China Southern Board Gives Principal Approval for New Aircraft

Acquisition; Plans Includes 15 Airbus A320-200 & Six A319-100 Aircraft 
Travel Writers / Business Editors
GUANGZHOU, China--(BUSINESS WIRE)--Feb. 2, 2004
The follow is an official announcement from the Board of
China Southern Airlines (NYSE: ZNH)(HKSE: 1055), the largest airline
in The People's Republic of China: 
The Board hereby announces that on January 29, 2004, the Board
gave its in-principle approval for the acquisition of 15 A320-200
aircraft and six A319-100 aircraft from Airbus. The Board noted that
certain press articles have recently reported that the Company plans
to acquire certain aircraft from Airbus. 
In response to these articles, the Company would like to clarify
that as of the date hereof, the agreement with Airbus for the
acquisition of Airbus Aircraft is in the course of being finalized and
no definitive agreement has been signed by the Company and Airbus. 
A further announcement will be made in due course in respect of
the proposed acquisition of Airbus Aircraft in accordance with the
Listing Rules and other rules and regulations applicable to the
Company. 
The Board hereby further announces that on January 18, 2004, it
approved the EMB Aircraft Acquisition Agreement dated December 17,
2003 between the Company and Harbin Embraer, an independent third
party who is not a connected person (as defined in the Listing Rules)
of the Company, for the purpose of acquiring six EMB-145LR aircraft. 
The Directors believe that the acquisition of EMB Aircraft,
together with the proposed acquisition of Airbus Aircraft, will
further expand the flight service network and operating capacity of
the Company, thereby enhancing its ability to compete significantly in
the industry. 
The Board has noted the recent increase in the trading volume of
the shares of the Company on January 28, 2004 and wish to state that,
save as disclosed in this announcement, it is not aware of any reasons
for such increase. Trading in the shares of the Company was suspended
from 9:30 a.m. on January 29, 2004, at the request of the Company
pending the release of this announcement, and will be resumed from
9:30 a.m. on February 2, 2004. 
Reference is made to the teletext announcement of the Company
dated January 29, 2004. 
Proposed Acquisition of Aircraft from Airbus 
The Board hereby announces that on January 29, 2004, the Board
gave its in-principle approval for the acquisition of 15 A320-200
aircraft and six A319-100 aircraft from Airbus. The Board noted that
certain press articles have recently reported that the Company plans
to acquire certain aircraft from Airbus. In response to these
articles, the Company would like to clarify that as of the date
hereof, the agreement with Airbus for the acquisition of Airbus
Aircraft is in the course of being finalized and no definitive
agreement has been signed by the Company and Airbus. 
A further announcement will be made in due course in respect of
the proposed acquisition of Airbus Aircraft in accordance with the
Listing Rules and other rules and regulations applicable to the
Company. 
The EMB Aircraft Acquisition Agreement 
The Board hereby further announces that on January 18, 2004, it
approved the EMB Aircraft Acquisition Agreement dated December 17,
2003 between the Company and Harbin Embraer for the purpose of
acquiring six EMB-145LR aircraft. 


Dated:
December 17, 2003
Parties:
(i) the Company; and
(ii) Harbin Embraer, a joint venture company established in the
PRC, which is an independent third party and not a connected person
(as defined in the Listing Rules) of the Company.

Aircraft to be acquired:
Six EMB-145LR aircraft

Consideration: 
The aggregate consideration for the transfer of EMB Aircraft is
below 10% of the net tangible assets of the Company based on its
latest annual report for the year ended December 31, 2002. The net
tangible assets of the Company as published in its latest annual
report for the year ended December 31, 2002 are RMB9,613,207,000. 
According to the information provided by Harbin Embraer, the
catalog price of an EMB-145LR aircraft is approximately US$20,100,000. 
The aggregate consideration is payable wholly in cash and is
determined after arm's length negotiation between the parties. 
Payment Terms: 
The aggregate consideration for the acquisition of EMB Aircraft is
payable by cash on installments. EMB Aircraft will be delivered in
stages to the Company through the years 2004 to 2005. 
Source of Funding: 
The acquisition of the EMB Aircraft will be wholly funded through
commercial loans by PRC domestic banks. Such PRC domestic banks are
not and will not be connected persons (as defined in the Listing
Rules) of the Company. As of the date hereof, the Company has not
entered into any agreement with any of these PRC domestic banks for
financing its acquisition of EMB Aircraft. 
Nature of the Transaction 
Pursuant to a waiver dated March 22, 2002 granted by the Stock
Exchange, a summary of which is set out in the Company's announcement
dated March 25, 2002, instead of the net asset test and consideration
test under Chapter 14 of the Listing Rules, in respect of the Company,
the tests for determining notifiable transactions (except for
connected transactions or share transactions) of the Company may be
calculated by reference to the ATKs for aircraft being acquired by the
Company as compared to the Company's aggregate fleet ATKs. 
The total ATKs for EMB Aircraft, when aggregated with the ATKs for
all aircraft acquired by the Company during the last 12 months,
represent approximately 7.68% of the Company's aggregate fleet ATKs.
The Transaction therefore does not constitute a discloseable
transaction of the Company. 
Reasons for and Benefits of the Transaction 
The Company's principal business is that of civil aviation. The
Directors believe that the acquisition of EMB Aircraft, together with
the proposed acquisition of Airbus Aircraft, will further expand the
flight service network and operating capacity of the Company, thereby
enhancing its ability to compete significantly in the industry. 
Further Information 
The Board has noted the recent increase in the trading volume of
the shares of the Company on January 28, 2004 and wish to state that,
save as disclosed in this announcement, it is not aware of any reasons
for such increase. 
The Board also confirm that, save as disclosed in this
announcement, there are no negotiations or agreements relating to
intended acquisitions or realizations which are discloseable under
paragraph 3 of the Listing Agreement, neither is the Board aware of
any matter discloseable under the general obligation imposed by
paragraph 2 of the Listing Agreement, which is or may be of a
price-sensitive nature. 
Trading in the shares of the Company was suspended from 9:30 a.m.
on January 29, 2004, at the request of the Company pending the release
of this announcement, and will be resumed from 9:30 a.m. on February
2, 2004. 
CONTACT:
China Southern Airlines
Jeff Ruffolo, 1-909-734-6141
fax: 1-909-734-6146
RuffoloPR@aol.com
www.Ruffolopr.com
-0- Feb/02/2004 15:00 GMT
 
 
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