.00 58.92 49.86 48.86 51.27 50.00 48.78 0.50 2017 2018 2019 2019Q1 2020Q1 40.00 2017 2018 2019 2019Q1 2020Q1 CR

EBITDA Interest Coverage Ratio Foreign Currency Exchange Analysis

12.00 (RMB in Yuan)

10.08 9.96 USD Liability USD USD Sensitivity 10.00 Proportion Exposure （+10%） 8.95 8.48

8.00 2018 21.2% -77.137,896 5,785,342

6.00 2019 9.0% 26,552,119 -1,991,409 2016 2017 2018 2019

18 Thank you!