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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Air China Ld | LSE:AIRC | London | Ordinary Share | CNE1000001S0 | H SHS CNY1 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 78.8045 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Air Transport, Scheduled | 140.73B | -1.05B | -0.2112 | -2.46 | 2.58B |
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) Dow Jones Newswires
August 31, 2023 04:40 ET (08:40 GMT)
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