DISCLOSEABLE TRANSACTION

RNS Number : 7805L

Air China Ld

30 April 2015

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Air China Limited

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTION:

FINANCIAL SERVICES AGREEMENTS

AIR CHINA FINANCIAL SERVICES AGREEMENT

Reference is made to the announcement of the Company dated 20 November 2012 and the circular of the Company dated 4 December 2012 in relation to, among other things, the continuing connected transactions entered into between the Company and CNAF in relation to the 2012 Financial Services Agreement. At the extraordinary general meeting of the Company held on 20 December 2012, the Independent Shareholders approved the 2012 Financial Services Agreement and the 2012 Annual Caps.

Reference is also made to the announcement of the Company dated 24 December 2014 in relation to the Company's acquisitions of equity interests in CNAF and the capital injection into CNAF by the Company and CNAHC.

Upon completion of the Acquisition, CNAF will become a non-wholly owned subsidiary of the Company. Since CNAHC will continue to be interested in more than 10% of its equity interest, CNAF will become a connected subsidiary of the Company as defined under Rule 14A.16 of the Listing Rules. Accordingly, the transactions contemplated under the 2012 Financial Services Agreement will continue to constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

It is expected that, after the completion of the Acquisition, the 2012 Annual Caps would not be sufficient to meet the demand of the expected increase in transaction amounts between the Group and CNAF. Pursuant to Rule 14A.54 of the Listing Rules, the Company is required to re-comply with the announcement and shareholders' approval requirements before the cap is exceeded or it proposes to renew the agreement or to effect a material change to its terms. Accordingly, on 29 April 2015, the Company (for itself and on behalf of its subsidiaries) and CNAF entered into the Air China Financial Services Agreement, pursuant to which (a) the 2012 Financial Services Agreement shall be replaced by the Air China Financial Services Agreement upon completion of the Acquisition; (b) CNAF shall provide a range of financial services to the Group for a period from the completion of the Acquisition to 31 December 2017; and (c) the annual caps in respect of the deposits to be placed by the Group with CNAF for the three years ending 31 December 2017 will be revised to the New Annual Caps.

As all of the applicable Percentage Ratios (other than the profits ratio) in respect of the New Annual Caps exceed 5.0% and the maximum annual consideration is more than HK$10,000,000, the deposit services to be provided to the Group by CNAF under the Air China Financial Services Agreement are subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

CNAHC FINANCIAL SERVICES AGREEMENT

CNAF has been providing financial services to the CNAHC Group. CNAHC is a substantial shareholder of the Company and therefore a connected person of the Company under the Listing Rules. Accordingly, the financial services provided by CNAF to the CNAHC Group will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules upon completion of the Acquisition. In light of this, on 29 April 2015, CNAF and CNAHC (for itself and on behalf of the CNAHC Group) entered into the CNAHC Financial Services Agreement, pursuant to which (a) CNAF shall provide a range of financial services to the CNAHC Group for a period from the completion of the Acquisition to 31 December 2017 and (b) the proposed annual caps for the loans and other credit services to be provided to CNAHC Group by CNAF for each of the three years ending 31 December 2017 are set.

As one or more of the applicable Percentage Ratios (other than the profits ratio) in respect of the CNAHC Annual Caps exceed 5.0% and the maximum annual consideration is more than HK$10,000,000, the loans and other credit services to be provided to CNAHC Group by CNAF under the CNAHC Financial Services Agreement are subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

GENERAL

The Company will seek Independent Shareholders' approval for the Agreements, the Non-exempt Continuing Connected Transactions and the Proposed Annual Caps.

A circular containing, among other things, (i) details of the Air China Financial Services Agreement and the CNAHC Financial Services Agreement and the Proposed Annual Caps; (ii) a letter from an independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its advice on the Non-exempt Continuing Connected Transactions contemplated thereunder and the Proposed Annual Caps; and (iii) the recommendation of the Independent Board Committee in respect of such transactions and the Proposed Annual Caps, will be despatched to Shareholders on or about 8 May 2015 in accordance with the Listing Rules.

1. INTRODUCTION

It is expected that, after the completion of the Acquisition, the 2012 Annual Caps would not be sufficient to meet the demand of the expected increase in transaction amounts between the Group and CNAF. Pursuant to Rule 14A.54 of the Listing Rules, the Company is required to re- comply with the announcement and shareholders' approval requirements before the cap is exceeded or it proposes to renew the agreement or to effect a material change to its terms. Accordingly, on 29 April 2015, the Company (for itself and on behalf of its subsidiaries) and CNAF entered into the Air China Financial Services Agreement, pursuant to which (a) the 2012 Financial Services Agreement shall be replaced by the Air China Financial Services Agreement upon completion of the Acquisition; (b) CNAF shall provide a range of financial services to the Group for a period from the completion of the Acquisition to 31 December 2017; and (c) the annual caps in respect of the deposits to be placed by the Group with CNAF for the three years ending 31 December 2017 will be revised to the New Annual Caps.

Furthermore, CNAF has been providing financial services to the CNAHC Group. CNAHC is a substantial shareholder of the Company and therefore a connected person of the Company under the Listing Rules. Accordingly, the financial services provided by CNAF to the CNAHC Group will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules upon completion of the Acquisition. In light of this, on 29 April 2015, CNAF and CNAHC (for itself and on behalf of the CNAHC Group) entered into the CNAHC Financial Services Agreement, pursuant to which (a) CNAF shall provide a range of financial services to the CNAHC Group for a period from the completion of the Acquisition to 31 December 2017 and (b) the proposed annual caps for the loans and other credit services to be provided to CNAHC Group by CNAF for each of the three years ending 31 December 2017 are set.

2. THE AIR CHINA FINANCIAL SERVICES AGREEMENT

The Company (for itself and on behalf of its subsidiaries) entered into the Air China Financial Services Agreement with CNAF on 29 April 2015.

The financial services to be provided by CNAF:

Pursuant to the Air China Financial Services Agreement, CNAF has agreed to provide the

Group with a range of financial services including the following:

a. loan and finance leasing services;

b. negotiable instrument and letter of credit services;

c. guarantee services;

d. trust loan and trust investment services;

e. underwriting services for debt issuances;

f. intermediary and consulting services;

g. settlement services;

h. internet banking services;

i. bills and payment collection services;

j. insurance agency services; and

k. other businesses approved by the CBRC, the PBOC and the SAFE to be provided by

CNAF.

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

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

Pricing basis

The interest rate applicable to the Group for deposits with CNAF shall not be lower than the minimum interest rate prescribed by the PBOC from time to time and published on PBOC's website for the same type of deposits (PBOC will also notify all relevant institutions of any updates of such interest rate in writing), and such interest rate shall not be lower than the interest rate for the same type of deposits placed by the members of CNAHC Group with CNAF, and shall not be lower than the interest rate for the same type of deposit services provided by state-owned commercial banks to the Group.

The interest rate applicable to loans (including other credit services) granted to the Group by CNAF shall be set with reference to the benchmark interest rate prescribed by the PBOC from time to time and published on PBOC's website for the same type of loans (PBOC will also notify all relevant institutions of any updates of such interest rate in writing), and such interest rate shall not be higher than the interest rate for the same type of loans granted by CNAF to the members of CNAHC Group or higher than those for the same type of loans granted by state- owned commercial banks to the Group.

Pursuant to the Air China Financial Services Agreement, the fees charged by CNAF to the Group for providing bills acceptance services, letter of credit services, guarantee services, finance leasing services, discounting services, bills and payment collection services and financial consulting services shall be in accordance with the relevant standards (if any) prescribed by the PBOC or the CBRC in respect of the same type of financial services, In addition, such fees shall not be higher than those generally charged to the Group by state-owned commercial banks and those charged by CNAF to members of the CNAHC Group for the same type of financial services.

If CNAF charges fees for the Unpaid Services and the New Financial Services during the term of the Air China Financial Services Agreement, such fees charged by CNAF to the Group shall comply with the standards stipulated by the PBOC or the CBRC for services of the same type and shall not be higher than those charged by state-owned commercial banks to the Group and those charged by CNAF to the members of CNAHC Group for the same type of financial services.

Other terms

Under the Air China Financial Services Agreement, the Company has agreed that it would accord priority to, and use the financial services provided by, CNAF if the terms and conditions offered by CNAF are similar to those offered by other service providers. CNAF has undertaken to provide financial services of the same kind to the Group under conditions no less favourable than those provided by CNAF to the members of CNAHC Group and those provided by other financial institutions to the Group.

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

The Air China Financial Services Agreement will be subject to the approval of the Independent Shareholders at the AGM, and if approved, will take effect upon the completion of the Acquisition and will expire on 31 December 2017. Upon expiry, the term of the Air China Financial Services Agreement may be renewed for three years upon written consent by both parties and entering into of a new agreement.

Reasons and benefits for the transaction:

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

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

• CNAF is able to provide safe, convenient, fast, comprehensive and personalised financial services to the Group and with its improving professionalism and financial services, CNAF is fully qualified for providing the relevant services to the Group;

• as a professional financial institution in the Group, CNAF could act more proactively in protecting the interest of the Group than external institutions;

• a good cooperative relationship has been established between CNAF and the relevant departments of the Group over the years which makes their cooperation more efficient; and

• upon completion of the Acquisition, the Company will be interested in 51% of the registered capital of CNAF and can ultimately benefit from the development of its business.

The Directors (including the independent non-executive Directors) consider that the Air China Financial Services Agreement is on normal commercial terms or better and in the ordinary and usual course of business of the Group, and the terms and conditions contained therein are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical Amounts and New Annual Caps:

Set forth below is a summary of the historical annual caps, the actual maximum amount and the New Annual Caps for the daily balance of deposits (including accrued interest) placed or to be placed by the Group with CNAF:

Historical Caps

Historical Figures

New Annual Caps

Transaction

Annual

cap for the year ended 31

December

2013

Annual

cap for the year ended 31

December

2014

Annual

cap for the year ending 31

December

2015

Actual maximum amount for the year ended 31 December

2013

Actual maximum amount for the year ended 31 December

2014

Actual maximum amount for the period from 1

January to

22 April

2015

for the year ending 31

December

2015

for the year ending 31

December

2016

for the year ending 31

December

2017

Financial Services (daily

balance of deposits)

RMB4

billion

RMB4

billion

RMB4

billion

RMB3.695

billion

RMB2.712

billion

RMB2.574

billion

RMB12

billion

RMB14

billion

RMB15

billion

Basis for the New Annual Caps:

The New Annual Caps are determined based on the following factors:

a. The estimated average daily balance of deposits placed or to be placed by the Group with CNAF for the three years ending 31 December 2017

Taking into consideration the expected business development of the Group, potential corporate financing need and the fact that the Group will fully utilize CNAF as a platform for fund management within the Group upon CNAF becoming a subsidiary of the Company, the average daily balance of deposits placed or to be placed by the Group with CNAF for each of the three years ending 31 December 2017 will be RMB3,800 million, RMB4,000 million and RMB4,300 million, respectively (without taking into account the factors set out in paragraph b below).

b. Further increase in the balance of deposits to be placed by the Group with CNAF

i. In November 2014, the PBOC issued the Notice on Matters Concerning Centralised Cross-Border RMB Fund Operation Conducted by Multinational Enterprise Groups, allowing multinational enterprises to centralise their management of RMB fund through intra-group cross-border pooling and allocation of RMB fund. The Company is currently applying to the PBOC for the qualification to carry out such operation and expects to obtain such qualification and commence such operation by the end of June. Upon becoming a subsidiary of the Company, CNAF will serve as the platform for pooling and monitoring fund within the Group, and assist the Company in strengthening its fund management and allocation. It is estimated that, under this centralized management model of cross-border RMB fund, net cash inflows of the Group may amount up to RMB5,000 million and the Group may deposit such funds with CNAF.

ii. In addition, the continued development of certain subsidiaries of the Company in recent years, including Air China Cargo Co., Ltd., Shenzhen Airlines Company Limited, Beijing Airlines Company Limited, Dalian Airlines Company Limited and Aircraft Maintenance and Engineering Corporation, resulted in increased amount of their monetary funds. As at the end of 2014, the aggregate amount of monetary funds of the abovementioned five subsidiaries of the Company was RMB2.8 billion and such amount is expected to increase gradually. Given that the annual cap for 2012 was only RMB4 billion per year, the majority of which have been utilized by the Company, the amount of the monetary funds placed with CNAF by the abovementioned five subsidiaries for previous years is insignificant. The financial services between CNAF and the Group members would be more flexible and diversified after CNAF becomes a subsidiary of the Company. It is expected that during the term of the Air China Financial Services Agreement, all of the monetary funds of the related subsidiaries will be placed with CNAF.

Based on the average daily balance of deposits placed with CNAF by the Group and taking into account the aforesaid various factors as well as the fact that daily maximum amount may be higher than the daily average balance, it is proposed that the maximum daily balance of deposit services to be provided by CNAF to the CNAHC Group under the Air China Financial Services Agreement for each of the three years ending 31 December 2017 shall be RMB12 billion, RMB14 billion and RMB15 billion, respectively.

3. THE CNAHC FINANCIAL SERVICES AGREEMENT

CNAF and CNAHC (for itself and on behalf of the CNAHC Group) entered into the CNAHC Financial Services Agreement on 29 April 2015.

The financial services to be provided by CNAF:

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

a. loan and finance leasing services;

b. negotiable instrument and letter of credit services;

c. guarantee services;

d. trust loan and trust investment services;

e. underwriting services for debt issuances;

f. intermediary and consulting services;

g. settlement services;

h. internet banking services;

i. bills and payment collection services;

j. insurance agency services; and

k. other businesses approved by the CBRC, the PBOC and the SAFE to be provided by CNAF.

The unpaid services provided by CNAF to the CNAHC Group include settlement services and financial information services ("Unpaid Services").

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

Pricing basis

The interest rate applicable to CNAHC Group's deposits with CNAF shall be determined based on arm's length negotiation by the parties subject to compliance with the requirements on the range of interest rates prescribed by the PBOC from time to time and published on the PBOC's website for the same type of deposits (PBOC will also notify all relevant institutions of any updates of such interest rate in writing).

The interest rate applicable to loans (including other credit services) granted to CNAHC Group by CNAF shall be based on arm's length negotiation by the parties by making reference to the benchmark interest rate and the range prescribed by the PBOC from time to time and published on the PBOC's website for the same type of loans (PBOC will also notify all relevant institutions of any updates of such interest rate in writing).

Pursuant to the CNAHC Financial Services Agreement, the fees charged by CNAF to the CNAHC Group for providing bills acceptance services, letter of credit services, guarantee services, finance leasing services, discounting services, bills and payment collection services and financial consulting services shall be in accordance with the relevant standards (if any) prescribed by the PBOC or the CBRC from time to time in respect of the same type of financial services. In addition, such fees shall be determined based on arm's length negotiation by the parties.

If CNAF charges fees for the Unpaid Services and the New Financial Services during the term of the CNAHC Financial Services Agreement, such fees charged by CNAF to the CNAHC Group shall be determined based on arm's length negotiation by the parties according to the relevant fee standards prescribed by the PBOC or the CBRC from time to time for services of the same type. As at the date of this announcement, CNAF has not charged CNAHC Group any fees for the Unpaid Services. The Directors are of the view that the Unpaid Services are value- added services in addition to the provision of deposit services and loan and other credit services given its insignificant amount involved as compared with that of deposit services and loan and other credit services. In addition, Air China Financial Services Agreement and CNAHC Financial Services Agreement belong to the two segments of the overall financial services provided by CNAF to the Group and CNAHC Group, therefore the terms of both agreements are basically equaled. Taking into account that CNAF has not charged the Group any fees for the Unpaid Services under the Air China Financial Services Agreement, CNAF will also not charged CNAHC Group any fees for such services. Therefore, the Directors believe that providing the Unpaid Services for CNAHC Group by CNAF pursuant to the CNAHC Financial Services Agreement without charging any fees is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Other terms

Pursuant to the CNAHC Financial Services Agreement, CNAF shall not carry out any business that is not permitted by the CBRC or any illegal activities.

The CNAHC Financial Services Agreement will be subject the approval of the Independent Shareholders at the AGM, and if approved, will take effect upon the completion of the Acquisition and will expire on 31 December 2017. Upon expiry, the term of the CNAHC Financial Services Agreement may be renewed for three years upon written consent by both parties and entering into of a new agreement.

Reasons and benefits for the transaction:

CNAF had been providing financial services to the members of the CNAHC Group prior to entering into the CNAHC Financial Services Agreement. The business with CNAHC Group had provided a steady and significant portion of CNAF's revenue in the past. Upon completion of the Acquisition, CNAF will become a non-wholly owned subsidiary of the Company. The Directors believe that it would be in the best interest of CNAF and the Group to continue the provision of financial services by CNAF to the members of CNAHC Group following the Acquisition. As CNAHC is a substantial shareholder of the Company and therefore a connected person of the Company under the Listing Rules, the financial services provided by CNAF to the CNAHC Group will constitute continuing connected transactions of the Company under Chapter

14A of the Listing Rules upon completion of the Acquisition. Therefore, CNAF and CNAHC (for itself and on behalf of the CNAHC Group) entered into the CNAHC Financial Services Agreement in accordance with the Listing Rules.

The Directors (including the independent non-executive Directors) consider that the CNAHC Financial Services Agreement is on normal commercial terms or better and in the ordinary and usual course of business of the Group, and the terms and conditions contained therein are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical Amounts and CNAHC Annual Caps:

Set forth below is a summary of the historical maximum amount and the CNAHC Annual Caps of the daily balance of loans and other credit services (including accrued interest) granted or to be granted by CNAF to the CNAHC Group:

Historical Figures

CNAHC Annual Caps

Transaction

Actual maximum amount for the year ended 31

December

2013

Actual

maximum

amount for

the year

ended 31

December

2014

Actual maximum amount for

the period from 1

January to

22 April

2015

for the year ending

December

2015

for the year ending

December

2016

for the year ending

December

2017

Financial Services (daily balance of loans and

other credit services)

RMB1.447 billion

RMB2.607 billion

RMB1.939 billion

RMB8 billion

RMB9 billion

RMB10 billion

Basis for the CNAHC Annual Caps:

The CNAHC Annual Caps are determined based on the following factors:

a. The historical maximum daily balance of loans granted by CNAF to the CNAHC Group

For the year ended 31 December 2014, the maximum daily balance of loans granted by CNAF to the CNAHC Group amounted to RMB2,600 million. From 2012 to 2014, the compound growth rate of the aggregate loans granted by CNAF to the CNAHC Group was

approximately 24%. On this basis, the maximum daily balance of loans granted by CNAF to the CNAHC Group for the three years ending 31 December 2017 are expected to be RMB3,200 million, RMB4,000 million and RMB5,000 million, respectively.

b. Further increase in the maximum daily balance of loans on top of the aforementioned balance

i. The PRC State Council has approved the construction of a new airport in Beijing and CNAHC Group will construct auxiliary facilities for the new airport during 2015 to 2017 to fulfill the Company's operational needs at the new airport in the future. During such period, CNAHC Group may require financings from CNAF for this project from time to time. For the second half of 2015, it is expected that the CNAHC Group may borrow RMB1,000 million in aggregate from CNAF for this purpose. The CNAHC Group may also require further financings from CNAF from time to time thereafter according to the progress of the development of such project and the funding requirements. Therefore, it is expected that the scale of financings required from CNAF would increase gradually.

ii. CNAHC is qualified to directly obtain debt financing. The scale of direct financing CNAHC registered with the National Association of Financial Market Institutional Investors for the three years ended 31 December 2014 was RMB7 billion, RMB8 billion and RMB8 billion, respectively. Currently, an application has been made by CNAHC for quota registration of the year of 2015. The registered quota is expected to increase, reflecting the development of China's bond market and the increased demand for internal funds of the CNAHC Group as a result of its business expansion. Such trend is expected to continue in the three years ending 31 December 2017. CNAF will act as a financing platform of the CNAHC Group by allocating and adjusting the internal financial resources among the members of the CNAHC Group with the funds raised by the CNAHC Group through direct debt financing. It is estimated that the total amount of loans to be provided by CNAF to the CNAHC Group for this purpose will increase by RMB2,000 million for each of the three years ending 31 December 2017 as compared with the corresponding data for 2014 and is expected to continue to increase.

iii. The amount of loans obtained by the CNAHC Group from institutions other than CNAF amounted to approximately RMB1,000 million in 2014. Upon obtaining sufficient funds by CNAF, it is expected that such portion of loans would be provided by CNAF after the financial resources of CNAF become sufficient.

Based on the accumulated amount of loans provided by CNAF to the CNAHC Group and taking into account the various factors as mentioned above as well as the fact that the daily maximum may be higher than the daily average, it is proposed that the maximum daily balance of loans and other credit services to be provided by CNAF to the CNAHC Group under the CNAHC Financial Services Agreement for each of the three years ending 31 December 2017 shall be RMB8 billion, RMB9 billion and RMB10 billion, respectively.

4. PARTIES AND CONNECTED RELATIONSHIP OF THE PARTIES

The Company's principal business activity is air passenger, air cargo and airline-related services.

CNAF is a company with limited liability incorporated in the PRC. As at the date of this announcement, it is a non-wholly owned subsidiary of CNAHC. CNAF is primarily engaged in providing financial services to CNAHC, its subsidiaries and associates. Upon completion of the Acquisition, CNAF will become a non-wholly owned subsidiary of the Company and since CNAHC will continue to be interested in more than 10% of its equity interest, CNAF will be a connected subsidiary of the Company as defined under Rule 14A.16 of the Listing Rules.

CNAHC is a state-owned company incorporated in the PRC with a registered capital of RMB10,027,830,000. Its registered address is Air China Plaza, 36 Xiaoyun Road, Chaoyang District, Beijing, the PRC and the legal representative is Mr. Cai Jianjiang. It is primarily engaged in managing its state-owned assets and its equity interest in investees, charter of aircrafts and maintenance of aviation equipment. CNAHC is a substantial shareholder of the Company and is therefore a connected person of the Company as defined under the Listing Rules.

5. LISTING RULES IMPLICATIONS

The Air China Financial Services Agreement

a. Deposit services

b. Loans and other credit services

The loans and other credit services to be provided to the Group by CNAF are expected to be conducted on normal commercial terms or better, and not to be secured by the assets of the Group. Therefore, such transactions will be fully exempt from the reporting, annual review, announcement and independent shareholders' approval requirements for continuing connected transactions in accordance with Rule 14A.90 of the Listing Rules.

c. Other financial services

The other financial services to be provided by CNAF (including the Unpaid Services and the New Financial Services under the Air China Financial Services Agreement) to the Group will be carried out on normal commercial terms or better and the aggregate annual fees to be paid by the Group to CNAF for such services for each of the three years ending

31 December 2015, 2016 and 2017 are expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1) of the Listing Rules. Therefore, such transactions will be fully exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under the Listing Rules.

The CNAHC Financial Services Agreement

a. Deposit services

The deposits placed by CNAHC Group with CNAF are expected to be conducted on normal commercial terms or better, and not to be secured by the assets of CNAF. Therefore, such transactions will be fully exempt from the reporting, annual review, announcement and independent shareholders' approval requirements for continuing connected transactions as provided under Rule 14A.90 of the Listing Rules.

b. Loans and other credit services

c. Other financial services

The other financial services to be provided by CNAF to the CNAHC Group (including the Unpaid Services and the New Financial Services under the CNAHC Financial Services Agreement) will be carried out on normal commercial terms or better and the aggregate annual fees to be paid by the CNAHC Group to CNAF for such services for each of the three years ending 31 December 2015, 2016 and 2017 is expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1) of the Listing Rules. Therefore, such transactions will be fully exempt from the reporting, annual review, announcement and independent shareholders' approval requirements for continuing connected transactions.

Discloseable Transactions

As one or more of the applicable Percentage Ratios in respect of the Proposed Annual Caps exceed 5% but are less than 25%, the relevant transactions contemplated under the Agreements also constitute discloseable transactions of the Company under Chapter 14 of the Listing Rules.

6. PRC LAW IMPLICATIONS

Pursuant to the Shanghai Listing Rules, the CNAHC Financial Services Agreement shall be approved or ratified by Independent Shareholders at the AGM.

7. GENERAL

The Company will seek Independent Shareholders' approval for the Agreements, the Non- exempt Continuing Connected Transactions and the Proposed Annual Caps.

The Independent Board Committee comprising all independent non-executive Directors has been set up to advise the Independent Shareholders in respect of the Non-exempt Continuing Connected Transactions contemplated under the Air China Financial Services Agreement and CNAHC Financial Services Agreement and the Proposed Annual Caps. Asian Capital (Corporate Finance) Limited has been appointed as the Independent Financial Advisor to advise the Independent Board Committee and the Independent Shareholders in this regard.

8. DEFINITIONS

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

"2012 Annual Caps"	the annual caps of the transactions contemplated under the 2012 Financial Services Agreement for each of the three years ending 31 December 2015
"2012 Financial Services Agreement"	the financial services agreement entered into between the Company (for itself and on behalf of its subsidiaries) and CNAF on 20 November 2012
"Acquisition"	the proposed acquisitions of equity interests in CNAF by the Company and the capital injection in CNAF by the Company and CNAHC as disclosed in the announcement of the Company dated 24 December 2014, which will result in the Company becoming interested in 51% of the registered capital of CNAF
"AGM"	the annual general meeting of the Company for the year 2014 to be held on 22 May 2015
"Agreements"	the Air China Financial Services Agreement and the CNAHC Financial Services Agreement
"Air China Financial Services Agreement"	the financial services agreement entered into between the Company (for itself and on behalf of its subsidiaries) and CNAF on 29 April 2015
"Board"	the board of Directors of the Company
"CBRC"	China Banking Regulatory Commission
"CNAF"	China National Aviation Finance Co., Ltd.
"CNAHC"	China National Aviation Holding Company
"CNAHC Annual Caps"	RMB8 billion, RMB9 billion and RMB10 billion, being the proposed maximum daily balance of loans and other credit services to be provided by CNAF to the CNAHC Group under the CNAHC Financial Services Agreement for each of the three years ending 31 December 2017, respectively
"CNAHC Financial Services Agreement"	the financial services agreement entered into between CNAF and CNAHC (for itself and on behalf of the CNAHC Group) on 29 April 2015
"CNAHC Group"	CNAHC, its subsidiaries and its associates (excluding the Group)
"Company"	Air China Limited, a company incorporated in the People's Republic of China, whose H shares are listed on the Hong Kong Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue, and whose A shares are listed on the Shanghai Stock Exchange
"Directors"	the directors of the Company
"Group"	the Company and its subsidiaries
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Independent Board Committee"	a board committee comprising Mr. Fu Yang, Mr. Yang Yuzhong, Mr. Pan Xiaojiang and Mr. Simon To Chi Keung, all being the independent non-executive Directors
"Independent Shareholders"	the independent shareholders of the Company
"Listing Rules"	The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"New Annual Caps"	RMB12 billion, RMB14 billion and RMB15 billion, being the proposed maximum daily balance of deposits placed or to be placed by the Group with CNAF under the Air China Financial Services Agreement for each of the three years ending 31 December 2017, respectively
"Non-exempt Continuing Connected Transactions"	the deposit services to be provided by CNAF to the Group under the Air China Financial Services Agreement and the loans and other credit services to be provided by CNAF to the CNAHC Group under the CNAHC Financial Services Agreement
"PBOC"	the Peoples' Bank of China
"Percentage Ratio"	shall have the meaning ascribed to it by the Listing Rules
"PRC"	The People's Republic of China, excluding, for the purpose of this announcement only, Hong Kong, Macau and Taiwan
"Proposed Annual Caps"	the New Annual Caps and the CNAHC Annual Caps
"RMB"	Renminbi, the lawful currency of the PRC
"SAFE"	the State Administration of Foreign Exchange of the PRC
"Shanghai Listing Rules"	the Rules Governing the Trading of Stocks on the Shanghai Stock Exchange
"Shareholders"	the shareholders of the Company

By order of the Board

Air China Limited

Rao Xinyu Tam Shuit Mui

Joint Company Secretaries

Beijing, the PRC, 29 April 2015

As at the date of this announcement, the directors of the Company are Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr. Song Zhiyong, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Yang Yuzhong*, Mr. Pan Xiaojiang* and Mr. Simon To Chi Keung*.

* Independent non-executive Director of the Company

This information is provided by RNS

The company news service from the London Stock Exchange

END

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