TIDMAIRC
RNS Number : 9536K
Air China Ld
31 August 2023
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.
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's
Republic of China with limited liability)
(Stock Code: 00753)
INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2023
The Board of the Company has approved, among others, the unaudited
interim results of the Group for the six months ended 30 June 2023
at a meeting of the Board held on 30 August 2023.
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
The Board presents the unaudited interim results of the Group
for the six months ended 30 June 2023 as follows:
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHSED 30 JUNE 2023
Six months ended 30 June
NOTES 2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Revenue 3A 59,613,193 23,952,653
Other income and gains 4 4,069,876 1,447,385
63,683,069 25,400,038
Operating expenses
Jet fuel costs (19,346,786) (10,348,319)
Employee compensation costs (13,594,872) (11,444,006)
Depreciation and amortisation (12,704,783) (10,458,318)
Take-off, landing and depot charges (6,635,703) (3,221,432)
Aircraft maintenance, repair and overhaul
costs (4,972,590) (2,370,572)
Air catering charges (1,167,220) (415,683)
Aircraft and engine lease expenses (146,086) (49,377)
Other lease expenses (242,637) (187,258)
Other flight operation expenses (3,419,424) (2,477,129)
Selling and marketing expenses (1,542,326) (908,624)
General and administrative expenses (706,174) (507,940)
Impairment loss recognised on property,
plant and equipment (91,160) -
Net impairment loss (recognised)/reversed
under expected credit loss model (11,508) 15,906
(64,581,269) (42,372,752)
Loss from operations 5 (898,200) (16,972,714)
Finance income 291,375 92,357
Finance costs 6 (3,542,402) (3,141,435)
Share of results of associates 1,265,560 (1,041,350)
Share of results of joint ventures 88,817 226,892
Exchange losses, net (1,565,320) (2,239,547)
Loss before taxation (4,360,170) (23,075,797)
Income tax credit 7 316,216 861,652
Loss for the period (4,043,954) (22,214,145)
Attributable to:
* Equity shareholders of the Company (3,446,814) (19,436,846)
* Non-controlling interests (597,140) (2,777,299)
(4,043,954) (22,214,145)
Loss per share
* Basic and diluted 9 RMB(22.39) cents RMB(141.51) cents
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2023
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Loss for the period (4,043,954) (22,214,145)
Other comprehensive (expense)/income for the period
Items that will not be reclassified to profit
or loss:
* Fair value (losses)/gains on investments in equity
instruments at fair value through other comprehensive
income (67,769) 37,808
* Remeasurement of net defined benefit liability 44 (347)
* Share of other comprehensive expense of an associate - (10)
* Income tax credit/(expense) relating to items that
will not be reclassified to profit or loss 16,942 (9,452)
Items that may be reclassified subsequently to
profit or loss:
* Fair value gains/(losses) on investments in debt
instruments at fair value through other comprehensive
income 5,530 (5,132)
* Impairment loss recognised on investments in debt
instruments at fair value through other comprehensive
income (2,505) (1,573)
* Share of other comprehensive (expense)/income of
associates and joint ventures (474,687) 261,569
* Exchange differences on translation of foreign
operations 561,877 699,473
* Income tax (expense)/credit relating to items that
may be reclassified subsequently to profit or loss,
net (756) 1,676
Other comprehensive income for the period, net
of tax 38,676 984,012
Total comprehensive expense for the period (4,005,278) (21,230,133)
Attributable to:
* Equity shareholders of the Company (3,389,356) (18,479,509)
* Non-controlling interests (615,922) (2,750,624)
(4,005,278) (21,230,133)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2023
At At
30 June 31 December
NOTE 2023 2022
RMB'000 RMB'000
(Unaudited) (Audited)
Non-current assets
Property, plant and equipment 110,177,752 99,574,059
Right-of-use assets 130,552,217 125,818,601
Investment properties 743,339 530,510
Intangible assets 106,586 35,031
Goodwill 4,095,733 1,099,975
Interests in associates 11,840,536 10,536,483
Interests in joint ventures 2,259,050 2,177,809
Advance payments for aircraft and flight
equipment 24,301,450 20,094,732
Deposits for aircraft under leases 543,599 539,624
Equity instruments at fair value through
other comprehensive income 730,964 241,717
Debt instruments at fair value through other
comprehensive income 1,262,873 1,360,982
Deferred tax assets 13,968,135 10,473,327
Other non-current assets 638,131 251,396
301,220,365 272,734,246
Current assets
Inventories 3,680,001 2,557,823
Accounts receivable 10 3,849,543 1,649,356
Bills receivable 22,387 7,483
Prepayments, deposits and other receivables 5,890,688 3,176,418
Financial assets at fair value through profit
or loss 112,981 3,398
Restricted bank deposits 644,892 828,166
Cash and cash equivalents 25,969,930 10,607,711
Assets held for sale - 1,302
Other current assets 3,096,122 3,413,474
43,266,544 22,245,131
Total assets 344,486,909 294,979,377
At At
30 June 31 December
NOTE 2023 2022
RMB'000 RMB'000
(Unaudited) (Audited)
Current liabilities
Air traffic liabilities (7,809,907) (2,757,601)
Accounts payable 11 (19,855,943) (10,935,546)
Bills payable (419,064) -
Dividends payable (98,000) (98,000)
Other payables and accruals (18,621,075) (16,548,144)
Advance (150,970) (58,970)
Current taxation (123,506) (9,359)
Lease liabilities (21,563,115) (17,085,829)
Interest-bearing borrowings (40,930,563) (42,957,170)
Provision for return condition checks (1,517,497) (936,804)
Contract liabilities (1,248,549) (1,095,185)
(112,338,189) (92,482,608)
Net current liabilities (69,071,645) (70,237,477)
Total assets less current liabilities 232,148,720 202,496,769
Non-current liabilities
Lease liabilities (73,207,451) (76,897,347)
Interest-bearing borrowings (106,425,461) (92,847,116)
Provision for return condition checks (16,129,866) (8,605,418)
Provision for early retirement benefit obligations (727) (807)
Long-term payables (963,363) (251,497)
Contract liabilities (1,571,911) (1,422,843)
Defined benefit obligations (194,759) (202,016)
Deferred income (395,217) (418,200)
Deferred tax liabilities (365,656) (323,297)
(199,254,411) (180,968,541)
NET ASSETS 32,894,309 21,528,228
CAPITAL AND RESERVES
Issued capital 16,200,793 14,524,815
Treasury shares (3,047,564) (3,047,564)
Reserves 21,761,570 12,099,925
Total equity attributable to equity shareholders
of the Company 34,914,799 23,577,176
Non-controlling interests (2,020,490) (2,048,948)
TOTAL EQUITY 32,894,309 21,528,228
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2023
1. BASIS OF PREPARATION
The condensed consolidated financial statements for the six
months ended 30 June 2023 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 with the applicable disclosure requirements
of Appendix 16 to 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
2022.
As at 30 June 2023, the Group's current liabilities exceeded its
current assets by approximately RMB 69,072 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 RMB118,035 million as at 30 June 2023, 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 2023. Accordingly,
these condensed consolidated financial statements have been
prepared on a basis that the Group will be able to continue as a
going concern.
2. 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 application of new and amendments to IFRSs, the
accounting policies and methods of computation used in the
condensed consolidated financial statements for the six months
ended 30 June 2023 are the same as those presented in the Group's
annual consolidated financial statements for the year ended 31
December 2022.
Application of amendments to IFRSs
In the current interim period, the Group has applied the
following new and 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 2023 for the preparation of the
Group's condensed consolidated financial statements:
IFRS 17 (including the June 2020 Insurance Contracts
and December 2021 Amendments to
IFRS 17)
Amendments to IAS 1 and IFRS Disclosure of Accounting Policies
Practice Statement 2
Amendments to IAS 8 Definition of Accounting Estimates
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
Amendments to IAS 12 International Tax Reform-Pillar Two model
Rules
The application of the new and 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.
3A. REVENUE
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Revenue from contracts with customers 59,482,882 23,828,703
Rental income (included in revenue of airline
operations segment) 130,311 123,950
Total revenue 59,613,193 23,952,653
Disaggregation of revenue from contracts with customers
Six months ended 30 June Six months ended 30 June
2023 2022
Segments Airline operations Other operations Airline operations Other operations
RMB'000 RMB'000 RMB'000 RMB'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Type of goods or services
Airline operations
Passenger 55,469,530 - 15,103,503 -
Cargo and mail 1,409,862 - 6,879,669 -
Ground service income 101,666 - 38,434 -
Others 593,835 - 760,810 -
57,574,893 - 22,782,416 -
Other operations
Aircraft engineering income - 1,872,556 - 1,004,000
Others - 35,433 - 42,287
- 1,907,989 - 1,046,287
Total 57,574,893 1,907,989 22,782,416 1,046,287
Geographical markets
Mainland China 48,304,525 1,907,989 15,204,681 1,046,287
Hong Kong Special Administrative
Region ("SAR"), Macau SAR and
Taiwan, China 1,730,660 - 530,154 -
International 7,539,708 - 7,047,581 -
Total 57,574,893 1,907,989 22,782,416 1,046,287
3B. 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 CASs for the six months ended 30 June 2023
and 2022 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 2023 (Unaudited)
Airline Other
operations operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 57,705,204 1,907,989 - 59,613,193
Intersegment 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 and CASs 5,219
Loss before taxation for the
period under IFRSs (4,360,170)
For the six months ended 30 June 2022 (Unaudited)
Airline Other
operations operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Revenue
Sales to external customers 22,906,366 1,046,287 - 23,952,653
Inter-segment sales 62,327 2,163,952 (2,226,279) -
Revenue for reportable segments
under CASs and IFRSs 22,968,693 3,210,239 (2,226,279) 23,952,653
Segment loss before taxation
Loss before taxation for reportable
segments under CASs (22,628,677) (491,684) 47,150 (23,073,211)
Effect of differences between
IFRSs and CASs (2,586)
Loss before taxation for the
period under IFRSs (23,075,797)
The following table presents the segment assets of the Group's
operating segments under CASs as at 30 June 2023 and 31 December
2022, and the reconciliations of reportable segment assets to the
Group's consolidated amounts under IFRSs:
Airline Other
operations operations Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000
Segment assets
Total assets for reportable
segments as at 30 June 2023
under CASs (unaudited) 330,732,436 24,572,838 (10,790,321) 344,514,953
Effect of differences between
IFRSs and CASs (28,044)
Total assets as at 30 June
2023 under IFRSs (unaudited) 344,486,909
Total assets for reportable
segments as at 31 December
2022 under CASs (audited) 284,165,518 26,473,501 (15,627,684) 295,011,335
Effect of differences between
IFRSs and CASs (31,958)
Total assets as at 31 December
2022 under IFRSs (audited) 294,979,377
Geographical information
The following tables present the Group's consolidated revenue
under IFRSs by geographical location for the six months ended 30
June 2023 and 2022, respectively:
For the six months ended 30 June 2023 (Unaudited)
Hong Kong
SAR, Macau
SAR and Taiwan,
Mainland China China International Total
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
For the six months ended 30 June 2022 (Unaudited)
Hong Kong
SAR, Macau
SAR and Taiwan,
Mainland China China International Total
RMB'000 RMB'000 RMB'000 RMB'000
Sales to external customers
and
total revenue 16,374,918 530,154 7,047,581 23,952,653
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 during the six months ended 30 June 2023 (six
months ended 30 June 2022: CNAHC and its subsidiaries (other than
the Group) contributed 30% of the Group's revenue).
4. OTHER INCOME AND GAINS
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Co-operation routes income and subsidy income 1,985,078 1,388,679
Gains on disposal of property, plant and equipment
and
right-of-use assets 669,898 2,039
Gain/(loss) on disposal of assets held for
sale 18,519 (13,141)
Dividend income 9,557 3,190
Others (Note) 1,386,824 66,618
4,069,876 1,447,385
Note: These mainly include flight operation remedies.
5. LOSS FROM OPERATIONS
The Group's loss from operations is arrived at after
charging:
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Depreciation of property, plant and equipment 5,350,122 4,333,124
Depreciation of right-of-use assets 7,340,150 6,112,491
Depreciation of investment properties 14,511 12,672
Amortisation of intangible assets - 31
Research and development costs recognised
as an expense 141,377 73,821
6. FINANCE COSTS
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Interest on interest-bearing borrowings 1,988,148 1,690,580
Interest on lease liabilities 1,677,935 1,578,905
Imputed interest expenses on defined benefit
obligations 3,188 3,373
3,669,271 3,272,858
Less: Interest capitalised (126,869) (131,423)
3,542,402 3,141,435
The interest capitalisation rates during the period ranged from
2.50% to 3.06% (six months ended 30 June 2022: 1.92% to 4.41%) per
annum relating to the costs of related borrowings during the
period.
7. INCOME TAX CREDIT
Six months ended 30 June
2023 2022
RMB'000 RMB'000
(Unaudited) (Unaudited)
Current income tax:
- Mainland China 126,521 18,301
- Hong Kong SAR and Macau SAR, China 833 819
Under/(over) provision in respect of prior
years 11,920 (197)
Deferred tax (455,490) (880,575)
(316,216) (861,652)
Under the relevant Corporate Income Tax Law and regulations in
the PRC, except for three (six months ended 30 June 2022: two)
branches and five (six months ended 30 June 2022: three)
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 corporate income tax rate of 25% (six months ended 30 June
2022: 25%). Subsidiaries in Hong Kong SAR, China are taxed at
corporate income tax rates of 16.5%, and subsidiaries in Macau SAR,
China are taxed at corporate income 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.
8. DIVIDS
(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 2023 (six months ended 30 June 2022:
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 2022 during the six months ended 30 June 2023 (six months
ended 30 June 2022: Nil).
9. 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
RMB3,447 million (six months ended 30 June 2022: RMB19,437 million)
and the weighted average number of 15,392,419,484 (six months ended
30 June 2022: 13,734,960,921) 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.
The Group had no potential ordinary shares in issue during both
periods.
10. 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 At
30 June 31 December
2023 2022
RMB'000 RMB'000
(Unaudited) (Audited)
Within 30 days 2,999,923 871,543
31 to 60 days 404,516 354,939
61 to 90 days 228,786 103,925
Over 90 days 216,318 318,949
3,849,543 1,649,356
11. 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 At
30 June 31 December
2023 2022
RMB'000 RMB'000
(Unaudited) (Audited)
Within 30 days 9,731,696 4,233,975
31 to 60 days 2,399,564 1,228,802
61 to 90 days 1,382,807 950,354
Over 90 days 6,341,876 4,522,415
19,855,943 10,935,546
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
June 2023 June 2022 Increase/(decrease)
Capacity
ASK (million) 128,799.56 48,186.03 167.30%
International 14,201.46 1,600.96 787.06%
Mainland China 111,479.91 45,768.22 143.57%
Hong Kong SAR, Macau SAR and Taiwan,
China 3,118.19 816.84 281.74%
AFTK (million) 4,090.64 5,221.24 (21.65%)
International 925.60 3,916.15 (76.36%)
Mainland China 3,078.23 1,244.76 147.30%
Hong Kong SAR, Macau SAR and Taiwan,
China 86.79 60.34 43.84%
ATK (million) 15,697.06 9,562.33 64.16%
Traffic
RPK (million) 90,835.35 29,313.90 209.87%
International 8,652.06 576.82 1,399.96%
Mainland China 80,191.99 28,349.32 182.87%
Hong Kong SAR, Macau SAR and Taiwan,
China 1,991.29 387.77 413.52%
RFTK (million) 1,088.96 2,139.29 (49.10%)
International 497.15 1,625.14 (69.41%)
Mainland China 575.51 493.13 16.71%
Hong Kong SAR, Macau SAR and Taiwan,
China 16.31 21.00 (22.34%)
Passengers carried (thousand) 55,544.89 19,022.17 192.00%
International 1,740.62 100.19 1,637.33%
Mainland China 52,566.97 18,695.11 181.18%
Hong Kong SAR, Macau SAR and Taiwan,
China 1,237.31 226.87 445.39%
Cargo and mail carried (tonnes) 429,444.60 506,274.49 (15.18%)
Kilometres flown (million) 705.70 351.76 100.62%
Block hours (thousand) 1,151.46 543.80 111.74%
Number of flights 417,396 184,330 126.44%
International 13,715 9,644 42.21%
Mainland China 393,420 171,617 129.24%
Hong Kong SAR, Macau SAR and Taiwan,
China 10,261 3,069 234.34%
RTK (million) 9,128.30 4,744.65 92.39%
Load factor
Passenger load factor (RPK/ASK) 70.52% 60.83% 9.69 ppt
International 60.92% 36.03% 24.89 ppt
Mainland China 71.93% 61.94% 9.99 ppt
Hong Kong SAR, Macau SAR and Taiwan,
China 63.86% 47.47% 16.39 ppt
Cargo and mail load factor (RFTK/AFTK) 26.62% 40.97% (14.35 ppt)
International 53.71% 41.50% 12.21 ppt
Mainland China 18.70% 39.62% (20.92 ppt)
Hong Kong SAR, Macau SAR and Taiwan,
China 18.79% 34.80% (16.01 ppt)
Overall load factor (RTK/ATK) 58.15% 49.62% 8.53 ppt
Utilisation
Daily utilisation of aircraft
(block hours per day per aircraft) 7.75 3.77 3.98 hours
Yield
Yield per RPK (RMB) 0.6107 0.5645 8.18%
International 0.7772 2.0472 (62.04%)
Mainland China 0.5873 0.5268 11.48%
Hong Kong SAR, Macau SAR and Taiwan,
China 0.8275 0.8789 (5.85%)
Yield per RFTK (RMB) 1.2947 3.2691 (60.40%)
International 1.6404 3.6153 (54.63%)
Mainland China 0.8886 1.7782 (50.03%)
Hong Kong SAR, Macau SAR and Taiwan,
China 5.0857 9.0151 (43.59%)
Unit cost
Cost of operation per ASK (RMB) 0.5014 0.9569 (47.60%)
Cost of operation per ATK (RMB) 4.1142 4.6248 (11.04%)
Note: As of 21 March 2023, the Company has acquired the control
of Shandong Aviation Group Corporation. Shandong Aviation Group
Corporation and its subsidiaries, including Shandong Airlines, have
been consolidated into the consolidated financial statements of the
Group. For details, please refer to the announcement of the Company
dated 21 March 2023. The sections headed "SUMMARY OF OPERATING
DATA" and "DEVELOPMENT OF FLEET" in this results announcement
include relevant operating data and fleet information of Shandong
Airlines and historical data in the above table have been adjusted
to a comparable basis.
DEVELOPMENT OF FLEET
During the first half of 2023, the Group introduced a total of
10 aircraft, including four A350 aircraft, two A320 series
aircraft, one B737 series aircraft and three ARJ21-700 aircraft,
and phased out two B737 series aircraft. As at the end of the
Reporting Period, the Group had a total of 902 aircraft with an
average age of 9.05 years (the fleet of Shandong Airlines were
consolidated into the Group's fleet during the Reporting Period),
of which the Company operated a fleet of 493 aircraft in total,
with an average age of 8.93 years. During the first half of the
year, the Company introduced 8 aircraft and phased out 2
aircraft.
Details of the fleet of the Group are set out in the table
below:
30 June 2023
Operating Average age
Sub-total Self-owned Finance leases leases (year)
Airbus 435 181 132 122 8.64
A320 348 151 104 93 8.77
A330 60 24 7 29 10.70
A350 27 6 21 - 2.40
Boeing 444 169 95 180 9.76
B737 392 143 77 172 9.81
B747 10 8 2 - 13.97
B777 28 6 16 6 9.21
B787 14 12 - 2 6.36
COMAC 18 6 12 - 1.22
ARJ21 18 6 12 - 1.22
Business jets 5 1 - 4 10.01
Total 902 357 239 306 9.05
Introduction Plan Phase-out Plan
2023 2024 2025 2023 2024 2025
Airbus 16 29 33 12 8 6
A320 9 29 33 8 4 4
A330 - - - 4 4 2
A350 7 - - - - -
Boeing 12 24 5 10 - 1
B737 12 24 - 10 - 1
B787 - - 5 - - -
COMAC 9 9 2 - - -
ARJ21 9 9 2 - - -
Business jets - 1 - 1 1 -
Total 37 63 40 23 9 7
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 enforced the responsibility of safety at all levels
and safeguarded the bottom line of production safety with
unwavering efforts. During the Reporting Period, the Group
conscientiously implemented the concept of overall national
security, carried out in-depth investigations and researches on
production safety, effectively carried out specific investigation
and rectification of major hidden safety hazards, and actively
pushed forward initiatives for this year of strengthening safety
management. It has also solidly pushed ahead with the development
of the "four systems" ( ) , namely safety management, flight
training, operation management, and aircraft maintenance. At the
same time, the Group closely monitored the actual conditions of
flight operation, exercised control over the whole process of its
flight operation under the complex conditions, coordinated the
rapid recovery of flight productivity and the restoration of
operation support capability, and properly carried out the specific
work for ensuring safe operation. The Group promoted in-depth
development of safety style, and continuously improved the working
pattern of shared management responsibilities among different
governance bodies. During the Reporting Period, the Group recorded
1.1515 million safe flight hours, and successfully accomplished a
series of major transportation safeguard missions such as the Two
Sessions and evacuation of nationals.
Maximising Operating Performance
The Group adhered to the general principle of pursuing progress
while ensuring stability and intensively implemented measures for
quality improvement and efficiency enhancement, making every effort
to reduce losses and extricate itself from difficulties. Based on
the domestic macro-circulation, the Group significantly increased
the transport capacity for the domestic market and diligently
developed the domestic express routes to enhance its competitive
advantages. Seizing the opportunities arising from the rapid
recovery of the international market, the Group steadily scaled up
its investments and expanded the scale of international routes
operation. Meanwhile, the Group gave its best efforts to improve
the quality of revenue and maximized its revenue effectively by
refining the marketing strategy. Through scientific pricing for
interline products, it has realized an increase in revenue from
interline products. Furthermore, the Group adjusted the pricing
structure of the first class and business class cabins so as to
ensure steady improvement of yield level of both cabins. Frequent
flier membership policies were also optimized with a focus on the
long-term contribution of customers with a view to increasing the
stickiness of frequent flier members. The Group strengthened the
operation of passenger aircraft for cargo operations to give play
to the complementary effect of bellyhold capacity of passenger
aircraft in the market and increase the revenue from passenger
flights. Cost management and control was further implemented to
deeply explore the cost potentials, while the investment in labor
costs was optimized continuously in a bid to enhance the
contribution to productivity. The Group continued to strengthen its
capital management and control and enhanced the management of
debt-related risks so as to improve the efficiency of capital use
without prejudice to safe capital operation, and to reduce its
finance costs.
Reform And Development
Having a keen grasp of the new development stage, the Group
clearly defined a model for centralized, synergetic, refined and
risk-resistant development to comprehensively promote in-depth
synergy of the Group's principal businesses in all aspects. For the
key areas of passenger transportation such as route network, cargo
spaces management and customer resources management, the Group has
achieved synergy through centralization of flight schedules and
transport capacities, and strengthened its express route products
and optimized the flight schedules of jointly-operated routes in
various regions with concerted efforts. The interlink operations
across multiple airlines under the Group have been strengthened
with a total of 106 thousand flight sectors being operated through
interlink operations during January to June, which is 7.3 times of
that of the corresponding period last year. The airlines shared
their customer resources and realized unification of agreed working
standards of customers, operation procedures and the relevant
agreements, as well as unification of ground support resources and
service standards from the perspective of passengers' perception,
thereby improving the service quality and enhancing the efficiency
of resources utilization.
The Group promoted the steady implementation of the "14th
Five-Year" Plan for green development and made deployment for
advancing the carbon peak action plan to empower green and
high-quality development with joint efforts. The implementation
plan for carbon peak-related works was released, which clarified
the strategic direction and technological paths with six major
tasks and nine major actions being formulated to serve as the
fundamental guidance for the carbon peak action plan. The
self-developed carbon emission monitoring and analysis platform
realized automatic, systematic, intelligent and integrated
management of aviation carbon emission data and established a
carbon emission measurement model for civil aviation passengers,
which won the "First Prize of the 19th Innovative Achievements of
Modernized Management of Transportation Enterprises". The Group
participated in the 2nd Civil Aviation Science and Education
Innovation Achievement Exhibition ( ), displaying a total of 21
innovations in the areas of smart travel, aircraft maintenance and
technological support. Meanwhile, the Group also contributed to the
conservation of biodiversity by setting up the "Join hands with Air
China to chase sturgeons in Yangtze River" Wuhan Public Welfare
Release Station ( ) to help restoring the endangered fish resources
in Yangtze River.
The Group pushed forward specific initiatives for brand
leadership and strengthened the efforts in the integration of brand
building with its business operation and marketing campaigns with a
view to facilitating the high-quality development of the Company.
The Group actively responded to the "Belt and Road" initiative by
utilizing the commencement of services of flight routes to promote
its brand image, and demonstrated its operational strengths and
good brand image by leveraging large-scale fairs such as the
Exposition of China Brand, the Western China International Fair and
other events as the platform. It has also enhanced the
international brand influence of Air China through the cooperation
with the Star Alliance and overseas industry associations.
According to the ranking list released by the World Brand Lab, Air
China ranked no. 24 in the 2023 China's 500 Most Valuable Brands
with a brand value of RMB235.162 billion, representing a
year-on-year increase of RMB21.503 billion and maintaining a
leading position in the domestic aviation
service industry in terms of ranking and brand value.
Enhancing Services
Staying committed to the people-centered development ideology,
the Group strived to improve the quality of its air travel
services. During the Reporting Period, the Group pursued the goal
and direction of developing world-class products and services. With
a focus on passenger demand, it continued to raise service
standards and optimize the design of services and products, in a
bid to enrich the service experience of passengers at various
aspects and solidify the foundation for high-quality development of
services.
The Group constantly refreshed and improved the general
conditions for transportation, and flexibly formulated and issued
special handling plans for passenger tickets in response to special
circumstances. It promoted the upgrade of air-ground products, and
launched Phase I of the "Fengting Lounge", a self-owned lounge
offering cultural experience and products. Furthermore, the
renovation with interior design layout under the "Phoenix Dance in
the Cloud" series was completed for 22 aircraft, and the passenger
interfaces of the "Chinese Red" in-flight entertainment system on
17 aircraft were fully upgraded. In order to promote the consistent
optimization and expansion of convenient services for passengers
and optimize the functions and service experience of various
self-service channels, Air China introduced an upgraded "Caring
Version" on its official website to assist the elderly in
travelling smoothly. The "ready to go anywhere at any time" product
was also launched to enhance the timeliness for passengers
travelling with our domestic express routes. Besides, Air China
strived to promote digital transformation of services through the
development of service systems, and the global platform for ground
service and flight support services has been operating smoothly
since its launch, which significantly strengthened the management
and control of flight and ground services operation. Continuous
efforts were made to optimize and improve the service quality
management system, the whole-process luggage tracking data system
and other service management data system so as to enhance the level
of service digitalization on a continuous basis. It also continued
to expand the air-railway interlink stations and network, which
covered 63 transit cities, 98 transit train stations, 371
accessible train stations and connected with 582 railways across
China, and contributed to the development of interline
transportation and services integration.
MANAGEMENT DISCUSSION AND ANALYSIS ON FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
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 16 to the
Listing Rules and are designed to assist the readers in further
understanding the information provided in this announcement 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 RMB59,613
million, representing a year-on-year increase of RMB35,661 million
or 148.88%. Among the revenues, air traffic revenue was RMB56,879
million, representing a year-on-year increase of RMB34,896 million
or 158.74%. Other operating revenue was RMB2,734 million,
representing a year-on-year increase of RMB764 million or
38.81%.
Revenue Contributed by Geographical Segments
For the six months ended 30 June
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
International 7,539,708 12.65% 7,047,581 29.43% 6.98%
Mainland China 50,342,825 84.45% 16,374,918 68.36% 207.44%
Hong Kong SAR, Macau SAR
and Taiwan, China 1,730,660 2.90% 530,154 2.21% 226.44%
Total 59,613,193 100.00% 23,952,653 100.00% 148.88%
Air Passenger Revenue
During the Reporting Period, the Group recorded an air passenger
revenue of RMB55,470 million, representing a year-on-year increase
of RMB40,366 million. Among the air passenger revenue, the increase
of capacity resulted in an increase in revenue of RMB28,827
million, and the increase of passenger load factor resulted in an
increase in revenue of RMB7,343 million, while the increase of
passenger yield resulted in an increase in revenue of RMB4,196
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
2023 2022 Change
Available seat kilometres (million) 128,799.56 44,282.01 190.86%
Passenger load factor (%) 70.52 60.42 10.10 ppt
Yield per RPK (RMB) 0.6107 0.5645 8.18%
Note: The operating data for the corresponding period in 2022 in
the above table does not include the operating data of Shandong
Airlines.
Air Passenger Revenue Contributed by Geographical Segments
For the six months ended 30 June
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
International 6,724,163 12.12% 1,172,233 7.76% 473.62%
Mainland China 47,097,647 84.91% 13,590,439 89.98% 246.55%
Hong Kong SAR, Macau
SAR and Taiwan, China 1,647,720 2.97% 340,831 2.26% 383.44%
Total 55,469,530 100.00% 15,103,503 100.00% 267.26%
Air Cargo and Mail Revenue
During the Reporting Period, the Group's air cargo and mail
revenue was RMB1,410 million, representing a year-on-year decrease
of RMB5,470 million. Among the air cargo and mail revenue, the
decrease of yield of cargo and mail business contributed to a
decrease in revenue of RMB2,150 million, and the decrease of cargo
and mail load factor resulted in a decrease in revenue of RMB1,881
million, while the decrease of capacity resulted in a decrease in
revenue of RMB1,439 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
2023 2022 Change
Available freight tonne kilometres
(million) 4,090.64 5,172.28 (20.91%)
Cargo and mail load factor
(%) 26.62 40.69 ( 14.07 ppt)
Yield per RFTK (RMB) 1.2947 3.2691 (60.40%)
Note: The operating data for the corresponding period in 2022 in
the above table does not include the operating data of Shandong
Airlines.
Air Cargo and Mail Revenue Contributed by Geographical
Segments
For the six months ended 30 June
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
International 815,545 57.85% 5,875,348 85.40% (86.12%)
Mainland China 511,377 36.27% 814,998 11.85% (37.25%)
Hong Kong SAR, Macau SAR
and Taiwan, China 82,940 5.88% 189,323 2.75% (56.19%)
Total 1,409,862 100.00% 6,879,669 100.00% (79.51%)
Operating Expenses
During the Reporting Period, the Group's operating expenses
increased by RMB22,209 million on a year-on-year basis to RMB64,581
million, representing an increase of 52.41%. The breakdown of the
operating expenses is set out below:
For the six months ended 30 June
2023 2022
(in RMB'000) Amount Percentage Amount Percentage Change
Jet fuel costs 19,346,786 29.96% 10,348,319 24.42% 86.96%
Take-off, landing and depot
charges 6,635,703 10.27% 3,221,432 7.60% 105.99%
Depreciation and amortisation 12,704,783 19.67% 10,458,318 24.68% 21.48%
Aircraft maintenance, repair
and overhaul costs 4,972,590 7.70% 2,370,572 5.59% 109.76%
Employee compensation costs 13,594,872 21.05% 11,444,006 27.01% 18.79%
Air catering charges 1,167,220 1.81% 415,683 0.98% 180.80%
Selling and marketing expenses 1,542,326 2.39% 908,624 2.14% 69.74%
General and administrative
expenses 706,174 1.09% 507,940 1.20% 39.03%
Others 3,910,815 6.06% 2,697,858 6.38% 44.96%
Total 64,581,269 100.00% 42,372,752 100.00% 52.41%
-- Jet fuel costs increased by RMB8,998 million on a
year-on-year basis, mainly due to the combined effect of the
increase in the consumption of jet fuel and decrease in the prices
of jet fuel.
-- Take-off, landing and depot charges increased by RMB3,414
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 RMB2,246 million
on a year-on-year basis, mainly due to the acquisition of Shandong
Aviation Group Corporation, the expansion of fleet as well as the
year-on-year increase in flying hours.
-- Aircraft maintenance, repair and overhaul costs increased by
RMB2,602 million on a year-on-year basis, mainly due to the
year-on-year increase in flying hours.
-- Employee compensation costs increased by RMB2,151 million on
a year-on-year basis, mainly due to the acquisition of Shandong
Aviation Group Corporation and the year-on-year increase in flight
hour fees.
-- Air catering charges increased by RMB752 million on a
year-on-year basis, mainly due to the increase in the number of
passengers.
-- Selling and marketing expenses increased by RMB634 million on
a year-on-year basis, mainly due to the consolidation of Shandong
Aviation Group Corporation, and 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 RMB198
million on a year-on-year basis, mainly due to the effect of the
acquisition of Shandong Aviation Group Corporation.
-- 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 increased
by RMB1,213 million on a year-on-year basis, mainly due to the
acquisition of Shandong Aviation Group Corporation and the increase
in the investment in production and operation.
Net Exchange Loss and Finance Costs
During the Reporting Period, the Group recorded a net exchange
loss of RMB1,565 million, representing a year-on-year decrease of
RMB674 million. The Group incurred finance costs of RMB3,542
million (excluding those capitalised) during the Reporting Period,
representing a year-on-year increase of RMB401 million.
Share of Results of Associates and Joint Ventures
During the Reporting Period, the Group's share of profits of its
associates was RMB1,266 million, as compared with the losses of
RMB1,041 million for the same period of the previous year. The
Group recorded a share of profits of Cathay Pacific of RMB1,279
million during the Reporting Period, as compared with the share of
losses of RMB423 million for the same period of the previous
year.
During the Reporting Period, the Group's share of profits of its
joint ventures was RMB89 million, representing a year-on-year
decrease of RMB138 million.
Assets Structure Analysis
At the end of the Reporting Period, the total assets of the
Group were RMB344,487 million, representing an increase of 16.78%
from that as at 31 December 2022. Among them, the current assets
accounted for RMB43,267 million or 12.56% of the total assets,
while the non-current assets accounted for RMB301,220 million or
87.44% of the total assets.
Among the current assets, cash and cash equivalents were
RMB25,970 million, representing an increase of 144.82% from that as
at 31 December 2022, which was mainly due to the non-public
issuance of shares of the Company, and the flexibility in cash
management based on capital and liquidity need.
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 RMB240,730 million, representing an
increase of 6.80% from that as at 31 December 2022, which was
mainly due to the combined effect of the consolidation of Shandong
Aviation Group Corporation's assets, depreciation for the period
and introduction of aircraft.
Asset Pledged
At the end of the Reporting Period, the Group's certain bank
loans and finance leasing agreements were secured by certain
aircraft, engines and flight equipment, other equipment and
buildings with an aggregated book value of approximately RMB92,149
million (31 December 2022: RMB95,499 million) and land use rights
with book value of approximately RMB25 million (31 December 2022:
RMB25 million). In addition, the Group had restricted bank deposits
of approximately RMB645 million (31 December 2022: approximately
RMB828 million). The restricted bank deposits were mainly statutory
reserves deposited in the People's Bank of China.
Capital Expenditure
During the Reporting Period, the Group's capital expenditure
amounted to a total of RMB12,499 million, of which the total
investment in aircraft and engines was RMB4,953 million. Other
capital expenditure investment amounted to RMB7,546 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 interests
in its associates amounted to RMB11,841 million, representing an
increase of 12.38% from that as at 31 December 2022, among which,
the carrying amount of the equity interests in Cathay Pacific
amounted to RMB11,682 million.
At the end of the Reporting Period, the Group's equity interests
in its joint ventures was RMB2,259 million, representing an
increase of 3.73% from that as at 31 December 2022.
Debt Structure Analysis
At the end of the Reporting Period, the total liabilities of the
Group amounted to RMB311,593 million, representing an increase of
13.95% from those as at 31 December 2022, among which current
liabilities were RMB112,338 million and non-current liabilities
were RMB199,255 million, accounting for 36.05% and 63.95% of the
total liabilities, respectively.
Among the current liabilities, interest-bearing debts (including
interest-bearing borrowings and lease liabilities) amounted to
RMB62,494 million, representing an increase of 4.08% as compared
with that as at 31 December 2022.
Among the non-current liabilities, interest-bearing debts
(including interest-bearing borrowings and lease liabilities)
amounted to RMB179,633 million, representing an increase of 5.83%
from that as at 31 December 2022. The increase in interest-bearing
debts was mainly due to the acquisition of Shandong Aviation Group
Corporation. Excluding this effect, the Group's interest-bearing
debts demonstrated a decreasing trend as compared with that at the
end of the previous year.
Details of interest-bearing liabilities of the Group by currency
are set out below:
30 June 2023 31 December 2022
(in RMB'000) Amount Percentage Amount Percentage Change
RMB 195,151,949 80.60% 187,990,038 81.81% 3.81%
US dollars 45,273,450 18.70% 39,999,600 17.41% 13.18%
Others 1,701,191 0.70% 1,797,824 0.78% (5.37%)
Total 242,126,590 100.00% 229,787,462 100.00% 5.37%
Commitments and Contingent Liabilities
The Group's capital commitments, which mainly consisted of the
payables in the next few years for purchasing certain aircraft and
related equipment, increased by 32.01% from RMB58,509 million as at
31 December 2022 to RMB77,239 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 RMB466 million as at the end of the
Reporting Period, as compared with RMB512 million as at 31 December
2022.
Gearing Ratio
At the end of the Reporting Period, the Group's gearing ratio
(total liabilities divided by total assets) was 90.45%,
representing a decrease of 2.25 percentage points from that as at
31 December 2022.
Working Capital and its Sources
At the end of the Reporting Period, the Group's net current
liabilities (current liabilities less current assets) were
RMB69,072 million, representing a decrease of RMB1,166 million from
that as at 31 December 2022. The Group's current ratio (current
assets divided by current liabilities) was 0.39, representing an
increase of 0.15 as compared to that as at 31 December 2022.
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 RMB16,142 million, as compared to the net cash
outflow of RMB9,960 million for the corresponding period in 2022,
which was mainly due to the significant increase in revenue on a
year-on-year basis. Net cash outflow from investing activities was
RMB2,032 million, representing an increase of 61.06% from RMB1,261
million for the corresponding period in 2022, mainly due to the
year-on-year increase in the cash payments for the purchase of
property, plant and equipment and other long-term assets, and the
effect of the acquisition of Shandong Aviation Group Corporation.
Net cash inflow from financing activities amounted to RMB1,046
million, representing a decrease of 92.40% from RMB13,758 million
for the corresponding period in 2022, mainly due to the
year-on-year increase in repayment of borrowings and rental
payments.
At the end of the Reporting Period, the Company has obtained
bank facilities of up to RMB205,863 million granted by several
banks in the PRC, among which approximately RMB87,828 million has
been utilised and approximately RMB118,035 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
With the gradual resumption of normal social and economic
activities, the domestic market has shown better performance than
the international market from the perspective of the overall
aviation industry. The progress of recovery in the international
market was lagging behind under the influence of factors such as
the restrictions of the immigration policy of certain countries.
Based on the characteristics of the new development stage, the
Group will fully, precisely and comprehensively implement the new
development philosophy, take the initiative to contribute to and
integrate with the new development paradigm, seek development based
on the domestic market and optimize international fleet capacity
structure 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 RMB967 million.
Exchange Rate Fluctuation
The Group's certain lease liabilities, bank loans and other
loans are mainly 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 2023 by approximately RMB297
million.
2. Risks of Competition
Industry competition
During the Reporting Period, as there was no significant
reduction in the number of operating entities in the market, the
Company still faced relatively huge industry competition pressure.
In respect of the domestic market, due to the slow recovery of the
international market, a large number of 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 routes of domestic airlines
were mainly concentrated in destinations such as Hong Kong, Macau,
Taiwan, Southeast Asia and Europe, resulting in an intense
competition in certain regions within a short period of time.
Adhering to its strategy for hub network, the Company spared no
efforts in building Beijing Capital Airport into a world-class hub
and Chengdu Tianfu Airport into an international hub, realising
differentiated development with other competing entities in the
market. Main routes and express routes were launched centering on
hubs as well as principal bases and markets with a view to
consolidating its competitiveness in the core markets with its
high-quality products.
Alternative competition
The world's largest expressway network has created substitution
effect to short-distance transportation. The world's largest
high-speed railway network has extended its reach towards central
and western China. Hence, 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 competitive edges in the comprehensive transportation system
and promote international exchange. 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.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
During the Reporting Period, neither the Company nor any of its
subsidiaries have purchased, sold or redeemed any listed securities
of the Company (the term "securities" has the meaning ascribed to
it under paragraph 1 of Appendix 16 to the Listing Rules).
INTERIM DIVID
No interim dividend will be paid by the Company for the six
months ended 30 June 2023.
SUBSEQUENT EVENTS
On 30 August 2023, the Board proposed to amend the Articles of
Association, the Rules and Procedures of Shareholders' Meetings and
the Rules and Procedures of Meetings of the Board. For details,
please refer to the announcement of the Company dated 30 August
2023.
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 14 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 as set out in Appendix 10 to the Listing Rules. 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.
DISCLOSURE REQUIREMENTS UNDER THE LISTING RULES
In order to comply with the requirements under paragraph 46 of
Appendix 16 to the Listing Rules, the Company confirmed that save
as disclosed in this announcement, there are no material changes in
the current information of the Company in relation to matters as
set out in paragraph 46(3) of Appendix 16 to the Listing Rules as
compared with relevant disclosures in the 2022 annual report of the
Company.
REVIEW BY THE AUDIT AND RISK CONTROL COMMITTEE
The audit and risk control committee of the Company has reviewed
the Company's interim results for the six months ended 30 June
2023, the Company's unaudited interim condensed consolidated
financial statements, and the accounting policies and practices
adopted by the Group.
GLOSSARY OF TECHNICAL TERMS
Capacity Measurements
"available tonne kilometres" the number of tonnes of capacity available for
or "ATK(s)" transportation multiplied by the kilometres
flown
"available seat kilometres" the number of seats available for sale multiplied
or "ASK(s)" by the kilometres flown
"available freight tonne the number of tonnes of capacity available for
kilometres" or "AFTK(s)" the carriage of cargo and mail multiplied by
the kilometres flown
Traffic Measurements
"passenger traffic" measured in RPK, unless otherwise specified
"revenue passenger kilometres" the number of revenue passengers carried multiplied
or "RPK(s)" by the kilometres flown
"cargo and mail traffic" measured in RFTK, unless otherwise specified
"revenue freight tonne the revenue cargo and mail load in tonnes multiplied
kilometres" or "RFTK(s)" by the kilometres flown
"revenue tonne kilometres" the revenue load (passenger and cargo) in tonnes
or "RTK(s)" 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 hour" 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 revenues from passenger operations divided by
per RPK" RPKs
"cargo yield"/"yield per revenues from cargo operations divided by RFTKs
RFTK"
DEFINITIONS
In this announcement, 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 Cargo" Air China Cargo Co., Ltd., a subsidiary of CNAHC
"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 is/are subscribed for and traded in Renminbi
and listed on the 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
"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
"COMAC" Commercial Aircraft Corporation of China, Ltd.
"Company" 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
"CNAHC" China National Aviation Holding Corporation
Limited
"CNAHC Group" CNAHC and its subsidiaries
"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)" overseas-listed foreign invested 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)
"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
10 to the Listing Rules
"Reporting Period" the period from 1 January 2023 to 30 June 2023
"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 subsidiary of
Shandong Aviation Group Corporation
"Shandong Aviation Group Shandong Aviation Group Company Limited, a non-wholly
Corporation" 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
"US dollars" United States dollars, the lawful currency of
the United States
By Order of the Board
Air China Limited
Huang Bin Huen Ho Yin
Joint Company Secretaries
Beijing, the PRC, 30 August 2023
As at the date of this announcement, the directors of the
Company are Mr. Ma Chongxian, Mr. Wang Mingyuan, Mr. Feng Gang, Mr.
Patrick Healy, Mr. Xiao Peng, Mr. Li Fushen*, Mr. He Yun*, Mr. Xu
Junxin* and Ms. Winnie Tam Wan-chi*.
* Independent non-executive director of the Company
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END
STRPBMPTMTJJMRJ
(END) Dow Jones Newswires
August 31, 2023 04:40 ET (08:40 GMT)
Air China Ld (LSE:AIRC)
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