Financial Performance - In 2020, the total operating revenue of Juneyao Air was approximately CNY 10.10 billion, a decrease of 39.69% compared to CNY 16.75 billion in 2019[21]. - The net profit attributable to shareholders was a loss of approximately CNY 473.78 million, a decline of 147.64% from a profit of CNY 994.47 million in 2019[21]. - The cash flow from operating activities was approximately CNY 612.65 million, down 77.61% from CNY 2.74 billion in 2019[21]. - The total assets at the end of 2020 were approximately CNY 32.31 billion, a decrease of 2.50% from CNY 33.14 billion at the end of 2019[21]. - The basic earnings per share for 2020 was -CNY 0.24, compared to CNY 0.54 in 2019, reflecting a decrease of 144.44%[23]. - The weighted average return on equity was -3.99% in 2020, down 13.18 percentage points from 9.19% in 2019[23]. - The company reported a net profit attributable to shareholders of -474 million yuan for the year[82]. - The company’s cargo transport revenue reached 620 million yuan, accounting for 6.13% of total revenue[82]. - The company reported a 42.40% decline in passenger transport revenue, amounting to CNY 9.38 billion, while cargo transport revenue increased by 107.08% to CNY 619.71 million[102]. Shareholder Information - The company plans to distribute a cash dividend of RMB 1.00 per 10 shares to all shareholders, totaling RMB 196,076,111.70 (including tax) after repurchasing 5,383,040 shares[2]. - The company does not plan to increase capital reserves to convert into share capital for the 2020 fiscal year[2]. - The company reported a net loss of CNY 473.78 million for 2020, resulting in a dividend payout ratio of -41.38%[198]. - The company repurchased shares amounting to ¥52,002,164.55, reflecting a decrease of 10.98% in cash dividends[199]. Operational Performance - The company operated a fleet of 72 Airbus A320 series aircraft and 6 Boeing B787 series aircraft by the end of the reporting period[33]. - The company executed over 400 cargo charter flights in 2020, transporting more than 4,000 tons of cargo, with a year-on-year increase in cargo gross profit of 0.61%[35]. - The company maintained a "no layoffs, no salary cuts" policy during the pandemic while actively seeking market opportunities[35]. - The company achieved a single-quarter profit in Q3 2020, benefiting from effective domestic pandemic control measures[36]. - The company operated 1,778 flights weekly, serving over 190 routes from Shanghai as the main operational base[77]. Risk Management - The company emphasizes the importance of risk awareness regarding forward-looking statements related to economic conditions and future plans[3]. - The company has detailed potential risks in the "Discussion and Analysis of Operating Conditions" section of the report[4]. - The company recognizes risks related to aviation safety and is committed to maintaining a robust safety management system to mitigate potential operational risks[179]. - The company is aware of the risks associated with changes in aviation policies that could impact its business operations and market access[180]. Market Strategy - The company aims to leverage its geographical advantages and operational experience to expand its low-cost airline market presence[55]. - The company has established a dual-brand and dual-hub operation strategy, covering high, medium, and low-end passenger markets[56]. - The company emphasizes a differentiated competition strategy, focusing on superior service quality and optimal cost structure rather than price competition[57]. - The company plans to expand its network in the Yangtze River Delta region, focusing on cities like Hangzhou and Wuxi[69]. Safety and Compliance - The company achieved "zero findings" in the IOSA remote audit, ensuring operational safety[67]. - The company maintained a zero accident rate and reduced serious error rates by 28.6% compared to 2019[86]. - The company has made commitments regarding the accuracy and completeness of information provided during transactions, ensuring legal responsibility for any misrepresentation[200]. Future Outlook - The company plans to expand its fleet, with a net increase of 17 aircraft expected in 2021, bringing the total fleet size to 89 for JUNEYAO and 26 for QIYUN[81]. - The company plans to open new routes and optimize its existing route network in 2021, including code-sharing with other airlines[145]. - The company aims to enhance its operational quality and efficiency through system platform-based management and risk management upgrades, including ETOPS and GLS certifications for international operations[172]. - The company plans to enhance safety management through digitalization and data analysis to reduce operational risks and improve safety quality[168].

Important Notice [Report Authenticity Guarantee](index=3&type=section&id=1.1%20Report%20Authenticity%20Guarantee) The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report, affirming no false statements, misleading representations, or material omissions, and note that this quarterly financial report is unaudited - Management guarantees the **truthfulness, accuracy, and completeness** of the report content and assumes corresponding legal responsibilities[6](index=6&type=chunk) - The company's **Q3 2020 report is unaudited**[6](index=6&type=chunk) Company Profile [Key Financial Data](index=3&type=section&id=2.1%20Key%20Financial%20Data) Severely impacted by the COVID-19 pandemic, the company's performance in the first three quarters of 2020 significantly declined, with revenue decreasing by 44.86% year-on-year and net profit attributable to shareholders turning into a loss of 480 million yuan, a 139.19% year-on-year decrease, alongside negative operating cash flow Key Financial Data for Q1-Q3 2020 (Compared to Prior Year) | Indicator | Q1-Q3 2020 | Q1-Q3 2019 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 7,169,949,438.15 | 13,003,732,151.55 | -44.86 | | Net Profit Attributable to Shareholders (CNY) | -479,701,390.62 | 1,224,135,078.77 | -139.19 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) (CNY) | -607,995,310.71 | 1,140,769,788.33 | -153.30 | | Net Cash Flow from Operating Activities (CNY) | -58,428,231.84 | 2,420,021,876.46 | -102.41 | | Basic Earnings Per Share (CNY/share) | -0.24 | 0.67 | -135.82 | | Weighted Average Return on Net Assets (%) | -3.99% | 12.12% | Decrease of 16.11 percentage points | Non-recurring Gains and Losses for Q1-Q3 2020 | Item | Amount (CNY) | | :--- | :--- | | Government grants included in current profit and loss | 105,635,837.65 | | Fair value changes and investment income from financial assets | 69,111,743.03 | | Net other non-operating income and expenses | -5,840,451.56 | | Gains and losses on disposal of non-current assets | 2,799,261.21 | | **Total** | **128,293,920.09** | [Shareholder Information](index=6&type=section&id=2.2%20Shareholder%20Information) As of the end of the reporting period, the company had 47,784 shareholders, with controlling shareholder Shanghai Juneyao (Group) Co., Ltd. holding 51.92% of shares, some of which are pledged, indicating a relatively concentrated ownership structure among the top ten shareholders - As of the end of the reporting period, the company had a total of **47,784 shareholders**[12](index=12&type=chunk) Top Ten Shareholders' Holdings | Shareholder Name | Number of Shares Held | Holding Percentage (%) | | :--- | :--- | :--- | | Shanghai Juneyao (Group) Co., Ltd. | 1,020,862,080 | 51.92 | | China Eastern Air Industry Investment Co., Ltd. | 294,921,623 | 15.00 | | Wang Junhao | 77,280,000 | 3.93 | | Shanghai Juneyao Airlines Investment Co., Ltd. | 36,066,977 | 1.83 | | Zhong Ou New Blue Chip Flexible Allocation Mixed Securities Investment Fund | 24,932,181 | 1.27 | - Controlling shareholder Shanghai Juneyao (Group) Co., Ltd. pledged **163 million shares** it holds[12](index=12&type=chunk) - Shareholder Wang Junhao holds equity in both Shanghai Juneyao (Group) Co., Ltd. and Shanghai Juneyao Airlines Investment Co., Ltd., but has no concerted action relationship with other shareholders[14](index=14&type=chunk) Significant Matters [Analysis of Significant Changes in Key Financial Statement Items and Indicators](index=8&type=section&id=3.1%20Analysis%20of%20Significant%20Changes%20in%20Key%20Financial%20Statement%20Items%20and%20Indicators%20and%20Their%20Causes) During the reporting period, the company's financial statement items significantly changed due to the pandemic and new revenue standard implementation, with increased cash and short-term borrowings to manage liquidity, decreased revenue and costs from reduced flights, higher finance costs from increased borrowing, and a shift to external financing to maintain operations Major Balance Sheet Item Changes (Compared to Prior Year-End) | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Cash and Cash Equivalents | 79.35% | Due to increased loans influenced by the pandemic during the reporting period | | Short-term Borrowings | 92.49% | Due to increased borrowing scale in the current period | | Deferred Income Tax Assets | 1,718.68% | Deferred income tax assets recognized for current period losses to be offset in future years | | Advances from Customers | -99.97% | Reclassified to contract liabilities due to the adoption of new revenue standards | | Contract Liabilities | Not Applicable | Due to the adoption of new revenue standards | Major Income Statement Item Changes (Compared to Prior Year) | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Operating Revenue | -44.86% | Significant reduction in flight volume due to the pandemic | | Operating Costs | -30.74% | Significant reduction in flight volume due to the pandemic | | Finance Costs | 61.55% | Due to increased interest expenses in the current period | | Investment Income | 8,481.62% | Due to cash dividends received in the current period | | Non-operating Expenses | 1,462.29% | Increased pandemic-related donation expenses in the current period | Major Cash Flow Statement Item Changes (Compared to Prior Year) | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Cash Received from Sales of Goods and Services | -44.59% | Due to reduced flight volume influenced by the pandemic | | Cash Paid for Acquisition of Fixed Assets, Intangible Assets, and Other Long-term Assets | -87.55% | Due to reduced investment in aircraft assets in the current period | | Cash Paid for Debt Repayment | 45.26% | Due to increased repayment of matured borrowings in the current period | | Cash Paid for Distribution of Dividends, Profits, or Interest Payments | 139.59% | Increased borrowing scale led to higher interest expenses | [Progress of Significant Matters](index=10&type=section&id=3.2%20Analysis%20of%20Progress%20and%20Impact%20of%20Significant%20Matters%20and%20Solutions) The company's board approved jet fuel futures hedging in March 2020 to mitigate price volatility, with an authorized limit not exceeding 20% of the latest audited net assets, though no actual transactions have been conducted as of the reporting period end - The company's board approved **futures hedging operations** on March 18, 2020, to hedge against jet fuel price risks[19](index=19&type=chunk) - As of the report date, the company has **not yet commenced any jet fuel hedging activities**[19](index=19&type=chunk) [Earnings Forecast and Risk Warning](index=10&type=section&id=3.4%20Warning%20and%20Explanation%20of%20Potential%20Cumulative%20Net%20Loss%20or%20Significant%20Change%20from%20Prior%20Year-End%20to%20Next%20Reporting%20Period-End) The company issued an earnings warning, anticipating a cumulative net loss for the full year 2020 due to significant uncertainties regarding the duration and impact of the COVID-19 pandemic, advising investors to be aware of associated risks - The company anticipates a **cumulative net loss for the full year 2020**[21](index=21&type=chunk) - The primary reasons for the loss forecast are the **significant impact of the COVID-19 pandemic on the transportation industry** and the **uncertainty of its duration**[21](index=21&type=chunk) Appendix [Financial Statements](index=11&type=section&id=4.1%20Financial%20Statements) This appendix includes the company's unaudited consolidated and parent company financial statements as of September 30, 2020, comprising the balance sheet, income statement, and cash flow statement, comprehensively reflecting the financial position, operating results, and cash flows for the reporting period [Consolidated Balance Sheet](index=11&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2020, total assets were 33.32 billion yuan, a slight 0.55% increase from the prior year-end, while total liabilities rose 10.18% to 22.25 billion yuan, driven by short-term borrowings, and net assets attributable to shareholders decreased 14.44% to 11.04 billion yuan due to current period losses and changes in other comprehensive income Key Consolidated Balance Sheet Items (September 30, 2020) | Item | Amount (CNY) | Change from Prior Year-End (%) | | :--- | :--- | :--- | | **Total Assets** | **33,320,601,158.08** | **0.55** | | Cash and Cash Equivalents | 2,909,788,745.53 | 79.35 | | Fixed Assets | 13,104,880,999.45 | -2.06 | | **Total Liabilities** | **22,249,427,576.99** | **10.18** | | Short-term Borrowings | 6,563,304,272.79 | 92.49 | | Long-term Borrowings | 6,990,867,683.26 | 1.14 | | **Equity Attributable to Parent Company Shareholders** | **11,036,738,435.67** | **-14.44** | [Consolidated Income Statement](index=15&type=section&id=Consolidated%20Income%20Statement) In the first three quarters of 2020, the company's operating revenue was 7.17 billion yuan, a 44.86% year-on-year decrease, leading to an operating loss of 718 million yuan from a prior year profit of 1.58 billion yuan, and a net loss attributable to parent company shareholders of 480 million yuan, despite a Q3 net profit of 196 million yuan indicating some domestic market recovery Key Consolidated Income Statement Items (Q1-Q3 2020) | Item | Q1-Q3 2020 (CNY) | Q1-Q3 2019 (CNY) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 7,169,949,438.15 | 13,003,732,151.55 | -44.86 | | Total Operating Costs | 8,395,830,477.67 | 11,725,124,805.73 | -28.39 | | Operating Profit | -717,968,403.67 | 1,584,557,718.62 | -145.31 | | Total Profit | -645,552,183.47 | 1,678,032,340.45 | -138.47 | | Net Profit | -490,167,293.48 | 1,243,986,167.33 | -139.40 | | Net Profit Attributable to Parent Company Shareholders | -479,701,390.62 | 1,224,135,078.77 | -139.19 | [Consolidated Cash Flow Statement](index=26&type=section&id=Consolidated%20Cash%20Flow%20Statement) In the first three quarters of 2020, net cash flow from operating activities significantly deteriorated to -58 million yuan from a 2.42 billion yuan inflow in the prior year, primarily due to reduced ticket revenue from the pandemic, while net cash outflow from investing activities narrowed to 513 million yuan due to reduced long-term asset investments, and net cash inflow from financing activities was 1.98 billion yuan, mainly from increased borrowings to maintain liquidity Key Consolidated Cash Flow Statement Items (Q1-Q3 2020) | Item | Q1-Q3 2020 (CNY) | Q1-Q3 2019 (CNY) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -58,428,231.84 | 2,420,021,876.46 | | Net Cash Flow from Investing Activities | -513,182,857.28 | -8,510,509,167.30 | | Net Cash Flow from Financing Activities | 1,983,862,368.61 | 7,081,105,212.62 | | Net Increase in Cash and Cash Equivalents | 1,456,912,029.78 | 1,025,341,583.29 | [Accounting Standard Change Adjustments](index=29&type=section&id=4.2%20Adjustments%20to%20Initial%20Financial%20Statements%20Upon%20First-time%20Adoption%20of%20New%20Revenue%20and%20Lease%20Standards%20from%202020) Effective January 1, 2020, the company adopted new revenue standards, retrospectively adjusting financial statements at the initial adoption date by reclassifying contract-related advances from "Advances from Customers" to "Contract Liabilities" and "Other Current Liabilities," without impacting total assets or net assets - The company first adopted the **new revenue standard** effective **January 1, 2020**, and made corresponding adjustments to its opening financial statements[54](index=54&type=chunk)[58](index=58&type=chunk) Impact of New Revenue Standard Adoption on Opening Consolidated Balance Sheet | Item | Before Adjustment (2019-12-31) | After Adjustment (2020-01-01) | Adjustment Amount | | :--- | :--- | :--- | :--- | | Advances from Customers | 1,159,947,713.37 | 299,698.00 | -1,159,648,015.37 | | Contract Liabilities | 0.00 | 1,140,064,321.21 | 1,140,064,321.21 | | Other Current Liabilities | 0.00 | 1,386,380.87 | 1,386,380.87 | | Deferred Income | 12,522,962.69 | 0.00 | -12,522,962.69 | | Retained Earnings | 5,105,549,531.09 | 5,129,812,748.26 | 24,263,217.17 |

Financial Performance - Operating revenue for 2018 was CNY 14.37 billion, an increase of 15.75% compared to CNY 12.41 billion in 2017[21]. - Net profit attributable to shareholders for 2018 was CNY 1.23 billion, a decrease of 6.99% from CNY 1.33 billion in 2017[21]. - Net cash flow from operating activities decreased by 29.42% to CNY 1.95 billion in 2018 from CNY 2.76 billion in 2017[21]. - Total assets at the end of 2018 were CNY 21.46 billion, up 6.02% from CNY 20.24 billion at the end of 2017[21]. - Basic earnings per share for 2018 were CNY 0.69, down 6.76% from CNY 0.74 in 2017[23]. - The weighted average return on equity for 2018 was 13.61%, a decrease of 2.69 percentage points from 16.30% in 2017[23]. - In Q4 2018, the company reported a net profit attributable to shareholders of -CNY 201.51 million, contrasting with profits in the first three quarters[25]. - Non-operating income from asset disposals in 2018 amounted to CNY 228.82 million, significantly higher than CNY 42.48 million in 2017[27]. - The company’s net assets attributable to shareholders increased by 9.00% to CNY 9.43 billion at the end of 2018 from CNY 8.65 billion at the end of 2017[21]. Strategic Developments - The company plans not to distribute cash dividends or issue bonus shares for the fiscal year 2018, considering strategic significance for future developments[5]. - The company is currently undergoing a private placement of A-shares, which is under review by the China Securities Regulatory Commission[5]. - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[21]. - The company aims to leverage its operational base in Shanghai to maximize efficiency and reduce costs, focusing on high passenger load factors[34]. - The company has established a strategic partnership with China Eastern Airlines, enhancing cooperation and market influence during the mixed ownership reform period[54]. - The company is actively pursuing the low-cost airline market through its subsidiary, Juneyao Airlines, which operates over 90 domestic routes from Guangzhou[38]. - The company plans to optimize the Nanjing auxiliary base's route network and focus on flight efficiency management in 2019[58]. - The company aims to enhance service quality by improving flight punctuality and providing customized services, with a focus on safety standards and customer experience[174]. Operational Efficiency - The company operates a fleet of 70 Airbus A320 series aircraft and 3 Boeing B787 series aircraft, with over 150 domestic and regional routes originating from Shanghai[35]. - The average age of Juneyao Air's fleet is 4.53 years, contributing to lower maintenance costs and higher operational efficiency[70]. - In 2018, Juneyao Air achieved a fleet load factor of 86.24% and an aircraft utilization rate of 10.6 hours per day, reflecting operational efficiency[73]. - The company has developed a detailed operational management system that enhances efficiency and cost control through advanced information management tools[73]. - The company has implemented a comprehensive information technology system to enhance operational efficiency and reduce costs[83]. Market Position and Growth - Juneyao Air's total passenger transportation volume exceeded 15.05 million in 2018, with 9.72 million passengers transported through Shanghai airports, achieving a market share of 8.26% in Shanghai[35]. - The company’s market share in the civil aviation market increased from 2.73% in 2017 to 3.09% in 2018, reflecting growth in passenger transport volume[56]. - The company operates over 150 main routes starting from Shanghai, effectively covering major domestic and international destinations[78]. - The company has successfully acquired international air rights for seven countries, supporting its international route expansion efforts[80]. - The company plans to introduce 6 new aircraft in 2019, maintaining a net increase of 9 aircraft in total[96]. Risk Management - The company has detailed potential risks in the section discussing future developments and analysis[6]. - The airline industry exhibits significant seasonality, with peak demand during the Spring Festival and summer vacation months, while January to February and November to December are typically low seasons[47]. - The company faces risks from macroeconomic fluctuations that can directly affect market demand for air transport services[181]. - Fuel costs accounted for 32.37% of the company's operating costs in 2018, with a total fuel cost of 3.951 billion RMB[183]. - A 5% change in average fuel procurement prices could result in a net profit variation of approximately 197.57 million RMB, highlighting the sensitivity of the company's financial performance to fuel price fluctuations[183]. Compliance and Governance - The company reported a standard unqualified audit opinion from Lixin Certified Public Accountants[4]. - The board of directors and supervisory board members confirmed the accuracy and completeness of the annual report[2]. - The company has committed to fulfilling the promises made by its directors and senior management at the time of listing[196]. - The company emphasizes compliance with legal obligations regarding share repurchase and investor compensation[197]. Future Outlook - The civil aviation industry in China is projected to achieve a total transportation turnover of 1,420 billion ton-kilometers by 2020, with an average annual growth rate of 10.8%[39]. - The aviation transportation industry is expected to maintain stable growth despite global economic uncertainties, with emerging markets contributing significantly to future growth[161]. - The global aircraft fleet is expected to grow by 123.73% to 47,990 aircraft by 2037, with passenger turnover expected to increase at an annual rate of 4.4%[162]. - The company aims to improve fuel efficiency by 1.5% annually before 2020 and reduce carbon emissions starting from 2020, targeting a 50% reduction by 2050 compared to 2005 levels[164].