UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of
1934
For the month of September 2015
Commission File Number: 001-14550
China
Eastern Airlines Corporation Limited
———————————————————————————————————
(Translation of Registrant’s name
into English)
Board Secretariat’s Office
Kong Gang San Lu, Number 88
Shanghai, China 200335
———————————————————————————————————
(Address of principal executive offices)
Indicate by check mark whether the registrant files or
will file annual reports under cover of Form 20-F or Form 40-F: x
Form 20-F ¨ Form 40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934: ¨ Yes x No
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b): n/a
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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China Eastern Airlines Corporation Limited |
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(Registrant) |
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Date |
September 2, 2015 |
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By |
/s/ Wang Jian |
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Name: Wang Jian |
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Title: Joint Company Secretary |
Certain statements
contained in this announcement may be regarded as "forward-looking statements" within the meaning of the U.S. Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors,
which may cause the actual performance, financial condition or results of operations of the Company to be materially different
from any future performance, financial condition or results of operations implied by such forward-looking statements. Further
information regarding these risks, uncertainties and other factors is included in the Company's filings with the U.S. Securities
and Exchange Commission. The forward-looking statements included in this announcement represent the Company's views as of the
date of this announcement. While the Company anticipates that subsequent events and developments may cause the Company's views
to change, the Company specifically disclaims any obligation to update these forward-looking statements, unless required by applicable
laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent
to the date of this announcement.
The directors of China Eastern Airlines Corporation Limited (the
“Company”) hereby present the unaudited interim consolidated financial information of the Company and its subsidiaries
(the “Group”) for the six months ended 30 June 2015 (which were reviewed and approved by the board of directors
and the audit and risk management committee of the Company on 14 August 2015), with comparative figures for the corresponding period
in 2014.
The interim consolidated financial information of the Group for
the six months ended 30 June 2015 is unaudited and is not necessarily indicative of annual or future results of the Group. Investors
should not place undue reliance on the interim consolidated financial information of the Group for the six months ended 30 June
2015.
China Eastern Airlines Corporation Limited
Interim Report 2015
DEFINITIONS
In this report, unless the context otherwise requires, the following
expressions have the following meanings:
Articles |
means the articles of association of the Company |
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|
Available freight
tonne – kilometres (AFTK) |
means the sum of the maximum tonnes of capacity available for
the carriage of cargo and mail multiplied by the distance flown for every route |
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Available seat – kilometres (ASK) |
means the sum of the maximum number of seats made available for sale multiplied by the distance flown for every route |
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Available tonne – kilometres (ATK) |
means the sum of capacity available for the carriage multiplied by the distance flown for every route |
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Board |
means the board of directors of the Company |
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CAAC |
means the Civil Aviation Administration of China |
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CEA Holding |
means 中國東方航空集團公司 (China Eastern Air Holding Company), the controlling shareholder of the Company |
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CES Finance |
means 東航金控有限責任公司 (CES Finance Holding Co., Ltd.), originally named 東航金戎控股有限責任公司 (CES Finance Holding Co., Ltd.), a wholly-owned subsidiary of CEA Holding and a substantial shareholder of the Company |
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CES Global |
means 東航國際控股(香港)有限公司 (CES Global Holdings (Hong Kong) Limited), a direct wholly-owned subsidiary of CES Finance, an indirect wholly-owned subsidiary of CEA Holding and a substantial shareholder of the Company |
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CES Leasing |
means CES International Financial Leasing Corporation Limited |
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China Eastern Airlines, CEA, or the Company |
means 中國東方航空股份有限公司 (China Eastern Airlines Corporation Limited) |
China Eastern Airlines Corporation Limited
Interim Report 2015
DEFINITIONS
China United Airlines |
means 中國聯合航空有限公司 (China United Airlines Co., Ltd.), a wholly-owned subsidiary of the Company |
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|
Code |
means the Corporate Governance Code set out in Appendix 14 to the Listing Rules |
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Code-share |
means a widely adopted marketing arrangement for all airlines across the world. Pursuant to the code-share agreements entered into with other airlines, an airline may conduct sales for the seats of code-share flights operated by other airlines as its own products |
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CSRC |
means the China Securities Regulatory Commission |
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Directors |
means the directors of the Company |
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Eastern Logistics |
means 東方航空物流有限公司 (Eastern Airlines Logistics Co., Ltd.), a wholly-owned subsidiary of the Company |
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Freight load factor |
means the ratio of freight traffic volume to AFTK |
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Freight tonne – kilometres yield |
means the ratio of the sum of freight transportation and related revenue to freight traffic volume |
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Hong Kong Stock Exchange |
means The Stock Exchange of Hong Kong Limited |
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Listing Rules |
means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
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Model Code |
means the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules |
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Overall load factor |
means the ratio of total traffic volume to ATK |
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Passenger – kilometres yield |
means the ratio of the sum of passenger traffic and related revenue to passenger traffic volume |
China Eastern Airlines Corporation Limited
Interim Report 2015
DEFINITIONS
Passenger load factor |
means the ratio of passenger traffic volume to ASK |
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|
Revenue freight tonne – kilometres (RFTK) |
means the freight traffic volume, the sum of cargo and mail load in tonnes multiplied by the distance flown for every route |
|
|
Revenue passenger – kilometres (RPK) |
means the passenger traffic volume, the sum of the number of passengers carried multiplied by the distance flown for every route |
|
|
Revenue tonne – kilometres (RTK) |
means the total traffic volume, the sum of load (passenger and cargo) in tonnes multiplied by the distance flown for every route |
|
|
Revenue tonne – kilometres yield |
means the ratio of the sum of transportation and related revenue to total traffic volume |
|
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SASAC |
means the State-owned Assets Supervision and Administration Commission of the State Council |
|
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SFO |
means the Securities and Features Ordinance (Chapter 571 of the Laws of Hong Kong) |
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Shanghai Airlines |
means 上海航空有限公司 (Shanghai Airlines Co., Ltd.), a wholly-owned subsidiary of the Company |
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SkyTeam Alliance |
means the SkyTeam Alliance, one of the three major airline alliances in the world. Please refer to the website http://www.skyteam.com for more details about the SkyTeam Alliance |
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Supervisors |
means the supervisors of the Company |
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The Reporting Period |
means the six months from 1 January 2015 to 30 June 2015 |
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Delta Air Lines |
means Delta Air Lines, Inc. |
China Eastern Airlines Corporation Limited
Interim Report 2015
INTERIM FINANCIAL INFORMATION
Prepared in accordance with International Financial Reporting Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 30 June 2015
| |
| |
(Unaudited) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014 | |
| |
Notes | |
RMB million | | |
RMB million | |
Revenues | |
5 | |
| 44,371 | | |
| 43,094 | |
Other operating income | |
| |
| 2,256 | | |
| 1,842 | |
| |
| |
| | | |
| | |
Operating expenses | |
| |
| | | |
| | |
Aircraft fuel | |
| |
| (10,562 | ) | |
| (14,949 | ) |
Gain on fair value movements of derivative financial instruments | |
| |
| 4 | | |
| 6 | |
Take-off and landing charges | |
| |
| (5,082 | ) | |
| (4,579 | ) |
Depreciation and amortisation | |
| |
| (5,011 | ) | |
| (4,449 | ) |
Wages, salaries and benefits | |
| |
| (7,576 | ) | |
| (6,885 | ) |
Aircraft maintenance | |
| |
| (1,896 | ) | |
| (2,080 | ) |
Impairment charges | |
| |
| (133 | ) | |
| (4 | ) |
Food and beverages | |
| |
| (1,212 | ) | |
| (1,148 | ) |
Aircraft operating lease rentals | |
| |
| (2,200 | ) | |
| (2,298 | ) |
Other operating lease rentals | |
| |
| (325 | ) | |
| (231 | ) |
Selling and marketing expenses | |
| |
| (1,888 | ) | |
| (2,044 | ) |
Civil aviation development fund | |
| |
| (878 | ) | |
| (797 | ) |
Ground services and other expenses | |
| |
| (2,794 | ) | |
| (2,483 | ) |
Indirect operating expenses | |
| |
| (1,348 | ) | |
| (1,393 | ) |
Total operating expenses | |
| |
| (40,901 | ) | |
| (43,334 | ) |
Operating profit | |
| |
| 5,726 | | |
| 1,602 | |
Share of results of associates | |
| |
| 71 | | |
| 15 | |
Share of results of joint ventures | |
| |
| (3 | ) | |
| 12 | |
Finance income | |
| |
| 54 | | |
| 40 | |
Finance costs | |
7 | |
| (1,160 | ) | |
| (1,466 | ) |
Profit before income tax | |
| |
| 4,688 | | |
| 203 | |
Income tax expense | |
8 | |
| (831 | ) | |
| (159 | ) |
Profit for the period | |
| |
| 3,857 | | |
| 44 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
INTERIM FINANCIAL INFORMATION
Prepared in accordance with International Financial Reporting Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 30 June 2015
| |
| |
(Unaudited) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014 | |
| |
Notes | |
RMB million | | |
RMB million | |
Other comprehensive income for the period | |
| |
| | | |
| | |
Other comprehensive income to be reclassified to profit or loss in subsequent periods: | |
| |
| | | |
| | |
Cash flow hedges, net of tax | |
| |
| 8 | | |
| (56 | ) |
Fair value movements of available-for-sale financial assets, net of tax | |
| |
| 67 | | |
| (47 | ) |
Fair value movements of available-for-sale financial assets held by an associate, net of tax | |
| |
| 4 | | |
| (1 | ) |
Net other comprehensive income to be reclassified to profit or loss in subsequent periods | |
| |
| 79 | | |
| (104 | ) |
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: | |
| |
| | | |
| | |
Actuarial losses on the post-retirement benefit obligations, net of tax | |
| |
| (76 | ) | |
| – | |
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods | |
| |
| (76 | ) | |
| – | |
Other comprehensive income, net of tax | |
| |
| 3 | | |
| (104 | ) |
Total comprehensive income for the period | |
| |
| 3,860 | | |
| (60 | ) |
Profit attributable to: | |
| |
| | | |
| | |
Equity shareholders of the Company | |
| |
| 3,562 | | |
| 12 | |
Non-controlling interests | |
| |
| 295 | | |
| 32 | |
Profit for the period | |
| |
| 3,857 | | |
| 44 | |
Total comprehensive income attributable to: | |
| |
| | | |
| | |
Equity shareholders of the Company | |
| |
| 3,562 | | |
| (90 | ) |
Non-controlling interests | |
| |
| 298 | | |
| 30 | |
Total comprehensive income for the period | |
| |
| 3,860 | | |
| (60 | ) |
Earnings per share attributable to the equity shareholders of the Company during the period | |
| |
| | | |
| | |
– Basic and diluted (RMB) | |
9 | |
| 0.2810 | | |
| 0.0009 | |
Dividends | |
10 | |
| – | | |
| – | |
China Eastern Airlines Corporation Limited
Interim Report 2015
Prepared in accordance with International Financial Reporting Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
| |
Notes | |
RMB million | | |
RMB million | |
Non-current assets | |
| |
| | | |
| | |
Intangible assets | |
12 | |
| 11,501 | | |
| 11,500 | |
Property, plant and equipment | |
13 | |
| 121,403 | | |
| 109,439 | |
Lease prepayments | |
| |
| 2,123 | | |
| 2,206 | |
Advanced payments on acquisition of aircraft | |
14 | |
| 21,051 | | |
| 20,260 | |
Investments in associates | |
| |
| 1,533 | | |
| 1,086 | |
Investments in joint ventures | |
| |
| 502 | | |
| 505 | |
Available-for-sale financial assets | |
| |
| 403 | | |
| 433 | |
Other long-term assets | |
| |
| 2,647 | | |
| 1,957 | |
Deferred tax assets | |
| |
| 170 | | |
| 170 | |
Derivative financial instruments | |
| |
| 53 | | |
| 30 | |
| |
| |
| 161,386 | | |
| 147,586 | |
Current assets | |
| |
| | | |
| | |
Flight equipment spare parts | |
| |
| 2,264 | | |
| 2,259 | |
Trade receivables | |
15 | |
| 4,119 | | |
| 3,862 | |
Prepayments and other receivables | |
| |
| 7,238 | | |
| 6,394 | |
Derivative financial instruments | |
| |
| – | | |
| 5 | |
Restricted bank deposits and short-term bank deposits | |
| |
| 37 | | |
| 38 | |
Cash and cash equivalents | |
| |
| 833 | | |
| 1,355 | |
Assets classified as held for sale | |
| |
| 2,520 | | |
| 4,330 | |
| |
| |
| 17,011 | | |
| 18,243 | |
Current liabilities | |
| |
| | | |
| | |
Sales in advance of carriage | |
| |
| 5,040 | | |
| 5,064 | |
Trade and bills payable | |
16 | |
| 3,265 | | |
| 2,083 | |
Other payables and accruals | |
| |
| 20,306 | | |
| 19,215 | |
Current portion of obligations under finance leases | |
17 | |
| 5,217 | | |
| 4,596 | |
Current portion of borrowings | |
18 | |
| 29,129 | | |
| 28,676 | |
Income tax payable | |
| |
| 499 | | |
| 229 | |
Current portion of provision for return condition checks for aircraft under operating leases | |
| |
| 1,022 | | |
| 1,267 | |
Derivative financial instruments | |
| |
| 5 | | |
| – | |
| |
| |
| 64,483 | | |
| 61,130 | |
Net current liabilities | |
| |
| (47,472 | ) | |
| (42,887 | ) |
Total assets less current liabilities | |
| |
| 113,914 | | |
| 104,699 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
INTERIM FINANCIAL INFORMATION
Prepared in accordance with International Financial Reporting Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
| |
Notes | |
RMB million | | |
RMB million | |
Non-current liabilities | |
| |
| | | |
| | |
Obligations under finance leases | |
17 | |
| 39,741 | | |
| 34,099 | |
Borrowings | |
18 | |
| 30,351 | | |
| 30,513 | |
Provision for return condition checks for aircraft under operating leases | |
| |
| 2,314 | | |
| 2,617 | |
Other long-term liabilities | |
| |
| 2,925 | | |
| 2,756 | |
Post-retirement benefit obligations | |
| |
| 2,893 | | |
| 2,822 | |
Deferred tax liabilities | |
| |
| – | | |
| 26 | |
Derivative financial instruments | |
| |
| 96 | | |
| 95 | |
| |
| |
| 78,320 | | |
| 72,928 | |
Net asset | |
| |
| 35,594 | | |
| 31,771 | |
Equity | |
| |
| | | |
| | |
Capital and reserves attributable to the equity shareholders of the Company | |
| |
| | | |
| | |
– Share capital | |
19 | |
| 12,674 | | |
| 12,674 | |
– Reserves | |
| |
| 20,862 | | |
| 17,300 | |
| |
| |
| 33,536 | | |
| 29,974 | |
Non-controlling interests | |
| |
| 2,058 | | |
| 1,797 | |
Total equity | |
| |
| 35,594 | | |
| 31,771 | |
China Eastern Airlines
Corporation Limited Interim Report 2015
Prepared in accordance with International Financial Reporting Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2015
| |
| | |
Six months ended 30 June 2015 (Unaudited) | | |
| |
| |
Attributable
to equity holders of the Company | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
Non- | | |
| |
| |
Share | | |
Other | | |
Retained | | |
| | |
controlling | | |
Total | |
| |
capital | | |
reserves | | |
earnings | | |
Subtotal | | |
interests | | |
equity | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Balance at 1 January 2015 | |
| 12,674 | | |
| 16,485 | | |
| 815 | | |
| 29,974 | | |
| 1,797 | | |
| 31,771 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total comprehensive income for the period | |
| – | | |
| – | | |
| 3,562 | | |
| 3,562 | | |
| 298 | | |
| 3,860 | |
– Profit for the period | |
| – | | |
| – | | |
| 3,562 | | |
| 3,562 | | |
| 295 | | |
| 3,857 | |
– Other comprehensive income for the period | |
| – | | |
| – | | |
| – | | |
| – | | |
| 3 | | |
| 3 | |
Dividends paid to non-controlling interests in subsidiaries | |
| – | | |
| – | | |
| – | | |
| – | | |
| (37 | ) | |
| (37 | ) |
Balance at 30 June 2015 | |
| 12,674 | | |
| 16,485 | * | |
| 4,377 | * | |
| 33,536 | | |
| 2,058 | | |
| 35,594 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | |
Six months ended 30 June 2014 (Unaudited) | | |
| |
| |
Attributable to equity holders of the Company | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
Non- | | |
| |
| |
Share | | |
Other | | |
Accumulated | | |
| | |
controlling | | |
Total | |
| |
capital | | |
reserves | | |
losses | | |
Subtotal | | |
interests | | |
equity | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Balance at 1 January 2014 | |
| 12,674 | | |
| 16,823 | | |
| (2,595 | ) | |
| 26,902 | | |
| 1,680 | | |
| 28,582 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total comprehensive income for the period | |
| – | | |
| (102 | ) | |
| 12 | | |
| (90 | ) | |
| 30 | | |
| (60 | ) |
– Profit for the period | |
| – | | |
| – | | |
| 12 | | |
| 12 | | |
| 32 | | |
| 44 | |
– Other comprehensive income for the period | |
| – | | |
| (102 | ) | |
| – | | |
| (102 | ) | |
| (2 | ) | |
| (104 | ) |
Dividends paid to non-controlling interests in subsidiaries | |
| – | | |
| – | | |
| – | | |
| – | | |
| (20 | ) | |
| (20 | ) |
Balance at 30 June 2014 | |
| 12,674 | | |
| 16,721 | | |
| (2,583 | ) | |
| 26,812 | | |
| 1,690 | | |
| 28,502 | |
| * | These reserve accounts comprise the unaudited consolidated reserve of RMB20,862 million in the
unaudited interim condensed consolidated statement of financial position. |
China Eastern Airlines Corporation Limited
Interim Report 2015
INTERIM FINANCIAL INFORMATION
Prepared in accordance with International Financial Reporting
Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2015
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Cash flows from operating activities | |
| | | |
| | |
Profit before tax | |
| 4,688 | | |
| 203 | |
| |
| | | |
| | |
Adjustments to reconcile profit before tax to net cash flows: | |
| | | |
| | |
Depreciation of property, plant and equipment | |
| 4,941 | | |
| 4,389 | |
Depreciation of investment properties | |
| – | | |
| 5 | |
Amortisation of intangible assets | |
| 70 | | |
| 58 | |
Amortisation of other long-term assets | |
| 177 | | |
| 354 | |
Impairment of an investment in an associate | |
| 33 | | |
| – | |
Impairment of available-for-sale financial assets | |
| 100 | | |
| – | |
Gain on disposal of property, plant and equipment | |
| (135 | ) | |
| (12 | ) |
Fair value adjustment of derivative financial instruments | |
| (4 | ) | |
| (6 | ) |
Gain on investment in associates and joint ventures | |
| (113 | ) | |
| (35 | ) |
Finance income | |
| (54 | ) | |
| (40 | ) |
Finance costs | |
| 1,160 | | |
| 1,466 | |
Provisions for flight equipment spare parts | |
| – | | |
| 4 | |
(Increase)/decrease in flight equipment spare parts | |
| (5 | ) | |
| 20 | |
Increase in trade and other receivables and prepayments | |
| (1,738 | ) | |
| (665 | ) |
Increase/(decrease) in trade and other payables | |
| 1,713 | | |
| (320 | ) |
Cash generated from operations | |
| 10,833 | | |
| 5,421 | |
Income tax paid | |
| (592 | ) | |
| (159 | ) |
Net cash flows from operating activities | |
| 10,241 | | |
| 5,262 | |
Cash flows from investing activities | |
| | | |
| | |
Additions of property, plant and equipment | |
| (369 | ) | |
| (414 | ) |
Payment of short-term deposits | |
| – | | |
| (800 | ) |
Advanced payments on acquisition of aircraft | |
| (13,234 | ) | |
| (10,163 | ) |
Capital injections in associates | |
| (413 | ) | |
| (53 | ) |
Purchases of available-for-sale financial assets | |
| – | | |
| (2 | ) |
Proceeds from disposal of assets classified as held for sale | |
| 1,901 | | |
| 201 | |
Proceeds from disposal of property, plant and equipment | |
| 325 | | |
| 406 | |
Gain on disposal of a subsidiary | |
| 49 | | |
| – | |
Proceeds from maturity of short-term deposits | |
| 2 | | |
| 2,449 | |
Interest received | |
| 54 | | |
| 38 | |
Dividends received | |
| 36 | | |
| 25 | |
Repayment of loans from an associate | |
| 247 | | |
| – | |
Proceeds from disposal of interests in associates | |
| – | | |
| 9 | |
Net cash flows used in investing activities | |
| (11,402 | ) | |
| (8,304 | ) |
China Eastern Airlines Corporation Limited
Interim Report 2015
Prepared in accordance with International Financial Reporting
Standards
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2015
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from draw down of short-term bank loans | |
| 9,288 | | |
| 13,022 | |
Repayments of short-term bank loans | |
| (17,796 | ) | |
| (7,877 | ) |
Proceeds from issuance of short-term debentures | |
| 9,000 | | |
| 4,000 | |
Repayments of short-term debentures | |
| (4,000 | ) | |
| (4,000 | ) |
Proceeds from draw down of long-term bank loans and other financing activities | |
| 14,723 | | |
| 3,552 | |
Proceeds from issuance of long-term debentures and bonds | |
| – | | |
| 3,298 | |
Repayments of long-term bank loans | |
| (6,359 | ) | |
| (4,999 | ) |
Principal repayments of finance lease obligations | |
| (2,563 | ) | |
| (1,610 | ) |
Interest paid | |
| (1,561 | ) | |
| (1,198 | ) |
Dividends paid to non-controlling interests of subsidiaries | |
| (37 | ) | |
| (20 | ) |
Net cash flows from financing activities | |
| 695 | | |
| 4,168 | |
Net (decrease)/increase in cash and cash equivalents | |
| (466 | ) | |
| 1,126 | |
Cash and cash equivalents at beginning of period | |
| 1,355 | | |
| 1,995 | |
Effect of foreign exchange rate changes | |
| (56 | ) | |
| 31 | |
Cash and cash equivalents at 30 June | |
| 833 | | |
| 3,152 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
China Eastern Airlines Corporation
Limited (the “Company”), a joint stock limited company, was incorporated in the People’s Republic of China
(the “PRC”) on 14 April 1995. The address of the Company’s registered office is 66 Airport Street, Pudong
International Airport, Shanghai, the PRC. The Company and its subsidiaries (together, the “Group”) are principally
engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery, tour operations and other
extended transportation services.
The Company is majority owned by China Eastern Air
Holding Company (“CEA Holding”), a state-owned enterprise incorporated in the PRC.
The Company’s shares are traded on the Shanghai
Stock Exchange, The Stock Exchange of Hong Kong Limited and The New York Stock Exchange.
This interim financial information was approved for
issue by the Company’s Board on 14 August 2015.
This interim financial information has not been audited.
This interim financial information
for the six months ended 30 June 2015 has been prepared in accordance with International Accounting Standard (“IAS”)
34 “Interim Financial Reporting”. The interim financial information does not include all the information and disclosures
required in the annual financial statements and should be read in conjunction with the annual financial statements for the year
ended 31 December 2014, which have been prepared in accordance with IFRS as issued by the International Accounting Standard Board
(“IASB”).
As at 30 June 2015, the Group’s
retained earnings were approximately RMB4.38 billion and its current liabilities exceeded its current assets by approximately RMB47.47
billion. In preparing the interim financial information, the Board conducts adequate and detailed review over the Group’s
going concern ability based on the current financial situation.
The Board has taken active actions
to deal with the situation that current liabilities exceeded its current assets, and the Board is confident that the Group has
obtained adequate credit facility from the banks to support the floating capital. As at 30 June 2015, the Group had total unutilised
credit facilities of approximately RMB52.3 billion from banks.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 2. | BASIS OF PREPARATION (cont’d) |
Based on the bank facility obtained
by the Group, the past record of the financing and the good working relationship with major banks and financial institutions, the
Board considers that the Group will be able to obtain sufficient financing to enable it to operate, as well as to meet its liabilities
as and when they become due, and the capital expenditure requirements for the upcoming twelve months. Accordingly, the Board believes
that it is appropriate to prepare these financial statements on a going concern basis without including any adjustments that would
be required should the Company and the Group fail to continue as a going concern.
The accounting policies adopted
in the preparation of the interim financial information are consistent with those followed in the preparation of the Group’s
annual consolidated financial statements for the year ended 31 December 2014, except for the adoption of new standards and interpretations
effective as of 1 January 2015. The Group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
The nature and the effect of
these changes are disclosed below. Although these new standards and amendments apply for the first time in 2015, they do not have
a material impact on the annual consolidated financial statements of the Group or the interim financial information of the Group.
The nature and the impact of
each new standard or amendment which is applicable to the Group is described below:
Annual Improvements 2010-2012
Cycle
These improvements are effective
from 1 July 2014 and the Group has applied these amendments for the first time in the interim financial information. They include:
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 3. | ACCOUNTING POLICIES (cont’d) |
IFRS 8 Operating Segments
The amendments are applied retrospectively and clarify
that:
| | An entity must disclose the judgements
made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments
that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments
are ‘similar’. |
| | The reconciliation of segment assets to
total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar
to the required disclosure for segment liabilities. |
The Group has presented the reconciliation of segment
assets to total assets in previous periods and continues to disclose the same in Note 6 in the interim financial information.
| 4. | FINANCIAL RISK MANAGEMENT |
| (a) | Financial risk factors |
The Group’s activities expose
it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate
risk and fuel price risk), credit risk and liquidity risk.
The interim financial information
does not include all financial risk management information and disclosures required in the annual financial statements, and should
be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2014.
There have been no changes in the risk management department
since the 2014 year end or in any risk management policies.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
The Group’s primary cash
requirements have been for day-to-day operations, additions of and upgrades to aircraft, engines and flight equipment and repayments
of borrowings. The Group finances its working capital requirements through a combination of funds generated from operations and
borrowings (both short-term and long-term). The Group generally finances the acquisition of aircraft through long-term finance
leases or bank loans.
The Group operates with a working
capital deficit. As at 30 June 2015, the Group’s net current liabilities amounted to RMB47,472 million (2014: RMB42,887 million).
For the six months ended 30 June 2015, the Group recorded a net cash inflow from operating activities of RMB10,241 million (2014:
inflow of RMB5,262 million).
The Directors of the Company believe
that cash from operations and borrowings will be sufficient to meet the Group’s operation requirement for cash. Due to the
dynamic nature of the underlying businesses, the Group’s treasury policy aims at maintaining flexibility in funding by keeping
credit lines available. The Directors of the Company believe that the Group has obtained sufficient general credit facilities from
the PRC banks for financing future capital commitments and for working capital purposes.
The table below analyses the Group’s
financial liabilities that will be settled into relevant maturity groupings based on the remaining period at the reporting date
to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (b) | Liquidity risk (cont’d) |
| |
Less than | | |
Between | | |
Between | | |
| |
| |
1 year | | |
1 and 2 years | | |
2 and 5 years | | |
Over 5 years | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
As at 30 June 2015 (Unaudited) | |
| | | |
| | | |
| | | |
| | |
Borrowings | |
| 30,728 | | |
| 12,255 | | |
| 10,633 | | |
| 10,900 | |
Derivative financial instruments | |
| 5 | | |
| 4 | | |
| 64 | | |
| 28 | |
Obligations under finance leases | |
| 6,215 | | |
| 6,780 | | |
| 17,158 | | |
| 19,964 | |
Trade, bills and other payables | |
| 16,124 | | |
| – | | |
| – | | |
| – | |
Total | |
| 53,072 | | |
| 19,039 | | |
| 27,855 | | |
| 30,892 | |
As at 31 December 2014 (Audited) | |
| | | |
| | | |
| | | |
| | |
Borrowings | |
| 30,204 | | |
| 9,751 | | |
| 12,532 | | |
| 12,170 | |
Derivative financial instruments | |
| – | | |
| 18 | | |
| 59 | | |
| 18 | |
Obligations under finance leases | |
| 5,453 | | |
| 5,174 | | |
| 13,165 | | |
| 19,272 | |
Trade, bills and other payables | |
| 14,163 | | |
| – | | |
| – | | |
| – | |
Total | |
| 49,820 | | |
| 14,943 | | |
| 25,756 | | |
| 31,460 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (c) | Fair value estimation of financial assets and liabilities |
| (i) | Financial instruments not measured at fair value |
The carrying amounts and fair
values of the Group’s financial instruments, other than those with carrying amounts that reasonably approximate to fair values,
were as follows:
| |
(Unaudited) | | |
(Audited) | |
| |
30 June 2015 | | |
31 December 2014 | |
| |
Carrying | | |
| | |
Carrying | | |
| |
| |
amounts | | |
Fair values | | |
amounts | | |
Fair values | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Financial assets | |
| | | |
| | | |
| | | |
| | |
Deposits relating to aircraft held under operating leases included in other long term assets | |
| 406 | | |
| 398 | | |
| 482 | | |
| 466 | |
Financial liabilities | |
| | | |
| | | |
| | | |
| | |
Long-term bank borrowings | |
| 34,722 | | |
| 35,691 | | |
| 30,925 | | |
| 31,914 | |
Guaranteed bonds | |
| 10,287 | | |
| 10,300 | | |
| 10,285 | | |
| 10,300 | |
Obligations under finance leases | |
| 44,958 | | |
| 45,017 | | |
| 38,695 | | |
| 38,455 | |
Total | |
| 89,967 | | |
| 91,008 | | |
| 79,905 | | |
| 80,669 | |
Management has assessed the fair
value of cash and cash equivalents, restricted bank deposits and short-term bank deposits, trade and other receivables, trade and
bills and other payables, short-term debentures. Given their short term nature, their carrying amounts approximated to the fair
values.
The fair values of the deposits
relating to aircraft held under operating leases, long-term bank borrowings and obligations under finance leases have been measured
using significant observable inputs and calculated by discounting the expected future cash flows using rates currently available
for instruments with similar terms, credit risk and remaining maturities.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (c) | Fair value estimation of financial assets and liabilities (cont’d) |
| (ii) | Financial instruments measured at fair value |
The Group enters into derivative
financial instruments with various counterparties, principally financial institutions with high credit ratings. Derivative financial
instruments, including forward currency contracts and interest rate swaps, are measured using valuation techniques similar to forward
pricing and swap models, using present value calculations. The models incorporate various market observable inputs including the
foreign exchange spot and forward rates and interest rate curves. As at 30 June 2015, the marked to market value of the derivative
asset position is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty
credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationship and other
financial instruments recognised at fair value.
Fair value hierarchy
The following tables illustrate the fair value measurement
hierarchy of the Group’s financial instruments:
Assets and liabilities measured at fair value:
As at 30 June 2015 (Unaudited)
| |
Fair value measurement using | | |
| |
| |
Quoted prices | | |
Significant | | |
Significant | | |
| |
| |
in active | | |
observable | | |
unobservable | | |
| |
| |
markets | | |
inputs | | |
inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Assets | |
| | | |
| | | |
| | | |
| | |
Available-for-sale financial assets | |
| 265 | | |
| – | | |
| – | | |
| 265 | |
Derivative financial instruments | |
| | | |
| | | |
| | | |
| | |
– Interest rate swaps | |
| – | | |
| 32 | | |
| – | | |
| 32 | |
– Forward foreign exchange contracts | |
| – | | |
| 21 | | |
| – | | |
| 21 | |
Total | |
| 265 | | |
| 53 | | |
| – | | |
| 318 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative financial instruments | |
| | | |
| | | |
| | | |
| | |
– Interest rate swaps | |
| – | | |
| 101 | | |
| – | | |
| 101 | |
Total | |
| – | | |
| 101 | | |
| – | | |
| 101 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (c) | Fair value estimation of financial assets and liabilities (cont’d) |
| (ii) | Financial instruments measured at fair value (cont’d)
Fair value hierarchy (cont’d) |
Assets and liabilities measured at fair value:
(cont’d)
As at 31 December 2014 (Audited)
| |
Fair value measurement using | | |
| |
| |
Quoted prices | | |
Significant | | |
Significant | | |
| |
| |
in active | | |
observable | | |
unobservable | | |
| |
| |
markets | | |
inputs | | |
inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Assets | |
| | | |
| | | |
| | | |
| | |
Available-for-sale financial assets | |
| 195 | | |
| – | | |
| – | | |
| 195 | |
Derivative financial instruments | |
| | | |
| | | |
| | | |
| | |
– Interest rate swaps | |
| – | | |
| 8 | | |
| – | | |
| 8 | |
– Forward foreign exchange contracts | |
| – | | |
| 27 | | |
| – | | |
| 27 | |
Total | |
| 195 | | |
| 35 | | |
| – | | |
| 230 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative financial instruments | |
| | | |
| | | |
| | | |
| | |
– Interest rate swaps | |
| – | | |
| 95 | | |
| – | | |
| 95 | |
Total | |
| – | | |
| 95 | | |
| – | | |
| 95 | |
The fair values of financial instruments traded in
active markets were based on quoted market prices at the reporting dates.
The fair value of hedging instruments
and other derivative instruments were determined by using valuation techniques. These valuation techniques use applicable models
and maximize the use of observable market data where it is available and also use quoted market prices or dealer quotes for reference.
Available-for-sale financial assets are listed A share
and listed H share stock investments.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (c) | Fair value estimation
of financial assets and liabilities (cont’d) |
| (ii) | Financial instruments measured at fair value (cont’d) |
Fair value hierarchy (cont’d)
Assets and liabilities for which fair values are
disclosed:
As at 30 June 2015 (Unaudited)
| |
Fair value measurement using | |
| |
Quoted prices | | |
Significant | | |
Significant | | |
| |
| |
in active | | |
observable | | |
unobservable | | |
| |
| |
markets | | |
inputs | | |
inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Assets | |
| | | |
| | | |
| | | |
| | |
Deposits relating to aircraft held under operating leases included in other long term assets | |
| – | | |
| 398 | | |
| – | | |
| 398 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Long-term bank borrowings | |
| – | | |
| 35,691 | | |
| – | | |
| 35,691 | |
Guaranteed bonds | |
| – | | |
| 10,300 | | |
| – | | |
| 10,300 | |
Obligations under finance leases | |
| – | | |
| 45,017 | | |
| – | | |
| 45,017 | |
Total | |
| – | | |
| 91,008 | | |
| – | | |
| 91,008 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 4. | FINANCIAL RISK MANAGEMENT (cont’d) |
| (c) | Fair value estimation of financial assets and liabilities
(cont’d) |
| (ii) | Financial instruments measured at fair value (cont’d) |
Fair value hierarchy (cont’d)
Assets and liabilities for which fair values
are disclosed: (cont’d)
As at 31 December 2014 (Audited)
| |
Fair value measurement using | |
| |
Quoted prices | | |
Significant | | |
Significant | | |
| |
| |
in active | | |
observable | | |
unobservable | | |
| |
| |
markets | | |
inputs | | |
inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Assets | |
| | | |
| | | |
| | | |
| | |
Deposits relating to aircraft held under operating leases included in other long term assets | |
| – | | |
| 466 | | |
| – | | |
| 466 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Long-term bank borrowings | |
| – | | |
| 31,914 | | |
| – | | |
| 31,914 | |
Guaranteed bonds | |
| – | | |
| 10,300 | | |
| – | | |
| 10,300 | |
Obligations under finance leases | |
| – | | |
| 38,455 | | |
| – | | |
| 38,455 | |
Total | |
| – | | |
| 80,669 | | |
| – | | |
| 80,669 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
The Group is principally engaged in the operation
of civil aviation, including the provision of passenger, cargo, mail delivery, tour operations and other extended transportation
services.
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Traffic revenues | |
| | | |
| | |
– Passenger | |
| 37,152 | | |
| 35,965 | |
– Cargo and mail | |
| 3,217 | | |
| 3,616 | |
Tour operations income | |
| 1,481 | | |
| 1,218 | |
Ground service income | |
| 1,185 | | |
| 1,159 | |
Cargo handling income | |
| 148 | | |
| 93 | |
Commission income | |
| 34 | | |
| 53 | |
Others | |
| 1,154 | | |
| 990 | |
| |
| 44,371 | | |
| 43,094 | |
CODM, office of the General Manager, reviews the
Group’s internal reporting in order to assess performance and allocate resources.
The Group has one reportable
operating segment, reported as “airline transportation operations”, which comprises the provision of passenger, cargo,
mail delivery, ground service and cargo handling income.
Other services including primarily
tour operations, air catering and other miscellaneous services are not included within the airline transportation operations segment,
as their internal reports are separately provided to the CODM. The management is of the opinion that these services have similar
economic characteristics and hence the results of these operations are included in the “other segments” column.
Inter-segment transactions are entered into under
normal commercial terms and conditions that would be available to unrelated third parties.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
In accordance with IFRS 8, segment
disclosure has been presented in a manner that is consistent with the information used by the Group’s CODM. The Group’s
CODM monitors the results, assets and liabilities attributable to each reportable segment based on financial results prepared under
the PRC Accounting Standards for Business Enterprises (the “PRC Accounting Standards”), which differ from IFRS
in certain aspects. The amount of each material reconciling items from the Group’s reportable segment revenue and profit
or loss, arising from different accounting policies are set out in Note 6(b) below.
The segment results for the six
months ended 30 June 2015 are as follows:
| |
(Unaudited) | |
| |
Airline | | |
| | |
| | |
| | |
| |
| |
transportation | | |
Other | | |
| | |
| | |
| |
| |
operations | | |
segments | | |
Elimination | | |
Unallocated* | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Reportable segment revenue from external customers | |
| 42,446 | | |
| 1,865 | | |
| – | | |
| – | | |
| 44,311 | |
Inter-segment sales | |
| – | | |
| 192 | | |
| (192 | ) | |
| – | | |
| – | |
Reportable segment revenue | |
| 42,446 | | |
| 2,057 | | |
| (192 | ) | |
| – | | |
| 44,311 | |
Reportable segment profit before income tax | |
| 4,530 | | |
| 47 | | |
| – | | |
| 113 | | |
| 4,690 | |
Other segment information | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation and amortisation | |
| 5,126 | | |
| 60 | | |
| – | | |
| – | | |
| 5,186 | |
Impairment charge | |
| 103 | | |
| 33 | | |
| – | | |
| – | | |
| 136 | |
Interest income | |
| 52 | | |
| 9 | | |
| (7 | ) | |
| – | | |
| 54 | |
Finance expenses | |
| 974 | | |
| 139 | | |
| (9 | ) | |
| – | | |
| 1,104 | |
Capital expenditure | |
| 18,551 | | |
| 212 | | |
| – | | |
| – | | |
| 18,763 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
The segment results for the six months ended 30 June
2014 are as follows:
| |
(Unaudited) | |
| |
Airline | | |
| | |
| | |
| | |
| |
| |
transportation | | |
Other | | |
| | |
| | |
| |
| |
operations | | |
segments | | |
Elimination | | |
Unallocated* | | |
Total** | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Reportable segment revenue from external customers | |
| 41,161 | | |
| 1,487 | | |
| – | | |
| – | | |
| 42,648 | |
Inter-segment sales | |
| – | | |
| 185 | | |
| (185 | ) | |
| – | | |
| – | |
Reportable segment revenue | |
| 41,161 | | |
| 1,672 | | |
| (185 | ) | |
| – | | |
| 42,648 | |
Reportable segment profit before income tax | |
| 47 | | |
| 124 | | |
| – | | |
| 35 | | |
| 206 | |
Other segment information | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation and amortisation | |
| 4,742 | | |
| 62 | | |
| – | | |
| – | | |
| 4,804 | |
Impairment charge | |
| 4 | | |
| – | | |
| – | | |
| – | | |
| 4 | |
Interest income | |
| 30 | | |
| 18 | | |
| (8 | ) | |
| – | | |
| 40 | |
Finance expenses | |
| 719 | | |
| 163 | | |
| (75 | ) | |
| – | | |
| 807 | |
Capital expenditure | |
| 15,707 | | |
| 84 | | |
| – | | |
| – | | |
| 15,791 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
The segment assets and liabilities as at 30 June 2015
and 31 December 2014 are as follows:
| |
Airline | | |
| | |
| | |
| | |
| |
| |
transportation | | |
Other | | |
| | |
| | |
| |
| |
operations | | |
segments | | |
Elimination | | |
Unallocated* | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
At 30 June 2015 (Unaudited) | |
| | | |
| | | |
| | | |
| | | |
| | |
Reportable segment assets | |
| 169,802 | | |
| 8,778 | | |
| (4,906 | ) | |
| 2,438 | | |
| 176,112 | |
Reportable segment liabilities | |
| 140,357 | | |
| 7,349 | | |
| (4,906 | ) | |
| – | | |
| 142,800 | |
At 31 December 2014 (Audited) | |
| | | |
| | | |
| | | |
| | | |
| | |
Reportable segment assets | |
| 156,786 | | |
| 8,679 | | |
| (3,947 | ) | |
| 2,024 | | |
| 163,542 | |
Reportable segment liabilities | |
| 130,696 | | |
| 7,306 | | |
| (3,947 | ) | |
| – | | |
| 134,055 | |
| * | Unallocated assets primarily represent investments in associates and joint ventures, and available-for-sale
financial assets. Unallocated results primarily represent the share of results of associates and joint ventures and available-for-sale
financial assets. |
| ** | In 2014, the Group acquired a subsidiary which was under the common control of CEA Holding. The
acquisition of this subsidiary under common control has been accounted for using the merger method of accounting in the consolidated
financial statements of the Company prepared under the PRC Accounting Standards. |
The merger method of accounting
involves incorporating the financial statement items of the consolidating entities or businesses in which the common control combination
occurs as if they had been consolidated from the date when the consolidating entities or businesses first came under the control
of the controlling party.
Hence, the financial statement
items of the Group prepared under the PRC Accounting Standards as at 30 June 2014 were re-presented to reflect the inclusion of
the acquiree, resulting in the re-presented corresponding information in the Group’s reportable segment for the period as
shown above.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
| (a) | Information about geographical areas. |
The Group’s revenues under IFRS by geographical
areas are analysed based on the following criteria:
| 1) | Traffic revenue from services within the PRC (excluding the Hong Kong Special Administrative Region
(“Hong Kong”), Macau Special Administrative Region (“Macau”)
and Taiwan, (collectively known as “Regional”)) is classified as domestic operations. Traffic revenue from inbound
and outbound services between overseas markets excluding Regional is classified as international operations. |
| 2) | Revenue from ticket handling services, ground services, cargo handling service and other miscellaneous
services are classified on the basis of where the services are performed. |
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Domestic (the PRC, excluding Hong Kong, Macau and Taiwan) | |
| 28,982 | | |
| 28,673 | |
International | |
| 13,629 | | |
| 12,514 | |
Regional (Hong Kong, Macau and Taiwan) | |
| 1,760 | | |
| 1,907 | |
Total | |
| 44,371 | | |
| 43,094 | |
The major revenue-earning assets
of the Group are its aircraft, all of which are registered in the PRC. Since the Group’s aircraft are deployed flexibly across
its route network, there is no suitable basis of allocating such assets and the related liabilities by geographic areas and hence
segment non-current assets and capital expenditure by geographic areas are not presented. Except the aircraft, most non-current
assets (except financial instruments) are registered in the PRC.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
| (b) | Reconciliation of reportable segment revenue, profit, assets and liabilities under the PRC Accounting Standards to the consolidated
figures under IFRS as reported in the interim financial information. |
| |
| |
(Unaudited) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014** | |
| |
Notes | |
RMB million | | |
RMB million | |
Revenue | |
| |
| | | |
| | |
Reportable segment revenue | |
| |
| 44,311 | | |
| 42,648 | |
– Reclassification of business tax | |
(i) | |
| (80 | ) | |
| (51 | ) |
– Reclassification of expired sales in advance of carriage | |
(i) | |
| 140 | | |
| 554 | |
– Adjustments of business combination under common control | |
| |
| – | | |
| (57 | ) |
Consolidated revenue | |
| |
| 44,371 | | |
| 43,094 | |
| |
| |
(Unaudited) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014** | |
| |
Note | |
RMB million | | |
RMB million | |
Profit before income tax | |
| |
| | | |
| | |
Reportable segment profit | |
| |
| 4,690 | | |
| 206 | |
– Differences in depreciation charges for aircraft and engines due to different depreciation lives | |
(ii) | |
| (2 | ) | |
| (2 | ) |
– Adjustments of business combination under common control | |
| |
| – | | |
| (1 | ) |
Consolidated profit before income tax | |
| |
| 4,688 | | |
| 203 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
| (b) | Reconciliation of reportable segment revenue, profit, assets and liabilities under the PRC
Accounting Standards to the consolidated figures under IFRS as reported in the interim financial information. (cont’d) |
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
| |
Notes | |
RMB million | | |
RMB million | |
Assets | |
| |
| | | |
| | |
Reportable segment assets | |
| |
| 176,112 | | |
| 163,542 | |
– Differences in depreciation charges for aircraft and engines due to different depreciation lives | |
(ii) | |
| 43 | | |
| 45 | |
– Difference in intangible asset arising from the acquisition of Shanghai Airlines | |
(iii) | |
| 2,242 | | |
| 2,242 | |
Consolidated total assets | |
| |
| 178,397 | | |
| 165,829 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 6. | SEGMENT INFORMATION (cont’d) |
| (b) | Reconciliation of reportable segment revenue, profit, assets and liabilities under the PRC
Accounting Standards to the consolidated figures under IFRS as reported in the interim financial information. (cont’d) |
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Liabilities | |
| | | |
| | |
Reportable segment liabilities | |
| 142,800 | | |
| 134,055 | |
– Adjustments of business combination under common control | |
| – | | |
| 3 | |
– Others | |
| 3 | | |
| – | |
Consolidated total liabilities | |
| 142,803 | | |
| 134,058 | |
Notes:
| (i) | The difference represents the different classification of business tax and expired sales in advance of carriage under the PRC
Accounting Standards and IFRS. |
| (ii) | The difference is attributable to the differences in the useful lives and residual values of aircraft and engines adopted for
depreciation purpose in prior periods under the PRC Accounting Standards and IFRS. Despite the depreciation policies of these assets
have been unified under IFRS and the PRC Accounting Standards in recent years, the changes were applied prospectively as changes
in accounting estimates which result in the differences in the carrying amounts and related depreciation charges under IFRS and
the PRC Accounting Standards. |
| (iii) | The difference represents the different measurement of the fair value of acquisition cost of the shares from Shanghai Airlines
between the PRC Accounting standards and IFRS, which results in the different measurement of goodwill. |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Interest on bank borrowings | |
| 788 | | |
| 707 | |
Interest relating to obligations under finance leases | |
| 391 | | |
| 267 | |
Interest on bonds and debentures | |
| 251 | | |
| 120 | |
Interest relating to bills payable | |
| 4 | | |
| 38 | |
Exchange losses, net | |
| 56 | | |
| 660 | |
| |
| 1,490 | | |
| 1,792 | |
Less: amounts capitalised into advanced payments on acquisition of aircraft (Note 14) | |
| (330 | ) | |
| (319 | ) |
amounts
capitalised into construction in progress (Note) | |
| – | | |
| (7 | ) |
| |
| 1,160 | | |
| 1,466 | |
Note:
The weighted average interest rate used for
interest capitalization is 2.63% per annum for the six months ended 30 June 2015 (2014: 2.69%).
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
Income tax expense charged to the profit or
loss is as follows:
| |
(Unaudited) | |
| |
Six months ended 30 June | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Provision for PRC income tax | |
| 860 | | |
| 159 | |
Deferred taxation | |
| (29 | ) | |
| – | |
| |
| 831 | | |
| 159 | |
Pursuant to the “Notice of the Ministry
of Finance, the State Administration of Taxation and the General Administration of Customs on Issues Concerning Relevant Tax Policies
for Enhancing the Implementation of Western Region Development Strategy” (Cai Shui [2011] No.58), and other series of tax
regulations, the enterprises, located in the western regions and engaged in the industrial activities as listed in the “Catalogue
of Encouraged Industries in Western Regions”, will be entitled to a reduced income tax rate of 15% from 2011 to 2020 upon
approval from tax authorities. China Eastern Yunnan Airlines Co., Ltd. (“CEA Yunnan”), a subsidiary of the Group,
obtained the approval from tax authority and has been entitled to a reduced tax rate of 15% from 1 January 2011. The Company’s
branches located in Sichuan, Gansu and Xibei also obtained the approval from the respective tax authorities and are entitled to
a reduced tax rate of 15%.
The Company and subsidiaries except for CEA
Yunnan, the Company’s branches located in Sichuan, Gansu and Xibei and those incorporated in Hong Kong, which are subject
to Hong Kong corporate income tax rate of 16.5% (2014: 16.5%), are generally subject to the PRC standard corporate tax rate of
25% (2014: 25%).
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
The calculation of basic earnings per share
is based on the unaudited consolidated profit attributable to equity shareholders of the Company of approximately RMB3,562 million
and the weighted average number of shares of 12,674 million in issue during the six months ended 30 June 2015.
The Company has no potentially dilutive ordinary
shares in issue during the six months ended 30 June 2015. (2014: Nil)
The Board has not recommended any interim dividend
for the six months ended 30 June 2015 (2014: Nil).
No appropriation to the statutory reserves
has been made during the six months ended 30 June 2015 (2014: Nil). Such appropriations will be made at year end in accordance
with the relevant PRC regulations and the Articles of Association of individual group companies.
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Goodwill (Note) | |
| 11,270 | | |
| 11,270 | |
Other intangible assets | |
| 231 | | |
| 230 | |
| |
| 11,501 | | |
| 11,500 | |
Note:
The balance represents goodwill arising from
the acquisition of Shanghai Airlines. Goodwill is attributable to strengthening the competitiveness of the Group’s airline
transportation operations, attaining synergy through integration of the resources and providing the evolution of Shanghai international
air transportation center.
China Eastern Airlines
Corporation Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 13. | PROPERTY, PLANT AND EQUIPMENT |
| |
(Unaudited) | |
| |
Six months ended 30 June 2015 | |
| |
Aircraft, | | |
| | |
| |
| |
engines | | |
| | |
| |
| |
and flight | | |
| | |
| |
| |
equipment | | |
Others | | |
Total | |
| |
RMB million | | |
RMB million | | |
RMB million | |
Carrying amount at 1 January 2015 | |
| 98,536 | | |
| 10,903 | | |
| 109,439 | |
Transfers from advanced payments on acquisition of aircraft (Note 14) | |
| 12,773 | | |
| – | | |
| 12,773 | |
Other additions | |
| 4,328 | | |
| 713 | | |
| 5,041 | |
Depreciation charges | |
| (4,488 | ) | |
| (453 | ) | |
| (4,941 | ) |
Transfer to assets classified as held for sale | |
| (188 | ) | |
| – | | |
| (188 | ) |
Transfer to other long-term assets | |
| – | | |
| (529 | ) | |
| (529 | ) |
Disposals | |
| (167 | ) | |
| (25 | ) | |
| (192 | ) |
Carrying amount at 30 June 2015 | |
| 110,794 | | |
| 10,609 | | |
| 121,403 | |
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 14. | ADVANCED PAYMENTS ON ACQUISITION OF AIRCRAFT |
| |
(Unaudited) | |
| |
Six months | |
| |
ended | |
| |
30 June | |
| |
2015 | |
| |
RMB million | |
Carrying amount at 1 January | |
| 20,260 | |
Additions | |
| 13,234 | |
Interest capitalised (Note 7) | |
| 330 | |
Transfers to property, plant and equipment (Note 13) | |
| (12,773 | ) |
Carrying amount at 30 June | |
| 21,051 | |
The credit terms given to trade customers are
determined on an individual basis, with credit periods generally ranging from 15 days to 60 days.
The aging analysis of trade receivables is
as follows:
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Within 90 days | |
| 2,642 | | |
| 1,539 | |
91 to 180 days | |
| 1,050 | | |
| 1,774 | |
181 to 365 days | |
| 251 | | |
| 456 | |
Over 365 days | |
| 384 | | |
| 299 | |
| |
| 4,327 | | |
| 4,068 | |
Less: provision for impairment of receivables | |
| (208 | ) | |
| (206 | ) |
Trade receivables | |
| 4,119 | | |
| 3,862 | |
Balances with related parties included in trade
receivables are summarised in Note 21(b)(i).
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 16. | TRADE AND BILLS PAYABLE |
The aging analyses of trade and bills payable
is as follows:
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Within 90 days | |
| 1,886 | | |
| 764 | |
91 to 180 days | |
| 149 | | |
| 309 | |
181 to 365 days | |
| 284 | | |
| 240 | |
Over 365 days | |
| 946 | | |
| 770 | |
Trade and bills payable | |
| 3,265 | | |
| 2,083 | |
Balances with related parties included in trade
and bills payable are summarised in Note 21 (b)(ii).
| 17. | OBLIGATIONS UNDER FINANCE LEASES |
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Within one year | |
| 5,217 | | |
| 4,596 | |
In the second year | |
| 5,899 | | |
| 4,411 | |
In the third to fifth year inclusive | |
| 15,227 | | |
| 11,482 | |
After the fifth year | |
| 18,615 | | |
| 18,206 | |
Total | |
| 44,958 | | |
| 38,695 | |
Less: amount repayable within one year | |
| (5,217 | ) | |
| (4,596 | ) |
Long-term portion | |
| 39,741 | | |
| 34,099 | |
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
| |
Note | |
RMB million | | |
RMB million | |
Non-current | |
| |
| | | |
| | |
Long-term bank borrowings | |
| |
| | | |
| | |
– Secured | |
| |
| 13,429 | | |
| 14,725 | |
– Unsecured | |
| |
| 8,833 | | |
| 5,503 | |
Guaranteed bonds | |
| |
| 8,089 | | |
| 10,285 | |
| |
| |
| 30,351 | | |
| 30,513 | |
Current | |
| |
| | | |
| | |
Current portion of long-term bank borrowings | |
| |
| | | |
| | |
– Secured | |
| |
| 2,373 | | |
| 2,254 | |
– Unsecured | |
| |
| 10,087 | | |
| 8,443 | |
Short-term bank borrowings | |
| |
| | | |
| | |
– Unsecured | |
| |
| 5,471 | | |
| 13,979 | |
Short-term bank debentures | |
(i) | |
| 9,000 | | |
| 4,000 | |
Guaranteed bonds | |
| |
| 2,198 | | |
| – | |
| |
| |
| 29,129 | | |
| 28,676 | |
Total borrowings | |
| |
| 59,480 | | |
| 59,189 | |
Note:
| (i) | On 12 February 2015, the Company issued unsecured short-term
debentures in an aggregate principal amount of RMB3 billion with a maturity of 180 days. The debentures bear interest at the rate
of 4.50% per annum. |
On 26 March 2015, the Company issued unsecured
short-term debentures in an aggregate principal amount of RMB3 billion with a maturity of 180 days. The debentures bear interest
at the rate of 4.50% per annum.
On 26 June 2015, the Company issued unsecured
short-term debentures in an aggregate principal amount of RMB3 billion with a maturity of 270 days. The debentures bear interest
at the rate of 3.50% per annum.
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Registered, issued and fully paid of RMB1.00 each | |
| | | |
| | |
| |
| | | |
| | |
A shares listed on The Shanghai Stock Exchange (“A Shares”) | |
| 8,481 | | |
| 8,481 | |
– Tradable shares held by CEA Holding with trading moratorium | |
| 242 | | |
| 242 | |
– Tradable shares held by CES Finance Holding Co., Ltd. with trading moratorium | |
| 457 | | |
| 457 | |
– Tradable shares without trading moratorium | |
| 7,782 | | |
| 7,782 | |
| |
| | | |
| | |
H shares listed on The Stock Exchange of Hong Kong Limited (“H Shares”) | |
| 4,193 | | |
| 4,193 | |
– Tradable shares held by CES Global Holding (Hong Kong) Limited with trading moratorium | |
| 699 | | |
| 699 | |
– Tradable shares without trading moratorium | |
| 3,494 | | |
| 3,494 | |
| |
| 12,674 | | |
| 12,674 | |
Pursuant to articles 49 and 50 of the Company’s
Articles of Association, both the listed A shares and the listed H shares are all registered ordinary shares and carry equal rights.
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
The Group had the following capital commitments:
| |
(Unaudited) | | |
(Audited) | |
| |
As at | | |
As at | |
| |
30 June | | |
31 December | |
| |
2015 | | |
2014 | |
| |
RMB million | | |
RMB million | |
Authorised and contracted for: | |
| | | |
| | |
– Aircraft, engines and flight equipment | |
| 90,492 | | |
| 105,011 | |
– Other property, plant and equipment | |
| 1,915 | | |
| 3,108 | |
– Investments | |
| – | | |
| 38 | |
| |
| 92,407 | | |
| 108,157 | |
Authorised but not contracted for: | |
| | | |
| | |
– Other property, plant and equipment | |
| 26,182 | | |
| 26,182 | |
– Investments | |
| – | | |
| 1,000 | |
| |
| 26,182 | | |
| 27,182 | |
Total | |
| 118,589 | | |
| 135,339 | |
China Eastern Airlines Corporation
Limited Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
For the six months ended 30 June 2015
| (b) | Operating lease commitments |
As at the reporting date, the Group had commitments
under operating leases to pay future minimum lease rentals as follows:
| |
(Unaudited) | | |
(Audited) | |
| |
As at 30 June 2015 | | |
As at 31 December 2014 | |
| |
Aircraft, | | |
| | |
Aircraft, | | |
| |
| |
engines | | |
| | |
engines | | |
| |
| |
and flight | | |
Land and | | |
and flight | | |
Land and | |
| |
equipment | | |
buildings | | |
equipment | | |
buildings | |
| |
RMB million | | |
RMB million | | |
RMB million | | |
RMB million | |
Within one year | |
| 4,026 | | |
| 301 | | |
| 3,818 | | |
| 202 | |
In the second year | |
| 3,435 | | |
| 174 | | |
| 3,508 | | |
| 164 | |
In the third to fifth year inclusive | |
| 7,833 | | |
| 389 | | |
| 8,022 | | |
| 382 | |
After the fifth year | |
| 7,568 | | |
| 2,007 | | |
| 8,682 | | |
| 1,983 | |
Total | |
| 22,862 | | |
| 2,871 | | |
| 24,030 | | |
| 2,731 | |
| 21. | RELATED PARTY TRANSACTIONS |
The Group is controlled by CEA Holding, which
directly owns 40.03% of the Company’s shares as at 30 June 2015 (2014: 40.03%). In addition, through CES Global Holding (Hong
Kong) Limited, and CES Finance Holding Co.,Ltd., two wholly owned subsidiaries of CEA Holding, CEA Holding indirectly owns additional
approximately 20.72% and 3.61% of the Company’s shares respectively as at 30 June 2015 (2014: 20.72% and 3.61%).
The Company is a state-owned enterprise established
in the PRC and is controlled by the PRC government, which also owns a significant portion of the productive assets in the PRC.
In accordance with IAS 24 “Related Party Disclosures”, government-related entities and their subsidiaries, directly
or indirectly controlled, jointly controlled or significantly influenced by the PRC government are defined as related parties of
the Group. On that basis, related parties include CEA Holding and its subsidiaries (other than the Group), other government-related
entities and their subsidiaries (“Other State Owned Enterprises”), other entities and corporations over which
the Company is able to control or exercise significant influence and key management personnel of the Company as well as their close
family members.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
For the purposes of the related
party transaction disclosures, the directors of the Company believe that meaningful information in respect of related party transactions
has been adequately disclosed below in addition to the transactions detailed elsewhere in the interim financial information:
| (a) | Related party transactions |
| |
| |
(Unaudited) | |
| |
| |
Income/(expense or payments) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014 | |
Nature of transactions | |
Related party | |
RMB million | | |
RMB million | |
With CEA Holding or companies directly or indirectly held by CEA Holding: | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Interest income on deposits at an average rate of 0.34% per annum (2014: 0.39% per annum) | |
Eastern Air Group Finance Co., Ltd. (“Eastern Finance”) | |
| 2 | | |
| 11 | |
| |
| |
| | | |
| | |
Interest income on loans | |
Jetstar Hong Kong Limited | |
| 6 | | |
| – | |
| |
| |
| | | |
| | |
Interest expense on loans at a rate of 2.28% (2014: 4.57%) per annum | |
Eastern Finance | |
| (18 | ) | |
| (21 | ) |
| |
| |
| | | |
| | |
Handling charges of 0.1% to 6% for purchase of aircrafts, flight equipment, flight equipment spare parts, other property, plant and flight equipment and repairs for aircraft and engines | |
Eastern Aviation Import & Export Co., Ltd. (“Eastern Import & Export”) | |
| (50 | ) | |
| (52 | ) |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
| (a) | Related party transactions (cont’d) |
| |
| |
(Unaudited) | |
| |
| |
Income/(expense or payments) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014 | |
Nature of transactions | |
Related party | |
RMB million | | |
RMB million | |
Repairs and maintenance expense for aircraft and engines | |
Shanghai Eastern Union Aviation Wheels & Brakes Maintenance Services Overhaul Engineering Co., Ltd. (“Wheels & Brakes”) | |
| (51 | ) | |
| (40 | ) |
| |
| |
| | | |
| | |
| |
Shanghai Technologies Aerospace Co., Ltd. (“Technologies Aerospace”) | |
| (110 | ) | |
| (112 | ) |
| |
| |
| | | |
| | |
| |
Shanghai Pratt & Whitney Aircraft Engine Maintenance Co., Ltd. (“Shanghai P&W”) | |
| (731 | ) | |
| (1,177 | ) |
| |
| |
| | | |
| | |
Supply of system services | |
Eastern China Kaiya System Integration (“China Kaiya”) | |
| (14 | ) | |
| (18 | ) |
| |
| |
| | | |
| | |
Supply of food and beverages | |
Shanghai Eastern Air Catering Co., Ltd. (“Shanghai Catering”) | |
| (500 | ) | |
| (372 | ) |
| |
| |
| | | |
| | |
Advertising expense | |
Shanghai Eastern Aviation Advertising Services Co., Ltd. (“Eastern Advertising”) | |
| (8 | ) | |
| (11 | ) |
| |
| |
| | | |
| | |
Media royalty fee | |
Eastern Advertising | |
| (1 | ) | |
| – | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
| (a) | Related party transactions (cont’d) |
| |
| |
(Unaudited) | |
| |
| |
Income/(expense or payments) | |
| |
| |
Six months ended 30 June | |
| |
| |
2015 | | |
2014 | |
Nature of transactions | |
Related party | |
RMB million | | |
RMB million | |
Automobile maintenance service,aircraft maintenance, providing transportation automobile and other products | |
CEA Development | |
| (57 | ) | |
| (63 | ) |
| |
| |
| | | |
| | |
Maintenance and repair services fee | |
Shanghai Hute Aviation Technology Co., Ltd. (“Shanghai Hute”) | |
| – | | |
| (20 | ) |
| |
| |
| | | |
| | |
| |
Shanghai Eastern Aviation Equipment Manufacturing Co., Ltd. | |
| (13 | ) | |
| (24 | ) |
| |
| |
| | | |
| | |
Land and building rental | |
CEA Holding | |
| (25 | ) | |
| (25 | ) |
| |
| |
| | | |
| | |
Hotel service fee | |
Eastern Air Tourism Investment Group Co., Ltd. (“Eastern Tourism”) | |
| – | | |
| (12 | ) |
| |
| |
| | | |
| | |
| |
CEA Development | |
| (18 | ) | |
| – | |
| |
| |
| | | |
| | |
Property management and green maintenance expenses | |
Shanghai Eastern Airline Investment Co. Ltd. (“Eastern Investment”) | |
| – | | |
| (5 | ) |
| |
| |
| | | |
| | |
| |
CEA Development | |
| (14 | ) | |
| – | |
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
| (b) | Balances with related parties |
| (i) | Amounts due from related parties |
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
Nature | |
Company | |
RMB million | | |
RMB million | |
Trade receivables | |
Others | |
| 3 | | |
| 1 | |
| |
| |
| 3 | | |
| 1 | |
Prepayments and | |
Eastern Import & Export | |
| 61 | | |
| 123 | |
other receivables | |
China Kaiya | |
| – | | |
| 14 | |
| |
Collins Aviation Maintenance Services (Shanghai) Limited (“Collins Aviation”) | |
| – | | |
| 16 | |
| |
Others | |
| 24 | | |
| 16 | |
| |
| |
| 85 | | |
| 169 | |
All the amounts due from related parties are interest
free and unsecured, within normal credit terms given to trade customers.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
| (b) | Balances with related parties (cont’d) |
| (ii) | Amounts due to related parties |
| |
| |
(Unaudited) | | |
(Audited) | |
| |
| |
As at | | |
As at | |
| |
| |
30 June | | |
31 December | |
| |
| |
2015 | | |
2014 | |
Nature | |
Company | |
RMB million | | |
RMB million | |
Trade and bills payable | |
Eastern Import & Export | |
| 101 | | |
| 112 | |
| |
Shanghai Catering | |
| 5 | | |
| 38 | |
| |
Technologies Aerospace | |
| 4 | | |
| 4 | |
| |
Others | |
| 50 | | |
| 32 | |
| |
| |
| 160 | | |
| 186 | |
Other payables and | |
Eastern Import & Export | |
| 1,347 | | |
| 652 | |
accruals | |
Shanghai P&W | |
| 205 | | |
| 255 | |
| |
Shanghai Catering | |
| 287 | | |
| 154 | |
| |
CEA Holding | |
| 77 | | |
| 97 | |
| |
Collins Aviation | |
| – | | |
| 15 | |
| |
China Kaiya | |
| – | | |
| 12 | |
| |
Shanghai Hute | |
| 1 | | |
| 59 | |
| |
Technologies Aerospace | |
| 48 | | |
| 157 | |
| |
CEA Development | |
| 53 | | |
| 50 | |
| |
Others | |
| 176 | | |
| 32 | |
| |
| |
| 2,194 | | |
| 1,483 | |
Except for the amounts due to
CEA Holding, which are reimbursement in nature, all other amounts due to related parties are trade in nature. All amounts due to
related parties are interest free and payable within normal credit terms given by trade creditors.
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
| 21. | RELATED PARTY TRANSACTIONS (cont’d) |
| (b) | Balances with related parties (cont’d) |
| (iii) | Short-term deposits and borrowings with associates and CEA Holding |
| |
| | |
| | |
(Unaudited) | | |
(Audited) | |
| |
Average interest rate | | |
As at | | |
As at 31 | |
| |
Six months ended 30 June | | |
30 June | | |
December | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
RMB million | | |
RMB million | |
Short-term deposits (included in restricted bank deposits and short-term bank deposits) “Eastern Finance” | |
| 0.34 | % | |
| 0.39 | % | |
| 57 | | |
| 369 | |
Short-term borrowings (included in borrowings) “Eastern Finance” | |
| 2.28 | % | |
| 3.92 | % | |
| 73 | | |
| 73 | |
Long-term borrowings (included in borrowings) “Eastern Finance” | |
| – | | |
| 6.15 | % | |
| – | | |
| 125 | |
Loans (included in prepayments and other receivables) “Jetstar Hong Kong Limited” | |
| 3.63 | % | |
| – | | |
| 122 | | |
| 369 | |
| (c) | Guarantees by holding company |
As at 30 June 2015, certain bonds of the Group guaranteed
by CEA Holding were RMB4.8 billion (As at 31 December 2014: RMB4.8 billion).
China Eastern Airlines Corporation Limited
Interim Report 2015
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2015
The civil aviation industry is
subject to seasonal fluctuations, with peak demand during the holiday season in the second half of the year. As such, the revenues
and results of the Group in the first half of the year are generally lower than those in the second half of the year.
| 23. | EVENTS AFTER THE REPORTING PERIOD |
On 9 July 2015, the Company entered
into an agreement with the Boeing Company, Inc. regarding the purchase of fifty brand new Boeing B737 series aircraft. The aggregate
consideration of the fifty brand new Boeing B737 series aircraft is approximately USD 4.55 billion. The aircraft are expected to
be delivered to the Company in stages from 2017 to 2019.
On 27 July 2015, the Company
entered into a subscription agreement with Delta Air Lines, Inc. (“Delta Air Lines”), pursuant to which the
Company has agreed to allot and issue to Delta Air Lines, and Delta Air Lines has agreed to subscribe for 465,910,000 issued H
Shares, at the subscription price of HK$3,488,895,000, upon the terms and subject to the conditions set out in the subscription
agreement. Completion of the subscription is subject to the fulfilment of a number of conditions. As such, the subscription may
or may not proceed.
On 14 August 2015, the Company
entered into an agreement with Airbus SAS regarding the purchase of fifteen brand new Airbus A330 series aircraft. The aggregate
consideration of the fifteen brand new Airbus A330 series aircraft is approximately USD3.63 billion. The aircraft are expected
to be delivered to the Company in stages from 2017 to 2018.
China Eastern Airlines Corporation Limited
Interim Report 2015
SUMMARY OF SELECTED OPERATING DATA
| |
For the six months ended 30 June | |
| |
2015 | | |
2014 | | |
Change | |
Capacity | |
| | | |
| | | |
| | |
ATK (available tonne – kilometres) (millions) | |
| 12,055.22 | | |
| 10,891.58 | | |
| 10.68 | % |
– Domestic routes | |
| 6,345.18 | | |
| 5,821.28 | | |
| 9.00 | % |
– International routes | |
| 5,323.47 | | |
| 4,664.27 | | |
| 14.13 | % |
– Regional routes | |
| 386.58 | | |
| 406.03 | | |
| –4.79 | % |
| |
| | | |
| | | |
| | |
ASK (available seat – kilometres) (millions) | |
| 86,106.75 | | |
| 76,931.77 | | |
| 11.93 | % |
– Domestic routes | |
| 57,732.51 | | |
| 53,085.18 | | |
| 8.75 | % |
– International routes | |
| 25,648.77 | | |
| 20,974.84 | | |
| 22.28 | % |
– Regional routes | |
| 2,725.47 | | |
| 2,871.75 | | |
| –5.09 | % |
| |
| | | |
| | | |
| | |
AFTK (available freight tonne – kilometres) (millions) | |
| 4,305.62 | | |
| 3,967.72 | | |
| 8.52 | % |
– Domestic routes | |
| 1,149.25 | | |
| 1,043.61 | | |
| 10.12 | % |
– International routes | |
| 3,015.08 | | |
| 2,776.53 | | |
| 8.59 | % |
– Regional routes | |
| 141.28 | | |
| 147.57 | | |
| –4.26 | % |
| |
| | | |
| | | |
| | |
Hours flown (thousands) | |
| 865.91 | | |
| 780.67 | | |
| 10.92 | % |
| |
| | | |
| | | |
| | |
Traffic | |
| | | |
| | | |
| | |
RTK (revenue tonne – kilometres) (millions) | |
| 8,554.37 | | |
| 7,752.63 | | |
| 10.34 | % |
– Domestic routes | |
| 4,614.25 | | |
| 4,222.01 | | |
| 9.29 | % |
– International routes | |
| 3,697.34 | | |
| 3,276.43 | | |
| 12.85 | % |
– Regional routes | |
| 242.78 | | |
| 254.20 | | |
| –4.49 | % |
| |
| | | |
| | | |
| | |
RPK (revenue passenger – kilometres) (millions) | |
| 69,220.14 | | |
| 61,499.79 | | |
| 12.55 | % |
– Domestic routes | |
| 46,686.59 | | |
| 42,628.16 | | |
| 9.52 | % |
– International routes | |
| 20,481.62 | | |
| 16,684.65 | | |
| 22.76 | % |
– Regional routes | |
| 2,051.93 | | |
| 2,186.98 | | |
| –6.18 | % |
| |
| | | |
| | | |
| | |
RFTK (revenue freight tonne – kilometres) (millions) | |
| 2,415.72 | | |
| 2,294.35 | | |
| 5.29 | % |
– Domestic routes | |
| 465.79 | | |
| 431.81 | | |
| 7.87 | % |
– International routes | |
| 1,888.42 | | |
| 1,801.25 | | |
| 4.84 | % |
– Regional routes | |
| 61.52 | | |
| 61.29 | | |
| 0.38 | % |
| |
| | | |
| | | |
| | |
Number of passengers carried (thousands) | |
| 44,827.67 | | |
| 40,418.67 | | |
| 10.91 | % |
– Domestic routes | |
| 37,348.49 | | |
| 34,286.27 | | |
| 8.93 | % |
– International routes | |
| 5,962.79 | | |
| 4,551.88 | | |
| 31.00 | % |
– Regional routes | |
| 1,516.38 | | |
| 1,580.53 | | |
| –4.06 | % |
China Eastern Airlines Corporation Limited
Interim Report 2015
SUMMARY OF SELECTED OPERATING DATA
| |
For the six months ended 30 June | |
| |
2015 | | |
2014 | | |
Change | |
Weight of freight carried (kg) (millions) | |
| 678.07 | | |
| 655.62 | | |
| 3.42 | % |
– Domestic routes | |
| 325.06 | | |
| 319.93 | | |
| 1.60 | % |
– International routes | |
| 303.34 | | |
| 286.50 | | |
| 5.88 | % |
– Regional routes | |
| 49.67 | | |
| 49.19 | | |
| 0.98 | % |
| |
| | | |
| | | |
| | |
Load factors | |
| | | |
| | | |
| | |
Overall load factor (%) | |
| 70.96 | | |
| 71.18 | | |
| –0.22 | pts |
– Domestic routes | |
| 72.72 | | |
| 72.53 | | |
| 0.19 | pts |
– International routes | |
| 69.45 | | |
| 70.25 | | |
| –0.80 | pts |
– Regional routes | |
| 62.80 | | |
| 62.61 | | |
| 0.19 | pts |
| |
| | | |
| | | |
| | |
Passenger load factor (%) | |
| 80.39 | | |
| 79.94 | | |
| 0.45 | pts |
– Domestic routes | |
| 80.87 | | |
| 80.30 | | |
| 0.57 | pts |
– International routes | |
| 79.85 | | |
| 79.55 | | |
| 0.30 | pts |
– Regional routes | |
| 75.29 | | |
| 76.16 | | |
| –0.87 | pts |
| |
| | | |
| | | |
| | |
Freight load factor (%) | |
| 56.11 | | |
| 57.83 | | |
| –1.72 | pts |
– Domestic routes | |
| 40.53 | | |
| 41.38 | | |
| –0.85 | pts |
– International routes | |
| 62.63 | | |
| 64.87 | | |
| –2.24 | pts |
– Regional routes | |
| 43.54 | | |
| 41.53 | | |
| 2.01 | pts |
| |
| | | |
| | | |
| | |
Unit revenue index (including fuel surcharge)* | |
| | | |
| | | |
| | |
Revenue tonne – kilometres yield (RMB) | |
| 4.891 | | |
| 5.276 | | |
| –7.30 | % |
– Domestic routes | |
| 5.675 | | |
| 6.242 | | |
| –9.08 | % |
– International routes | |
| 3.746 | | |
| 3.859 | | |
| –2.93 | % |
– Regional routes | |
| 7.418 | | |
| 7.482 | | |
| –0.86 | % |
| |
| | | |
| | | |
| | |
Passenger – kilometres yield (RMB) | |
| 0.558 | | |
| 0.606 | | |
| –7.92 | % |
– Domestic routes | |
| 0.551 | | |
| 0.605 | | |
| –8.93 | % |
– International routes | |
| 0.552 | | |
| 0.587 | | |
| –5.96 | % |
– Regional routes | |
| 0.787 | | |
| 0.770 | | |
| 2.21 | % |
| |
| | | |
| | | |
| | |
Freight tonne – kilometres yield (RMB) | |
| 1.332 | | |
| 1.576 | | |
| –15.48 | % |
– Domestic routes | |
| 1.043 | | |
| 1.274 | | |
| –18.13 | % |
– International routes | |
| 1.348 | | |
| 1.582 | | |
| –14.79 | % |
– Regional routes | |
| 3.023 | | |
| 3.541 | | |
| –14.63 | % |
China Eastern Airlines Corporation Limited
Interim Report 2015
SUMMARY OF SELECTED OPERATING DATA
| |
For the six months ended 30 June | |
| |
2015 | | |
2014 | | |
Change | |
Unit revenue index (excluding fuel surcharge)* | |
| | | |
| | | |
| | |
Revenue tonne – kilometres yield (RMB) | |
| 4.447 | | |
| 4.427 | | |
| 0.45 | % |
– Domestic routes | |
| 5.601 | | |
| 5.489 | | |
| 2.04 | % |
– International routes | |
| 2.885 | | |
| 2.934 | | |
| –1.67 | % |
– Regional routes | |
| 6.290 | | |
| 6.046 | | |
| 4.04 | % |
| |
| | | |
| | | |
| | |
Passenger – kilometres yield (RMB) | |
| 0.515 | | |
| 0.516 | | |
| –0.19 | % |
– Domestic routes | |
| 0.544 | | |
| 0.532 | | |
| 2.26 | % |
– International routes | |
| 0.432 | | |
| 0.462 | | |
| –6.49 | % |
– Regional routes | |
| 0.671 | | |
| 0.631 | | |
| 6.34 | % |
| |
| | | |
| | | |
| | |
Freight tonne – kilometres yield (RMB) | |
| 0.998 | | |
| 1.115 | | |
| –10.49 | % |
– Domestic routes | |
| 0.966 | | |
| 1.169 | | |
| –17.37 | % |
– International routes | |
| 0.958 | | |
| 1.053 | | |
| –9.02 | % |
– Regional routes | |
| 2.438 | | |
| 2.578 | | |
| –5.43 | % |
| * | In calculating unit revenue index, the relevant revenue includes income generated from co-operation routes. |
China Eastern Airlines Corporation Limited
Interim Report 2015
FLEET STRUCTURE
The Group has been continuously optimising
its fleet structure in recent years. In the first half of 2015, the Group introduced a total of 35 aircraft of major models and
a total of 21 aircraft of older models, including B757-200F aircraft, retired. The variety of aircraft models of the Group’s
fleet has been further streamlined and the fleet structure has been made younger.
As at 30 June 2015, the Group operated
a fleet of 527 aircraft, which included 501 passenger aircraft, 10 freighters and 16 business aircraft held under trust.
| |
| |
| | |
| | |
| | |
(Units) | |
| |
Fleet structure as at 30 June 2015 | |
| | |
| | |
| |
| |
| |
Self-owned | | |
| | |
| | |
| |
| |
| |
and under | | |
Under | | |
| | |
Average | |
| |
| |
finance | | |
operating | | |
| | |
fleet age | |
No. | |
Model | |
lease | | |
lease | | |
Sub-total | | |
(Years) | |
Total
number of passenger aircraft | |
| |
| 371 | | |
| 130 | | |
| 501 | | |
| | |
Wide-body aircraft | |
| |
| 53 | | |
| 10 | | |
| 63 | | |
| 5.2 | |
1 | |
B777-300ER | |
| 6 | | |
| 0 | | |
| 6 | | |
| 0.5 | |
2 | |
B767 | |
| 6 | | |
| 0 | | |
| 6 | | |
| 14.3 | |
3 | |
A340–600*Note | |
| 2 | | |
| 0 | | |
| 2 | | |
| 11.0 | |
4 | |
A330–300 | |
| 11 | | |
| 7 | | |
| 18 | | |
| 7.0 | |
5 | |
A330–200 | |
| 28 | | |
| 3 | | |
| 31 | | |
| 3.0 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Narrow-body aircraft | |
| |
| 318 | | |
| 120 | | |
| 438 | | |
| 5.9 | |
6 | |
A321 | |
| 42 | | |
| 0 | | |
| 42 | | |
| 4.6 | |
7 | |
A320 | |
| 116 | | |
| 39 | | |
| 155 | | |
| 6.6 | |
8 | |
A319 | |
| 30 | | |
| 4 | | |
| 34 | | |
| 3.2 | |
9 | |
B757-200*Note | |
| 1 | | |
| 0 | | |
| 1 | | |
| 10.3 | |
10 | |
B737–800 | |
| 56 | | |
| 68 | | |
| 124 | | |
| 4.4 | |
11 | |
B737–700 | |
| 53 | | |
| 9 | | |
| 62 | | |
| 6.9 | |
12 | |
B737–300 | |
| 12 | | |
| 0 | | |
| 12 | | |
| 16.8 | |
13 | |
EMB–145LR | |
| 8 | | |
| 0 | | |
| 8 | | |
| 8.5 | |
Total number
of freighters | |
| |
| 2 | | |
| 8 | | |
| 10 | | |
| 6.1 | |
14 | |
B747-400F | |
| 2 | | |
| 2 | | |
| 4 | | |
| 8.0 | |
15 | |
B777F | |
| 0 | | |
| 6 | | |
| 6 | | |
| 4.8 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
FLEET STRUCTURE
| |
Fleet structure as at 30 June 2015 | |
| | |
| | |
| |
| |
| |
Self-owned | | |
| | |
| | |
| |
| |
| |
and under | | |
Under | | |
| | |
Average | |
| |
| |
finance | | |
operating | | |
| | |
fleet age | |
No. | |
Model | |
lease | | |
lease | | |
Sub-total | | |
(Years) | |
Total number of passenger aircraft and freighters | |
| |
| 373 | | |
| 138 | | |
| 511 | | |
| 5.8 | |
Business aircraft held under trust | |
| |
| | | |
| | | |
| 16 | | |
| | |
Total number of aircraft | |
| |
| | | |
| | | |
| 527 | | |
| | |
Note:
A340-600 and B757-200 models are planned to be retired from the Group’s fleet by 31 December 2015.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
Review of Operation
In the first half of 2015, the global economy
experienced weak recovery and major economies diverged significantly. Despite being under relatively strong downward pressure,
the growth of the PRC’s overall economy was in line with expectation. The global air passenger and freight volume continued
to increase, the aircraft fuel costs further decreased, and the development of the industry had good momentum. Thanks to the stable
progress of the structural adjustment in the domestic economy, consumption upgrade and the development of tourism economy, the
overall demand in the Chinese air transportation market was strong. Nevertheless, the competition in the industry increasingly
intensified and the challenge brought by alternative means of transportation, such as high-speed railway, demonstrated a normalized
trend. Facing the complicated and dynamic operating environment and under the premise of ensuring safe operation, the Group has
been strengthening its marketing on passenger and freight transportation, continuously improving service quality and actively fostering
transformation and development. As a result, the Group achieved favourable results of operations.
In the first half of 2015, the Group recorded
an operating revenue of RMB46,627 million, representing an increase of 3.76% from the same period last year. Net profit attributable
to the equity shareholders of the Company was RMB3,562 million, representing an increase of RMB3,550 million from the same period
last year.
Operations
| | Safe Operation |
The Group has been committed
to ensuring safe operation. In the first half of 2015, the Group facilitated the establishment of the operation risk control system
in order to raise safety and risk management standards. It also established operation qualification and flight protection data
platform in order to raise safety management abilities. It also intensified the analysis and application of flight data and further
promoted phase 2 of the Electronic Flight Bag in order to reinforce the application of safety techniques.
In the first half of 2015, the
Group had 865,900 safe flying hours and 371,600 take-off and landing flights, which have increased by 10.9% and 8%, respectively
over the same period last year.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
| | Passenger Transportation Marketing |
In the first half of 2015, through
refining market analysis, optimising production structure, and reinforcing revenue control and customer development, operating
capabilities of the Group were continuously enhanced, achieving passenger revenue of RMB37,152 million, representing an increase
of 3.3% from the same period last year.
In order to seize the opportunity
of the booming demand for tourism, the Group increased its flight capacity on the Japan, Europe and Southeast Asia routes and reduced
its flight capacity on the China – Korea routes in a timely manner in view of the situation of MERS (Middle East respiratory
syndrome) in Korea. The Group proactively expanded its direct sales channels, the proportion of revenue from direct sales has increased
by approximately 9 pts from the same period last year. By optimising transit connection and reinforcing interline transit, the
Group continued to facilitate the establishment of Shanghai core hub and Kunming and Xi’an regional hubs. Relying on the
data from the marketing data analysing system, the Group actively expanded its marketing towards high-end customers and the total
number of corporate customers increased by 9% from the same period last year, among which, both the total number of customers of
corporate contracts and revenue increased by over 40% from the same period last year and the total number of frequent flyer members
increased by approximately 2 million.
| | Freight Transportation and Logistics |
In the first half of 2015, Eastern
Logistics has tightened its cost control, optimized production organization and broadened marketing channels to achieve a profit
of RMB48 million.
In terms of traditional freight
transportation operation, the Group further streamlined its fleet scale and terminated the leases of two older freighters in order
to reduce operating costs. By improving the utilisation rate of freighters, the Group’s flight capacities in the core markets
in Europe and America were stabilised. The Group proactively broadened its sourcing channels, strengthened joint cooperation and
increased transit ratio of freight transportation at Shanghai hub. In terms of transformation of freight transportation logistics,
the Group established transit marketing platform to establish CEA’s rapid supply chain. The Group also entered into the high-end
pharmaceutical flight logistics market and constructed online platform of aviation equipment to optimize third party logistics
solution. It established channels connecting Los Angeles and first to third-tier cities in China through Ningbo and refined its
cross-border e-commerce logistics solution.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
| | Alliance and Cooperation |
The Group placed importance on
the cooperation platform of SkyTeam Alliance, and enhanced its cooperation with SkyTeam partners in different aspects.
The Group proactively improved
the strategic cooperation with Delta Air Lines and planned to introduce Delta Air Lines as the Group’s strategic investor.
Such cooperation included realizing interline transit with Delta Air Lines at Pudong Airport T1 Terminal, adding 13 code-share
cooperation routes, jointly exploring corporate customer resources and developing the sales of the Group’s premium North
America routes.
In the first half of 2015, the
Group also commenced code-share cooperation with other SkyTeam members, including Air France, Alitalia, Russian Airlines, China
Southern Airlines, Xiamen Airlines and China Airlines, on 24 routes, and realized the reciprocal arrangement of interline transit
and direct baggage transit with Air France for two-way flights at Pudong Airport. As at the end of the first half of 2015, the
Group cooperated with 12 SkyTeam members on code-share cooperation for a total of 704 routes, with an aggregate of 372 destinations.
| | Service Quality |
Adhering to the service philosophy
of “Customer-Oriented and Dedicated Service”, the Group improved its standardized service processes and enhanced consistency
in services to improve service quality. In improving the construction and application of information technologies in services,
the Group promoted self-rebooking system, upgraded traveler baggage inquiry system and optimized the function of self-check-in
machines to constantly improve customer experience. The response mechanism in respect of irregular flight service has been improved
to enhance contingency protection capability of the system. Meanwhile, in order to further improve the waiting experience of high-end
travelers, the Group has completed the upgrade of lounges at Hongqiao Airport and invested in the refurbishment of lounges in various
airports, such as Beijing, Hong Kong, Chengdu and Wuhan airports.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
| | Cost Control |
In the first half of 2015, the
operating costs of the Group, benefiting from the low international fuel prices, decreased by 5.61% from the same period last year.
The Group has been lowering its
operating costs by continuously strengthening its cost control, optimizing fleet structure and routes and enhancing efficiency
in flight operation. By strictly controlling the number of incoming staff and optimising the retirement schemes, the staff-to-aircraft
ratio reduced by approximately 6% from the same period last year. Through enhancing aircraft technological maintenance abilities
of Eastern Airlines Technology Co., Ltd., the maintenance costs for aircraft engines reduced by 8.85% from the same period last
year. In the first half of 2015, the available tonne – kilometres per unit of the Group decreased by 3.43% from the same
period last year, excluding the factor of aircraft fuel costs, indicating the significant effect of cost control.
| | Reform and Transformation |
In the first half of 2015, the
Group continuously facilitated the various work for transformation and development.
The steady transformation of
China United Airlines into a low-cost airline has laid a solid foundation for future development. China United Airlines has finalized
its all-economy class cabin renovation plan to increase loading capacity. The active establishment of direct sales platform and
the launch of China United Airlines official website and mobile application increased the proportion of revenue from direct sales
by 12.6 pts from the same period last year. China United Airlines strived to expand non-flight income through the implementation
of low-cost servicing mode, cancellation of complimentary in-flight meal and promotion of products such as check-in baggage charges,
in-flight sales and paid lounge services. As at the end of the first half of 2015, China United Airlines operated 30 aircraft in
total and realized operating income of RMB1,916 million, profit of RMB93.27 million, representing an increase of 28.04% from the
same period last year.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
The Group has proactively explored
“Internet+” business mode. China Eastern Airlines E-Commerce Co., Ltd., a wholly-owned subsidiary of the Company, has
facilitated the development of transformation of resources, such as customers, points and offline contact point in its five major
segments, including e-commerce platform, points mall and digital marketing. The research and development of integrated products
was accelerated and 32 types of key products in 10 categories such as online vacation and insurances were launched successively
to realize rapid replacement of e-commerce platform technology and continually improve user experience. The Group enhanced its
digital marketing ability, explored partnership with internal and external parties on marketing and expedited the coordination
of O2O (Offline to Online) marketing resources.
The Group continued to facilitate
the construction of the project of in-flight connection platform. 21 long-and-medium haul routes wide-body aircraft of the Group
was allowed to adopt satellite communication system to provide internet access services, among which, equipment of 14 aircraft
was upgraded to successfully perform functions such as in-flight internet platform for shopping, sales of duty-free products and
display of in-flight meal. The assessments on technical solution for the modification of air-ground connection for narrow-body
aircraft and commercial operation solution have commenced.
In the first half of 2015, the
Group has launched non-public issuance of A Shares project and began to introduce Delta Air Lines as a strategic investor. The
shareholding structure and assets quality of the Group are expected to be improved, and financial risk is expected to be reduced.
| | Social Responsibilities |
While pursuing sustainable enterprise
development, the Group has adopted a social responsibility philosophy with respect to corporate decision making and operations,
which seeks to unify corporate development and social responsibility. In the first half of 2015, the Group completed several significant
transportation support tasks for charter flights for the medical aid mission in Africa and the evacuation of Chinese from quake-stricken
Nepal and earned widespread recognition and praise from the public. The Group also actively rallied younger members for the education-aid
programme of “Love at China Eastern Airlines” in Cangyuan county, Yunnan province. As at the end of the first half
of 2015, this large-scale charitable programme “Love at China Eastern Airlines” had launched nearly 5,000 projects
with more than 260,000 staff participating, serving a total of over 210,000 people.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
Financial Overview
Operating Revenues
In the first half of 2015, there was an
increase in the Group’s passenger revenues, which amounted to RMB37,152 million, representing an increase of 3.3% from the
same period last year, and accounted for 92.03% of the Group’s traffic revenues. Passenger traffic volume was 69,220.14 million
passenger-kilometres, representing an increase of 12.55% from the same period last year.
The passenger traffic volume of the Group’s
domestic routes was 46,686.59 million passenger-kilometres, representing an increase of 9.52% from the same period last year. Compared
to the first half of 2014, domestic passenger revenues decreased by 0.95% to RMB24,494 million, accounting for 65.93% of the Group’s
passenger revenues.
The passenger traffic volume of the Group’s
international routes was 20,481.62 million passenger-kilometres, representing an increase of 22.76% from the same period last year.
Compared to the same period of 2014, international passenger revenues increased by 15.98% to RMB11,084 million, accounting for
29.83% of the Group’s passenger revenues.
The passenger traffic volume of the Group’s
regional routes was 2,051.93 million passenger-kilometres, representing a decrease of 6.18% from the same period last year. Compared
to the first half of 2014, regional passenger revenues decreased by 6.2% to RMB1,574 million, accounting for 4.24% of the Group’s
passenger revenues.
In the first half of 2015, the Group’s
cargo and mail traffic volume was 2,415.72 million tonne-kilometres, representing an increase of 5.29% from the same period last
year; cargo and mail traffic revenues amounted to RMB3,217 million, representing a decrease of 11.03% from the same period last
year, and accounting for 7.97% of the Group’s traffic revenues.
In the first half of 2015, other major
revenues of the Group amounted to RMB4,002 million, representing an increase of 13.92% from the same period last year.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
Operating Expenses
In the first half of 2015, the Group’s
total operating costs were RMB40,901 million, representing a decrease of 5.61% from the same period last year. Analysis of the
changes in items under operating costs of the Group is set out as follows:
Aircraft fuel costs accounted for the most
significant operating costs of the Group. In the first half of 2015, the average price of fuel decreased by 37.57% from the same
period last year. The Group’s total aircraft fuel consumption was approximately 2,558,100 tonnes, representing an increase
of 13.18% from the same period last year. Jet fuel expenditures of the Group reached RMB10,562 million, representing a decrease
of 29.35% from the same period last year.
In the first half of 2015, the Group’s
take-off and landing charges amounted to RMB5,082 million, representing an increase of 10.98% from the same period last year, and
was primarily due to the increase in the number of take-off and landings.
In the first half of 2015, the Group’s
depreciation and amortisation amounted to RMB5,011 million, representing an increase of 12.63% from the same period last year,
and was primarily due to the introduction of new aircraft and engines by the Group, resulting in a greater base for depreciation.
In the first half of 2015, the Group’s
wages, salaries and benefits amounted to RMB7,576 million, representing an increase of 10.04% from the same period last year, and
was primarily due to an increase in remuneration brought about by business growth.
In the first half of 2015, the Group’s
aircraft maintenance expenses amounted to RMB1,896 million, representing a decrease of 8.85% from the same period last year, and
was primarily due to a decrease in the number of aircraft sent for external repair given the enhancement in the Group’s own
maintenance abilities.
In the first half of 2015, the Group’s
food and beverage expenses amounted to RMB1,212 million, representing an increase of 5.57% from the same period last year, and
was primarily due to the increase in the number of passengers carried.
In the first half of 2015, the Group’s
aircraft operating lease rentals amounted to RMB2,200 million, representing a decrease of 4.26% from the same period last year,
and was primarily due to a decrease in the number of aircraft held under operating leases.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT
DISCUSSION AND ANALYSIS
In the first half of 2015, the Group’s
other operating lease rentals amounted to RMB325 million, representing an increase of 40.69% from the same period last year, and
was primarily due to an increase in leasehold properties of the Group’s subsidiaries.
In the first half of 2015, the Group’s
selling and marketing expenses amounted to RMB1,888 million, representing a decrease of 7.63% from the same period last year, and
was primarily due to a decrease in agency rates for domestic routes and an increase in the proportion of revenue from direct sales.
In the first half of 2015, the amount of
civil aviation infrastructure levies payable to the CAAC by the Group was RMB878 million, representing an increase of 10.16% from
the same period last year. This increase was primarily due to an increase in miles flown by the Group.
In the first half of 2015, the Group’s
ground service and other expense amounted to RMB2,794 million, representing an increase of 12.53% from the same period last year.
The increase was primarily due to the corresponding increase in expenses resulting from an increase in the income from tour operations
and ground services of the Group.
In the first half of 2015, the Group’s
indirect operating expenses were RMB1,348 million, representing a decrease of 3.23% from the same period last year. This was primarily
due to the strict cost control measures on controllable costs imposed by the Group.
Other Operating Income
In the first half of 2015, other operating
income of the Group amounted to RMB2,256 million, representing an increase of 22.48% from the same period last year, primarily
due to an increase in income from co-operation routes and gain on disposal of fixed assets.
Finance Income/Costs
In the first half of 2015, the Group’s
finance income was RMB54 million, representing an increase of 35% from the same period last year. Finance costs amounted to RMB1,160
million, representing a decrease of 20.87% from the same period last year, primarily due to a decrease in the Group’s net
exchange losses.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Profit
In the first half of 2015, the Group’s
profit attributable to the equity shareholders of the Company increased by RMB3,550 million from the same period last year to RMB3,562
million. Earnings per share attributable to the equity shareholders of the Company were RMB0.28.
Liquidity and Capital Structure
The Group monitors its capital position on the basis of its debt
ratio, which is calculated as total liabilities divided by total assets. As at 30 June 2015, the debt ratio of the Group was 80.05%.
The Group generally operates with net current
liabilities. As at 30 June 2015, the Group’s current liabilities exceeded its current assets by RMB47,472 million. The Group
has been and believes it will continue to be capable of satisfying its working capital requirements through obtaining loans from
banks and various financing means such as the issuance of bonds.
The Group generally finances its working capital
requirements through business operations and short-term bank loans. As at 30 June 2014 and 30 June 2015, the Group’s cash
and cash equivalents amounted to RMB3,152 million and RMB833 million, respectively. In the first half of 2014 and first half of
2015, net cash inflow generated from the Group’s operating activities was RMB5,262 million and RMB10,241 million, respectively.
Capital expenditures for the purchase of aircraft were partly funded by internal funds, the balance of which was mainly financed
by long-term and short-term borrowings and finance leasing. In the first half of 2014 and first half of 2015, the Group’s
net cash outflow from investment activities was RMB8,304 million and RMB11,402 million, respectively. Net cash inflow from the
Group’s financing activities was RMB4,168 million and RMB695 million, respectively.
As at 31 December 2014 and 30 June 2015, the
Group’s borrowings payable within one year were RMB28,676 million and RMB29,129 million, respectively. As at 31 December
2014, the Group’s borrowings payable within one to two years, within three to five years and beyond five years were RMB8,801
million, RMB10,868 million and RMB10,844 million, respectively, as compared to RMB11,318 million, RMB9,149 million and RMB9,884
million, respectively, as at 30 June 2015.
The Group’s obligations under finance
leases as at 31 December 2014 and 30 June 2015, converted into RMB, were RMB38,695 million and RMB44,958 million, respectively.
As at 31 December 2014, the Group’s lease obligations payable within two years, within three to five years and beyond five
years were RMB9,007 million, RMB11,482 million and RMB18,206 million, respectively, as compared to RMB11,116 million, RMB15,227
million and RMB18,615 million, respectively, as at 30 June 2015.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
The Group’s obligations under finance
leases comprised only floating-rate obligations. As at 31 December 2014, the Group’s obligations under finance leases comprised
USD-denominated obligations of USD5,954 million, SGD-denominated obligations of SGD201 million, HKD-denominated obligations of
HKD1,203 million and JPY-denominated obligations of JPY7,309 million. As at 30 June 2015, the Group’s obligations under finance
leases comprised USD-denominated obligations of USD7,010 million, SGD-denominated obligations of SGD190 million, HKD-denominated
obligations of HKD1,138 million and JPY-denominated obligations of JPY6,852 million.
As at 31 December 2014, the Group’s borrowings
comprised USD-denominated borrowings of USD7,025 million and RMB-denominated borrowings of RMB16,205 million. Fixed-rate borrowings
accounted for 36.98% of the total borrowings, and floating-rate borrowings accounted for 63.02% of the total borrowings. As at
30 June 2015, the Group’s borrowings comprised USD-denominated borrowings of USD6,526 million and RMB-denominated borrowings
of RMB19,575 million. Fixed-rate borrowings accounted for 38.92% of the total borrowings, and floating-rate borrowings accounted
for 61.08% of the total borrowings.
Interest Rate Fluctuation
The Group’s total interest-bearing liabilities
(including long-term and short-term borrowings, finance leases payable and bonds payable) as at 31 December 2014 and 30 June 2015
were RMB97,884 million and RMB104,438 million, respectively, the proportion of short-term interest-bearing liabilities accounted
for 33.99% and 32.89%, respectively. Most of the long-term interest-bearing liabilities were liabilities with floating interest
rates. Both of the short-term and the long-term interest-bearing liabilities were affected by fluctuations in current market interest
rates.
The Group’s interest-bearing liabilities
were primarily denominated in USD and RMB. As at 31 December 2014 and 30 June 2015, the Group’s USD-denominated interest-bearing
liabilities accounted for 81.14% and 79.24%, respectively, of total interest-bearing liabilities for the relevant periods while
RMB-denominated interest-bearing liabilities accounted for 16.56% and 18.74%, respectively, of total interest-bearing liabilities.
Fluctuations in the USD and RMB interest rates have and will continue to have significant impact on the Group’s finance costs.
As at 31 December 2014, the notional amount of the outstanding interest rate swap agreements was approximately USD801 million.
As at 30 June 2015, such amount was USD1,526 million and these agreements will expire between 2016 and 2025.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Exchange Rate Fluctuation
As at 30 June 2015, the Group’s total
interest-bearing liabilities denominated in foreign currencies, converted to RMB, amounted to RMB84,863 million, of which USD liabilities
accounted for 97.52% of the total interest-bearing liabilities denominated in foreign currencies. Therefore, a significant fluctuation
in foreign exchange rates will subject the Group to significant foreign exchange loss/gain arising from the conversion of foreign
currency denominated liabilities, which will also affect the profitability and development of the Group. The Group typically uses
hedging contracts for foreign currencies to reduce the foreign exchange risks for foreign currency revenue generated from ticket
sales and expenses to be paid in foreign currencies. As at 31 December 2014, the subsisting foreign currency hedging contracts
held by the Group amounted to a notional amount of USD39 million. Such amount was USD15 million as at 30 June 2015, and will expire
between 2016 and 2017.
For the financial assets and liabilities denominated
in foreign currencies of the Group, if such foreign currencies had strengthened or weakened by 1% against RMB with all other variables
held constant, and excluding the effect of the original hedging contracts for foreign currencies, the effect on the Group’s
net profit for the first half of 2015 would be as follows:
| |
Effect on the net profit | |
| |
(RMB million) | |
| |
Strengthened | | |
Weakened | |
| |
by 1% against | | |
by 1% against | |
Foreign currencies | |
RMB | | |
RMB | |
USD | |
| –600 | | |
| 600 | |
Euro | |
| 1 | | |
| –1 | |
JPY | |
| –2 | | |
| 2 | |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Fluctuation of Aircraft Fuel Prices
In the first half of 2015, assuming other factors
remain unchanged, if the average price of aircraft fuel had increased or decreased by 5%, aircraft fuel costs of the Group would
have increased or decreased by approximately RMB528 million.
In the first half of 2015, the Group did not engage in any aviation
fuel hedging activities.
Pledges on Assets and Contingent Liabilities
The Group generally finances the purchases
of aircraft through finance leases and bank loans secured by its assets. As at 31 December 2014, the value of the Group’s
relevant assets used to secure certain bank loans was RMB23,117 million. As at 30 June 2015, the value of the Group’s relevant
assets pledged to secure certain bank loans was RMB27,857 million, representing an increase of 20.5% when compared to that as at
30 June 2014.
As at 30 June 2015, the Group had no material contingent liabilities.
Human Resources
As at 30 June 2015, the Group had 69,894 employees, the majority
of whom were employed in the PRC. The wages of the Group’s employees generally consisted of basic salaries and performance
bonuses.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Outlook for the Second Half of 2015
The Group would like to bring to the attention
of readers of this report that this report contains certain forward-looking statements, including a general outlook of international
and domestic economies and the aviation industry, and descriptions of the Group’s future operating plans for the second half
of 2015 and beyond. Such forward-looking statements are subject to many uncertainties and risks, many of which are beyond the control
of the Group. The actual events that occur may be different from these forward-looking statements.
In the second half of 2015, the global economy
is facing an unclear prospect of recovery. According to the latest estimates from the International Monetary Fund, economic growth
of developed economies may further experience slowdown throughout 2015. On the other hand, China is expected to sustain steady
growth due to implementation of national policies and measures such as “stabilising growth, adjusting structures, improving
livelihood and preventing risks”. Meanwhile, China has further pushed ahead national strategies such as “One Belt,
One Road”, “Yangtze River Economic Belt” and “Shanghai Free-Trade Zone”, which provides the Group
with a good opportunity for development.
In the second half of 2015, the Group will
seize the opportunities arising from the opening of the Shanghai Disneyland and the boom of the tourism business to focus on the
following areas in order to achieve better operating results: 1. reinforcing the implementation of the safety responsibility system
and strengthening safety inspection and supervision to assure flight safety on an ongoing basis; 2. optimising allocation of flight
capacity, seizing opportunities during peak seasons, enriching marketed products via passenger transportation and improving the
operation of long-haul routes; 3. strengthening sales of freight transportation, optimising cross-border e-commerce passages and
enhancing efficiency of freight transportation; 4. further leveraging on information technology, enhancing big data application,
promoting the establishment of in-flight internet access and optimising online services integration; 5. transforming China United
Airlines into a low-cost airline and strengthening the establishment of e-commerce platforms; capturing market opportunities and
continuing with the non-public issuance of A shares project in a stable manner and deepening cooperation with Delta Air Lines through
shareholding and business.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Fleet Plan
In the future, the Group will continue to focus on major aircraft
models, optimise its fleet structure on an ongoing basis, phase out the remaining older models to better match models with routes.
Introduction and Retirement Plan of Aircraft for the Second Half
of 2015 to 2017
(Units)
No. | |
Model | |
Second Half of 2015 | | |
2016 | | |
2017 | |
| |
| |
Introduction | | |
Retirement | | |
Introduction | | |
Retirement | | |
Introduction | | |
Retirement | |
Total number of passenger aircraft | |
| |
| 45 | | |
| 24 | | |
| 72 | | |
| 26 | | |
| 45 | | |
| 17 | |
Wide-body aircraft | |
| |
| 5 | | |
| 2 | | |
| 7 | | |
| | | |
| 4 | | |
| | |
1 | |
B777-300ER | |
| 3 | | |
| | | |
| 7 | | |
| | | |
| 4 | | |
| | |
2 | |
A340-600 | |
| | | |
| 2 | | |
| | | |
| | | |
| | | |
| | |
3 | |
A330 series | |
| 2 | | |
| | | |
| | | |
| | | |
| | | |
| | |
Narrow-body aircraft | |
| |
| 40 | | |
| 22 | | |
| 65 | | |
| 26 | | |
| 41 | | |
| 17 | |
4 | |
A320 series | |
| 17 | | |
| 8 | | |
| 30 | | |
| 6 | | |
| 15 | | |
| | |
5 | |
B737 series | |
| 23 | | |
| 10 | | |
| 35 | | |
| 15 | | |
| 26 | | |
| 17 | |
6 | |
B757-200 | |
| | | |
| 1 | | |
| | | |
| | | |
| | | |
| | |
7 | |
EMB-145 | |
| | | |
| 3 | | |
| | | |
| 5 | | |
| | | |
| | |
Total number of freighters | |
| |
| | | |
| 1 | | |
| | | |
| | | |
| | | |
| 1 | |
8 | |
B747-400F | |
| | | |
| 1 | | |
| | | |
| | | |
| | | |
| 1 | |
| |
Total | |
| 45 | | |
| 25 | | |
| 72 | | |
| 26 | | |
| 45 | | |
| 18 | |
Notes:
| 1. | As at 30 June 2015, according to confirmed orders, the Group planned to introduce 169 aircraft
and retire 25 aircraft in 2018 and future years. |
| 2. | The abovementioned quantity and timing for the introduction and retirement of aircraft will be
subject to adjustment based on market conditions and flight capacity allocation of the Group. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Significant Events
As at 30 June 2015, the share capital structure of the
Company is set out as follows:
| |
| |
| | |
Approximate | |
| |
| |
| | |
percentage in | |
| |
| |
Total number | | |
shareholding | |
| |
| |
of shares | | |
(%) | |
I | |
A Shares | |
| | | |
| | |
| |
1. Listed shares with trading moratorium | |
| 698,865,000 | | |
| 5.514 | |
| |
2. Listed shares without trading moratorium | |
| 7,782,213,860 | | |
| 61.402 | |
II | |
H Shares | |
| | | |
| | |
| |
1. Listed shares with trading moratorium | |
| 698,865,000 | | |
| 5.514 | |
| |
2. Listed shares without trading moratorium | |
| 3,494,325,000 | | |
| 27.570 | |
III | |
Total number of shares | |
| 12,674,268,860 | | |
| 100 | |
Explanation notes:
| 1. | On 16 April 2013, the Group issued 698,865,000 A shares, which are listed shares with trading moratorium,
on the Shanghai Stock Exchange, to its controlling shareholder, CEA Holding and its wholly-owned subsidiary, CES Finance, by way
of non-public issuance. A shares under this issue are subject to a lock-up period of 36 months. For details, please refer to the
announcement of the Company dated 17 April 2013 issued in Hong Kong. |
| 2. | On 21 June 2013, the Company issued 698,865,000 H shares,
which are listed shares with trading moratorium, on the Hong Kong Stock Exchange, to CES Global, an overseas wholly-owned subsidiary
of CEA Holding, by way of specific issuance. H shares under this issue are subject to a lock-up period of 36 months. For details,
please refer to the announcement of the Company dated 21 June 2013 issued in Hong Kong. |
| 3. | As at the date of this report, the Company had 698,865,000
listed A shares with trading moratorium, which were held by CEA Holding and its wholly-owned subsidiary, CES Finance, and 7,782,213,860
listed A shares without trading moratorium. The Company also had 698,865,000 listed H shares with trading moratorium, which were
held by CES Global, an overseas wholly-owned subsidiary of CEA Holding, and 3,494,325,000 listed H shares without trading moratorium.
The total number of shares of the Company amounted to 12,674,268,860 shares. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 2. | Substantial Shareholders |
So far as the Directors are aware,
each of the following persons, not being a Director, chief executive, Supervisor or member of senior management, had, as at 30
June 2015, an interest and/or short position in the Company’s shares or underlying shares (as the case may be) which would
fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or was otherwise, as at 30 June 2015, interested in 5% or more of any class of the then issued share capital of the Company,
or was otherwise, as at 30 June 2015, a substantial shareholder (as defined in the Listing Rules) of the Company:
| |
| |
| | |
As at 30 June 2015 | |
| |
| |
| | |
Approximate | | |
Approximate | | |
Approximate | |
| |
| |
| | |
percentage of | | |
percentage of | | |
percentage of | |
| |
| |
| | |
shareholding | | |
shareholding | | |
shareholding | |
| |
| |
| | |
in the | | |
in the | | |
in the | |
| |
| |
| | |
Company’s | | |
Company’s | | |
Company’s | |
| |
Type of | |
Number of | | |
total issued | | |
total issued | | |
total issued | |
Name of Shareholders | |
shares | |
shares held | | |
share capital | | |
A shares | | |
H shares | |
CEA Holding (Note 1) | |
A shares | |
| 5,530,240,000 | | |
| 43.64 | % | |
| 65.21 | % | |
| – | |
| |
| |
| | | |
| | | |
| | | |
| | |
CEA Holding (Note 2) | |
H shares | |
| 2,626,240,000 | | |
| 20.72 | % | |
| – | | |
| 62.63 | % |
| |
| |
| | | |
| | | |
| | | |
| | |
HKSCC Nominees Limited (Note 3) | |
H shares | |
| 4,181,990,288 | | |
| 32.97 | % | |
| – | | |
| 99.67 | % |
Notes:
Based on the information available to the Directors
as at 30 June 2015 (including such information as was available on the website of the Hong Kong Stock Exchange) and so far as they
are aware of, as at 30 June 2015:
| 1. | Among such A shares, 5,072,922,927 A shares (representing
approximately 59.81% of the Company’s then total issued A shares) were held by CEA Holding in the capacity of beneficial
owner; and 457,317,073 A shares (representing approximately 5.39% of the Company’s then total issued A shares) were held
by CES Finance in the capacity of beneficial owner, which in turn was 100% held by CEA Holding. |
| 2. | Such H shares were held by CES Global in the capacity
of beneficial owner, which in turn was 100% held by CEA Holding. |
| 3. | Among the 4,181,990,288 H shares held by HKSCC Nominees
Limited, 2,626,240,000 H shares (representing approximately 62.63% of the Company’s then total issued H shares) were held
by CES Global in the capacity of beneficial owner, which in turn was 100% held by CEA Holding. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Save as disclosed above, based on
the information available to the Directors and so far as they are aware, as at 30 June 2015, among the 4,181,990,288 H shares held
by HKSCC Nominees Limited, no other person had any interest or short position in the Company’s shares or underlying shares
(as the case may be) which would fall to be and was disclosed to the Company and the Hong Kong Stock Exchange under the provisions
of Divisions 2 and 3 of Part XV of the SFO.
| 3. | Shareholdings of Directors, Supervisors and Senior
Management |
Names, relevant information of and shares held by the
Directors, the Supervisors and members of senior management of the Company as at 30 June 2015 are as follows:
| |
| |
| |
| |
| |
Number of | | |
| |
| |
| |
| |
| |
| |
listed | | |
| |
| |
| |
| |
| |
| |
A shares of | | |
Capacity in | |
| |
| |
| |
| |
| |
the Company | | |
which the | |
| |
| |
| |
Effective date
and expiry | |
held–personal | | |
A shares | |
Name | |
Position | |
Age | |
date of appointment | |
interest | | |
were held | |
| |
| |
| |
| |
| |
(shares) | | |
| |
Liu Shaoyong | |
Chairman | |
56 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Ma Xulun | |
Vice Chairman, President | |
51 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Xu Zhao | |
Director | |
46 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Gu Jiadan | |
Director | |
59 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Li Yangmin | |
Director, Vice President | |
52 | |
26 June 2013 | |
30 June 2016 | |
| 3,960 | | |
| Beneficial
Owner | |
| |
| |
| |
| |
| |
| (Note
1) | | |
| | |
Tang Bing | |
Director, Vice President | |
48 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Tian Liuwen | |
Director, Vice President | |
56 | |
16 June 2015 | |
30 June 2016 | |
| 0 | | |
| – | |
| |
(Note 2) | |
| |
| |
| |
| | | |
| | |
Sandy Ke-Yaw Liu | |
Independent Non-executive Director | |
67 | |
26 June 2013 | |
16 June 2015 | |
| 0 | | |
| – | |
Ji Weidong | |
Independent Non-executive Director | |
58 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Li Ruoshan | |
Independent Non-executive Director | |
66 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Ma Weihua | |
Independent Non-executive Director | |
67 | |
29 October 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Shao Ruiqing | |
Independent Non-executive Director | |
58 | |
16 June 2015 | |
30 June 2016 | |
| 0 | | |
| – | |
Yu Faming | |
Chairman of the Supervisory Committee | |
61 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Xi Sheng | |
Supervisor | |
52 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Ba Shengji | |
Supervisor | |
57 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| |
| |
| |
| |
| |
Number of | | |
| |
| |
| |
| |
| |
| |
listed | | |
| |
| |
| |
| |
| |
| |
A shares of | | |
Capacity in | |
| |
| |
| |
| |
| |
the Company | | |
which the | |
| |
| |
| |
Effective date and expiry | |
held–personal | | |
A shares | |
Name | |
Position | |
Age | |
date of appointment | |
interest | | |
were held | |
| |
| |
| |
| |
| |
(shares) | | |
| |
Feng Jinxiong | |
Supervisor | |
53 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Yan Taisheng | |
Supervisor | |
61 | |
26 June 2013 | |
16 June 2015 | |
| 0 | | |
| – | |
Xu Haihua | |
Supervisor | |
54 | |
16 June 2015 | |
30 June 2016 | |
| 0 | | |
| – | |
Wu Yongliang | |
Vice President, Chief | |
52 | |
26 June 2013 | |
30 March 2016 | |
| 3,696 | | |
| Beneficial Owner | |
| |
Financial Officer | |
| |
| |
| |
| (Note 2) | | |
| | |
Feng Liang | |
Vice President | |
51 | |
27 August 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Sun Youwen | |
Vice President | |
55 | |
24 March 2014 | |
30 June 2016 | |
| 62,731 | | |
| Beneficial Owner | |
| |
| |
| |
| |
| |
| (Note 3) | | |
| | |
Wang Jian | |
Board Secretary | |
42 | |
26 June 2013 | |
30 June 2016 | |
| 0 | | |
| – | |
Total | |
| |
| |
| |
| |
| 70,387 | | |
| – | |
Note 1: |
representing approximately 0.000031% of the Company’s total issued shares as at 30 June 2015. |
|
|
Note 2: |
Mr. Tian Liuwen held the office of vice president of the Company from 26 June 2013 to 15 June 2015 and has been a Director and vice president of the Company since 16 June 2015. |
|
|
Note 3: |
representing approximately 0.000029% of the Company’s total issued shares as at 30 June 2015. |
|
|
Note 4: |
representing approximately 0.00049% of the Company’s total issued shares as at 30 June 2015. |
H Shares Appreciation Rights
In 2012, the Company implemented H shares appreciation
rights scheme for the first time. As authorised at the shareholders’ meeting of the Company, the Board authorized and confirmed
the date of grant for the first scheme was 30 November 2012 and the granting price was HK$2.67. The H share appreciation rights
granted under this scheme shall be valid for a period of 5 years from the date of grant. The lock-up period of the share appreciation
rights shall be the 24 months from the date of grant, during which no share appreciation right shall be exercised. Subject to the
satisfaction of performance appraisal indicators, incentive recipients may exercise their share appreciation rights in equal installments
within three years (36 months) after the expiration of the lock-up period (i.e. to be effective for 1/3 annually).
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
The particulars of H shares appreciation rights held
by the Company’s Directors and the senior management appointed by the Board as at 30 June 2015 were as follows:
| |
| |
| | |
Numbers | | |
| | |
| | |
| | |
| | |
| |
| |
| |
| | |
of
shares | | |
Numbers
of | | |
Numbers
of | | |
| | |
Numbers | | |
Market | |
| |
| |
Numbers | | |
appreciation | | |
Exercisable | | |
exercised | | |
| | |
of
shares | | |
price | |
| |
| |
of
shares | | |
rights | | |
Shares | | |
shares | | |
Exercise | | |
appreciation | | |
of
H shares | |
| |
| |
appreciation | | |
granted | | |
appreciation | | |
appreciation | | |
price
of | | |
rights
held | | |
as
at the | |
| |
| |
rights
held at | | |
during
the | | |
rights
during | | |
rights
during | | |
shares | | |
at
the end of | | |
end
of the | |
| |
| |
the
beginning | | |
Reporting | | |
the
Reporting | | |
the
Reporting | | |
appreciation | | |
the
Reporting | | |
Reporting | |
Name | |
Position | |
of
the year | | |
Period | | |
Period | | |
Period | | |
rights | | |
Period | | |
Period | |
| |
| |
(Ten | | |
(Ten | | |
(Ten | | |
(Ten | | |
| | |
(Ten | | |
| |
| |
| |
thousand | | |
thousand | | |
thousand | | |
thousand | | |
| | |
thousand | | |
| |
| |
| |
shares) | | |
shares) | | |
shares) | | |
shares) | | |
(HK$) | | |
shares) | | |
(HK$) | |
Liu Shaoyong | |
Chairman | |
| 33.33 | | |
| 0 | | |
| 33.33 | | |
| 0 | | |
| 2.67 | | |
| 33.33 | | |
| 6.49 | |
Ma Xulun | |
Vice Chairman, President | |
| 33.33 | | |
| 0 | | |
| 33.33 | | |
| 0 | | |
| 2.67 | | |
| 33.33 | | |
| 6.49 | |
Xu Zhao | |
Director | |
| 28.67 | | |
| 0 | | |
| 28.67 | | |
| 0 | | |
| 2.67 | | |
| 28.67 | | |
| 6.49 | |
Gu Jiadan | |
Director | |
| 28.67 | | |
| 0 | | |
| 28.67 | | |
| 0 | | |
| 2.67 | | |
| 28.67 | | |
| 6.49 | |
Li Yangmin | |
Director, Vice President | |
| 28.67 | | |
| 0 | | |
| 28.67 | | |
| 0 | | |
| 2.67 | | |
| 28.67 | | |
| 6.49 | |
Tang Bing | |
Director, Vice President | |
| 28.67 | | |
| 0 | | |
| 28.67 | | |
| 0 | | |
| 2.67 | | |
| 28.67 | | |
| 6.49 | |
Tian Liuwen | |
Vice President | |
| 23.67 | | |
| 0 | | |
| 23.67 | | |
| 0 | | |
| 2.67 | | |
| 23.67 | | |
| 6.49 | |
Wu Yongliang | |
Vice President, Chief
Financial Officer | |
| 23.67 | | |
| 0 | | |
| 23.67 | | |
| 0 | | |
| 2.67 | | |
| 23.67 | | |
| 6.49 | |
Feng Liang | |
Vice President | |
| 19 | | |
| 0 | | |
| 19 | | |
| 0 | | |
| 2.67 | | |
| 19 | | |
| 6.49 | |
Sun Youwen | |
Vice President | |
| 19 | | |
| 0 | | |
| 19 | | |
| 0 | | |
| 2.67 | | |
| 19 | | |
| 6.49 | |
Wang Jian | |
Board secretary | |
| 19 | | |
| 0 | | |
| 19 | | |
| 0 | | |
| 2.67 | | |
| 19 | | |
| 6.49 | |
For information related to shares appreciation rights
of the Company, please refer to the relevant announcements of the Company dated 27 August 2012, 19 October 2012, 9 November 2012
and 30 November 2012 which are published on the website of the Hong Kong Stock Exchange.
There was no granting or exercise of share appreciation
rights under the H shares appreciation rights of the Company during the first half of 2015.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Save as disclosed above, as at 30 June 2015, none
of the Directors, chief executive, Supervisors or members of senior management of the Company and their respective associates had
any other interest or short position in the shares, underlying shares and/or debentures (as the case may be) of the Company and/or
any of its associated corporations (within the meaning of Part XV of the SFO) which was required to be (i) notified to the Company
and the Hong Kong Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including any interest
or short position which were taken or deemed to have under such provisions of the SFO), or (ii) recorded in the register required
to be kept by the Company pursuant to section 352 of the SFO, or (iii) notified to the Company and the Hong Kong Stock Exchange
pursuant to the Model Code as set out in the Appendix 10 to the Listing Rules (which shall be deemed to apply to the Supervisors
to the same extent as it applied to the Directors for this purpose).
| 4. | Non-Public Issuance of A Shares |
On
23 April 2015, the Company held the eleventh ordinary meeting of the seventh session of the Board, which considered and passed
the relevant resolutions regarding the non-public issuance of A shares and resolved to submit to the general meeting for consideration.
In June 2015, the Company received the Guo Zi Chan Quan [2015] No.354 (國務院國資委《國資產權[2015]354
號》)
from the SASAC, in which it agreed in principle such non-public issuance of A shares of the Company. On 16 June 2015, the Company
held the 2014 annual general meeting, the 2015 first A shareholders class meeting and the 2015 first H shareholders class meeting,
which considered and passed the relevant resolutions regarding the non-public issuance of A shares. On the same date, the Company
held the fifteenth ordinary meeting of the seventh session of the Board. Pursuant to the authority granted at the general meeting,
the relevant resolutions regarding adjusting the use of proceeds of non-public issuance of A shares were considered and passed.
In July 2015, the Company received the Notice of Acceptance of Application for Administrative Approval (中國證監會《行政許可申請受理通知書》)
(No. 151777) from CSRC, accepting the application of the Company for the non-public issuance of A shares.
The Company’s non-public issuance of A shares
is subject to approval by the CSRC and shall be implemented according to the practical market conditions.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 5. | Issuance of H Shares to Delta Air Lines |
On 27 July 2015, the Company entered into a conditional
subscription agreement with Delta Air Lines, pursuant to which, Delta Air Lines agreed to subscribe for 465,910,000 newly issued
ordinary H shares of the Company in an amount of HKD3,488,895,000.
There is some uncertainty relating to the implementation
of this share subscription transaction. If the conditions precedent to the share subscription agreement cannot be satisfied, the
transaction will not proceed to completion.
The Board did not recommend a payment of any interim
dividend for the half year ended 30 June 2015.
| 7. | Purchase, Sale or Redemption of Securities |
During the first half of 2015, neither the Company
nor its subsidiaries purchased, sold or redeemed any of its listed securities (“securities”, having the meaning
ascribed thereto under Section 1 of Appendix 16 to the Listing Rules).
During the six months ended 30 June 2015, the Company
has adopted the Model Code as the securities transactions code for the Directors. Having made specific enquiries to all the Directors,
it is the Company’s understanding that the Directors have complied with the requirements as set forth in the Model Code regarding
Directors’ securities transactions.
For the six months ended 30 June 2015, the Group was
not involved in any material litigation, arbitration or claim.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
The Board has reviewed the relevant provisions and
corporate governance practices under the codes of corporate governance adopted by the Company, and is of the view that the Company’s
corporate governance practices during the six months ended 30 June 2015 met the requirements under the code provisions in the Code.
Pursuant to the latest regulations promulgated by
the CSRC, the Shanghai Stock Exchange, the Hong Kong Stock Exchange and in line with the Company’s development needs, the
Company comprehensively reviewed regulations regarding the Board and securities affairs and revised the Detailed Working Rules
of the Nominations and Remuneration Committee of the Board of Directors, Management Regulations of Connected Transactions, Regulations
on the Management of the Proceeds and the Information Disclosure Management System to effectively safeguard the standardised operation
of the Company.
To further strengthen the awareness of compliance
among the Directors, supervisors and senior management of the Company, and to enhance their understanding and application of the
relevant rules, the Company has comprehensively reviewed and implemented written monitoring rules for listed companies promulgated
by regulatory bodies including the CSRC, the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock Exchange
in the half year, as well as the latest development of the relevant laws, rules and regulations regarding the duties and responsibilities
of directors, supervisors and senior management of a listed company, and arranged training and learning sessions.
| 10. | Audit and Risk Management Committee |
The Audit and Risk Management Committee of the Company
has reviewed with the management of the Company the accounting principles and methods adopted by the Group, and has discussed with
the Board the internal controls and financial reporting issues, including a review of the consolidated results for the six months
ended 30 June 2015 prepared in accordance with IFRS.
The Audit and Risk Management Committee of the Company
has no disagreement with the accounting principles and methods adopted by the Group.
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
Cessation
Name | |
Date of Cessation | |
Reason
for Change | |
Position |
Sandy Ke-Yaw Liu | |
16 June 2015 | |
Expiry of term of office | |
Independent non- executive director |
| |
| |
| |
|
Yan Taisheng | |
16 June 2015 | |
Retirement | |
Supervisor |
Appointment
| |
Date of | |
| |
|
Name | |
Appointment | |
Reason for Change | |
Position |
Tian Liuwen | |
16 June 2015 | |
Elected at the 2014 annual general meeting | |
Director |
| |
| |
| |
|
Shao Ruiqing | |
16 June 2015 | |
Elected at the 2014 annual general meeting | |
Independent non- executive director |
| |
| |
| |
|
Xu Haihua | |
16 June 2015 | |
Elected at the second joint meeting of team leaders in 2015 of the sixth session of the employee’s representatives conference | |
Supervisor |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 12. | Change of particulars of directors or supervisors under Rule 13.51B(1) of the Listing Rules |
| |
Name of | |
Position(s) held | |
Date of | |
Date of |
Name | |
other entities | |
in other entities | |
appointment | |
cessation |
Li Yangmin | |
China Eastern Airlines Technology Application Research Center Co., Ltd. | |
Executive director | |
February 2014 | |
June 2015 |
| |
| |
| |
| |
|
Feng Jingxiong | |
China Eastern Airlines Media Co., Ltd. | |
Chairman of supervisory committee | |
June 2015 | |
— |
The Company wishes to highlight the following information:
| 1. | On 9 February 2015, the Company redeemed the 2014 first tranche of RMB4 billion 4.95% super short-term
commercial paper, which was issued on 14 May 2014. The commercial paper had a maturity of 270 days at a nominal value of RMB100
per unit. For details, please refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on
4 February 2015. |
| 2. | On 12 February 2015, the Company completed the issuance of the 2015 first tranche of RMB3 billion
4.5% super short-term commercial paper, with a maturity of 180 days at a nominal value of RMB100 per unit. For details, please
refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on 13 February 2015. |
| 3. | On 18 March 2015, the Company paid for the accrued interest from 18 March 2014 to 17 March 2015
of the first tranche of the 2012 corporate bonds which was issued on 20 March 2013 and listed on the Shanghai Stock Exchange on
22 April 2013. The first tranche of the corporate bonds are RMB4.8 billion 5.05% to 10-year fixed interest rate bonds, with an
issue price of RMB100 each. For details, please refer to the announcement disclosed by the Company on the website of Hong Kong
Stock Exchange on 10 March 2015. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 4. | On 26 March 2015, the Company completed the issuance of the 2015 second tranche of RMB3 billion
4.5% super short-term commercial paper, with a maturity of 180 days at a nominal value of RMB100 per unit. For details, please
refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on 27 March 2015. |
| 5. | On
23 April 2015, the Company held the eleventh ordinary meeting of the seventh session
of the Board, which considered and passed the relevant resolutions regarding the non-public
issuance of A shares and resolved to submit to the general meeting, the A shareholders
class meeting and the H shareholders class meeting for consideration. In June 2015, the
Company received the SASAC’s Guo Zi Chan Quan [2015] No.354 (國務院國資委《國資產權[2015]354號》),
in which it agreed in principle such non-public issuance of A shares of the Company.
On 16 June 2015, the Company held the 2014 annual general meeting, the 2015 first A Shareholders
Class Meeting and the 2015 first H Shareholders Class Meeting, which considered and passed
the relevant resolution regarding the nonpublic issuance of A shares. On the same date,
the Company held the fifteenth ordinary meeting of the seventh session of the Board.
Pursuant to the authority granted at the general meeting, the relevant resolutions regarding
adjusting the use of proceeds of nonpublic issuance of A shares were considered and passed.
In July 2015, the Company received the CSRC Notice of Acceptance of Application for Administrative
Approval (中國證監會《行政許可申請受理通知書》)(No.
151777), accepting the application of the Company for the non-public issuance of A shares.
For details, please refer to the announcements disclosed by the Company on the website
of Hong Kong Stock Exchange on 23 April, 1 June, 16 June and 2 July 2015 and the circular
similarly disclosed on 26 May 2015. |
| 6. | On 5 May 2015, the Company entered into the Aircraft Finance Lease Framework Agreement with CES
Leasing in Shanghai. The Company leased not more than 23 aircraft under finance lease from the wholly-owned subsidiaries which
CES Leasing intended to incorporate in the China (Shanghai) Pilot Free Trade Zone or the Tianjin Dongjiang Bonded Zone of the PRC.
For details, please refer to the announcement and circular disclosed by the Company on the website of Hong Kong Stock Exchange
on 5 May 2015 and 26 May 2015 respectively. |
| 7. | On 26 June 2015, the Company completed the issuance of the 2015 third tranche of RMB3 billion super
short-term commercial paper at an interest rate of 3.5% per annum, with a maturity of 270 days at a nominal value of RMB100 per
unit. For details, please refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on 26 June
2015. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 8. | On 9 July 2015, the Company entered into the aircraft purchase agreement in relation to B737 Series
Aircraft with Boeing Company in Shanghai to purchase fifty brand new B737 series aircraft from Boeing Company. For details, please
refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on 9 July 2015. |
| 9. | On 27 July 2015, the Company entered into a conditional subscription agreement with Delta Air Lines,
pursuant to which Delta Air Lines agreed to subscribe for 465,910,000 shares of the newly issued ordinary H shares of the Company
in an amount of HKD3,488,895,000. For details, please refer to the announcement disclosed by the Company on the website of Hong
Kong Stock Exchange on 27 July 2015. |
| 10. | On 11 August 2015, the Company redeemed the 2015 first tranche of RMB3 billion 4.50% super short-term
commercial paper, which was issued on 12 February 2015. The commercial papers had a maturity of 180 days at a nominal value of
RMB100 per unit. For details, please refer to the announcement disclosed by the Company on the website of Hong Kong Stock Exchange
on 4 August 2015. |
| 11. | On 14 August 2015, the Company entered into the A330 series aircraft purchase agreement with Airbus
SAS in Shanghai, regarding the purchase of fifteen brand new A330 series aircraft from Airbus SAS. For details, please refer to
the announcement disclosed by the Company on the website of Hong Kong Stock Exchange on 14 August 2015. |
China Eastern Airlines Corporation Limited
Interim Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
| 12. | The estimated transaction caps for the continuing connected transactions, which were considered
and approved by the Board and at the general meetings of the Company, and their actual amounts incurred up to 30 June 2015, are
set out as follows: |
| |
Unit: RMB thousand | |
| |
Actual amount | | |
2015 | |
| |
incurred up to | | |
transaction | |
Approved categories | |
30 June 2015 | | |
caps | |
Financial services (balance) | |
| | | |
| | |
– balance of deposit | |
| 57,077 | | |
| 6,500,000 | |
– balance of loans | |
| 73,363 | | |
| 6,500,000 | |
Catering supply services | |
| 499,939 | | |
| 1,230,000 | |
Import and export agency services | |
| 49,778 | | |
| 135,000 | |
Production and maintenance services | |
| 56,834 | | |
| 173,200 | |
Property leasing | |
| 25,025 | | |
| 125,000 | |
Property management and green maintenance | |
| 14,086 | | |
| 70,000 | |
Advertising agency services | |
| 7,606 | | |
| 60,000 | |
Hotel accommodation services | |
| 18,160 | | |
| 46,500 | |
|
By order of the Board |
|
China Eastern Airlines Corporation Limited
Liu Shaoyong |
|
Chairman |
Shanghai, the People’s Republic of China
14 August 2015
As at the date of this report, the directors
of the Company include Liu Shaoyong (Chairman), Ma Xulun (Vice Chairman, President), Xu Zhao (Director), Gu Jiadan (Director),
Li Yangmin (Director, Vice President), Tang Bing (Director, Vice President), Tian Liuwen (Director, Vice President), Ji Weidong
(Independent non-executive Director), Li Ruoshan (Independent non-executive Director), Ma Weihua (Independent non-executive Director)
and Shao Ruiqing (Independent non-executive Director).
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