Air China Limited 21 Annual Results Under IFRS March 211
Agenda Part 1 Highlights Part 2 Business Overview Part 3 Financial Overview Part 4 Outlook 2
Part 1 Highlights
Steady Economic Growth; Asia Pacific Led Global Airline Recovery Chinese Economy Continues Steady Growth 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% -2.% 13.% 1.2% 1.7% 9.% 8.7% 1.3% 4.9% 5.1% 5.% 3.7% 4.5% E -.8% 25 26 27 28 29 21 Global GDP annual growth rate China GDP annual growth rate Source: IMF, NBS Strong Recovery in Global Airline Industry 25 2 15 1 5 1.% 8.% 6.% 4.% 2.% Rapid Growth in Chinese Airline Industry.% Mar-8 May-8 Jul-8 Sep-8 Nov-8 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1-2.% -4.% May-8 Jul-8 Sep-8 Nov-8 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Global Airlines Index US Airlines Index Asia-Pacific Airlines Index Europe and Middle East Airlines Index Source: Bloomberg RPK Source: CAAC RFTK 4
Results Highlights Key Financial Metrics 21 YoY Change Turnover (RMB million) 82,488 6.5% Operating Expenses (RMB million) 71,56 55.93% Net Profit (RMB million) 12,336 156.83% Profits Attributable to Shareholders (RMB million) 12,5 147.31% EPS (RMB) 1.3 151.22% Key Operational Metrics* 21 YoY Change ASK (million) 132,74.8 33.92% RPK (million) 15,695. 4.4% ATK (million) 19,74.7 28.6% RTK (million) 14,294.4 38.87% Passenger Load Factor (%) 8. 3.5pts ATK Load Factor (%) 72.4 5.63pts * Note: Including Shenzhen Airlines operational figures from April 2 to December 31 5
Part 2 Business Overview
Passenger Services Air China Total 21 YoY Change Revenue (RMB million) 55,997.9 34.91% ASK (million) 17,423.1 12.53% RPK (million) 86,212.2 17.53% Load Factor (%) 8.25 3.42pts Yield (RMB/RPK).65 14.4% Domestic 21 YoY Change Revenue (RMB million) 35,526.9 32.58% ASK (million) 64,62.3 11.37% RPK (million) 51,414.5 16.48% Load Factor (%) 8.26 3.52pts Yield (RMB/RPK).69 13.11% International 21 YoY Change Revenue (RMB million) 18,199.2 38.2% ASK (million) 39,566.2 13.55% RPK (million) 31,897.9 18.7% Load Factor (%) 8.62 3.9pts Yield (RMB/RPK).57 16.33% Regional 21 (HK, Macao and Taiwan) YoY Change Revenue (RMB million) 2,271.9 48.92% ASK (million) 3,794.6 22.61% RPK (million) 2,899.9 32.15% Load Factor (%) 76.42 5.51pts Yield (RMB/RPK).78 11.43% 7
Demand-orientated Capacity Deployment to Further Improve Efficiency 4% 3% 2% 1% Passenger Capacity and Traffic Changes (21 vs 29) International Domestic Regional 32% 23% 18% 16% 14% 11% 3pts 4pts 6pts Passenger Capacity Distribution Change (21 vs 29) 3.53% 59.64% 3.24% 6.26% 36.83% 36.5% 21 29 % ASK Change RPK Change Passenger Load Factor Change International Domestic Regional Total (as of December 31, 29) 262 Introduced in 21 3 B737-8 (12), A321/32 (12), A33 (3), Business Jet (2 under custody), B747-4F (1) Retired in 21 1 B757-2 (2), B767-3ER (1), B747-2F freighter (2), B737-3 (4), A321-1 (1) Total (as of December 31, 21) 282 *Note: does not include the conversion of a B747-4COMBI passenger jet to a B747-4F freighter Timely adjustments of capacity deployment to achieve the alignment of scale, growth rate and market demand Retirement of older aircraft to further optimize fleet structure and maintain a more efficient fleet 8
Improved Hub Operation to Realize Greater Network Effects Transfer passenger traffic at Beijing hub rose 2% year-over-year. Number of effective connecting flights within two hours rose 12.5% year-over-year. New routes from Beijing to Manila, Ulanhot, Jiuzhaigou valley and seven other cities launched Transfer traffic rose by 4% year-over-year at Chengdu hub, excluding domestic-to-domestic transfers. Through check-in service established in 35 cities, and new routes from Chengdu to Bangalore, Nagoya, Ngari and four other cities launched Shanghai gateway saw transfer traffic increase by 23%. New routes from Shanghai to Taipei Sungshan, Yinchuan and one other city launched. More wide-body aircraft were put into service on Beijing-Shanghai express and Shanghai-Tokyo and Shanghai-Osaka routes Take majority shareholding Shenzhen Airlines boosted the Company s foothold in Southern China, resulting in a more balanced network Revenue from transfer passenger rose 32% year-over-year Changes in Capacity Input in Beijing, Chengdu and Shanghai Transfer Passenger Revenue Rose 32% 6% 4% 2% % 39.9% 15.2% 17.6% 13.% 8.8% 3.7% Beijing Chengdu Shanghai RMB 1 million 18 12 6 87 115 29 21 ASK YoY Growth AFTK YoY Growth 9
Sustained Improvement in Yield Quality 8 7 6 5 4 3 2 1 RMB 1 million Premium Class Continued Growth Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 21 29 International YoY Change Domestic YoY Change Regional YoY Change 1% 8% 6% 4% 2% % 92% Growth in E-commerce Revenue RMB 1million 8 63 6 4 33 2 29 21 Frequent Flyer Revenue Rose 59% Corporate Customer Revenue Grew 78% Revenue from Star Alliance Carriers Cooperation Rose 91% 18 12 6 RMB 1 million 99 157 1 8 6 4 2 RMB 1 million 5 89 25 2 15 1 5 RMB 1 million 9 18 29 21 29 21 29 21 1
Air China Cargo Optimizing Operational Efficiency to Significantly Increase Yield 21 29 YoY Change AFTK (million) 7,428.9 6,449. 15.2% Freighter AFTK (million) 2,791.1 2,3.9 39.28% RFTK (million) 4,53.8 3,496.2 29.59% Freighter RFTK (million) 2,296.2 1,536.7 49.42% Tonnage Carried (tonne) 1,148,157.3 943,341.3 21.71% Freighter Tonnage Carried (tonne) 385,193.2 264,882.7 45.42% Load Factor (%) 6.99% 54.21% 6.78pts Yield (RMB/RFTK) 1.81 1.51 19.87% Cargo Traffic Maintained Rapid Growth Million 5. 45. 4. 35. 3. 25. 2. 15. 1. 5.. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec RTK in 21 International YoY Growth International Cargo Load Factor YoY Growth Cargo Load Factor 8% 7% 6% 5% 4% 3% 2% 1% % 11
Shenzhen Airlines 21 YoY Change ASK (million) 3,4.4 11.27% RPK (million) 24,386.8 14.68% ATK (million) 3,22.1 8.32% RTK (million) 2,539.87 15.% Passengers carried (thousand) 17,568.1 12.25% Passenger load factor (%) 8.22% 2.38pts ATK load factor (%) 78.88% 4.58pts Passenger Yield (RMB/RPK).61-12
Air Macao 21 YoY Change ASK (million) 3,16. -1.71% RPK (million) 2,184.9 2.96% ATK (million) 386.3 3.3% RTK (million) 257.7 5.4% Passengers carried (thousand) 1,364.5-5.7% Passenger load factor (%) 7.35% 3.19pts ATK load factor (%) 66.71% 1.34pts Passenger Yield (RMB/RPK).74 32.14% 13
Part 3 Financial Overview
Record High Net Profit Benefited from industry recovery and operational efficiency (RMB million) 21 29 YoY Growth Turnover 82,488 51,393 6.5% Air traffic revenue 78,29 48,92 62.63% Operating expenses 71,56 45,892 55.93% Operating expenses ex-fuel cost 47,464 31,426 51.3% Gain from change in fair value of fuel derivative contracts 1,954 2,758-29.15% Profit/(loss) from operations 1,928 5,51 98.65% Finance costs -531 1,59 15.14% Share of profit/(loss) of associates 3,375 624 44.92% Profit/(loss) before tax 14,834 5,66 192.79% Net profit/(loss) 12,336 4,83 156.83% Profit/(loss) attributable to equity holders 12,5 4,854 147.31% EPS (RMB) 1.3.41 151.22% 15
Optimizing Capacity Deployment and Enhancing Passenger and Cargo Services Synergy Revenue Breakdown: RMB million Revenue Breakdown Passenger Services YoY Change Cargo Services YoY Change Total YoY Change Domestic 45,515 69.85% 2,648 19.66% 48,163 71.64% (%) 66.8 4.4pts 26.29 2.88pts 61.58 3.23pts International 18,961 41.48% 6,873 79.4% 25,834 49.91% (%) 27.83-3.65pts 68.24-2.75pts 33.3-2.8pts Regional 3,661 46.62% 551.41 82.45% 4,212 5.48% (%) 5.37 -.48pts 5.47 -.13pts 5.39 -.43pts RMB million 9, 8, 7, 6, 5, 4, 3, 2, 1, 11.22% 88.78% 12.88% 87.12% 29 21 Passenger Cargo 35.83% 21 Passenger Revenue Breakdown 5.82% 58.35% 33.3% 5.39% 29 21 Domestic International Regional 61.58% 16
Cost Pressure from Jet Fuel Price Surge (RMB million) 21 29 YoY Change Jet fuel 24,96 14,466 66.57% Depreciation 12.% Take-off, Landing and Depot charges 1.8% Maintenance 3.6% 21 Staff 13.8% Leasing 4.9% Other flight operation expenses 11.5% Catering 2.9% Gain/loss from change in fair value Take-off, landing and depot charges -1,954-2,758-29.15% 7,77 5,789 33.14% Depreciation 8,569 7,51 21.53% Maintenance 2,577 1,768 45.78% Staff 9,852 6,627 48.65% Jet Fuel 33.7% Others (including gain from change in fair value) 7.% Leasing 3,488 2,319 5.4% Air Catering 2,44 1,519 34.59% Other flight operation expenses 8,228 4,532 81.54% Others 6,953 4,579 51.84% Total 71,56 45,892 55.93% 17
Higher Jet Fuel Cost with Uncertainties in Future Price Trend Fuel Costs and Jet Fuel Surcharge RMB million 3 25 2 15 1 5 25 26 27 28 29 21 Fuel Costs Jet Fuel Surcharge Changes in Jet Fuel Purchase Price RMB/Tonne 7, 6, 5, 4, 3, 2, 1, Average Domestic International 21 Average: 5,588 29 Average: 4,583 RMB/Tonne 7, 6, 5, 4, 3, 2, 1, 21 Average: 5,74 29 Average: 4,728 RMB/Tonne 21 Average: 5,82 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6, 5, 4, 3, 2, 1, 29 Average: 4,69 21 29 21 29 21 29 18
Enhanced Cost Efficiency Fuel Cost and Non-fuel Cost Unit Cost RMB million 8, 6, 47,485 42,416 4, 15,716 17,21 2, 26,7 3,284 62,715 22,614 4,11 45,892 14,466 31,426 71,56 24,96 47,464 RMB 5 4 3.4 3.18 3 2 1.51.53.68 4.28 2.98.47.54 3.46 26 27 28 29 21 26 27 28 29 21 Operating cost excluding fuel cost Fuel cost Cost per ATK Cost per ASK Cost as Percentage of Revenue Ex-fuel Unit Cost 12% 1% 8% 6% 94.4% 59.42% 92.53% 59.1% 118.54% 75.79% 89.3% 86.75% 61.15% 57.54% RMB 5 4 3 2.74 1.91 2.7 2.4 2 1.32.35.44.32.36 2.3 4% 26 27 28 29 21 Operating cost as % of revenue Ex-fuel operating cost as % of revenue 26 27 28 29 21 Ex-fuel cost per ATK Ex-fuel cost per ASK 19
Margins and Returns 21 29 YoY Change EBITDA (RMB million) 19,497 12,552 55.33% EBITDA margin (%) 23.64% 24.42% -.78pts EBITDAR (RMB million) 23,697 15,349 54.39% EBITDAR margin (%) 28.73% 29.87% -1.14pts Operating profit margin (%) 13.25% 1.7% 2.55pts Pre-tax profit margin (%) 17.98% 9.86% 8.12pts Net profit margin (%) 14.55% 9.45% 5.1pts ROE (%) 36.74% 22.14% 14.6pts 2
Financial Strength and Healthy Capital Structure Net Debt to Equity Ratio Total Debt to Asset Ratio 3 2 (x) 2.5 2.54 1.72 1 8 6 % 62.4 66.32 79.63 77.8 73.94 1.94 1.15 4 2 26 27 28 29 21 26 27 28 29 21 (x) 16 12 8 4-4 EBITDA Interest Cover Ratio 12.12 8.89 4.15 4.8-1.63 26 27 28 29 21 (RMB million) 42, 35, 28, 21, 14, 7, Net Assets (Excludes minority interest) 31,736 31,57 19,943 23,916 41,438 26 27 28 29 21 21
Part 4 Outlook
211: Business Environment Opportunities Sustained global economic recovery and continued rapid economic growth in China Continued growth in air travel, balancing capacity and demand Increased market concentration; stabilizing and improving yield Synergies created by member airlines within Air China Group Challenges Accelerated consolidation in global airline industry; intensified competition Impacts from high-speed rail with full HSR coverage in near future Insufficiency of core aviation resources Uncertainties from fluctuations in jet fuel prices, exchange rates and interest rates 23
211: New Developments Improving operational efficiency of hubs Business Enhancing sales and marketing efforts in international market Speeding up introduction of wide-body aircraft, delivery of five A33 and four B777 wide-body aircraft in 211 Annual capital expenditure RMB23.6 billion; 86% invested in aircraft Shenzhen Airlines Optimizing market structure and layout and improving efficiency Improving marketing collaboration to strengthen market controlling power Creating comprehensive synergy with Air China Cargo Operation model: air network + hub cargo terminal + truck network Improving marketing and service standards Service Customer-oriented service promoting Customer Service Management solutions Service upgrade for e-commerce, irregular flight information transfer and seven other service projects 24
211-215 Five-year Plan Strategic Positioning: Large-scale network carrier with sustained growth Strategic Objective: Top-tier international airline with strong competitive edge for further development Offer customers with exceptional experience, catering to the interest of all relevant parties Targets for Development Objectives: Become one of the world s top six airlines with significantly increased international competitiveness Balance domestic and international development, building a network with a composite hub in Beijing, a regional hub in Chengdu, an international gateway in Shanghai, and Shenzhen as a supportive hub in southern China Build three main businesses: passenger, cargo and aircraft maintenance 25
Appendix Other Financial and Operational Data
1 Fleet Air China Sub-total Owned 21 Delivery Finance Lease Operating Lease Average Age 211 212 213 A319 33 21 9 3 5.7 A32/A321 44 8 24 12 2.8 * 14 14 1 A33 23 3 17 3 3.1 5 6 9 A34 6 5 1 12.6 B737 127 56 22 49 7.2 * 9 9 11 B747 9 7 2 13.7 B757 11 11 16. B767 5 5 15.9 B777 1 6 4 1.9 4 6 6 TU24 1 1 2.2 B747F 9 7 2 16. 1 2 Business jet 4 4 1.4 3 TOTAL 282 13 79 73 7.4 36 37 36 *Wet lease aircraft excluded in calculation of average ages 27
2 Fleet Shenzhen Airlines 21 Delivery Sub-total Owned Financial Lease Operating Lease Average Age 211 212 213 A319 5 3 2 4.7 A32 38 28 1 2.4 9 12 7 B737 56 22 5 29 7.6 1 6 1 TOTAL 99 53 5 41 5.2 19 18 17 28
3 Consolidated Balance Sheet (Condensed) (RMB million) As of Dec 31, 21 As of Dec 31, 29 YoY Change Non-current assets 96,153 75,45 28.13% Aircraft 82,655 65,7 27.15% Property 5,876 3,676 59.85% Current assets 22,979 8,551 168.74% Cash and cash equivalents 14,42 2,77 432.7% Total assets 158,774 17,919 47.12% Current liabilities 52,389 37,199 4.84% Non-current liabilities 65,14 46,766 39.2% Total liabilities 117,43 83,965 39.82% Shareholders equity 41,371 23,954 72.71% 29
4 Consolidated Cash Flow Statement (Condensed) (RMB million) 21 29 YoY Change Net cash flow from operating activities 18,366 5,465 236.7% Net cash flow from investing activities -14,58-12,666 1.99% Net cash flow from financing activities 7,463 6,948 7.41% Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate changes on cash and cash equivalents 11,771-252 4671.3% 2,676 2,949-9.26% -71-2 255.% Cash and cash equivalents 14,376 2,676 437.22% 3
5 Consolidated Borrowings and Obligations RMB million (as of Dec 31, 21) Sub-total RMB denominated USD denominated HKDK denominated EUR denominated Bank loans and notes Finance lease obligation 59,29 8,81 44,177 5,846 26 18,285 829 17,456 Bond 9, 9, Total 86,314 18,629 61,633 5,846 26 Weight (%) 1 21.6 71.4 6.8.2 31
Investor Relations Beijing Rao Xinyu Tel: +861-6146 2777 Fax: +861-6146 285 E-mail: raoxinyu@mail.airchina.com.cn Wang Kai Tel: +861-6146 2799 Fax: +861-6146 285 E-mail: kai@mail.airchina.com.cn Website: www.airchina.com.cn