A STAR ALLIANCE MEMBER V 中国国际航空股份有限公司 二零二零年度业绩发布 AIR CHINA LIMITED 2020 ANNUAL RESULTS Part 4 Financial Analysis Part 1 Industry Environment Contents Part 3 Operational Highlights Part 5 Outlook Part 2 Performance Summary 01 Industry Environment Overview of international aviation transport industry In 2020, due to the impact of the COVID-19 pandemic on global airlines, global air transport volume fell sharply, issued of aircraft grounded and lack of operating capital, doubled the operating pressure of enter ...

Fleet and Operations - As of the reporting period, Air China operates a fleet of 707 aircraft with an average age of 7.74 years, serving 674 routes, including 48 international routes and 620 domestic routes[4]. - Air China has expanded its service network to 1,300 destinations across 195 countries and regions through cooperation with Star Alliance members[4]. - The company operated 40 international flights per week, the highest among domestic airlines, following the Civil Aviation Administration's "Five Ones" policy[38]. - The company launched new domestic routes such as Beijing-Hengyang and Beijing-Daxing-Bazhong, and international routes including Shanghai-Pudong-Singapore[40]. - The company introduced 14 new aircraft in 2020, including 2 A350 and 8 A320NEO, while retiring 6 aircraft[90]. Financial Performance - The total operating revenue for 2020 was CNY 69,503,749, a decrease of 48.96% compared to CNY 136,180,690 in 2019[23]. - The net profit attributable to shareholders for 2020 was a loss of CNY 14,409,429, representing a decline of 324.85% from a profit of CNY 6,408,576 in 2019[23]. - The operating cash flow for 2020 was CNY 1,408,174, down 96.33% from CNY 38,340,183 in 2019[23]. - The total assets at the end of 2020 were CNY 284,070,710, a decrease of 3.46% from CNY 294,253,553 at the end of 2019[23]. - The company reported a loss of CNY 18,474,520 for the total profit in 2020, compared to a profit of CNY 9,104,639 in 2019, marking a decline of 302.91%[23]. Customer Engagement and Loyalty - The total number of Phoenix Miles members reached 68.18 million by the end of the reporting period, reflecting the company's strong customer loyalty program[1]. - As of the end of the reporting period, Air China's frequent flyer program, Phoenix Miles, had over 68.18 million members, contributing 52.3% to passenger revenue, an increase of 6 percentage points year-on-year[41]. - The company has optimized its mobile applications and e-commerce platforms, completing 112 iterations and adding over 1,970 new features[57]. - The company launched a series of innovative travel products, including "Your Journey, Defined by You," to enhance customer engagement and revenue generation[59]. Safety and Risk Management - Air China is committed to enhancing service quality by prioritizing passenger health and safety, implementing strict pandemic prevention measures throughout the travel process[9]. - The company has established a comprehensive risk management mechanism to prevent operational risks and enhance governance capabilities[9]. - In 2020, Air China achieved a total of 1.553 million safe flight hours, ensuring the safety of major transportation tasks[8]. - The company executed over 100 charter flights to support the resumption of work and school during the pandemic, receiving widespread customer recognition[41]. Cost Management and Efficiency - The company implemented a cost control strategy focusing on optimizing fleet operations and improving resource efficiency, which helped mitigate the impact of the pandemic[42]. - The company maintained strict cost control measures, rapidly restructuring its cost structure to ensure stable cash flow[59]. - Total operating costs decreased by 33.22% to CNY 75.63 billion, primarily due to reduced fuel costs and lower flight operations[73]. - The company reported a significant reduction in financial expenses by 78.77%, from RMB 6.17 billion to RMB 1.31 billion[63]. Market Position and Strategy - The company is positioned as China's only flag carrier, with a focus on building a strong national aviation brand and expanding its international route network[35]. - The company aims to create a world-class aviation transport group during the "14th Five-Year Plan" period, focusing on quality development and safety[9]. - The company aims to enhance its global network and improve passenger experience as part of its strategic transformation[31]. - The company is actively pursuing a hub network strategy to strengthen its position in key markets, including the Yangtze River Delta and the Guangdong-Hong Kong-Macau Greater Bay Area[113]. Corporate Governance and Management - The total compensation for the board members and senior management during the reporting period amounted to CNY 1,581.57 million[166]. - The company has established over 20 governance systems, including the "Board of Directors Proposal Collection Management Regulations" to improve proposal quality[199]. - The company has a diverse board structure, including independent directors who hold a majority in key committees[197]. - The company has maintained its auditing relationship with Deloitte for both domestic and international audits for four years[130]. Environmental and Social Responsibility - The company has established a comprehensive carbon emission monitoring system, becoming the only domestic airline to do so[49]. - The company has implemented ecological restoration projects in drought-affected regions, investing 291.51 thousand RMB in ecological protection[150]. - The company has engaged 39 volunteers in the "Aviation Blue Sky Classroom" initiative, providing a total of 1,088 teaching hours[150]. - The company trained 4,890 grassroots cadres and technical personnel as part of its poverty alleviation efforts, contributing to the exit of two regions from the national poverty list[60].

Financial Performance - Operating revenue for the first nine months was CNY 48,454,050,000, down 52.99% year-on-year[6] - Net profit attributable to shareholders of the listed company was negative CNY 10,111,847,000, a decline of 249.54% year-on-year[6] - Basic earnings per share for the period was negative CNY 0.74, a decrease of 251.02% compared to the previous year[7] - The weighted average return on net assets was -11.56%, a decrease of 19.01 percentage points year-on-year[7] - Total operating revenue for Q3 2020 was CNY 18,808,284, a decrease of 50.2% compared to CNY 37,764,085 in Q3 2019[26] - Net profit for Q3 2020 was a loss of CNY 600,082, compared to a profit of CNY 4,107,211 in Q3 2019[27] - The company reported a total comprehensive income of CNY -1,381,287 for Q3 2020, compared to CNY 4,688,759 in Q3 2019[28] - Total comprehensive income for Q3 2020 was CNY 184,677 thousand, down from CNY 2,721,785 thousand in Q3 2019[30] Assets and Liabilities - Total assets at the end of the reporting period were CNY 290,845,914,000, a decrease of 1.16% compared to the end of the previous year[6] - Net assets attributable to shareholders of the listed company decreased by 13.00% to CNY 81,350,516,000[6] - Total liabilities increased significantly, with short-term financing bonds rising by 104.23% to CNY 15.08 billion[13] - Current liabilities increased from 77,629,717 to 87,549,648, an increase of about 12%[21] - Total liabilities increased from 192,876,910 to 203,163,235, an increase of approximately 5.9%[21] - Total current assets decreased from 16,266,387 to 14,871,007, a decrease of about 8.6%[23] - Cash and cash equivalents decreased from 6,782,234 to 4,888,067, a decline of approximately 28%[23] Cash Flow - Net cash flow from operating activities was negative CNY 1,784,564,000, a decrease of 105.93% compared to the same period last year[6] - Cash flow from operating activities for the first three quarters of 2020 was negative CNY 1,784,564 thousand, contrasting with positive cash flow of CNY 30,103,490 thousand in the same period of 2019[31] - Cash inflow from operating activities totaled 30,679,362 thousand RMB, down from 74,444,865 thousand RMB in the previous year[34] - The net cash flow from financing activities was positive at 14,804,963 thousand RMB, contrasting with a negative -19,799,620 thousand RMB in the prior year[32] Government Support and Cost Control - The company received government subsidies amounting to CNY 90,664,000 during the reporting period[8] - The company has implemented cost control measures to mitigate the impact of the pandemic, focusing on optimizing revenue management and reducing operational costs[12] Shareholder Information - The total number of shareholders at the end of the reporting period was 189,677[9] - The largest shareholder, China National Aviation Holding Company, held 40.98% of the shares, with 127,445,536 shares frozen[10] Investment and Research - The company reported a significant decline in investment income, with a loss of CNY 3.67 billion compared to a profit of CNY 0.98 billion in the same period last year, a decrease of 473.78%[15] - Research and development expenses for Q3 2020 were CNY 58,788, an increase of 20.5% from CNY 48,676 in Q3 2019[26] - Research and development expenses for the first three quarters of 2020 were CNY 76,133 thousand, a decrease from CNY 100,349 thousand in the same period of 2019[29]

Financial Performance - The operating revenue for the first half of 2020 was 29.646 billion yuan[9]. - The net loss attributable to shareholders of the parent company was 9.441 billion yuan[9]. - The company's operating revenue for the reporting period was CNY 29,645,766, a decrease of 54.61% compared to the same period last year[20]. - The net loss attributable to shareholders was CNY (9,441,128), representing a significant increase of 400.72% compared to a net profit of CNY 3,139,457 in the previous year[20]. - The net cash flow from operating activities was CNY (7,633,715), a decrease of 148.30% compared to CNY 15,803,481 in the previous year[20]. - The total comprehensive loss for the first half of 2020 amounted to RMB (11,483,815) thousand, compared to a total comprehensive income of RMB 3,857,249 thousand in the first half of 2019[149]. - The company reported a significant increase in financial expenses, totaling RMB 3,512,190 thousand in the first half of 2020, compared to RMB 2,587,146 thousand in the same period of 2019[148]. - The company experienced an investment loss of RMB (2,871,223) thousand in the first half of 2020, compared to a gain of RMB 292,163 thousand in the same period of 2019[148]. Operational Highlights - The total transportation turnover for the first half of 2020 was 5.355 billion ton-kilometers[9]. - The company executed 166 charter flights related to the pandemic, transporting 11,306 medical personnel and 1,158 tons of supplies[8]. - The company operated 5,800 cargo flights using passenger aircraft to support global supply chains[8]. - The company resumed nearly 2,000 flights and operated 67 international charter flights during the recovery phase[8]. - The company achieved a safe flight record of 617,000 hours[8]. - The company introduced a risk control model for its "passenger-to-cargo" flight operations[8]. - The company is focusing on building a world-class hub in Beijing and an international hub in Chengdu, while expanding its market presence in the Yangtze River Delta and Guangdong-Hong Kong-Macau Greater Bay Area[24]. Cost Management and Financial Strategy - The company implemented strict cost control measures, adjusting aircraft retirement schedules and optimizing major cost management to reset the cost structure[10]. - The company issued bonds to replace bank loans, reducing financing costs and ensuring stable cash flow[10]. - The company’s financing activities generated a net cash inflow of 195.25 billion RMB, a significant increase of 270.80% year-on-year[46]. - The total liabilities increased by 6.03% to RMB 204.50 billion, with current liabilities accounting for 45.50% of total liabilities[56]. - The group’s interest-bearing debt increased by 76.45% to RMB 645.67 billion, primarily due to increased financing to ensure liquidity amid the COVID-19 pandemic[56]. Market Position and Strategy - The company has a strong market position as the only flag carrier in China, with a young fleet and leading profitability in the industry[28]. - The company is committed to maintaining a dual circulation economic strategy, focusing on both domestic and international markets[10]. - The company plans to enhance service quality and transform its business model through innovation[10]. - The company is actively seeking profit opportunities through dynamic capacity optimization and refined marketing strategies[69]. Social Responsibility and Community Engagement - The company is focused on poverty alleviation efforts as part of its corporate social responsibility initiatives[10]. - The company engaged in targeted poverty alleviation efforts, focusing on direct assistance, industrial support, and intellectual support in designated areas[92]. - The company invested a total of 67.11 million in poverty alleviation projects, including 40.40 million in industrial poverty alleviation projects[94]. - The company provided financial assistance of 9.86 million to support 245 impoverished students[94]. Shareholder Information - The total number of ordinary shareholders at the end of the reporting period was 210,821[105]. - The largest shareholder, China Aviation Group, held 5,952,236,697 shares, representing 40.98% of the total shares[106]. - Cathay Pacific Airways Limited is the second-largest shareholder with 2,633,725,455 shares, accounting for 22.25% of the total shares[108]. Financial Reporting and Compliance - The company’s financial report for the reporting period is unaudited and available for review[133]. - The accounting policies comply with the requirements of the enterprise accounting standards, ensuring a true and complete reflection of the financial position as of June 30, 2020[163]. - The company applies the equity method for accounting for investments in joint ventures, reflecting its rights and obligations in the arrangements[168].

Financial Performance - In Q1 2020, the company's operating revenue was RMB 17.26 billion, a decrease of 46.99% compared to the same period last year[4] - The net loss attributable to shareholders of the parent company was RMB 4.80 billion, representing a decline of 276.48% year-on-year[4] - The net cash flow from operating activities was negative RMB 8.72 billion, a decrease of 246.86% compared to the previous year[4] - The company's total revenue for Q1 2020 was CNY 17,255,757, a decrease of 46.99% compared to CNY 32,554,019 in Q1 2019, primarily due to a decline in transportation turnover caused by the COVID-19 pandemic[14] - The company's cash received from sales of goods and services was CNY 11,619,620, down 63.42% from CNY 31,766,329 in the same period last year, reflecting the impact of the pandemic[14] - The company's operating revenue for Q1 2020 was CNY 12,074,346 thousand, a decrease of 45.4% compared to CNY 22,202,958 thousand in Q1 2019[28] - The net profit for Q1 2020 was a loss of CNY 5,616,412 thousand, compared to a profit of CNY 3,237,185 thousand in Q1 2019, representing a significant decline[26] - The total comprehensive income for Q1 2020 was a loss of CNY 5,208,024 thousand, compared to a gain of CNY 2,765,166 thousand in Q1 2019[26] - The company's operating profit for Q1 2020 was a loss of CNY 6,788,836 thousand, compared to a profit of CNY 3,980,088 thousand in Q1 2019[25] - The total profit for Q1 2020 was a loss of CNY 6,789,201 thousand, compared to a profit of CNY 4,085,238 thousand in Q1 2019[25] Assets and Liabilities - Total assets at the end of the reporting period were RMB 293.52 billion, a slight decrease of 0.25% from the end of the previous year[4] - The net assets attributable to shareholders of the parent company were RMB 89.12 billion, down 4.69% from the previous year[4] - Total liabilities increased to 136,314,938 from 133,794,576, marking an increase of 1.9%[22] - Shareholders' equity decreased to 80,843,376 from 83,763,970, a decline of 3.5%[23] Cash Flow - The cash flow from operating activities for Q1 2020 was a net outflow of CNY 8,716,790 thousand, compared to an inflow of CNY 5,935,389 thousand in Q1 2019[31] - The total cash inflow from operating activities was 7,921,586 in Q1 2020, down from 22,098,764 in Q1 2019, indicating a significant drop in operational performance[34] - Cash inflow from financing activities totaled 24,321,878 in Q1 2020, a substantial increase from 6,486,183 in Q1 2019, driven by bond issuance and borrowing[34] - The net cash flow from financing activities was 12,838,610 in Q1 2020, contrasting with a negative cash flow of -5,047,725 in Q1 2019, showcasing improved financing conditions[32] Impact of COVID-19 - The company faced significant impacts from the COVID-19 pandemic, leading to a sharp reduction in air travel demand[11] - The company anticipates that the ongoing impact of the COVID-19 pandemic on the global aviation industry will significantly affect its performance in the upcoming reporting period[15] - The company implemented measures to optimize capacity and enhance cost control to mitigate the pandemic's impact[11] Investments and Expenditures - The company’s cash paid for the purchase of fixed assets increased by 80.33% to CNY 2,811,387 from CNY 1,559,059, indicating ongoing investment in capital expenditures despite the challenging environment[15] - Research and development expenses increased to 119,234 in Q1 2020 from 22,086 in Q1 2019, showing a significant rise of 440.5%[24] - Research and development expenses for Q1 2020 were CNY 36,263 thousand, an increase from CNY 15,357 thousand in Q1 2019[28] Shareholder Information - As of the end of the reporting period, the total number of shareholders was 205,909, with the largest shareholder holding 40.98% of the shares[7] Other Financial Metrics - The weighted average return on net assets was -5.26%, a decrease of 8.33 percentage points year-on-year[4] - The basic earnings per share were -0.35 RMB, a decline of 275.00% compared to the previous year[5] - Other comprehensive income increased to CNY 402,908 from a loss of CNY 14,562, a change of 2,866.85%, mainly due to an increase in foreign currency translation differences[13] - The company recorded an investment loss of CNY -1,238,000, a decline of 499.47% compared to a profit of CNY 309,911 in Q1 2019, due to the performance decline of its joint ventures affected by the pandemic[14]

Financial Performance - The company achieved operating revenue of CNY 136.18 billion and a net profit attributable to shareholders of CNY 6.41 billion for the year 2019[10]. - The total operating revenue for 2019 was CNY 136,180.69 million, a decrease of 0.43% compared to 2018[24]. - The net profit attributable to shareholders for 2019 was CNY 6,408.58 million, down 12.65% from the previous year[24]. - The net cash flow from operating activities increased by 22.03% to CNY 38,340.18 million in 2019[24]. - The basic earnings per share for 2019 was CNY 0.47, reflecting a decrease of 11.32% from 2018[25]. - The weighted average return on equity for 2019 was 7.09%, down from 8.17% in 2018, indicating a decline of 13.22%[25]. - The company reported a net asset attributable to shareholders of CNY 93,505.86 million at the end of 2019, a slight increase of 0.31% from the previous year[24]. - The total revenue for the group was CNY 94.777 billion, with a year-on-year growth of 1.19%[131]. - The after-tax profit for the group was CNY 1.498 billion, showing a year-on-year increase of 10.16%[131]. - The operating income from air transportation was CNY 86.645 billion, with a year-on-year change of -0.22%[131]. Passenger and Cargo Operations - The total number of passengers transported reached 115 million, representing a year-on-year increase of 4.81%[10]. - The total turnover of freight and mail was 1.4342 million tons, showing a year-on-year decrease of 1.83%[10]. - In 2019, the company achieved a passenger transport volume of 660 million, with a year-on-year growth of 7.9%[45]. - The company's total turnover volume reached 129.27 billion ton-kilometers in 2019, reflecting a year-on-year increase of 7.1%[45]. - The cargo turnover decreased by 3.61% to 4.78 billion revenue ton kilometers, with a cargo load factor of 43.63%[69]. - The company transported 115 million passengers, a year-on-year growth of 4.81%[70]. - The total passenger turnover reached 233.18 billion revenue passenger kilometers, a year-on-year increase of 5.74%[69]. Fleet and Route Network - The company has a fleet of 699 aircraft with an average age of 6.96 years, operating 770 passenger routes, including 137 international routes[5]. - The company expanded its international route network by launching 9 new routes, including Beijing-Nice and Shanghai-London[10]. - The company operates a total of 770 passenger routes, including 137 international routes and 606 domestic routes, serving 43 countries and regions with 187 cities[53]. - The group introduced a total of 48 aircraft in 2019, including 4 A350s, 1 A330-300, 2 B737-8MAX, 4 B737-800, 30 A320NEOs, and 7 A321NEOs[112]. - The average daily utilization rate for the A320 series aircraft was 9.22 hours, with a total revenue flight hours of 892,969.50[116]. - The average daily utilization rate for the B737 series aircraft was 9.31 hours, with a total revenue flight hours of 863,912.97[117]. Digital Transformation and Innovation - The company is committed to digital transformation and enhancing service quality, with significant improvements noted in operational efficiency[10]. - The company expanded its digital transformation efforts, launching a "Lounge Service Management System" across 33 self-operated lounges in 12 airports[78]. - The company has been awarded 323 patents and 5 software copyrights, enhancing its innovation capabilities[56]. - The company has established 2 company-level innovation laboratories and 7 specialized laboratories to enhance innovation management[78]. - The company implemented digital aircraft maintenance management technology to enhance predictive maintenance and resource utilization[126]. Customer Experience and Loyalty Programs - The total number of "Phoenix Miles" loyalty program members reached 63.5953 million, with a year-on-year revenue contribution increase of 5%[10]. - The loyalty program "Phoenix Miles" reached a total membership of 63.6 million, with a year-on-year revenue contribution growth of 5%[75]. - The company emphasizes a customer experience-oriented approach, aiming to create a unique experience for travelers[35]. - Customer satisfaction ratings improved to 90%, reflecting the success of recent service enhancements[10]. Strategic Goals and Market Position - The company aims to enhance its international competitiveness and achieve sustainable development as a large network carrier[32]. - The strategic focus includes building a world-class hub in Beijing and an international hub in Chengdu, targeting the Yangtze River Delta and Guangdong-Hong Kong-Macau Greater Bay Area markets[38]. - The company is focused on enhancing operational efficiency and expanding its market presence through strategic initiatives[18]. - The company plans to optimize its fleet and cost structure to maintain industry-leading cost advantages[40]. - The company plans to leverage the operational advantages of the newly opened Beijing Daxing International Airport to enhance its hub capabilities[51]. Financial Management and Investments - The company plans to distribute a cash dividend of approximately CNY 645 million, equating to CNY 0.4442 per 10 shares[7]. - The company’s cash dividend policy mandates a minimum of 15% of distributable profits to be allocated for cash dividends, emphasizing a commitment to investor returns[145]. - The company has capital commitments of RMB 36.621 billion for future aircraft and equipment purchases, down 6.74% from the previous year[105]. - The company reported a net cash outflow from investing activities of RMB 11.967 billion, an increase of 33.71% from 2018[106]. - The company plans to invest in new technologies and product development to improve service offerings and operational capabilities[18]. Leadership and Governance - The company has a diverse leadership team with significant experience in both operational and strategic roles within the aviation industry[184]. - The average age of the board members is approximately 57 years, indicating a wealth of experience[184]. - The company maintains a policy of transparency regarding the remuneration of its independent directors[183]. - The ongoing leadership transitions are expected to strengthen the company's strategic initiatives and operational performance in the coming years[186]. Market Challenges and Outlook - The company faces risks from market volatility, with potential impacts from oil price fluctuations estimated at approximately 1.798 billion CNY for a 5% change in average fuel prices[139]. - The company anticipates that the international market will continue to experience intense competition, particularly in long-haul routes[136]. - The company expects the RMB exchange rate to maintain two-way fluctuations around a reasonable equilibrium level, with a 1% appreciation or depreciation against the USD potentially impacting net profit and shareholder equity by RMB 444 million[141]. - The company is facing intensified competition from both domestic airlines and high-speed rail, which is becoming a preferred mode of transport for short to medium distances[143].

Financial Performance - Operating revenue for the third quarter reached CNY 103,077,172,000, a slight increase of 0.19% compared to the previous year[7] - Net profit attributable to shareholders decreased by 2.53% to CNY 6,762,090,000[7] - The company reported a basic earnings per share of CNY 0.49, down 3.92% from the previous year[7] - Total operating revenue for Q3 2019 was CNY 37,764,085, a decrease from CNY 38,637,773 in Q3 2018, representing a decline of approximately 2.2%[27] - Net profit for Q3 2019 reached CNY 4,107,211, compared to CNY 3,728,793 in Q3 2018, indicating an increase of approximately 10.1%[28] - The total profit for Q3 2019 was CNY 4,838,261, compared to CNY 4,577,098 in Q3 2018, reflecting an increase of about 5.7%[28] - The total comprehensive income for Q3 2019 was CNY 4,688,759, slightly down from CNY 4,701,392 in Q3 2018[29] - The company reported investment income of CNY 688,711 in Q3 2019, compared to CNY 596,386 in Q3 2018, showing an increase of about 15.4%[28] Assets and Liabilities - Total assets increased by 18.58% year-on-year to CNY 289,007,619,000[6] - The number of total assets at the end of the reporting period was CNY 289,007,619,000, compared to CNY 243,716,006,000 at the end of the previous year[6] - Total liabilities increased to 187.30 billion, up from 143.16 billion, representing a growth of approximately 30.8% year-over-year[21] - Current liabilities totaled 75.38 billion, compared to 72.23 billion, reflecting an increase of about 4.8%[21] - Non-current liabilities rose significantly to 111.92 billion from 70.93 billion, marking an increase of approximately 57.8%[21] - The company reported a significant decrease in long-term borrowings, down 53.92% to RMB 1,467,852 thousand from RMB 3,185,481 thousand, due to lower new borrowings compared to repayments[14] Cash Flow - Net cash flow from operating activities increased by 22.30% to CNY 30,103,490,000 for the first nine months[6] - Cash received from operating activities increased by 53.20% to RMB 7,687,329 thousand compared to RMB 5,017,851 thousand in the previous year[15] - The net cash flow from operating activities for the first three quarters of 2019 was CNY 18,715,257 thousand, an increase from CNY 17,154,552 thousand in the same period of 2018, reflecting a growth of approximately 9.1%[35] - The net cash flow from financing activities was -CNY 15,981,892 thousand, compared to -CNY 8,569,096 thousand in the same period last year, representing a decline of approximately 86.5%[36] - The company experienced a net increase in cash and cash equivalents of -CNY 4,722,319 thousand, contrasting with a net increase of CNY 3,143,170 thousand in the same period last year[36] Shareholder Information - The total number of shareholders at the end of the reporting period was 170,901[9] - The largest shareholder, China National Aviation Holding, holds 40.98% of the shares[9] Research and Development - Research and development expenses in Q3 2019 were CNY 48,676, significantly higher than CNY 20,743 in Q3 2018, marking an increase of about 134%[27] - Research and development expenses increased significantly to CNY 36,454, up 206.57% from CNY 11,881 in Q3 2018[31] Other Financial Metrics - The weighted average return on equity decreased by 0.23 percentage points to 7.45%[7] - Cash and cash equivalents decreased to 2.46 billion from 7.18 billion, a decline of approximately 65.7%[23] - The company reported a decrease in undistributed profits to 42.50 billion from 42.88 billion, a decline of approximately 0.9%[21] - The company’s total equity increased to 101.71 billion from 100.56 billion, reflecting a growth of about 1.1%[21]

[Cover and Company Profile](index=1&type=section&id=Cover%20and%20Company%20Profile) [Company Profile](index=2&type=section&id=Company%20Profile) Air China, the sole flag carrier of China and a Star Alliance member, is headquartered in Beijing, operating 676 aircraft and serving 1,317 destinations in 193 countries, with stakes in Shenzhen Airlines, Air Macau, and Cathay Pacific - Air China is the sole flag carrier of China, headquartered in Beijing[3](index=3&type=chunk) - As of the reporting period, the group operates a total of **676 passenger aircraft** (including business jets), possessing the largest wide-body fleet in China[3](index=3&type=chunk) - Through Star Alliance, the route network covers **1,317 destinations in 193 countries**[3](index=3&type=chunk) [Financial and Operational Summary](index=5&type=section&id=Financial%20and%20Operational%20Summary) [Financial Data Summary](index=5&type=section&id=Financial%20Data%20Summary) In H1 2019, group revenue increased by 1.67% to RMB 65.31 billion, but net profit attributable to shareholders decreased by 9.55% to RMB 3.14 billion due to various factors, while EBITDA significantly grew by 24.72% primarily due to new leasing standards, which also led to a substantial increase in total assets and liabilities Financial Indicators (RMB billions) | Indicator (RMB billions) | H1 2019 | H1 2018 | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 65.313 | 64.242 | 1.67% | | Operating Profit | 6.742 | 6.641 | 1.52% | | Profit Before Tax | 4.505 | 5.006 | (10.01%) | | Profit Attributable to Equity Holders of the Company | 3.144 | 3.476 | (9.55%) | | EBITDA | 17.045 | 13.667 | 24.72% | | Earnings Per Share Attributable to Equity Holders of the Company (RMB) | 0.2289 | 0.2531 | (9.56%) | Balance Sheet Indicators (RMB billions) | Indicator (RMB billions) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | 285.454 | 243.657 | | Total Liabilities | 188.487 | 143.159 | | Equity Attributable to Equity Holders of the Company | 89.609 | 93.157 | - Effective January 1, 2019, the Group adopted International Financial Reporting Standard 16 (New Leasing Standard), adjusting financial statement items without restating comparative data[9](index=9&type=chunk) [Business Operations Data Summary](index=6&type=section&id=Business%20Operations%20Data%20Summary) In H1 2019, group passenger capacity (ASK) increased by 5.93%, RPK by 6.60%, and load factor by 0.51 percentage points to 80.99%, while cargo data adjusted due to Air China Cargo's deconsolidation showed a 2.17% decrease in belly-hold cargo RTK and a 2.43 percentage point drop in load factor, with improved aircraft daily utilization Passenger Indicators (Millions) | Passenger Indicator | Jan-Jun 2019 | Jan-Jun 2018 | Change | | :--- | :--- | :--- | :--- | | Available Seat Kilometers (Millions) | 141,728.21 | 133,799.77 | 5.93% | | Revenue Passenger Kilometers (Millions) | 114,784.17 | 107,679.81 | 6.60% | | Passenger Load Factor | 80.99% | 80.48% | +0.51 percentage points | | Number of Passengers (Thousands) | 56,483.19 | 53,752.20 | 5.08% | Cargo Indicators (Millions) | Cargo Indicator | Jan-Jun 2019 | Jan-Jun 2018 | Change | | :--- | :--- | :--- | :--- | | Available Freight Ton Kilometers (Millions) | 5,534.23 | 5,349.36 | 3.46% | | Revenue Freight Ton Kilometers (Millions) | 2,333.48 | 2,385.29 | (2.17%) | | Cargo and Mail Load Factor | 42.16% | 44.59% | (2.43 percentage points) | - Revenue per Revenue Passenger Kilometer was **RMB 0.5214**, a **1.29% decrease** year-on-year[11](index=11&type=chunk) - Effective January 2019, due to the completion of Air China Cargo's equity transfer, operational data only includes belly-hold cargo data, with prior period data adjusted for comparability[11](index=11&type=chunk) [Business Overview](index=8&type=section&id=Business%20Overview) [Fleet Development](index=8&type=section&id=Fleet%20Development) During the reporting period, the Group introduced 19 aircraft and retired 12, resulting in a fleet of 676 aircraft with an average age of 6.81 years, primarily Airbus and Boeing series, with plans for continued new aircraft introductions in the next three years - As of June 30, 2019, the Group operated a total of **676 aircraft**, with an average age of **6.81 years**[15](index=15&type=chunk)[16](index=16&type=chunk) Fleet Composition | Aircraft Type Series | Total as of June 30, 2019 | Average Age (Years) | | :--- | :--- | :--- | | Airbus Series | 342 | 7.10 | | Boeing Series | 329 | 6.50 | | Business Jets | 5 | 6.90 | | **Total** | **676** | **6.81** | - Future introduction plans include Airbus, Boeing, and COMAC series aircraft, with an estimated **55, 93, and 42 aircraft** to be introduced in **2019, 2020, and 2021**, respectively[17](index=17&type=chunk) [Hub Network](index=9&type=section&id=Hub%20Network) The company maintains its 'Four-Corner Diamond' hub network strategy centered on Beijing, while developing Chengdu, Shanghai, and Shenzhen as gateways, actively expanding its route network by opening and optimizing international and domestic routes in response to the 'Belt and Road' initiative, operating 766 passenger routes to 190 cities in 41 countries and regions as of the period end - Adhering to the 'Four-Corner Diamond' hub network strategy centered in Beijing, actively promoting related renovation and construction projects at Beijing Capital International Airport[18](index=18&type=chunk) - The number of connecting passengers at the Beijing hub increased by **11%** year-on-year[18](index=18&type=chunk) - As of the reporting period, the Group operates **766 passenger routes**, serving **190 cities**, and through Star Alliance partnerships, services extend to **1,317 destinations in 193 countries**[18](index=18&type=chunk) [Brand and Marketing](index=10&type=section&id=Brand%20and%20Marketing) The company improved aircraft daily utilization by 0.15 hours, increasing profit by nearly RMB 400 million, with first/business class revenue up 4.3% and ancillary service revenue up 73%, while mobile sales were strong with APP revenue reaching RMB 3.59 billion, and 'PhoenixMiles' members totaled 60.09 million, contributing 6.3% more revenue - Aircraft daily utilization increased by **0.15 hours**, leading to efficiency improvements and structured profit increase of nearly **RMB 400 million**[19](index=19&type=chunk) - First/business class revenue increased by **4.3%** year-on-year, and ancillary service product revenue grew by **73%** to **RMB 160 million**[19](index=19&type=chunk) - 'PhoenixMiles' members totaled **60.09 million**, contributing **6.3%** more revenue, with the company's APP users reaching **9.37 million**, generating **RMB 3.59 billion** in sales revenue[19](index=19&type=chunk) [Products and Services](index=10&type=section&id=Products%20and%20Services) The company is committed to enhancing passenger experience, benchmarking Star Alliance service standards, and continuously advancing digitalization projects, optimizing and upgrading in-flight products such as seats, entertainment systems, and catering, and progressing with in-flight WIFI modifications, having released 75 product service standards as of the reporting period - Benchmarking Star Alliance service standards, advancing digitalization and baggage hub center projects[20](index=20&type=chunk) - In the first half of the year, **10 aircraft**, including A320 and B777, underwent in-flight WIFI modifications[20](index=20&type=chunk)[21](index=21&type=chunk) [Synergy and Cooperation](index=11&type=section&id=Synergy%20and%20Cooperation) The company deepened strategic synergy with its member airlines and strengthened joint ventures with international partners, making progress with Lufthansa and Air Canada joint ventures, while enhancing cooperation with United Airlines and Air New Zealand, currently engaging in code-sharing with 36 airlines - Deepened joint venture cooperation with Lufthansa and fully launched joint venture cooperation with Air Canada[22](index=22&type=chunk) - Engaged in code-sharing cooperation with **19 Star Alliance members** and a total of **36 airlines**[22](index=22&type=chunk) [Safety Operations and Future Outlook](index=11&type=section&id=Safety%20Operations%20and%20Future%20Outlook) During the reporting period, the company maintained its safety baseline, achieving 1.1292 million safe flight hours, actively addressing challenges like the B737MAX grounding to ensure operational safety, and plans to uphold high-quality development in the second half, further strengthening safety management, optimizing the hub network, and enhancing service quality to build a world-class air transport group - During the reporting period, the company achieved **1.1292 million safe flight hours** and nearly **410,000 safe take-offs and landings**[23](index=23&type=chunk) - Looking ahead, the Group will continue to pursue steady progress, strengthen risk control and profitability, optimize its hub network and production organization, and enhance service quality[24](index=24&type=chunk) [Performance of Major Subsidiaries and Associates](index=12&type=section&id=Performance%20of%20Major%20Subsidiaries%20and%20Associates) This section details the operating performance of Air China's major subsidiaries and associates, with Shenzhen Airlines contributing significant revenue and profit despite a year-on-year profit decline, Air Macau showing revenue growth but reduced profit, Cathay Pacific's performance significantly improving from loss to profit, providing investment income to Air China, and Shandong Airlines turning from profit to loss [Shenzhen Airlines](index=12&type=section&id=Shenzhen%20Airlines) Shenzhen Airlines (including Kunming Airlines) achieved operating revenue of **RMB 15.61 billion**, a 3.70% year-on-year increase, but profit attributable to shareholders decreased by 11.57% to **RMB 466 million**, with a load factor of 81.12%, down 0.86 percentage points year-on-year Indicators (RMB millions) | Indicator | Amount (RMB millions) | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 15610 | +3.70% | | Profit Attributable to Shareholders | 466 | -11.57% | [Air Macau](index=13&type=section&id=Air%20Macau) Air Macau achieved operating revenue of **RMB 1.853 billion**, a 12.85% year-on-year increase, but after-tax profit was **RMB 71 million**, a decrease of RMB 45 million year-on-year, driven by strong passenger demand with passenger traffic up 17.90% Indicators (RMB millions) | Indicator | Amount (RMB millions) | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 1853 | +12.85% | | Profit After Tax | 71 | -45 million | [Cathay Pacific](index=15&type=section&id=Cathay%20Pacific) Cathay Pacific (Air China's 29.99% stake) significantly improved its performance, achieving operating revenue of **RMB 47.011 billion**, a 5.50% year-on-year increase, and profit attributable to shareholders reached **RMB 1.183 billion**, compared to a loss of RMB 221 million in the same period last year Indicators (RMB billions) | Indicator | Amount (RMB billions) | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 47.011 | +5.50% | | Profit Attributable to Shareholders | 1.183 | Loss of 0.221 billion in prior period | [Shandong Airlines](index=16&type=section&id=Shandong%20Airlines) Shandong Airlines achieved operating revenue of **RMB 8.989 billion**, a 2.98% year-on-year increase, but recorded a loss attributable to shareholders of **RMB 27 million**, compared to a profit of RMB 204 million in the same period last year Indicators (RMB millions) | Indicator | Amount (RMB millions) | Y-o-Y Change | | :--- | :--- | :--- | | Operating Revenue | 8989 | +2.98% | | Loss Attributable to Shareholders | 27 | Profit of 204 million in prior period | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) [Profitability Analysis](index=17&type=section&id=Profitability%20Analysis) During the reporting period, the Group's operating profit slightly increased by 1.52% to RMB 6.742 billion, driven by a 1.67% revenue growth primarily from passenger business, while cargo revenue significantly decreased due to Air China Cargo's deconsolidation, operating expenses increased by 1.56% with stable fuel costs but higher landing fees and staff costs, exchange losses significantly reduced, interest expenses increased due to new leasing standards, and profit from associates significantly increased due to Cathay Pacific's turnaround - In H1 2019, the Group recorded an operating profit of **RMB 6.742 billion**, a **1.52% increase** year-on-year[39](index=39&type=chunk) - Profit from associates was **RMB 146 million**, an increase of **RMB 69 million** year-on-year, primarily due to recognizing an investment gain of **RMB 199 million** from Cathay Pacific (compared to a loss of RMB 157 million in the prior period)[59](index=59&type=chunk) [Operating Revenue](index=17&type=section&id=Operating%20Revenue) Total group revenue increased by 1.67% to RMB 65.313 billion, with passenger revenue growing 5.20% to RMB 59.851 billion driven by increased capacity and load factor, while cargo and mail revenue decreased by 44.23% due to Air China Cargo's deconsolidation, and China mainland revenue accounted for the largest share at 65.03% Revenue Type (RMB billions) | Revenue Type (RMB billions) | H1 2019 | Y-o-Y Change | | :--- | :--- | :--- | | Air Transportation Revenue | 62.681 | +1.15% | | Other Operating Revenue | 2.632 | +15.79% | | **Total Operating Revenue** | **65.313** | **+1.67%** | - Passenger revenue increased by **5.20%**, primarily driven by increased capacity input (**+5.93%**) and higher load factor (**+0.51 percentage points**), partially offset by a decrease in yield (**-1.29%**)[43](index=43&type=chunk)[44](index=44&type=chunk) - Excluding the impact of Air China Cargo's deconsolidation, cargo and mail transportation revenue decreased by **RMB 67 million** year-on-year, mainly due to a decline in load factor[48](index=48&type=chunk) [Operating Expenses](index=20&type=section&id=Operating%20Expenses) Group operating expenses increased by 1.56% to RMB 60.502 billion, with aviation fuel costs being the largest component (29.11%) but remaining largely stable year-on-year, while landing and parking fees and staff costs increased due to business expansion, and aircraft maintenance, repair, and overhaul costs decreased by 15.50% year-on-year due to the adoption of new leasing standards Expense Items (RMB billions) | Expense Item (RMB billions) | H1 2019 | Proportion | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Aviation Fuel Costs | 17.615 | 29.11% | +0.19% | | Staff Costs | 11.761 | 19.44% | +1.42% | | Depreciation, Amortization and Lease Expenses | 10.863 | 17.96% | +3.17% | | Landing and Parking Fees | 8.055 | 13.31% | +9.29% | | Aircraft Maintenance, Repair and Overhaul Costs | 2.886 | 4.77% | -15.50% | | **Total Operating Expenses** | **60.502** | **100.00%** | **+1.56%** | [Asset and Debt Structure Analysis](index=22&type=section&id=Asset%20and%20Debt%20Structure%20Analysis) Due to the new leasing standards, the Group's total assets and liabilities significantly increased at the beginning of the year, reaching RMB 285.454 billion and RMB 188.487 billion respectively as of the reporting period, with a debt-to-asset ratio of 66.03%, slightly down from the beginning of the year but remaining at a reasonable level, while the proportion of RMB-denominated interest-bearing debt increased to 54.63% and USD-denominated debt decreased to 44.19%, indicating optimization of debt currency structure, with capital expenditures primarily for aircraft and engine investments - The adoption of new leasing standards led to a **RMB 36.717 billion** increase in total assets on January 1, 2019, with total assets reaching **RMB 285.454 billion** as of the reporting period[60](index=60&type=chunk) - Capital expenditures during the reporting period totaled **RMB 9.667 billion**, of which **RMB 8.965 billion** was for aircraft and engine investments[62](index=62&type=chunk) - As of the reporting period, the debt-to-asset ratio was **66.03%**, a **0.30 percentage point decrease** from **66.33%** at the beginning of the year (after adopting the new standard)[68](index=68&type=chunk) Interest-Bearing Debt Currency Structure | Interest-Bearing Debt Currency Structure | Proportion as of June 30, 2019 | Proportion as of Jan 1, 2019 | | :--- | :--- | :--- | | USD | 44.19% | 48.43% | | RMB | 54.63% | 50.28% | | Other | 1.18% | 1.29% | [Liquidity and Funding Sources](index=24&type=section&id=Liquidity%20and%20Funding%20Sources) During the reporting period, the Group's net cash inflow from operating activities was RMB 13.075 billion, an 11.64% year-on-year increase, primarily due to operating lease payments being reclassified to financing activities under the new leasing standards, while net cash outflow from investing activities significantly decreased and net cash outflow from financing activities increased, with the company possessing sufficient bank credit lines to meet liquidity and capital expenditure needs Cash Flow (RMB billions) | Cash Flow (RMB billions) | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 13.075 | 11.712 | | Net Cash Outflow from Investing Activities | (3.456) | (8.451) | | Net Cash (Outflow)/Inflow from Financing Activities | (8.703) | 0.120 | - The company has secured a total credit line of **RMB 131.216 billion** from multiple domestic banks, of which approximately **RMB 18.183 billion** has been utilized[69](index=69&type=chunk) [Risk Analysis](index=24&type=section&id=Risk%20Analysis) The Group faces multiple risks, including macroeconomic fluctuations, oil price volatility, and exchange rate fluctuations, with high sensitivity to oil prices and exchange rates, where a 1% depreciation of RMB against USD would reduce net profit by RMB 480 million, while operational risks include intensified industry competition, high-speed rail substitution, and 'de-hubbing' challenges from the development of international routes in second-tier cities - Oil price risk: A **5% increase or decrease** in average aviation fuel prices would result in an approximate **RMB 881 million** change in the Group's aviation fuel costs[71](index=71&type=chunk) - Exchange rate risk: If the RMB depreciates by **1%** against the USD, the Group's net profit and shareholders' equity would decrease by approximately **RMB 480 million**[72](index=72&type=chunk) - Competition risk: Facing 'de-hubbing' challenges from joint ventures of large network airlines, expansion of domestic medium-sized airlines, diversion by high-speed rail networks, and the development of long-haul routes in second-tier cities[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Shareholders and Governance](index=26&type=section&id=Shareholders%20and%20Governance) [Major Shareholder Holdings](index=26&type=section&id=Major%20Shareholder%20Holdings) As of the reporting period, China National Aviation Holding Corporation (CNAHC) is the controlling shareholder, holding a total of 51.70% of the company's shares directly and indirectly, with Cathay Pacific as the second largest shareholder holding 18.13% of H shares, and a total of 159,245 shareholders - Controlling shareholder CNAHC, through direct holdings and indirect holdings via its wholly-owned subsidiary CNAH Limited, collectively holds **51.70%** of the Company's shares[78](index=78&type=chunk)[82](index=82&type=chunk) Major Shareholders | Major Shareholder | Shareholding Proportion | Share Class | | :--- | :--- | :--- | | China National Aviation Holding Corporation (Total) | 51.70% | A Share & H Share | | Cathay Pacific Airways Limited | 18.13% | H Share | | HKSCC Nominees Limited | 11.62% | H Share | | China National Aviation Corporation (Group) Limited | 10.72% | A Share & H Share | [Corporate Governance and Other Information](index=30&type=section&id=Corporate%20Governance%20and%20Other%20Information) During the reporting period, the company complied with the Corporate Governance Code and Model Code, prioritizing environmental protection through fleet optimization, fuel-saving measures, and promoting 'oil-to-electricity' conversions for energy conservation and emission reduction, with the report disclosing the use of proceeds from the 2017 non-public A-share offering, mostly for aircraft purchases and working capital, and the Board of Directors decided not to declare an interim dividend for H1 2019 - The company has consistently complied with the code provisions of Appendix 14 'Corporate Governance Code' of the Listing Rules during the reporting period[85](index=85&type=chunk) - The company actively promoted energy conservation and environmental protection, achieving **6,609.9 tons of fuel savings** and **20,821.2 tons of CO2 emission reduction** through various fuel-saving measures during the reporting period[86](index=86&type=chunk) - The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2019[92](index=92&type=chunk) - Subsequent event: On July 11, 2019, the company entered into an agreement with Airbus for the purchase of **20 A350-900 aircraft**[95](index=95&type=chunk) [Condensed Consolidated Financial Statements](index=33&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Review Report](index=33&type=section&id=Review%20Report) Deloitte Touche Tohmatsu, the auditor, reviewed the interim condensed consolidated financial statements in accordance with Hong Kong Standard on Review Engagements, and based on the review, found no matters that caused them to believe the financial statements were not prepared in all material respects in accordance with International Accounting Standard 34 - Auditor's conclusion: No matters were noted that caused the auditor to believe the condensed consolidated financial statements were not prepared in all material respects in accordance with International Accounting Standard 34[98](index=98&type=chunk) [Key Financial Statement Items](index=34&type=section&id=Key%20Financial%20Statement%20Items) This section includes the condensed consolidated statement of profit or loss, statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows for the six months ended June 30, 2019, showing a profit of RMB 3.500 billion for the period, profit attributable to shareholders of RMB 3.144 billion, total assets of RMB 285.454 billion, total equity of RMB 96.968 billion, and net cash inflow from operating activities of RMB 13.075 billion Condensed Consolidated Statement of Profit or Loss (RMB thousands) | Condensed Consolidated Statement of Profit or Loss (RMB thousands) | For the six months ended June 30, 2019 | | :--- | :--- | | Revenue | 65,313,087 | | Operating Profit | 6,742,370 | | Profit Before Tax | 4,505,149 | | Profit for the Period | 3,500,354 | | Profit Attributable to Equity Holders of the Company | 3,144,219 | Condensed Consolidated Statement of Financial Position (RMB thousands) | Condensed Consolidated Statement of Financial Position (RMB thousands) | June 30, 2019 | | :--- | :--- | | Non-current Assets | 259,867,100 | | Current Assets | 25,587,332 | | **Total Assets** | **285,454,432** | | Current Liabilities | 77,790,795 | | Non-current Liabilities | 110,695,764 | | **Total Liabilities** | **188,486,559** | | **Total Equity** | **96,967,873** | [Summary of Notes to Financial Statements](index=41&type=section&id=Summary%20of%20Notes%20to%20Financial%20Statements) The notes to the financial statements detail accounting policies, segment information, key financial item breakdowns, commitments and contingent liabilities, and related party transactions, with the most significant change being the first-time adoption of IFRS 16 'Leases' from January 1, 2019, which significantly impacted the company's asset, liability, and expense structure [Note 3: Significant Accounting Policies (Impact of IFRS 16)](index=41&type=section&id=Note%203%3A%20Significant%20Accounting%20Policies%20(Impact%20of%20IFRS%2016)) The Group first adopted IFRS 16 'Leases' from January 1, 2019, choosing the simplified transition method without restating comparative data, resulting in the recognition of **RMB 108.88 billion** in right-of-use assets and **RMB 93.549 billion** in lease liabilities on January 1, 2019, and a negative impact of **RMB 5.105 billion** on opening retained earnings, significantly altering the company's balance sheet structure - The Group first adopted IFRS 16 on January 1, 2019, using the modified retrospective approach without restating comparative data[112](index=112&type=chunk)[125](index=125&type=chunk) - As of January 1, 2019, the Group recognized **RMB 93.549 billion** in lease liabilities and **RMB 108.88 billion** in right-of-use assets[125](index=125&type=chunk) - The initial application of IFRS 16 resulted in a **RMB 5.105 billion** decrease in retained earnings as of January 1, 2019[135](index=135&type=chunk) [Note 4B: Segment Information](index=51&type=section&id=Note%204B%3A%20Segment%20Information) The Group's operating segments are primarily categorized into 'Air Transportation Operations' and 'Other' businesses, with 'Air Transportation Operations' being the absolute core, contributing the vast majority of revenue and profit, and China mainland being the largest revenue source geographically, accounting for 65.03% of total revenue Segment (H1 2019) | Segment (H1 2019) | External Revenue (RMB billions) | Profit Before Tax (RMB billions) | | :--- | :--- | :--- | | Air Transportation Operations | 64.129 | 4.354 | | Other | 1.184 | 0.416 | [Note 12: Interests in Associates](index=57&type=section&id=Note%2012%3A%20Interests%20in%20Associates) As of the reporting period, interests in associates totaled **RMB 14.369 billion**, with the investment in Cathay Pacific having a carrying value of **RMB 12.225 billion**, and Cathay Pacific achieving revenue of **RMB 47.011 billion** and net profit of **RMB 1.183 billion** during this reporting period - As of June 30, 2019, the carrying value of the investment in Cathay Pacific was **RMB 12.225 billion**[159](index=159&type=chunk) [Note 21: Commitments](index=66&type=section&id=Note%2021%3A%20Commitments) As of the reporting period, the Group had total contracted but unprovided capital commitments of **RMB 29.677 billion**, primarily for the purchase of aircraft and related equipment, in addition to **RMB 59 million** in investment commitments - Total capital commitments amounted to **RMB 29.677 billion**, of which **RMB 26.963 billion** was for aircraft and aviation equipment[184](index=184&type=chunk) [Note 22: Related Party Transactions](index=67&type=section&id=Note%2022%3A%20Related%20Party%20Transactions) The Group engages in extensive related party transactions with its controlling shareholder CNAHC and its subsidiaries, associates, and joint ventures, including service provision and procurement, leasing, and financial services, with significant transaction volumes with CNAHC during the reporting period, such as procurement of airport ground services and in-flight catering, and CNAHC also provides guarantees for some of the company's bonds - The Group has significant transactions with CNAHC and its related parties across various areas, including sales, procurement, leasing, and financial services[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - As of June 30, 2019, CNAHC provided guarantees for the Company's corporate bonds totaling **RMB 6.5 billion**[198](index=198&type=chunk)