Continuing Connected Transactions Aircraft Maintenance

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

HONG KONG AIRCRAFT ENGINEERING COMPANY LIMITED (Incorporated in Hong Kong with limited liability) (Stock Code: 44)

Announcement

Continuing Connected Transactions Aircraft Maintenance

Independent Financial Adviser: ING Bank N.V.

Cathay Pacific, HAECO and HXITM entered into the Framework Agreement on 13th November 2013. It provides a framework for the performance of the Services for a term of 10 years ending on 31st December 2022. The Services (being maintenance and related services in respect of aircraft, aircraft engines and aircraft parts and components and including ITM Services and the secondment of personnel) are provided by the HAECO Group to the Cathay Pacific Group and vice versa and by HXITM to the HAECO Group and vice versa.

As Cathay Pacific and HXITM are connected persons of HAECO, the transactions contemplated under the Framework Agreement constitute continuing connected transactions for HAECO under Rule 14A.14 of the Listing Rules and are subject to the reporting, announcement and independent shareholders’ approval requirements under Rule 14A.35.

A circular containing the particulars of the Framework Agreement, a letter from the Independent Board Committee, a letter from the Independent Financial Adviser and a notice to convene an EGM of the Company, will be despatched to the shareholders of the Company on or before 4th December 2013 in accordance with the Listing Rules.

Framework Agreement dated 13th November 2013

Parties: (1) Cathay Pacific (2) HAECO (3) HXITM

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Particulars

A duration of 10 years for the Framework Agreement is required in order for the HAECO Group and HXITM to maintain the facilities, components and spare parts necessary for them to provide the Services in a cost effective manner. Since the duration of the Framework Agreement is 10 years, ING Bank N.V. has been appointed as Independent Financial Adviser to comment on such duration. The comments of the Independent Financial Adviser will be set out in a letter from it in the circular to be despatched to shareholders. The Framework Agreement covers existing Relevant Agreements between (i) the Cathay Pacific Group and the HAECO Group and (ii) the HAECO Group and HXITM and provides a framework under which Relevant Agreements are entered into, renewed and extended for terms or successive terms expiring on or before 31st December 2022.

The terms of the Framework Agreement are consistent with normal business practices.

The terms of the existing Relevant Agreements covered by the Framework Agreement, including the fact that charges for the Services are determined by reference to the aircraft, aircraft engines, aircraft parts and components concerned and the required technical standards, have been arrived at after negotiations at arm’s length on normal commercial terms. Payments are required to be made in cash within 30 days of receipt of invoices. A party to any Relevant Agreement may terminate that Relevant Agreement with immediate effect by notice in the event of material default by another party. If a Relevant Agreement is terminated, all the rights and obligations of the parties under it, except those subsisting at the time of termination, will thereupon cease.

The Framework Agreement is conditional upon approval being given at the EGMs of Cathay Pacific and HAECO to be convened for the purpose of approving it. If such condition is satisfied, the Framework Agreement will thereupon come into effect and the 2007 Framework Agreement will thereupon be terminated. As between the parties, the 2007 Framework Agreement will be treated as having been terminated on 1st January 2013 and the Framework Agreement will be treated as having come into effect on 1st January 2013. The 2007 Framework Agreement was entered into between Cathay Pacific and HAECO on 21st May 2007. HAECO published an announcement in respect of the 2007 Framework Agreement dated 21st May 2007 and despatched a circular to shareholders in respect of it dated 5th June 2007.

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The Services

The Services are or will be provided under Relevant Agreements as follows:

(1) Total Care Package Contract dated 9th September 2004 between AHK and HAECO;

(2) Aircraft Line Maintenance Services Agreement dated 26th February 2013 between AHK and TAECO;

(3) IATA Standard Ground Handling Agreement dated 1st January 2008 between Cathay Pacific and TAECO;

(4) IATA Standard Ground Handling Agreement dated 26th July 2010 between Dragonair and TAECO;

(5) Aircraft Maintenance Services Agreement for AHK B747-400BCF aircraft dated 20th May 2011 between AHK and HAECO;

(6) TAECO Services Agreement dated 19th July 2012 between Cathay Pacific and TAECO;

(7) Joint Venture Agreement dated 24th September 2012 between HAECO, Cathay Pacific and HXITM;

(8) Services Agreement dated 24th September 2012 between HAECO and HXITM;

(9) Secondment Agreement dated 24th September 2012 between Cathay Pacific and HXITM;

(10) Inventory Technical Management Services Agreement dated 24th September 2012 between Cathay Pacific, Dragonair and HXITM;

(11) HAECO Services Agreement dated 29th November 2012 between Cathay Pacific and HAECO;

(12) Aircraft Line Maintenance (Hong Kong) Services Agreement dated 1st January 2013 between AHK and HAECO; and

(13) any further agreements under which maintenance and related services in respect of aircraft, aircraft engines and aircraft parts and components are provided by the HAECO Group to the Cathay Pacific Group and vice versa and by HXITM to the HAECO Group and vice versa.

The Services include, but are not limited to, the following:

(1) the provision by HAECO to AHK of a total care package for AHK’s fleet, including acquisition of an inventory of rotable and repairable spares for leasing

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to AHK and providing management of and logistics support and maintenance for this inventory;

(2) the provision by HAECO of line maintenance services for AHK’s fleet at HKIA, including routine maintenance checks, non-routine maintenance, actions to address inbound technical issues, ad-hoc maintenance support, ramp services, material supplies, tooling supplies, aircraft release and certification and aircraft on ground support;

(3) the provision by HAECO to the Cathay Pacific Group of LM Services and BM Services at HKIA, stores and logistics support services (comprising receiving and inspection, warehousing, distribution and import export services), supply of materials, CAO Services and Engineering Services;

(4) the provision by TAECO to the Cathay Pacific Group of storage facilities, supply of materials, BM Services at Xiamen, Engineering Services and LM Services for aircraft visiting Xiamen and such other airports as the Cathay Pacific Group and TAECO agree;

(5) the provision of ITM Services by HXITM to the Cathay Pacific Group;

(6) the secondment of personnel from the HAECO Group to HXITM and the provision by the HAECO Group to HXITM of certain repair services (including testing, overhaul, modification and investigation of aircraft parts and components) and certain administrative and other services; and

(7) the secondment of personnel from the Cathay Pacific Group to HXITM in order to facilitate the operations of HXITM.

The annual caps

The annual caps for the Transactions have been determined by reference to the actual amounts of the Services provided in the ten years ended 31st December 2012 (as set out below) and a forecast of payments for the Services to be provided in the 10 years ending 31st December 2022. The forecast has been prepared having regard, inter alia, to projections by the Cathay Pacific Group of its fleet size, its annual aircraft utilisation and other operating parameters and take into account the fact that there are (or were in the case of aircraft which have already been delivered) firm orders for the delivery of 89 aircraft from 2013 to 2020. Account has also been taken of the fact that, in 2012, HK$1 million was payable by HXITM to Cathay Pacific for the secondment of personnel and HK$17 million was payable by HXITM to HAECO for the secondment of personnel and the provision of other Services. Cushions have been added to provide flexibility for possible changes in the level of Services associated with the growth of the Cathay Pacific Group and in the scheduled and possible unscheduled maintenance of its aircraft. The Directors estimate that the amounts payable for the Services in respect of aircraft maintenance for the 10 years ending 31st December 2022 will not exceed the annual caps set out below, which consolidate and replace the annual caps previously set for the Transactions. The annual caps in

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respect of Services payable by the Cathay Pacific Group to the HAECO Group (including HXITM) (and vice versa) and by the HAECO Group (excluding HXITM) to HXITM (and vice versa) include Services provided under the joint venture agreement entered into between Cathay Pacific, HAECO and HXITM on 24th September 2012, in respect of which Cathay Pacific and HAECO published an announcement dated 24th September 2012. The annual caps in respect of Services payable by the Cathay Pacific Group to the HAECO Group for 2013 to 2016 were approved at the Company’s EGM held on 29th June 2007 and remain unchanged.

Amounts payable by the Cathay Pacific Group to the HAECO Group (including HXITM):

2003 2004 2005 2006 2007 (HK$ million) Actual Actual Actual Actual Actual Services 1,227 1,345 1,476 1,627 1,831

2008 2009 2010 2011 2012 (HK$ million) Actual Actual Actual Actual Actual Services 2,069 1,891 1,818 2,287 2,447

2013 2014 2015 2016 2017 (HK$ million) Cap Cap Cap Cap Cap Services 5,315 5,846 6,431 7,075 7,783

2018 2019 2020 2021 2022 (HK$ million) Cap Cap Cap Cap Cap Services 8,561 9,417 10,359 11,395 12,535

Amounts payable by the HAECO Group (including HXITM) to the Cathay Pacific Group:

2013 2014 2015 2016 2017 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

2018 2019 2020 2021 2022 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

Amounts payable by the HAECO Group (excluding HXITM) to HXITM:

2013 2014 2015 2016 2017 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

2018 2019 2020 2021 2022 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

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Amounts payable by HXITM to the HAECO Group (excluding HXITM):

2013 2014 2015 2016 2017 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

2018 2019 2020 2021 2022 (HK$ million) Cap Cap Cap Cap Cap Services 2,000 2,000 2,000 2,000 2,000

Reasons for, and benefits of, the Transactions

The Transactions form part of the normal commercial activities of the HAECO Group in the ordinary course of its business and it is expected that they will make a substantial contribution to the HAECO Group’s revenue and profitability. In 2012, sales to the Cathay Pacific Group accounted for 42% of the turnover of the HAECO Group.

Connections between the parties

As Cathay Pacific is an associate of Swire Pacific, a substantial shareholder of HAECO, Cathay Pacific is a connected person of HAECO. As Cathay Pacific, a connected person of HAECO at the listed company level, owns more than 10% of the voting rights in HXITM, HXITM is a connected person of HAECO.

Compliance with the Listing Rules

As the highest of the relevant percentage ratios as defined under Rule 14.07 of the Listing Rules (other than the profits ratio) in respect of the Transactions will, on an annual basis, be more than 5%, the Company has to comply with the announcement, reporting and independent shareholders’ approval requirements in Rule 14A.35 of the Listing Rules.

The Independent Board Committee has been constituted to advise the Independent Shareholders in respect of the resolution to approve the Framework Agreement, its term and the Transactions (including the annual caps). ING Bank N.V. has been appointed as Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the Framework Agreement, its term and the Transactions (including the annual caps).

The Company will convene an EGM to consider and, if thought fit, to approve the Framework Agreement, its term and the Transactions (including the annual caps). Voting will be by poll and Swire Pacific, a substantial shareholder of Cathay Pacific, will abstain from voting.

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A circular containing the particulars of the Framework Agreement, a letter from the Independent Board Committee, a letter from the Independent Financial Adviser and Notice of the EGM of the Company will be despatched to shareholders on or before 4th December 2013 in accordance with the Listing Rules.

The Company will comply with its continuing obligations under Rules 14A.37-41 of the Listing Rules and will re-comply with the relevant Listing Rules after 31st December 2022 or if the annual caps are exceeded or when there is a material change to the terms of the Framework Agreement.

Opinion of the Directors

The Directors (other than the independent non-executive Directors, whose views will be set out in the circular to be despatched to the shareholders together with the advice of the Independent Financial Adviser) consider that the terms of the Framework Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole and have been negotiated on an arm’s length basis in the usual and ordinary course of business, on normal commercial terms and on terms no more favourable to Cathay Pacific and HXITM than those which the Company would offer to parties which are not connected persons (as defined under the Listing Rules) of the Company.

C.D. Pratt and M.B. Swire, being directors of Cathay Pacific, C.P. Gibbs, being an employee of Cathay Pacific, and A.K.W. Tang, being a director of HXITM, are interested in the Transactions and have abstained from voting on the relevant board resolutions of HAECO in respect of the Transactions.

Directors

As at the date of this announcement, the Directors of the Company are:

Executive Directors: C.D. Pratt (Chairman), M. Hayman, F.N.Y. Lung, A.K.W. Tang; Non-Executive Directors: C.P. Gibbs, P.A. Johansen, M.B. Swire; and Independent Non-Executive Directors: R.E. Adams, L.K.K. Leong, D.C.L. Tong and P.P.W. Tse.

Definitions

“2007 Framework The framework agreement dated 21st May 2007 between Agreement” Cathay Pacific and HAECO for the provision of services by the HAECO Group to the Cathay Pacific Group under the agreements referred to in that agreement.

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“AHK” AHK Air Hong Kong Limited, a non-wholly owned subsidiary of Cathay Pacific, the principal activity of which is the operation of cargo airline services.

“BM Services” Base maintenance services, comprising a comprehensive range of scheduled maintenance services, for example airframe heavy checks, major structural and avionics modifications, refurbishment, painting and freighter conversions.

“CAO Services” Component and avionics overhaul services for a range of aircraft components and avionics equipment, including mechanical and hydraulic equipment.

“Cathay Pacific” Cathay Pacific Airways Limited, a company incorporated in Hong Kong and whose shares are listed on the Stock Exchange, the principal activity of which is the operation of scheduled airline services.

“Cathay Pacific Cathay Pacific and its subsidiaries, including AHK and Group” Dragonair.

“Directors” The directors of the Company.

“Dragonair” Hong Kong Dragon Airlines Limited, a wholly owned subsidiary of Cathay Pacific, the principal activity of which is the operation of scheduled airline services.

“EGM” extraordinary general meeting.

“Engineering Services in support of LM Services, BM Services and CAO Services” Services, including aircraft documentation, technical data exchanges, interior product maintenance and other support services agreed between the Cathay Pacific Group and the HAECO Group.

“Framework The framework agreement dated 13th November 2013 Agreement” between Cathay Pacific, HAECO and HXITM for the provision of the Services by the HAECO Group to the Cathay Pacific Group and vice versa and by HXITM to the HAECO Group and vice versa.

“HAECO” or the Hong Kong Aircraft Engineering Company Limited, a “Company” company incorporated in Hong Kong and whose shares are listed on the Stock Exchange, the principal activity of which is the provision of overhaul and maintenance services for commercial aircraft.

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“HAECO Group” HAECO and its subsidiaries, including TAECO and HXITM.

“HKIA” Hong Kong International Airport.

“HXITM” HAECO ITM Limited, a company incorporated in Hong Kong and owned as to 70% by HAECO and 30% by Cathay Pacific, the principal activity of which is the provision of ITM Services (including, where relevant, any subsidiaries of HXITM).

“Independent An independent committee of the Board of Directors Board Committee” comprising R.E. Adams, L.K.K. Leong, D.C.L. Tong and P.P.W. Tse, all of whom are independent non-executive Directors.

“Independent ING Bank N.V. Financial Adviser”

“Independent Shareholders of HAECO apart from Swire Pacific and its Shareholders” associates.

“ITM Services” Inventory technical management services provided in connection with the maintenance and management of aircraft components.

“Listing Rules” The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

“LM Services” Line maintenance services, including transit and overnight servicing, progressive maintenance checks (up to “A” checks), defect rectification and non-technical services such as aircraft towing, provision of water, servicing of toilets, washing and waxing the exterior of aircraft, cabin cleaning and ground equipment support.

“PRC” The People’s Republic of China.

“Relevant The agreements described under the heading “The Services” Agreements” in this announcement.

“Services” Maintenance and related services in respect of aircraft, aircraft engines and aircraft parts and components and including ITM Services and the secondment of personnel.

“Stock Exchange” The Stock Exchange of Hong Kong Limited.

“Swire Pacific” Swire Pacific Limited, an investment holding company incorporated in Hong Kong and whose shares are listed on the Stock Exchange, the subsidiaries, associated companies and

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jointly controlled entities of which are engaged in property, aviation, beverages, marine services and trading and industrial businesses.

“TAECO” Taikoo (Xiamen) Aircraft Engineering Company Limited, a non-wholly owned subsidiary of HAECO incorporated in the PRC, whose principal activity is the provision of overhaul and maintenance services for commercial aircraft.

“Transactions” The provision of the Services in accordance with the Framework Agreement and the Relevant Agreements.

By Order of the Board Hong Kong Aircraft Engineering Company Limited David Fu Company Secretary

Hong Kong, 13th November 2013

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