Air China Limited 21 Interim Results Under IFRS August 21 1
Agenda 21 Interim Results Overview Business Overview Financial Overview Outlook 2 2 2
21 Interim Results 3
21 Interim Results Overview 4 4 4
Highlights Key Financial Metrics 1H21 YoY Change Turnover (RMB million) 34,781 5.5% Operating expenses (RMB million) 3,68 51.21% Profit from operations (RMB million) 4,71 67.19% Profit attributable to equity holders (RMB million) 4,613 6.27% EPS (RMB).4 64.19% Key Operational Metrics * 1H21 YoY Change ASK (million) 59,85.2 24.51% RPK (million) 47,213.7 32.13% ATK (million) 9,85.9 22.54% RTK (million) 6,445.7 36.46% Passenger load factor (%) 78.9 4.55pts ATK load factor (%) 7.9 6.94pts *Note: including Shenzhen Airlines operational figures between April 2 to June 3. 5 5 5
Business Overview 6 6 6
Passenger Services - Air China Total 1H21 YoY Change Domestic 1H21 YoY Change Traffic revenue (RMB million) 25,146.1 34.43% ASK (million) 52,24.6 12.28% RPK (million) 41,342.5 19.6% Load factor (%) 79.19 4.51pts Yield (RMB/RPK).61 12.91% International 1H 21 Traffic revenue (RMB million) YoY Change 8,25.8 37.55% ASK (million) 18,749.2 9.52% RPK (million) 15,39.8 21.31% Load factor (%) 81.66 7.94pts Yield (RMB/RPK).54 13.38% Traffic revenue (RMB million) 15,812.5 31.72% ASK (million) 31,634.5 13.3% RPK (million) 24,633.9 16.73% Load factor (%) 77.97 2.29pts Yield (RMB/RPK).64 12.84% Regional 1H 21 (HK, Macau and Taiwan) Traffic revenue (RMB million) YoY Change 1,82.8 54.14% ASK (million) 1,82.8 25.23% RPK (million) 1,368.7 4.46% Load factor (%) 75.17 8.15pts Yield (RMB/RPK).79 9.74% 7 7
Passenger Services - Air China Rapid Traffic Growth on International Routes 8 Million 16.2% 6 4 1H 28 1H 29 1H 21 19.1% 42.3% 21vs29 21.3% International routes experienced significant year-over-year growth in passenger traffic in all areas in the first half of 21 2 Europe North America Japan and Korea Southeast Asia and other areas 4 3 2 Million 1.1% 29Q4 21Q1 21Q2 14.6% 12.9% Q2vsQ1-19.1% On a quarter-over-quarter basis, North America, Japan and Korea, as well as European routes maintained solid growth 1 E u ro p e N o rth A m e rica Japan and Korea Southeast Asia and other areas 8 8 8
Optimized Capacity Deployment to Further Improve Efficiency 5% 4% 3% 2% 1% % Passenger Capacity and Traffic Changes (1H21 vs 1H29) 1% 13% 25% International Domestic Regional 21% 17% 4% 8pts ASK Change RPK Change Passenger Load Factor Change Total (as of Dec. 31, 29) 262 Introduced in 1H21 2 B737-8(8), A321/32(8), A33(3), Business jet (1 under custody ) Retired in 1H21 6 B767-3(3), B767-3ER(1), B747-2F freighter(1), B757-2(1) Total (as of Jun. 3, 21) 276 9 2pts 8pts Optimization of capacity redeployment: raising domestic capacity by 13% while RPK increased by 17%; increasing international and regional capacity by 1% and 25%, respectively, while RPK up 21% and 4%, respectively Across-the-board improvement in efficiency Timely adjustments of capacity deployment, adding capacity in higher yield markets Continued to retire older aircraft to further optimize fleet structure and to maintain a younger and more efficient fleet 9
Improved Hub Operation with Strengthened Hub Position 251, transferred passengers in Beijing, 8% growth YoY Transfer traffic rose by 71% year-over-year in Chengdu hub, domestic to domestic transfers not included Shanghai gateway saw transfer traffic increased by 3%; completion of Terminal 2 transfer in Shanghai Hongqiao, optimizing support of Shanghai hub Increased stake in Shenzhen Airlines, strengthening support to Beijing, Chengdu and Shanghai, resulting in more balanced route network Changes in Capacity Input Strong Growth in Transfer Passenger 6% 4% 2% % 45.8% 22.9% 14.4% 11.3% 8.3% 5.2% Beijing Chengdu Shanghai 1 thousand 3 25 2 15 1 5 Grow 8% 233 251 Down 3% 46 45 Grow 3% 18 24 Beijing Chengdu Shanghai ASK YoY Growth AFTK YoY Growth 1 1H29 1H21 1
Sustained Improvement in Yield Quality Premium Class Resumed Growth RMB 1 million 6 1% 5 8% 4 6% 3 2 4% 1 2% % Jan Feb Mar Apr May Jun 1H21 1H29 YoY Change International YoY Change International Long-haul Premium Class Revenue Saw Steady Increase RMB 1 million 8 [32%] 7 6 [31%] 5 [37%] 4 [34%] 3 2 1 [23%] [25%] Europe America Australia 1H29 1H21 [%] 124% Growth in E- commerce Revenue Frequent Flyer Revenue Rose 83% Corporate Customer Revenue Grew 7% RMB 1 million RMB 1 million RMB 1 million 4 3 2 13 29 8 6 4 38 7 4 3 2 21 36 1 2 1 1H29 1H21 1H29 1H21 1H29 1H21 11 11
Air China Cargo Leveraging on Market Recovery to Achieve Rapid Growth 1H21 1H29 YoY Change AFTK (million) 3,589.8 3,44.7 17.9% Freighter AFTK (million) 1,289.2 83.7 6.42% RFTK (million) 2,125.3 1,54.6 41.25% Freighter RFTK (million) 1,58. 583.1 81.43% Tonnage carried (tonne) 544,55.3 48,768.7 33.21% Freighter tonnage carried (tonne) 179,727.7 94,855 89.48% Load factor (%) 59.2% 49.42% 9.79pts Yield (RMB/RFTK) 1.85 1.27 45.2% Cargo Traffic Maintained Rapid Growth Million 45 4 35 3 25 2 15 1 5 Jan Feb Mar Apr May Jun RTK in 21 YoY Growth Domes tic YoY Growth International YoY Growth Regional YoY Growth 8% 7% 6% 5% 4% 3% 2% 1% % Progress of Cargo Joint Venture Submitted application for set-up of the cargo joint venture with Cathay Pacific Airways Expect to commence operation in the fourth quarter First freighter of the joint venture will be introduced this year 12 12
Shenzhen Airlines 1H21 YoY Change ASK (million) 14,965.6 19.63% RPK (million) 11,877.5 22.3% ATK (million) 1,69.1 19.56% RTK (million) 1,229.5 22.6% Passengers carried (thousand) 8,732.2 22.33% Passenger load factor (%) 79.37% 1.74pts ATK load factor (%) 76.41% 1.9pts 13 13 13
Shenzhen Airlines (Cont d) Shenzhen Airlines Route Network Maximize Synergies with Expanded Business Co-operation Passenger and cargo marketing Maintenance Information Technology Ground service Sourcing Finance Routes: As of June 3, 21, Shenzhen Airlines operates 162 routes, of which 146 are domestic routes, 11 are international routes and 5 are regional routes Fleet: 94 aircraft Workforce: >8, 14 14
Air Macao 1H21 YoY Change ASK (million) 1,534.8-2.42% RPK (million) 1,82.7 7.29% ATK (million) 184.2 -.55% RTK (million) 126.3 1.89% Passengers carried (thousand) 681.1-3.34% Passenger load factor (%) 7.55% 6.38pts ATK load factor (%) 68.59% 7.8pts Passenger yield (RMB/RPK).68 27.18% 15 15
Financial Review 16 16 16
Record High Net Profit Benefited from industry recovery and management efforts (RMB million) 1H21 1H29 YoY Change Turnover 34,781 23,11 5.5% Operating expenses 3,68 2,289 51.21% Operating expenses ex-fuel cost 2,67 14,191 41.4% Gain from change in fair value of fuel derivative contracts 721 1,45-5.28% Profit/(loss) from operations 4,11 2,82 45.42% Finance costs 354 469-24.48% Share of profit/(loss) of associates 1,719 316 444.44% Profit/(loss) before tax 5,466 2,667 14.95% Net profit/(loss) 4,71 2,817 67.19% Profit/(loss) attributable to equity holders 4,613 2,878 6.27% EPS (RMB).4.24 64.19% 17 17
Optimizing Capacity Deployment and Creating Higher Passenger and Cargo Services Synergy Revenue breakdown: RMB million Revenue Breakdown Passenger Services YoY Change Cargo Services YoY Change Total YoY Change Domestic 18,389 53.18% 96 59.55% 19,295 53.47% (%) 64.24 1.85pts 2.3-8.57pts 58.31 -.97pts International 8,543 4.1% 3,323 162.47% 11,866 61.14% (%) 29.84-1.85pts 74.46 1.8pts 35.86 1.14pts Regional 1,695 48.61% 233.95 76.21% 1,929 51.49% (%) 5.92 -.1pts 5.24-1.51pts 5.83 -.17pts RMB million 3, 25, 13.49% 6% Passenger Revenue Breakdown 5.83% 2, 9.27% 15, 1, 9.73% 86.51% 34.72% 59.28% 35.86% 58.31% 5, 1H29 Passenger 1H21 Cargo 1H29 1H21 Domestic International Regional 18 18
Surge in Jet Fuel Prices Challenges Cost Management 1H21 (RMB million) 1H21 1H29 YoY Change Jet fuel 1,613 6,98 74.3% Gain/loss from change in fair value Take-off, landing and depot charges -721-1,45-5.28% 3,559 2,76 31.52% Depreciation 4,6 3,46 17.62% Maintenance 1,39 879 18.13% Staff 4,151 2,937 41.34% Leasing 1,495 1,14 31.18% Air Catering 854 694 22.95% Other flight operation expenses 2,654 1,96 35.46% Others 3,3 1,92 57.85% TOTAL 3,68 2,289 51.21% 19 19
Higher Jet Fuel Purchase Price with Uncertainties in Trend Fuel Costs and Jet Fuel Surcharge RMB billion 25 2 15 1 5 25 26 27 28 29 1H29 1H21 Fuel Costs Jet Fuel Surcharge Changes in Jet Fuel Purchase Prices Average Domestic International RMB / tonne 6, 5, 4, 3, 2, 1, - 1H21 average:5,47 1H29 average :4,34 Jan Feb Mar Apr May Jun RMB / tonne 1H21 average :5,613 6, 4, 1H29 average :4,172 2, - Jan Feb Mar Apr May Jun RMB / tonne 6, 4, 2, - 1H21 average :4,981 1H29 average :3,524 Jan Feb Mar Apr May Jun 1H21 1H29 1H21 1H29 1H21 1H29 2 2 2
Enhanced Cost Efficiency RMB million Fuel Cost and Non-fuel Cost 62,715 6, 47,485 22,614 45,892 42,416 4, 17,21 14,466 15,716 3,68 2,289 1,613 2, 4,11 26,7 3,284 31,426 6,98 2,67 14,191 26 27 28 29 1H29 1H21 Operating cost excluding fuel cost Fuel cost RMB 5 4 3 Unit Cost 4.28 3.4 3.18 3.29 2.98 2.74 2 1.51.53.68.47.42.51 26 27 28 29 1H29 1H21 Cost per ATK Cost per ASK Cost as Percentage of Revenue Ex-fuel Unit Cost 3 RMB 2.74 2 1.91 2.7 2.4 1.91 2.15 1.32.35.44.32.3.33 26 27 28 29 1H29 1H21 Ex-fuel Cost per ATK Ex-fuel Cost per ASK 21 21
Margins and Returns 1H21 1H29 YoY change EBITDA (RMB million) 8,16.8 6,225.8 3.21% EBITDA margin (%) 23.31% 26.94% -3.63pts EBITDAR (RMB million) 1,368.6 7,6.9 36.41% EBITDAR margin (%) 29.81% 32.89% -3.8pts Operating profit margin (%) 11.79% 12.2% -.41pts Pre-tax profit margin (%) 15.71% 11.54% 4.17pts Net profit margin (%) 13.26% 12.45%.81pts ROE (%) 17.73% 13.12% 4.61pts 22 22 22
Healthy Financial Strength and Capital Structure 3 2 (Times) Net Debt to Equity Ratio 2.5 2.54 2.79 1 8 6 % 62.4 Total Debt to Asset Ratio 66.32 79.63 77.8 8.58 1.94 1.15 4 2 26 27 28 29 1H21 26 27 28 29 1H21 16 12 8 4-4 EBITDA Interest Cover Ratio (Times) 12.73 8.89 4.15 4.8-1.63 26 27 28 29 1H21 (RMB million) 4, Net Asset (excludes minority interest) 31,736 31,57 3, 28,11 23,916 19,943 2, 1, 26 27 28 29 1H21 23 23 23
Outlook 24
21 Opportunities and Challenges Opportunities Sustained recovery of global economy and economic growth in China bolstering demand in aviation industry Co-operation with Shenzhen Airlines to strengthen hub development and maximize synergies Cargo market is expected to maintain strong growth Significant growth opportunities deriving from Shanghai World Expo and Guangzhou Asian Games Challenges Risk of double dip recession in global economy still exists Industry capacity growth intensifies competition High-speed rail will trigger changes in competitive landscape of transportation Uncertainties from fluctuations in oil prices, exchange rates and interest rates Traffic and timeslot limits at main airports restrict aircraft utilization and operational quality Strategic Priorities Improve operational efficiency to strengthen core competitiveness Enhance sales and marketing initiatives Continue to improve cost management On-going efforts to improve service and product delivery Enhance overall strategic management to solidify foundation for further development 25 25 25
Appendix Other Financial and Operational Data 26
1 Fleet Air China 1H21 Delivery Sub-total Owned Finance Lease Operating Lease Average Age A319 33 21 9 3 5.9 21 211 212 A32/A321 41 8 2 13 2.5* 12 14 14 A33 23 3 17 3 2.6 3 5 6 A34 6 3 3 12.1 B737 124 55 22 47 7.4* 12 9 9 B747 9 5 4 13.2 B757 12 12 15.6 B767 5 5 13.4 B777 1 3 7 1.4 4 6 B787 TU24 1 1 1.7 1 B747F 9 7 2 15.9 1 (Not including passenger aircraft converting to freighter) Business jet 3 3 1.3 2 TOTAL 276 123 82 71 7.2 31 35 35 3 27 *Note: wet lease aircraft is not included 27
2 Fleet Shenzhen Airlines 1H21 Delivery Sub-total Owned Finance Lease Operating Lease Average Age 21 211 212 A319 5 3 2 4. A32 32 22 1 2. 13 9 12 B737 57 24 6 27 7.4 1 6 TOTAL 94 49 6 39 5.4 13 19 18 28 28
3 Balance Sheet (Condensed) (RMB million) As of Jun 3, 21 As of Dec 31, 29 YoY Change Non-current assets 95,215 75,45 26.88% Aircraft 82,419 65,7 26.78% Property 4,883 3,676 32.83% Current assets 14,867 8,551 73.87% Cash & cash equivalents 5,674 2,77 19.64% Total assets 143,92 17,893 32.62% Current liabilities 51,623 37,199 38.78% Non-current liabilities 63,674 46,74 36.23% Total liabilities 115,298 83,939 37.36% Shareholders equity 27,794 23,954 16.3% 29 29 29
4 Cash Flow Statement (Condensed) (RMB million) 1H21 1H29 YoY Change Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities 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 6,99 1,189 481.27% -5,41-1,958 157.53% 716 1,4-28.71% 2,583 235 999.38% 2,676 2,949-9.25% -47-19 145.83% Cash and cash equivalents 5,213 3,165 64.69% 3 3 3
5 Borrowings and Obligations RMB million (as of Jun 3 21) Sub-total RMB denominated USD denominated HKD denominated EUR denominated Bank loans and notes Finance lease obligation 57,435 7,29 43,97 6,238 199 19,378 325 19,53 Bond 9, 9, Total 85,813 16,355 63,23 6,238 199 Weight (%) 1 19.1 73.4 7.3.2 31 31 31
Investor Relations - Beijing Rao Xinyu Tel: +861-6146 2777 Fax: +861-6146 285 E-mail: raoxinyu@airchina.com Wang Kai Tel: +861-6146 2799 Fax: +861-6146 285 E-mail: kai@airchina.com Website: www.airchina.com.cn 32