Air China Limited Air China Limited Stock code: 00753 Hong Kong 601111 Shanghai AIRC London Annual Report 20 No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, 101312, P.R. China Tel 86-10-61462560 Fax 86-10-61462805 19 Annual Report 2019 www.airchina.com.cn 中國國際航空股份有限公司 (short name: 中國國航) (English name: travel experience and help passengers to stay safe by upholding the Air China Limited, short name: Air China) is the only national spirit of phoenix of being a practitioner, promoter and leader for the flag carrier of China. development of the Chinese civil aviation industry. The Company is also committed to leading the industrial development by establishing As the old saying goes, “Phoenix, a bird symbolizing benevolence” itself as a “National Brand”, at the same time pursuing outstanding and “The whole world will be at peace once a phoenix reveals performance through innovative and excelling efforts. 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 Air China was listed on The Stock Exchange of Hong Kong Limited calligraphy written by Mr. Deng Xiaoping, by whom the China’s (stock code: 0753) and the London Stock Exchange (stock code: reform and opening-up blueprint was designed, and the characters of AIRC) on 15 December 2004, and was listed on the Shanghai Stock “AIR CHINA” in English. Signifying good auspices in the ancient Exchange (stock code: 601111) on 18 August 2006. Chinese legends, phoenix is the king of all birds. It “flies from the eastern Happy Land and travels over mountains and seas and Headquartered in Beijing, Air China has set up branches in Southwest bestows luck and happiness upon all parts of the world”. At the core China, Zhejiang, Chongqing, Tianjin, Shanghai, Hubei, Guizhou, of the “Phoenix Spirit” advocated by Air China is the will to “serve Tibet and Wenzhou, and a base in Southern China. As at the end the world, to lead and move forward to higher goals”. By virtue of of the Reporting Period, the major subsidiaries of Air China are the immense historical heritage, Air China strives to create perfect Shenzhen Airlines Company Limited (including Kunming Airlines Our Global Footprint Company Limited), Air Macau Company Limited, Beijing Airlines interests and benefits”. Air China is dedicated to serving passengers Company Limited, Dalian Airlines Company Limited, Air China with credibility, convenience, comfort and choice. “Air China Miles” Inner Mongolia Co., Ltd., Aircraft Maintenance and Engineering is the oldest frequent flier programme in China, under which all Corporation, Air China Import and Export Co., Ltd., Chengdu members of the frequent flier programmes under various brands of Falcon Aircraft Engineering Service Co., Ltd., Air China Shantou its subsidiaries and associates have been consolidated into the brand Industrial Development Company; and its joint ventures mainly of “Phoenix Miles”. As at the end of the Reporting Period, the total include GA Innovation China Co., Ltd. and Sichuan Services Aero- number of “Phoenix Miles” members amounted to 63.5953 million. Engine Maintenance Co., Ltd. Moreover, the associates of Air China are Tibet Airlines Co., Ltd., Cathay Pacific Airways Limited and As at the end of the Reporting Period, the Group had a total of Shandong Airlines Co., Ltd.. It is also the largest shareholder of 699 aircraft of various types, with an average age of 6.96 years. Shandong Aviation Group Co., Ltd. The Group operated a total of 770 passenger routes, including 137 international routes, 27 regional routes and 606 domestic routes. With the goal of becoming “the world’s leading airline”, Air China Through cooperation with members of Star Alliance, the Company is actively implementing the strategic objectives of “globally leading has further expanded its service coverage to 1,317 destinations in competitive advantages, constantly enhanced development capability, 195 countries and regions. excellent and unique customer experience, and steadily improved Our Global Footprint CONTENTS 3 Corporate Information Financial Statements Prepared under International Financial Reporting Standards 4 Chairman’s Statement 85 Independent Auditor’s Report 6 Chronicle of Events 90 Consolidated Statement of Profit or Loss 10 Summary of Financial Information 91 Consolidated Statement of Profit or Loss and Other Comprehensive Income 12 Summary of Operating Data 92 Consolidated Statement of Financial Position 14 Fleet Information 94 Consolidated Statement of Changes in Equity 17 Business Overview 95 Consolidated Statement of Cash Flows 31 Management’s Discussion and Analysis of Financial Position and Operating Results 97 Notes to the Consolidated Financial Statements 42 Corporate Governance Report 207 Supplementary Information 54 Report of the Directors 208 Glossary of Technical Terms 74 Profile of Directors, Supervisors and Senior 209 Definitions Management 83 Prizes and Awards CORPORATE INFORMATION REGISTERED CHINESE DIRECTORS:1 LEGAL ADVISERS TO THE NAME: COMPANY: Cai Jianjiang 中國國際航空股份有限公司 Song Zhiyong DeHeng Law Offices (as to PRC Law) Patrick Healy Xue Yasong DLA Piper Hong Kong (as to Hong ENGLISH NAME: Wang Xiaokang Kong and English Law) Stanley Hui Hon-chung Air China Limited Li Dajin INTERNATIONAL AUDITOR: REGISTERED OFFICE: SUPERVISORS:2 Deloitte Touche Tohmatsu Blue Sky Mansion Zhao Xiaohang 28 Tianzhu Road He Chaofan Airport Industrial Zone Xiao Yanjun H SHARE REGISTRAR AND Shunyi District Li Guixia Beijing TRANSFER OFFICE: China Computershare Hong Kong Investor LEGAL REPRESENTATIVE Services Limited OF THE COMPANY: Rooms 1712-1716, 17th Floor, Hopewell PRINCIPAL PLACE OF Centre BUSINESS IN HONG KONG: Cai Jianjiang 183 Queen’s Road East Wanchai 5th Floor Hong Kong CNAC House JOINT COMPANY 12 Tung Fai Road SECRETARIES: Hong Kong International Airport LISTING VENUES: Hong Kong Zhou Feng Tam Shuit Mui Hong Kong, London and Shanghai WEBSITE: AUTHORISED www.airchina.com.cn REPRESENTATIVES: Cai Jianjiang Tam Shuit Mui 1 For details of changes in Directors of the Company during the Reporting Period and up to the date of this annual report, please refer to P.62 of this annual report. 2 For details of changes in Supervisors of the Company during the Reporting Period and up to the date of this annual report, please refer to P.62 of this annual report. Air China Limited 004 Annual Report 2019 CHAIRMAN’S STATEMENT Cai Jianjiang Chairman 2019 was a crucial year for completing the building of a million tonne kilometres, representing a year-on-year increase moderately prosperous society in all respects. Under the of 3.50%; 115 million passengers were carried, representing a guidance of Xi Jinping Thought on Socialism with Chinese year-on-year increase of 4.81%; the volume of cargo and mail Characteristics for a New Era, the Group faithfully fulfilled carried amounted to 1,434.2 thousand tonnes, down by 1.83% its political and social responsibilities as a central enterprise. on a year-on-year basis. In doing so, the Group earnestly studied and implemented the important instructions of General Secretary Xi Jinping, The Group stayed committed to the overarching principle resolutely carried out the decisions and arrangements of the of pursuing progress while ensuring stability. Amidst the Central Committee of the Party and the State Council, and increasingly complicated operating environment, the Group adhered to new development philosophy and requirements of continued to push forward and deepen its reform and high-quality development. With a commitment to becoming enhanced its growth momentum steadily, industry leading a world’s leading enterprise, the Group capitalized on operating result was thus maintained. The Group continued to opportunities and surmounted difficulties to maintain safe optimise the operation of the entire fleet in order to eliminate and stable operation and improved its service quality on a the impact of insufficient capacity, and continued to align its continuous basis. Thus, the Group stayed at the forefront investments closely with market demand, thereby improving of the industry in terms of operating performance with its resource utilization efficiency. Focusing consistently strengthened competitive advantages. At the same time, on the establishment of world-class hubs, the Group has positive and stable development was sustained in all aspects delivered satisfactory results in the quick-profiting projects and new progress in high-quality development was achieved. with solid progress achieved in network expansion. The Group continued to strengthen its marketing control capacity In 2019, the Group’s revenue amounted to RMB136,181 and deepen the transformation of its business model while million with a profit before tax of RMB9,120 million. Net reinforcing the refined management of yield and enhancing profit attributable to equity shareholders of the Company its competitive edges in marketing quality. In advancing its was RMB6,420 million. The Group recorded 2.285 million premium brand strategy, the Group has enhanced the synergy accident-free flight hours, representing a year-on-year of its service provision with a focus on flight punctuality increase of 4.12%; traffic measured by RTK reached 25,364 management, which significantly improved the quality of its 005 CHAIRMAN’S STATEMENT operation and services. Meticulous arrangements have been governance bodies. The Board of the Company was once again made for the first flight and commencement of operation at honoured with the “Best