China Southern Airlines Company Limited 中 國 南 www.csair.com 方 H Share Stock Code: 1055 A Share Stock Code: 600029 ADR Code: ZNH 航 空 股 份 有 限 公 司 2020 Annual ReportAnnual Mobile App WeChat App 1 About Us Operating Results Contents Corporate Governance Financial Report About Us Corporate Governance Financial Report 2 Definitions 60 Report of Directors Financial Statements Prepared under International Financial 4 Corporate Profile 83 Changes in the Share Capital, Reporting Standards Shareholders’ Profile and 6 Corporate Information Disclosure of Interests 134 Independent Auditor’s Report 8 Company Business Summary 92 Directors, Supervisors, Senior 139 Consolidated Income Statement Management and Employees Operating Results 140 Consolidated Statement of 105 Corporate Governance Report Comprehensive Income 20 Principal Accounting Information 118 CORPORATE BOND 141 Consolidated Statement of and Financial Indicators Financial Position 126 RISK MANAGEMENT AND 21 Summary of Operating Data INTERNAL CONTROL 143 Consolidated Statement of 26 Summary of Fleet Data Changes in Equity 130 SOCIAL RESPONSIBILITY 28 Highlights of the Year 144 Consolidated Cash Flow 32 Management Discussion and Statement Analysis 145 Notes to the Financial Statements 248 SUPPLEMENTARY FINANCIAL INFORMATION 252 FIVE YEAR SUMMARY China Southern Airlines Company Limited Definitions 2 Unless the context otherwise requires, the following terms should have the following meanings in this report: Company, CSA, China Southern Airlines China Southern Airlines Company Limited Group China Southern Airlines Company Limited and its subsidiaries CSAH China Southern Air Holding Company Limited Xiamen Airlines Xiamen Airlines Company Limited Guizhou Airlines Guizhou Airlines Company Limited Zhuhai Airlines Zhuhai Airlines Company Limited Shantou Airlines Shantou Airlines Company Limited Chongqing Airlines Chongqing Airlines Company Limited Henan Airlines China Southern Airlines Henan Airlines Company Limited SAGA Southern Airlines General Aviation Co., Ltd. Hebei Airlines Hebei Airlines Company Limited Jiangxi Airlines Jiangxi Airlines Company Limited Finance Company China Southern Airlines Group Finance Company Limited Freight and Logistic Company Southern Airlines Freight and Logistic (Guangzhou) Co., Ltd. CSAGPMC China Southern Airlines Group Property Management Company Limited Nan Lung Nan Lung Holding Limited SACC Shenzhen Air Catering Co., Ltd. SACM Southern Airlines Culture and Media Co., Ltd. SPV Special Purpose Vehicles exclusively set up by China Southern Airlines and its subsidiaries for leased aircraft Sichuan Airlines Sichuan Airlines Corporation Limited PRC The People’s Republic of China CSRC China Securities Regulatory Commission NDRC National Development and Reform Commission SASAC State-owned Assets Supervision and Administration Commission of the State Council CAAC Civil Aviation Administration of China IATA International Air Transport Association Annual Report 2020 Definitions 3 Daxing Airport Beijing Daxing International Airport About Us SSE Shanghai Stock Exchange Stock Exchange The Stock Exchange of Hong Kong Limited Articles of Association Articles of Association of China Southern Airlines Company Limited 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 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited Operating Results Corporate Governance Code Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited SFO Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) Available Seat Kilometers or “ASK” the number of seats available for sale multiplied by the kilometers flown Available Tonne Kilometers or “ATK” the number of tonnes of capacity available for the transportation multiplied by the kilometers flown Corporate Governance Financial Report Available Tonne Kilometers – passenger the number of tonnes of capacity available for the carriage of passenger multiplied by the kilometers flown Available Tonne Kilometers – cargo the number of tonnes of capacity available for the carriage of cargo and mail multiplied by the kilometers flown Revenue Passenger Kilometers or “RPK” i.e. passenger traffic volume, the number of passengers carried multiplied by the kilometers flown Revenue Tonne Kilometers or “RTK” i.e. total traffic volume, the load (passenger and cargo) in tonnes multiplied by the kilometers flown Revenue Tonne Kilometers – i.e. cargo and mail traffic volume, the load for cargo and mail in tonnes cargo or “RFTK” multiplied by the kilometers flown Revenue Tonne Kilometers – the load for passenger in tonnes multiplied by the kilometers flown passenger Aircraft Daily Utilization Rate Flight hours that aircraft can provide service during a day Passenger Load Factor RPK expressed as a percentage of ASK Overall Load Factor RTK expressed as a percentage of ATK Yield per RPK revenue from passenger operations divided by RPK Yield per RTK revenue divided by RTK Yield per RFTK revenue from cargo and mail operations divided by RFTK China Southern Airlines Company Limited Corporate Profile 4 The Group is the biggest airline in China with the largest fleet, the most extensive route network and the largest annual passenger turnover. The Group’s headquarters is located in Guangzhou. It has 16 branches in Beijing, Shenzhen, and other cities and 8 holding aviation subsidiaries including Xiamen Airlines. The Company has set up SAGA in Zhuhai, and has set up 23 domestic offices in Hangzhou, Qingdao and other places, and 55 overseas offices in Sydney, New York, Tokyo and other places. By the end of 2020, the Company has operated a total of 867 passenger and cargo transport aircraft including Boeing 787, 777, 737 series, Airbus 380, 350, 330, 320 series. In 2020, the Group’s passenger turnover ranked first among Chinese airlines for 42 consecutive years, and continued to rank first in Asia and at the forefront of the world. The Company has maintained the best safety record among Chinese airlines. The Company was awarded “Two-Star Diamond Award for Flight Safety”, the top award for flight safety from the CAAC, in June 2018 and has been an airline with the highest safety star in China. Annual Report 2020 Corporate Profile 5 In recent years, the Company has striven to build two comprehensive international About Us hubs in Guangzhou and Beijing, and a network-based airlines has gradually taken shape. In 2020, the Company continued to strengthen the integrated construction of the Guangdong-Hong Kong-Macao Greater Bay Area, which promoted the flow of people, logistics, information and capital in Guangdong Province and the entire Guangdong-Hong Kong-Macao Greater Bay Area, and promoted the connectivity between the Guangdong- Operating Results Hong Kong-Macao Greater Bay Area city cluster and major global city clusters. In 2020, the Company completed the transit of all flights in Beijing hub to Daxing Airport, and the construction of Beijing hub has entered a new era. The Group plans to operate an average of Two more than 400 flights per day at Daxing Airport, reaching more than 40 domestic destinations. comprehensive By connecting with ground transportation, the Group forms an airlines network that radiates the Beijing- Corporate Governance Financial Report Tianjin-Hebei region and the Xiong’ an New Area and international connects the country and the world, with utilised time slots accounting for 45%, becoming the largest main base airlines in Daxing Airport. hubs in Guangzhou and Beijing AS OF 2020, THE GROUP’S PASSENGER TURNOVER RANKED FIRST AMONG CHINESE AIRLINES FOR 42 CONSECUTIVE YEARS, AND CONTINUED TO RANK FIRST IN ASIA AND AT THE FOREFRONT OF THE WORLD. China Southern Airlines Company Limited Corporate Information 6 Chinese Name: 中國南方航空股份有限公司 Chinese Short Name: 南方航空 English Name: China Southern Airlines Company Limited English Short Name: CSN Legal Representative: Ma Xu Lun Registered Address: Unit 301, 3/F, Office Tower Guanhao Science Park Phase I, 12 Yuyan Street, Huangpu District, Guangzhou, Guangdong Province, PRC Contact Address: China Southern Air Building, 68 Qixin Road, Baiyun District, Guangzhou, Guangdong Province, PRC Place of Business in Hong Kong: Unit B1, 9th Floor, United Centre, 95 Queensway, Hong Kong Website of the Company: www.csair.com Telephone: +86-20-86112480 Fax: +86-20-86659040 E-mail: [email protected] APP: China Southern Airlines WeChat Official Account: China Southern Airlines Sina Weibo: http://weibo.com/csair WeChat QR Code: Place of Listing of A Shares: SSE Short Name of A Shares: 南方航空 Stock Code of A Shares: 600029 A Share Registrar: China Securities Depository and Clearing Corporation Limited, Shanghai Branch Floor 36, China Insurance Building, 166 Lu Jia Zui East Road, Shanghai, PRC Place of Listing of H Shares: The Stock Exchange Annual Report 2020 Corporate Information 7 Short Name of H Shares: China South Air About Us Stock Code of H Shares: 01055 H Share Registrar: Hong Kong Registrars Limited 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong Place of Listing of N Shares: The New York Stock Exchange Short Name of N Shares: China Southern Air Stock Code of N Shares: ZNH N Share Registrar: BNY Mellon Shareowner Services Operating Results P.O.Box 505000 Louisville, KY40233-5000, USA Domestic Legal Adviser: Dentons