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Air China Ld AIRC CONTINUING CONNECTED TRANSACTIONS



  Air China Ld (AIRC) - CONTINUING CONNECTED TRANSACTIONS

RNS Number : 6392R
Air China Ld
21 November 2012
 



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 whatsoever 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)

 

                      CONTINUING CONNECTED TRANSACTIONS

 

Reference is made to the 2009 Circular in relation to the continuing connected
transactions of the  Company. At  the 2009 EGM,  the Independent  Shareholders 
approved (i)  certain  non-exempt  continuing  connected  transaction  of  the 
Company and its relevant  annual caps for the  three years ending 31  December 
2012; and (ii) certain exempt continuing connected transactions of the Company
and their relevant  annual caps for  the three years  ending 31 December  2012 
that are  required  by  the Shanghai  Listing  Rules  to be  approved  by  the 
Independent Shareholders. The  Company expected  certain continuing  connected 
transactions set out in the 2009 Circular will continue to be conducted  after 
31 December 2012, therefore the Company  will continue to comply with  Chapter 
14A of the Hong Kong Listing  Rules for the continuing connected  transactions 
to be  conducted in  the next  three years  (i.e. from  1 January  2013 to  31 
December  2015),  including   further  disclosure  of   information  in   this 
announcement and to seek Independent Shareholders' approval for the Non-exempt
Continuing Connected  Transactions  (including the  relevant  proposed  annual 
caps).

 

On 20 November 2012, the Board approved the continuing connected  transactions 
set out in this announcement and the relevant annual caps for each of them for
the three years ending 31 December 2013, 2014 and 2015. The Company will  seek 
Independent Shareholders'  approval for  the Non-exempt  Continuing  Connected 
Transactions and the relevant proposed annual caps for each of the three years
ending 31  December 2013,  2014 and  2015  in accordance  with the  Hong  Kong 
Listing Rules.

 

Except for the Non-exempt  Continuing Connected Transactions,  as each of  the 
applicable Percentage  Ratios (other  than  the profits  ratio) of  the  other 
continuing  connected  transactions  (excluding  the  de  minimis   continuing 
connected transactions) set out in this  announcement, on an annual basis,  is 
higher than 0.1% and less than 5.0%, they therefore fall under Rule 14A.34  of 
the  Hong  Kong  Listing   Rules.  Accordingly,  these  continuing   connected 
transactions are subject  to the reporting  and announcement requirements  set 
out under Rules  14A.45 to  14A.47 of  the Hong  Kong Listing  Rules, but  are 
exempt from  the  requirements  of independent  shareholders'  approval  under 
Chapter 14A of the Hong Kong Listing Rules.

 

In addition, pursuant  to the Shanghai  Listing Rules, the  Company will  seek 
Independent Shareholders' approval for  the continuing connected  transactions 
under the  Construction  Project Management  Agreement,  Advertising  Services 
Framework Agreement,  Properties  Leasing  Agreement,  Sales  Agency  Services 
Framework Agreement, Comprehensive Services Agreement, Charter Flight  Service 
Framework Agreement and Financial Services Agreement.

 

A circular  containing, among  other  things, (i)  details of  the  Non-exempt 
Continuing Connected Transactions and the other exempted continuing connection
transactions of  the Company;  (ii)  a letter  from an  independent  financial 
adviser to the  Independent Board Committee  and the Independent  Shareholders 
containing its advice on the Non-exempt Continuing Connected Transactions; and
(iii) the recommendation of the Independent Board Committee in respect of  the 
Non-exempt  Continuing   Connected  Transactions,   will  be   despatched   to 
Shareholders in  accordance  with the  Hong  Kong  Listing Rules  as  soon  as 
practicable.

 

CONTINUING CONNECTED TRANSACTIONS

 

1.       INTRODUCTION

 

Reference is made to the 2009 Circular in relation to the continuing connected
transactions of the  Company. At  the 2009 EGM,  the Independent  Shareholders 
approved (i)  certain  non-exempt  continuing  connected  transaction  of  the 
Company and its relevant  annual caps for the  three years ending 31  December 
2012; and (ii) certain exempt continuing connected transactions of the Company
and their relevant  annual caps for  the three years  ending 31 December  2012 
that are  required  by  the Shanghai  Listing  Rules  to be  approved  by  the 
Independent Shareholders. The  Company expected  certain continuing  connected 
transactions set out in the 2009 Circular will continue to be conducted  after 
31 December 2012, therefore the Company  will continue to comply with  Chapter 
14A of the Hong Kong Listing  Rules for the continuing connected  transactions 
to be  conducted in  the next  three years  (i.e. from  1 January  2013 to  31 
December  2015),  including   further  disclosure  of   information  in   this 
announcement and to seek Independent Shareholders' approval for the Non-exempt
Continuing Connected  Transactions  (including the  relevant  proposed  annual 
caps).

 

On 20 November 2012, the Board approved the continuing connected  transactions 
set out in this announcement and the relevant annual caps for each of them for
the three years ending 31 December 2013, 2014 and 2015. The Company will  seek 
Independent Shareholders'  approval for  the Non-exempt  Continuing  Connected 
Transactions and the relevant proposed annual caps for each of the three years
ending 31  December 2013,  2014 and  2015  in accordance  with the  Hong  Kong 
Listing Rules.  In  addition, pursuant  to  the Shanghai  Listing  Rules,  the 
Company will  seek  Independent  Shareholders'  approval  for  the  continuing 
connected transactions under  the Construction  Project Management  Agreement, 
Advertising Services Framework Agreement, Properties Leasing Agreement,  Sales 
Agency Services Framework Agreement, Comprehensive Services Agreement, Charter
Flight Service Framework Agreement and Financial Services Agreement.

 

2.       PARTIES AND CONNECTION OF THE PARTIES

 

The Company, whose principal business activity is air passenger, air cargo and
airline-related   services,   has   been   conducting   continuing   connected 
transactions with the following parties:

 

•        CNAHC Group

 

CNAHC is a substantial shareholder of the Company and is therefore a connected
person of the Company as defined under  the Hong Kong Listing Rules. CNAHC  is 
primarily engaged in managing the state-owned  assets of CNAHC and the  equity 
it holds in various companies.

 

•        CNAMC

 

CNAMC is  a wholly-owned  subsidiary of  CNAHC and  is therefore  a  connected 
person of the Company as defined under  the Hong Kong Listing Rules. CNAMC  is 
primarily engaged in media and advertising business.

 

•        CNAF

 

CNAF is a 75.54% held subsidiary of CNAHC and is therefore a connected  person 
of the Company as defined under the Hong Kong Listing Rules. CNAF is primarily
engaged in providing financial services to the members of CNAHC Group.

 

3.         CONTINUING   CONNECTED   TRANSACTIONS   EXEMPT   FROM   INDEPENDENT 
SHAREHOLDERS' APPROVAL

 

3.1     Media and Advertising Services

 

The Company entered into  the Advertising Services  Framework Agreement on  20 
November 2012 with CNAMC.

 

Description of  transaction: Pursuant  to the  Advertising Services  Framework 
Agreement, CNAMC will have the following rights:

 

•        an exclusive right to  distribute in-flight reading materials of  the 
Company;

 

•        an  exclusive  operation  right  of certain  media  of  the  Company, 
including the  boarding  passes,  in-flight entertainment  system  and  flight 
schedules;

 

•        a  right  to  be commissioned  to  purchase  in-flight  entertainment 
programmes (which  may include  advertising  content) from  independent  third 
parties or produce such programmes on its own;

 

•        a right  to develop  and use  the media  of the  Company and  receive 
effective support and assistance from the Company in the course of the sale of
advertisements. The advertising  business cooperation which  may be  conducted 
from time to time  between the Company and  CNAMC includes (i)  advertisements 
produced by CNAMC  or for which  CNAMC acts  as agent and  media developed  by 
CNAMC for the Company (including outdoor advertisements on properties owned by
the Company, ground broadcasting programmes (at ticket offices and on  airport 
shuttles), the  international e-commerce  network check-in  system and  ticket 
envelopes (including air  ticket envelopes and  boarding pass envelopes))  and 
(ii) advertisements designed, produced and published by CNAMC, as commissioned
by the Company through public tender; and

 

•        a right  to receive advertising  fees at market  price in respect  of 
advertising design  and image  promotion conducted  by CNAMC  for the  Company 
under the Company's commissioning.

 

As a consideration, CNAMC agrees to:

 

•        pay the Company RMB26.25  million, RMB27.5625 million and  RMB28.9406 
million, respectively, for each  of the three years  ending 31 December  2013, 
2014 and 2015  in respect of  the exclusive operation  rights of the  specific 
media of  the Company,  and according  to the  annual budget  of the  Company, 
provide the  Company with  sufficient in-flight  media (other  than  in-flight 
entertainment programmes), including  in-flight publications, boarding  passes 
and flight schedules that meet the Company's requirements; and

 

•        pay the Company 20% of any revenue from any new advertising media  of 
the Company  which is  not  mentioned in  the Advertising  Services  Framework 
Agreement but proposed to be developed by CNAMC on a case by case basis.

 

The Company  agrees  to  pay  immediately  and  directly  to  the  independent 
entertainment programmes  providers the  purchase  price for  those  in-flight 
entertainment programmes provided or  purchased by CNAMC  for the Company.  In 
the event that the relevant entertainment programmes are produced by CNAMC  at 
the request of the Company, the Company will pay the corresponding  production 
costs and expenses to CNAMC.

 

The term of  the Advertising Services  Framework Agreement is  from 1  January 
2013 to 31 December 2015.

 

Reasons for such  transaction: The Directors  believe that it  is in the  best 
interest of the Company to enter into above transactions with CNAMC because:

 

•        media and  advertising business  is not  the core  competency of  the 
Company  while  CNAMC  has  extensive  experience  in  in-flight   advertising 
operation and has a proven network of advertising sponsors to draw upon; and

 

•        CNAMC, being a company having engaged in the aviation media  business 
for a long time, has a better  understanding of the corporate culture and  the 
brand of the Company  and has certain  advantages in entertainment  programmes 
production and advertising agency business.

Historical Amounts and Proposed Caps:

 

The annual  cap for  the aggregate  amount including  in-flight  entertainment 
programmes production fees and advertising agency fees paid by the Company  to 
CNAMC for each of the  three years ending 31  December 2012 is RMB60  million, 
RMB100 million and  RMB120 million, respectively.  For each of  the two  years 
ended 31 December 2010 and 31 December 2011 and the first six months of  2012, 
the actual aggregate amount paid by  the Company to CNAMC including  in-flight 
entertainment production fees  and advertising agency  fees was  approximately 
RMB28.23 million, RMB57.75 million and RMB51.50 million, respectively.

 

It is proposed that for each of the three years ending 31 December 2013,  2014 
and 2015, the annual cap for the aggregate amount paid by the Company to CNAMC
including in-flight entertainment production fees and advertising agency  fees 
shall be RMB138 million, RMB151.8 million and RMB167 million, respectively.

 

The annual  amount payable  by  CNAMC to  the  Company under  the  Advertising 
Services Framework  Agreement for  each  of the  next  three years  ending  31 
December 2013,  2014  and  2015 is  expected  to  fall below  the  de  minimis 
threshold as stipulated under Rule 14A.33(3)  of the Hong Kong Listing  Rules, 
therefore such transaction will be  exempt from the reporting, annual  review, 
announcement  and   independent   shareholders'  approval   requirements   for 
continuing connected transactions.

 

                 Historical Caps                 Historical Figures                  Future Caps
                                                          Unaudited
                                         Actual   Actual            Estimated
                                                         historical
                                         annual   annual               annual
              Annual   Annual   Annual                   amount for             Annual   Annual   Annual
                 cap      cap      cap   amount   amount               amount      cap      cap      cap
                                            for      for the period
             for the  for the  for the                                for the  for the  for the  for the
                year     year     year the year the year       from      year     year     year     year

               ended    ended    ended    ended    ended  1 January    ending   ending   ending   ending
                                                                 to
                  31       31       31       31       31                   31       31       31       31
            December December December December December    30 June  December December December December

Transaction     2010     2011     2012     2010     2011       2012      2012     2013     2014     2015
Amount paid
by

 the
Company to

 CNAMC
under

 the
Advertising

 Services

 Framework

 Agreement     RMB60   RMB100   RMB120 RMB28.23 RMB57.75   RMB51.50    RMB120   RMB138 RMB151.8   RMB167
             million  million  million  million  million    million   million  million  million  million

 

Basis for such caps:

 

The Company's service development strategy aims at continuously enhancing  its 
service quality. Therefore, the Company will gradually increase its investment
in the purchase  and production  of entertainment  programmes as  well as  its 
investment in advertising on an annual  basis. CNAMC will participate more  in 
the Company's  advertising promotion  work  in the  next three  years  through 
tender. In addition, due to the  increased number of aircraft of the  Company, 
the need for entertainment programmes will increase correspondingly.

 

3.2     Property Leasing

 

The Company (for itself  and on behalf of  its subsidiaries) entered into  the 
Properties Leasing  Agreement with  CNAHC (on  behalf of  CNAHC Group)  on  20 
November 2012.

 

Description of transaction: Pursuant to the Properties Leasing Agreement,  the 
Company will  lease  from  CNAHC  a number  of  properties  for  various  uses 
including as business premises, offices and storage facilities.

 

The Company  will lease  to CNAHC  a  number of  properties for  various  uses 
including as business premises and offices.

 

The rent payable under the Properties Leasing Agreement will be determined  in 
accordance with the relevant PRC regulations  or market rates and by  entering 
into a specific properties leasing agreement.

 

The term of  the Properties Leasing  Agreement is  from 1 January  2013 to  31 
December 2015.

 

Reasons for such transaction: In the ordinary course of business, the  Company 
has entered into  similar property leasing  transactions with various  parties 
including both connected persons and independent third parties.

 

Historical Amounts and Proposed Caps:

 

The annual cap for the  aggregate amount of rent paid  by the Company and  its 
subsidiaries to CNAHC  Group for each  of the three  years ending 31  December 
2012 is RMB140  million, RMB147 million  and RMB154.35 million,  respectively. 
The actual aggregate amount of rent  paid by the Company and its  subsidiaries 
to CNAHC  Group for  each of  the  two years  ended 31  December 2010  and  31 
December 2011  and the  first  six months  of  2012 was  approximately  RMB101 
million, RMB75 million and RMB46.88 million, respectively.

 

It is proposed that the annual cap for the aggregate amount of rent payable by
the Company and its subsidiaries  to CNAHC Group for  each of the three  years 
ending 31 December 2013, 2014 and 2015 shall be RMB120 million, RMB138 million
and RMB150 million, respectively.

 

The annual aggregate amount of rent payable by CNAHC Group to the Company  and 
its subsidiaries for  each of the  next three years  ending 31 December  2013, 
2014 and  2015  are  expected  to  fall below  the  de  minimis  threshold  as 
stipulated under Rule 14A.33(3) of the Hong Kong Listing Rules, therefore such
transaction will be exempt from the reporting, annual review, announcement and
independent  shareholders'  approval  requirements  for  continuing  connected 
transactions.

 

 

                   Historical Caps                 Historical Figures                  Future Caps
                                           Actual   Actual  Unaudited Estimated

                                           annual   annual historical    annual
               Annual   Annual    Annual                                          Annual   Annual   Annual
                  cap      cap       cap   amount   amount amount for    amount      cap      cap      cap

              for the  for the   for the  for the  for the The period   for the  for the  for the  for the
                 year     year      year     year     year                 year     year     year     year
                                                                 from
                ended    ended     ended    ended    ended               ending   ending   ending   ending
                                                            1 January
                   31       31        31       31       31                   31       31       31       31
             December December  December December December to 30 June  December December December December

Transaction      2010     2011      2012     2010     2011       2012      2012     2013     2014     2015
Rent paid by
the

 Company and

 its
subsidiaries

 to CNAHC

 Group under

 the
Properties

 Leasing
Agreement      RMB140   RMB147 RMB154.35   RMB101    RMB75   RMB46.88     RMB85   RMB120   RMB138   RMB150
              million  million   million  million  million    million   million  million  million  million

 

Basis for such caps:

 

As at  the  date hereof,  the  Company and  its  subsidiaries have  leased  an 
aggregate area of  approximately 58,000  sq.m. from CNAHC  Group. The  Company 
expects the rent level will rise in the next three years.

 

Based on our needs for operation and  development, the area to be leased  from 
CNAHC Group will increase in the next  three years. In arriving at the  annual 
caps, the Company and  its subsidiaries have taken  into account the  possible 
10% to 15% overall  annual rental increase and  based on the estimated  rental 
expenditure of RMB85 million for the year of 2012. It is estimated the  rental 
expenditure for 2013 will not exceed RMB120 million, with subsequent  increase 
of 10% to 15% per year.

 

3.3     Sales Agency Services of Airline Tickets and Cargo Space

 

The Company (for itself  and on behalf of  its subsidiaries) entered into  the 
Sales Agency  Services Framework  Agreement  with CNAHC  (on behalf  of  CNAHC 
Group) on 20 November 2012.

 

Description of  transaction:Pursuant to  the Sales  Agency Services  Framework 
Agreement, the Sales Agency Companies will:

 

•        procure purchasers for the Company's air tickets and cargo spaces  on 
a commission basis; or

 

•        purchase  air tickets  (other than  domestic air  tickets) and  cargo 
spaces from the Company and  resell such air tickets  and cargo spaces to  end 
customers.

 

As for the air  passenger agency services, the  Company will consult with  the 
Sales Agency Companies on a fair and voluntary basis and determine the  agency 
service fee standards. In addition, the Company and the Sales Agency Companies
may agree on specific sales targets and the corresponding incentive plans  for 
achieving such targets to the extent  permitted by law and in accordance  with 
the industry practice.

 

As for  the  air cargo  agency  services, the  Company  and the  Sales  Agency 
Companies will  discuss and  determine  the applicable  transportation  prices 
based on the  prevailing market  prices, and  the Sales  Agency Companies  may 
formulate the transportation  prices charged to  its customers (including  the 
prices for extended services offered to its customers) based on the  aforesaid 
transportation prices,  with differences  to be  retained as  commissions.  In 
addition, the Company  and the Sales  Agency Companies may  agree on  specific 
sales targets and the corresponding  price discounts for achieving such  sales 
targets in accordance with the industry practice.

 

The term of the  Sales Agency Services Framework  Agreement is from 1  January 
2013 to 31 December 2015.

 

Reasons for the transaction: The Company has entered into similar transactions
with various parties  including both connected  persons and independent  third 
parties in its ordinary course of business. Air transportation sales agency is
a highly marketized business. In view  of the long-term amicable sales  agency 
cooperation relationship between the Company and the Sales Agency Companies as
well as the rich experience and sizable customer base of the latter in the air
transportation agency business,  the Company  is willing  to continue  working 
with the Sales  Agency Companies  to provide air  transportation sales  agency 
services.

 

Historical Amounts and Proposed Caps:

 

For each of the three  years ending 31 December 2012,  the annual cap for  the 
aggregate sales of  airline tickets  and cargo space  by the  Company and  its 
subsidiaries to CNAHC  Group for resale  to end customers  is RMB270  million, 
RMB324 million and RMB388.8 million, respectively.  For each of the two  years 
ended 31 December 2010 and 31 December 2011 and the first six months of  2012, 
the actual annual aggregate  sales of airline tickets  and cargo space by  the 
Company and its  subsidiaries to CNAHC  Group for resale  to end customers  in 
relation to  the  sales agency  services  were approximately  RMB149  million, 
RMB175 million and RMB89.819 million, respectively.

 

It is proposed that the annual cap for the aggregate sales of airline  tickets 
and cargo space by the Company and its subsidiaries to CNAHC Group for  resale 
to end customers for each of the three years ending 31 December 2013, 2014 and
2015  shall  be   RMB270  million,  RMB324   million  and  RMB388.8   million, 
respectively.

 

For each  of the  three years  ending 31  December 2013,  2014 and  2015,  the 
aggregate annual amount of agency commission to be paid by the Company and its
subsidiaries to CNAHC Group is expected to fall below the de minimis threshold
as stipulated under Rule 14A.33(3) of the Hong Kong Listing Rules;  therefore, 
such  transaction  will   be  exempt  from   the  reporting,  annual   review, 
announcement  and   independent   shareholders'  approval   requirements   for 
continuing connected transactions.

 

 

                 Historical Caps                 Historical Figures                  Future Caps
                                                          Unaudited
                                         Actual   Actual            Estimated
                                                         historical
                                         annual   annual               annual
              Annual   Annual   Annual                       amount             Annual   Annual   Annual
                 cap      cap      cap   amount   amount               amount      cap      cap      cap
                                                            for the
             for the  for the  for the  for the  for the     period   for the  for the  for the  for the
                year     year     year     year     year                 year     year     year     year
                                                               from
               ended    ended    ended    ended    ended                ended   ending   ending   ending
                                                          1 January
                  31       31       31       31       31                   31       31       31       31
            December December December December December to 30 June  December December December December

Transaction     2010     2011     2012     2010     2011       2012      2012     2013     2014     2015
Sales of
airline
tickets

 and cargo
space to

 CNAHC
Group         RMB270   RMB324 RMB388.8   RMB149   RMB175  RMB89.819    RMB220   RMB270   RMB324 RMB388.8
             million  million  million  million  million    million   million  million  million  million

 

Basis for such caps:

 

In arriving at the  above caps, the Directors  have considered the  historical 
transaction amount and the expected growth of such transactions.

 

In light  of  the increase  of  the  air passenger  and  cargo  transportation 
capacity of the Company and the  air transportation market price for the  year 
2013 to 2015, and the  uncertainty of the future jet  fuel cost, based on  the 
estimated sale revenue of airline tickets  and cargo space by the Company  and 
its subsidiaries to CNAHC Group for resale to end customers of RMB220  million 
in 2012, it is expected that such sales revenue in 2013 will not exceed RMB270
million and will increase at an annual rate of 20% thereafter.

 

3.4     Comprehensive Services

 

The Company (for itself  and on behalf of  its subsidiaries) entered into  the 
Comprehensive Services Agreement with CNAHC (on  behalf of CNAHC Group) on  20 
November 2012.

 

Description of transaction: Pursuant to the Comprehensive Services Agreement:

 

•        Certain wholly-owned  and controlled  companies of  CNAHC engaged  in 
ancillary production and  supply services  in relation  to air  transportation 
business  ("Ancillary  Business  Companies"),  provided  that  such  Ancillary 
Business   Companies   have   obtained   the   relevant   qualifications   and 
certification, will primarily  provide the following  services to the  Company 
(including but not limited to):

 

(i)      supply of various items for in-flight services;

 

(ii)      manufacturing and  repair of aviation-related  ground equipment  and 
vehicles;

 

(iii)     cabin decoration and equipment;

 

(iv)     properties management services;

 

(v)     frequent-flyer cooperation programme;

 

(vi)     hotel accommodation and staff recuperation;

 

(vii)    aviation tourist services with special features;

 

(viii)   warehousing services;

 

(ix)     airline catering services; and

 

(x)     printing of air tickets and other publications.

 

•         The   Company  accepts   the  commission   of  CNAHC   and   provide 
welfare-logistics services for CNAHC's retired employees.

 

•        The  charges  of the  services  provided by  the  Ancillary  Business 
Companies to  the  Company  shall  not  exceed  the  prevailing  market  rates 
(including the tender  quotes) and  the prices  of the  similar services  they 
provide to  independent  third  parties.  If  no  prevailing  market  rate  is 
available, a fair and reasonable price should be adopted through arm's  length 
negotiation between the parties.  The management charges  payable by CNAHC  to 
the Company for the welfare-logistics services  shall be settled at a rate  of 
4% of the actual aggregate welfare  expense paid to such retired employees  as 
confirmed by CNAHC.

 

The term of the Comprehensive Services Agreement is from 1 January 2013 to  31 
December 2015.

 

Reasons for the transaction: For the  services to be provided by CNAHC  Group, 
the Directors believe that CNAHC Group has special strengths that  independent 
parties do not possess, including (i) knowledge of the aviation industry; (ii)
a proven track  record of  quality and timely  service; and  (iii) the  sites, 
where services are provided by CNAHC Group, are generally near to the site  of 
the Company, and  therefore CNAHC Group  is in a  position to offer  efficient 
services. In light of these factors, the  Directors believe that it is in  the 
best interest of the Company to  enter into the above transactions with  CNAHC 
Group.

 

Historical Amounts and Proposed Caps:

 

For each of the three  years ending 31 December 2012,  the annual cap for  the 
aggregate amount paid by the Company and its subsidiaries to CNAHC Group under
the Comprehensive Services  Agreement is  RMB784 million,  RMB862 million  and 
RMB862 million, respectively. The actual aggregate amount paid by the  Company 
and its  subsidiaries to  CNAHC  Group for  each of  the  two years  ended  31 
December 2010 and 31 December 2011 and the first six months of 2012 under  the 
Comprehensive Services was  approximately RMB662 million,  RMB827 million  and 
RMB399.8 million, respectively.

 

It is proposed that the annual cap for the aggregate amount to be paid by  the 
Company and its subsidiaries to  CNAHC Group under the Comprehensive  Services 
Agreement for each of the three years  ending 31 December 2013, 2014 and  2015 
shall be RMB950 million, RMB1,045 million and RMB1,150 million, respectively.

 

For each  of the  three years  ending 31  December 2013,  2014 and  2015,  the 
aggregate annual amount  to be  paid by  CNAHC Group  to the  Company and  its 
subsidiaries for the  provision of welfare-logistics  services to the  retired 
employees is expected  to fall below  the de minimis  threshold as  stipulated 
under  Rule  14A.33(3)  of  the  Hong  Kong  Listing  Rules,  therefore   such 
transaction will be exempt from the reporting, annual review, announcement and
independent  shareholders'  approval  requirements  for  continuing  connected 
transactions.

 

                    Historical Caps                 Historical Figures                  Future Caps
                                                             Unaudited
                                            Actual   Actual            Estimated
                                                            historical
                                            annual   annual               annual
                 Annual   Annual   Annual                       amount             Annual   Annual   Annual
                    cap      cap      cap   amount   amount               amount      cap      cap      cap
                                                               for the
                for the  for the  for the  for the  for the     period   for the  for the  for the  for the
                   year     year     year     year     year                 year     year     year     year
                                                                  from
                  ended    ended    ended    ended    ended               ending   ending   ending   ending
                                                             1 January
                     31       31       31       31       31                   31       31       31       31
               December December December December December to 30 June  December December December December

Transaction        2010     2011     2012     2010     2011       2012      2012     2013     2014     2015
Amount to be
paid

 by the
Company

 and its
subsidiaries

 to CNAHC

 Group under
the

 Comprehensive

 Services
Agreement        RMB784   RMB862   RMB862   RMB662   RMB827   RMB399.8    RMB862   RMB950 RMB1,045 RMB1,150
                million  million  million  million  million    million   million  million  million  million

 

Basis for such caps:

 

In arriving at the  above caps, the Directors  have considered the  historical 
transaction amount  for the  same type  of transactions  and have  taken  into 
account the expected  growth of the  Company's air passenger  services in  the 
next few years.

 

The transaction volume increased during the past three years primarily due  to 
the expansion  of the  fleet  size of  the Company  and  the increase  of  its 
transportation capacity.

 

As the Company has been continually increasing its transportation capacity and
flights, and  the airline  catering services  provided by  another company  in 
which CNACG invested have also  been increasing, the transaction amount  under 
the Comprehensive Services Agreement is expected to increase consequently.  In 
addition, due to the reorganization of  CNACD and CNATC, the transactions  set 
forth in the previous tourism  cooperation agreement entered into between  the 
Company and CNATC dated 27 October 2009 will also fall within the scope of the
Comprehensive Services Agreement. It is  expected that the actual  transaction 
amount generated  by  the Company  in  respect  of its  businesses  under  the 
Comprehensive Services Agreement in 2013  will not exceed RMB950 million,  and 
will increase at an annual rate of 10% afterwards.

 

3.5     Subcontracting of Charter Flight Services

 

The Company entered into the  Charter Flight Service Framework Agreement  with 
CNAHC on 20 November 2012.

 

Description of transaction: Pursuant to  the Charter Flight Service  Framework 
Agreement, CNAHC shall resort to the  Company's charter flight services so  as 
to fulfil the government charter flight assignment. The Company's hourly  rate 
of the charter  flight service  fee will  be calculated  on the  basis of  the 
following formula:

 

Hourly rate = Total cost per flight hour x (1 + 6.5%)

 

Total cost per flight hour includes direct costs and indirect costs.

 

The term of the Charter Flight  Service Framework Agreement is from 1  January 
2013 to 31 December 2015.

 

Reasons for  the transaction:  As  the national  flag  carrier of  China,  the 
Company has  historically  provided  charter flights  for  government  related 
travel services  to State  leaders,  government delegations,  national  sports 
teams  and  cultural  envoys.  The   Company  has  gained  significant   brand 
recognition by being the designated  government charter flight carrier.  Based 
upon the  hourly  rate formula  under  the Charter  Flight  Service  Framework 
Agreement, it is  expected that the  Company will generate  good revenue  from 
such transaction.

 

Historical Amounts and Proposed Caps:

 

For each  of the  three years  ending 31  December 2012,  the annual  cap  for 
aggregate amount paid by CNAHC to the Company in respect of the charter flight
services is RMB750 million, RMB825  million and RMB900 million,  respectively. 
The actual aggregate amount  paid by CNAHC  to the Company  in respect of  the 
charter flight services for each of the  two years ended 31 December 2010  and 
31 December 2011  and the first  six months of  2012 was approximately  RMB558 
million, RMB522 million and RMB376 million, respectively.

 

It is proposed that the annual cap for the aggregate amount of revenue derived
from the Charter  Flight Service  Framework Agreement  for each  of the  three 
years ending  31  December  2013,  2014 and  2015  shall  be  RMB900  million, 
respectively.

 

                 Historical Caps                 Historical Figures                  Future Caps
                                                          Unaudited
                                         Actual   Actual            Estimated
                                                         historical
                                         annual   annual               annual
              Annual   Annual   Annual                       amount             Annual   Annual   Annual
                 cap      cap      cap   amount   amount               amount      cap      cap      cap
                                                            for the
             for the  for the  for the  for the  for the     period   for the  for the  for the  for the
                year     year     year     year     year                 year     year     year     year
                                                               from
               ended    ended    ended    ended    ended               ending   ending   ending   ending
                                                          1 January
                  31       31       31       31       31                   31       31       31       31
            December December December December December to 30 June  December December December December

Transaction     2010     2011     2012     2010     2011       2012      2012     2013     2014     2015
Amount of
revenue

 derived
from

 the
Charter
Flight

 Service
Framework

 Agreement    RMB750   RMB825   RMB900   RMB558   RMB522     RMB376    RMB850   RMB900   RMB900   RMB900
             million  million  million  million  million    million   million  million  million  million

 

Basis for such caps:

 

In arriving at  the above caps,  the Directors considered  the historical  and 
estimated transaction amount as set out in the table above of the same type of
transactions and the following factors:

 

•        China's influence  in the  world is growing,  the government  charter 
flight services are  expected to  increase on  a continuous  basis during  the 
period from 2013 to 2015; and

 

•        uncertainties such  as the  future jet fuel  price could  lead to  an 
increase of flight-related costs.

 

4.       NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

 

4.1     Financial Services

 

The Company (for itself  and on behalf of  its subsidiaries) entered into  the 
Financial Services Agreement with CNAF on 20 November 2012.

 

Description of transaction: Pursuant to the Financial Services Agreement, CNAF
has agreed to provide the Company with a range of financial services including
the following:

 

•        deposit services;

 

•        loan and finance leasing services;

 

•        negotiable instrument and letter of credit services;

 

•        trust loan and trust investment services;

 

•        underwriting services for debt issuances;

 

•        intermediary and consulting services;

 

•        guarantee services;

 

•        settlement services;

 

•        internet banking services;

 

•        bills and payment collection services;

 

•        insurance agency services; and

 

•        other services provided by CNAF under the approval of the CBRC.

 

Among the abovementioned services, bills acceptance services, letter of credit
services, guarantee services, finance leasing services, discounting  services, 
ticket collection services and financial consulting services are paid services
provided by CNAF  to the Company  and its subsidiaries  and handling fees  are 
also charged upon providing such services. Such fees are charged in accordance
with the relevant fees  standard (if any) stipulated  by the People's Bank  of 
China or  the CBRC.  In addition  to complying  with the  foregoing, the  fees 
charged by CNAF to the Company and its subsidiaries for financial services  of 
similar type shall not be higher  than those generally charged to the  Company 
and its subsidiaries by state-owned commercial banks and those charged by CNAF
to other group members.

 

With respect to the deposit and loan services, both parties agree:

 

•        the interest rate applicable to the Company and its subsidiaries  for 
its deposits  with CNAF  shall not  be lower  than the  minimum interest  rate 
specified by  the People's  Bank of  China for  deposits of  similar type.  In 
addition, the interest rate for the Company's deposits with CNAF shall not  be 
lower than the  interest rate  for similar type  of deposits  placed by  other 
members of CNAHC Group  with CNAF, and  shall not be  lower than the  interest 
rate for similar type of  deposit services provided by state-owned  commercial 
banks to the Company and its subsidiaries generally; and

 

•        the interest rate for loans (including other credit business) granted
to the Company  and its  subsidiaries by  CNAF shall  not be  higher than  the 
maximum interest rate  specified by the  People's Bank of  China for loans  of 
similar type. In addition, the interest rate for loans granted to the  Company 
and its subsidiaries by CNAF  shall not be higher  than the interest rate  for 
similar type of  loans granted  by CNAF  to other  members of  CNAHC Group  or 
higher than those for similar type of loans granted by state-owned  commercial 
banks to the Company and its subsidiaries generally.

 

The Company agrees  that it  will accord priority  to, and  use the  financial 
services provided by,  CNAF if the  terms and conditions  offered by CNAF  are 
similar to those  offered by  other service  providers. CNAF  has treated  the 
Company and its  subsidiaries as  its major  client and  undertook to  provide 
financial services of the same kind  under conditions no less favourable  than 
those provided by CNAF to other members  of CNAHC Group and those provided  by 
other financial institutions to the Company  and its subsidiaries at the  same 
time.

 

CNAF shall not carry out any business that is not permitted by the CBRC or any
illegal activities. CNAF  is not  allowed, during  the term  of the  Financial 
Services Agreement, to make use of the deposits of the Company for investments
with  high  risks  including,  but  not  limited  to,  investments  in  equity 
securities and corporate bonds. CNAF is obliged to provide convenience for the
auditors of the Company. If the auditors of the Company intend to inspect  the 
accounts of CNAF, CNAF  shall make arrangement for  such inspection within  10 
days after receiving the notice of the Company.

 

The Company and CNAF agree that  the maximum daily balance of deposits  placed 
by the Company and its subsidiaries with  CNAF shall be less than the  maximum 
daily balance  of loans  and other  credit  services granted  by CNAF  to  the 
Company and its subsidiaries, and the average daily balance of deposits placed
by the Company and its subsidiaries with CNAF in each accounting year shall be
less than  the  average daily  balance  of  loans and  other  credit  services 
actually granted by CNAF to the  Company and its subsidiaries in the  relevant 
year.

 

The unpaid  services provided  by CNAF  to the  Company and  its  subsidiaries 
include  settlement  services  and  financial  information  services  ("Unpaid 
Services").

 

In addition  to  the specific  services  set  out in  the  Financial  Services 
Agreement, CNAF  is also  exploring and  developing other  licensed  financial 
services and will  provide new financial  services to other  members of  CNAHC 
Group as and when appropriate ("New Financial Services").

 

If CNAF charges fees for the Unpaid Services and New Financial Services during
the period in which  the Financial Services Agreement  remains in force,  such 
fees charged  by  CNAF shall  comply  with  the standards  stipulated  by  the 
People's Bank of China or the CBRC for services of similar type and shall  not 
be higher than those  charged by state-owned commercial  banks to the  Company 
and its subsidiaries for similar type of financial services and those  charged 
by CNAF to other members of CNAHC Group.

 

The term of  the Financial Services  Agreement is  from 1 January  2013 to  31 
December 2015.

 

Reasons for the  transaction: The  Directors believe that  it is  in the  best 
interest of the Company to enter into the above transactions with CNAF  having 
taken into account the following factors:

 

•        in respect of transactions  between the Company and its  subsidiaries 
and CNAHC Group,  CNAF is able  to provide more  efficient settlement  service 
compared with independent third party banks;

 

•        CNAF is  able to  provide safe, convenient,  fast, comprehensive  and 
personalized financial services to the Company and its subsidiaries. With  the 
improving professionalism of CNAF and its enhancing financial services, it  is 
fully qualified for providing relevant services to CNAHC and its subsidiaries.
As a professional financial institution in CNAHC Group, it acts more  actively 
to protect the  interest of  the Company  than external  institutions. A  good 
cooperative relationship has  been established  between CNAF  and the  related 
departments of the  Company and  its subsidiaries  over the  years which  make 
their cooperation more efficient; and

 

•        since CNAF is 19.31% directly  owned by the Company, the Company  can 
ultimately benefit from the business development of CNAF.

 

Historical Amounts and Proposed Caps:

 

The annual cap for  the aggregate amount of  certain transactions between  the 
Company and its subsidiaries and  CNAF for each of  the three years ending  31 
December 2012 is as follows:

 

•        maximum daily balance of deposits (including accrued interest) placed
by the Company and  its subsidiaries with CNAF  is RMB7 billion, RMB7  billion 
and RMB7 billion, respectively; and

 

•        maximum daily balance of  loans and other credit services  (including 
accrued interest) granted by CNAF to the Company and its subsidiaries is  RMB3 
billion, RMB3 billion and RMB3 billion, respectively.

 

The Company undertook on 12 August 2010 that the actual amount of the  maximum 
daily balance of deposits of the Company and its subsidiaries placed with CNAF
pursuant to the Financial Services Agreement  dated 27 October 2009 would  not 
exceed RMB4 billion.

 

The actual annual aggregate amount of certain transactions between the Company
and its subsidiaries and CNAF for each of the two years ended 31 December 2010
and 31 December 2011 and the first six months of 2012 was as follows:

 

•        actual amounts of  the maximum daily  balance of deposits  (including 
accrued interest) placed by  the Company and its  subsidiaries with CNAF  were 
RMB3,962 million, RMB3,963 million and RMB3,741 million, respectively; and

 

•        actual amounts of the maximum daily outstanding balance of loans  and 
other credit  services (including  accrued interest)  granted by  CNAF to  the 
Company and  its  subsidiaries were  RMB1,069  million, RMB1,263  million  and 
RMB1,940 million, respectively.

 

It is  proposed  that the  annual  cap for  the  aggregate amount  of  certain 
transactions between the Company and its subsidiaries and CNAF for each of the
three years ending 31 December 2013, 2014 and 2015 shall be as follows:

 

•        maximum daily balance of deposits (including accrued interest) placed
by the Company and its subsidiaries with CNAF shall be RMB4 billion; and

 

•        maximum daily balance of loans  and other credit services granted  by 
CNAF to the Company and its subsidiaries shall be RMB4.5 billion.

 

The aggregate annual fees to  be paid by the  Company and its subsidiaries  to 
CNAF for  other financing  services for  each  of the  three years  ending  31 
December 2013,  2014  and  2015 is  expected  to  fall below  the  de  minimis 
threshold as stipulated under Rule 14A.33(3)  of the Hong Kong Listing  Rules, 
therefore such transactions will be exempt from the reporting, annual  review, 
announcement  and   independent   shareholders'  approval   requirements   for 
continuing connected transactions.

 

 

                 Historical Caps                 Historical Figures                  Future Caps
                                                          Unaudited
                                         Actual   Actual            Estimated
                                                         historical
                                         annual   annual               annual
              Annual   Annual   Annual                       amount             Annual   Annual   Annual
                 cap      cap      cap   amount   amount               amount      cap      cap      cap
                                                            for the
             for the  for the  for the  for the  for the     period   for the  for the  for the  for the
                year     year     year     year     year                 year     year     year     year
                                                               from
               ended    ended    ended    ended    ended                ended   ending   ending   ending
                                                          1 January
                  31       31       31       31       31                   31       31       31       31
            December December December December December to 30 June  December December December December

Transaction     2010     2011     2012     2010     2011       2012      2012     2013     2014     2015
Financial
Services

 (deposit)      RMB7     RMB7     RMB7 RMB3,962 RMB3,963   RMB3,741      RMB4     RMB4     RMB4     RMB4
             billion  billion  billion  million  million    million   billion  billion  billion  billion
Financial
Services

 (loan and
other

 credit
services)       RMB3     RMB3     RMB3 RMB1,069 RMB1,263   RMB1,940      RMB3   RMB4.5   RMB4.5   RMB4.5
             billion  billion  billion  million  million    million   billion  billion  billion  billion

 

Basis for such caps:

 

Deposit services

 

In light of the Company's  undertaking in 2010 that  the actual amount of  the 
daily balance  of deposits  would not  exceed RMB4  billion, the  cap of  RMB4 
billion should generally meet the funding requirements of the Company and  its 
subsidiaries based upon the historical  transaction amounts. In addition,  the 
Company specifically  stated  in the  Financial  Services Agreement  that  the 
maximum daily balance of deposits shall be less than the maximum daily balance
of loans and other credit services, and the average daily balance of  deposits 
shall be  less  than the  average  daily balance  of  loans and  other  credit 
services. As  the  historical  amounts  of the  loans  were  not  significant, 
maintaining the cap for daily balance  of deposits at RMB4 billion shall  meet 
the requirements of the Company and its subsidiaries.

 

Loan and other credit services

 

From January to September 2012, the aggregated amount of the loans granted  by 
CNAF to the  Company and  its subsidiaries  amounts to  RMB2.2 billion,  among 
which RMB1.6  billion was  granted  to Shenzhen  Airlines Co.,  Ltd.,  RMB0.38 
billion was  granted  to  Aircraft  Maintenance  and  Engineering  Corporation 
(Beijing) and RMB0.15 billion was granted  to Air China Cargo. It is  expected 
that the  scale of  loans  will increase  for the  next  three years  for  the 
following reasons:

 

(1)     Shenzhen Airlines Co., Ltd., Air China Cargo and Aircraft  Maintenance 
and Engineering Corporation (Beijing) has indicated their intention to  obtain 
additional loans from CNAF and it is  anticipated that the amount of loans  to 
be granted by CNAF would increase in the next three years;

 

(2)     Dalian Airlines Company Limited, Beijing Airlines Company Limited  and 
Air China Inner Mongolia Limited have been established in 2011, 2011 and  2012 
respectively and each is controlled by the Company. It is anticipated that the
above entities  would have  financing needs  and the  main financing  provider 
would be CNAF; and

 

(3)     the Company has  not borrowed money from  CNAF directly in the  recent 
years. In light of the trend of RMB exchange rate, the Company may also adjust
its credit structure and obtain more RMB loans from CNAF.

 

5.       LISTING RULES IMPLICATIONS

 

5.1     The Financial Services Agreement between the Company and CNAF and  the 
Non-exempt Continuing Connected  Transactions fall  under Rule  14A.35 of  the 
Hong Kong  Listing Rules.  Therefore, the  Financial Services  Agreement,  the 
Non-exempt Continuing Connected Transactions and the relevant proposed  annual 
caps are subject to the reporting, annual review and announcement requirements
set out under Rules 14A.45  to 14A.47 of the Hong  Kong Listing Rules and  are 
required to be  approved by  Independent Shareholders in  accordance with  the 
requirements set out under Rules 14A.48 at the Company's EGM.

 

5.2     Except for the Non-exempt  Continuing Connected Transactions, as  each 
of the applicable  Percentage Ratios  (other than  the profits  ratio) of  the 
other continuing connected transactions  (excluding the de minimis  continuing 
connected transactions) set out above, on an annual basis, is higher than 0.1%
and less than 5.0%,  they therefore fall  under Rule 14A.34  of the Hong  Kong 
Listing  Rules.  Accordingly,  these  continuing  connected  transactions  are 
subject to the reporting, annual review and announcement requirements set  out 
under Rules 14A.45 to 14A.47 of the Hong Kong Listing Rules, but are  exempted 
from the requirements of Independent Shareholders' approval under Chapter  14A 
of the Hong Kong Listing Rules.

 

6.       PRC LAW IMPLICATIONS

 

6.1     Pursuant to the Shanghai Listing Rules, the following agreements shall
be approved or ratified by Independent Shareholders at the EGM:

 

(a)     Construction Project Management Agreement;

 

(b)     Advertising Services Framework Agreement;

 

(c)     Properties Leasing Agreement;

 

(d)     Sales Agency Services Framework Agreement;

 

(e)     Comprehensive Services Agreement;

 

(f)      Charter Flight Service Framework Agreement; and

 

(g)     Financial Services Agreement.

 

A circular  containing, among  other  things, (i)  details of  the  Non-exempt 
Continuing Connected Transactions and the other exempted continuing  connected 
transactions of  the Company;  (ii)  a letter  from an  independent  financial 
adviser to the  Independent Board Committee  and the Independent  Shareholders 
containing its advice on the Non-exempt Continuing Connected Transactions; and
(iii) the recommendation of the Independent Board Committee in respect of  the 
Non-exempt  Continuing   Connected  Transactions,   will  be   despatched   to 
Shareholders in  accordance  with the  Hong  Kong  Listing Rules  as  soon  as 
practicable.

 

DEFINITIONS

 

In this announcement,  unless the  context otherwise  requires, the  following 
terms shall have the following meanings:

 

"2009 Circular"         the circular issued by the Company on 6 November  2009 
                        to its Shareholders in  respect of certain  continuing 
                        connected transactions
"2009 EGM"              the Company's extraordinary general meeting held on 22
                        December 2009
"Advertising Services   the advertising services  framework agreement  entered 
                        into between the Company and CNAMC on 20 November 2012
 Framework Agreement"
"Air China Cargo"       Air China  Cargo  Co.,  Ltd, a  company  with  limited 
                        liability incorporated  under  the  laws  of  People's 
                        Republic of  China  and  with 51%  of  its  registered 
                        capital owned by the  Company as at  the date of  this 
                        announcement
"Board"                 the board of Directors of the Company
"CBRC"                  China Banking Regulatory Commission
"Charter Flight Service the  government  charter   flight  service   framework 
                        agreement entered into between  the Company and  CNAHC 
 Framework Agreement"   on 20 November 2012
"CNACD"                 China National Aviation  Construction and  Development 
                        Company, a wholly-owned subsidiary of CNAHC
"CNACG"                 China National Aviation Corporation (Group) Limited, a
                        company incorporated under the laws of Hong Kong and a
                        wholly-owned subsidiary  of CNAHC  as at  the date  of 
                        this announcement.  CNACG  is  an  investment  holding 
                        company whose principal  businesses include  passenger 
                        terminal operation, cargo terminal operation,  airport 
                        ground handling services,  airline catering  services, 
                        property  investment,  ticket  and  tourism  services, 
                        logistics and other  businesses conducted through  its 
                        subsidiaries
"CNAF"                  China National Aviation  Finance Co.,  Ltd., a  75.54% 
                        held subsidiary of CNAHC
"CNAHC"                 China National Aviation Holding Company, a substantial
                        shareholder of the Company
"CNAHC Group"           CNAHC, its subsidiaries and its associates  (excluding 
                        the Company)

 

"CNAMC"                    China National  Aviation  Media  and  Advertisement 
                           Co., Ltd., a wholly-owned subsidiary of CNAHC
"CNATC"                    China  National   Aviation   Tourism   Company,   a 
                           wholly-owned subsidiary of CNAHC
"Company"                  Air China Limited,  a company  incorporated in  the 
                           People's Republic  of  China, 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
"Comprehensive Services    the comprehensive services  agreement entered  into 
                           between the Company  (for itself and  on behalf  of 
 Agreement"                its subsidiaries)  and CNAHC  (on behalf  of  CNAHC 
                           Group) on 20 November 2012
"Construction Project      the framework agreement for assigning management of
                           basic construction project entered into between the
 Management Agreement"     Company and CNACD on  20 November 2012. The  annual 
                           amount   payable   by   the   Company   under   the 
                           Construction Project Management Agreement for  each 
                           of the three  years ending 31  December 2013,  2014 
                           and 2015 is expected to  fall below the de  minimis 
                           threshold as stipulated under Rule 14A.33(3) of the
                           Hong  Kong   Listing   Rules.   Accordingly,   such 
                           transaction will  be  exempt  from  the  reporting, 
                           annual   review,   announcement   and   independent 
                           shareholders' approval requirements for  continuing 
                           connected transactions
"Directors"                the directors of the Company
"EGM"                      the extraordinary general meeting of the Company to
                           be held to seek Independent Shareholders'  approval 
                           for, among other things, the Non-exempt  Continuing 
                           Connection  Transactions  and  the  other  exempted 
                           continuing connected transactions  as set forth  in 
                           this announcement
"Financial Services        the  financial  services  agreement  entered   into 
                           between the Company  (for itself and  on behalf  of 
 Agreement"                its subsidiaries) and CNAF on 20 November 2012
"Hong Kong Listing Rules"  The Rules Governing  the Listing  of Securities  on 
                           The Stock Exchange of Hong Kong Limited
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"Independent Board         a board committee  comprising Mr. Fu  Yang, Mr.  Li 
                           Shuang, Mr. Han Fangming and Mr. Yang Yuzhong,  all 
 Committee"                being the  independent non-executive  directors  of 
                           the Company
"Independent Shareholders" the independent shareholders of the Company

 

"Non-exempt Continuing           the  deposit  services  and  loan  and  other 
                                 credit services to be provided by CNAF to the
 Connected Transactions"         Company  and  its   subsidiaries  under   the 
                                 Financial Services Agreement
"Percentage Ratios"              the percentage ratios set  out in Rule  14.07 
                                 of the Hong Kong Listing Rules, i.e.  "assets 
                                 ratio",  "profits  ratio",  "revenue  ratio", 
                                 "consideration  ratio"  and  "equity  capital 
                                 ratio"
"PRC"                            The People's  Republic of  China,  excluding, 
                                 for the  purpose of  this announcement  only, 
                                 Hong Kong, Macau and Taiwan
"Properties Leasing              the properties leasing agreement entered into
                                 between the Company (for itself and on behalf
 Agreement"                      of its subsidiaries) and CNAHC (on behalf  of 
                                 CNAHC Group) on 20 November 2012
"RMB"                            Renminbi, the lawful currency of the PRC
"Sales Agency Companies"         certain subsidiaries of  CNAHC acting as  the 
                                 Company's sales agents pursuant to the  Sales 
                                 Agency Services Framework Agreement
"Sales Agency Services Framework the sales agency services framework agreement
Agreement"                       entered into between the Company (for  itself 
                                 and on behalf of its subsidiaries) and  CNAHC 
                                 (on behalf  of CNAHC  Group) on  20  November 
                                 2012
"Shanghai Listing Rules"         the Rules Governing the Trading of Stocks  on 
                                 the Shanghai Stock Exchange
"Shareholders"                   the shareholders of the Company

 

 

                            By order of the Board

                              Air China Limited

                           Rao Xinyu Tam Shuit Mui

                          Joint Company Secretaries

 

Beijing, the PRC, 20 November 2012

 

As at the date of this announcement, the directors of the Company are Mr. Wang
Changshun, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Sun Yude, Mr. Christopher
Dale Pratt, Mr. Ian Sai Cheung Shiu, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr.  Fu 
Yang*, Mr. Li Shuang*, Mr. Han Fangming* and Mr. Yang Yuzhong*.

 

* Independent non-executive Director of the Company

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
MSCLFLBLLFFFFBV -0- Nov/21/2012 08:00 GMT
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