ANNUAL REPORT 2024

中國國際航空股份有限公司 (short name: 中國國航) (English name: Air China Limited, short name: Air China) is the only national flag carrier of China.

As the old saying goes, "Phoenix, a bird symbolizing benevolence" and "The whole world will be at peace once a phoenix reveals itself". The corporate logo of Air China is composed of an artistic phoenix figure, the Chinese characters of "中國國際航空公司" in calligraphy written by Deng Xiaoping, by whom the China's reform and opening-up blueprint was designed, and the characters of "AIR CHINA" in English. Signifying good auspices in the ancient Chinese legends, phoenix is the king of all birds. It "flies from the eastern Happy Land and travels over mountains and seas and bestows luck and happiness upon all parts of the world". Air China advocates the core spirit of phoenix which is to "serve the world, to lead and move forward to higher goals". By virtue of the immense historical heritage, Air China strives to create perfect travel experience and keep passengers safe by upholding the spirit of phoenix of being a practitioner, promoter and leader for the development of the Chinese civil aviation industry. The Company is also committed to leading the industrial development by establishing itself as a national brand, at the same time pursuing outstanding performance through innovation and excelling efforts.

Air China was listed on The Stock Exchange of Hong Kong Limited (stock code: 00753) and the London Stock Exchange (stock code: AIRC) on 15 December 2004, and was listed on the Shanghai Stock Exchange (stock code: 601111) on 18 August 2006.

Headquartered in Beijing, Air China has set up branches in Southwest China, Zhejiang, Chongqing, Tianjin, Shanghai, Hubei, Xinjiang, Guangdong, Guizhou, Tibet and Wenzhou. As at the end of the Reporting Period, the major subsidiaries of Air China are Shenzhen Airlines Company Limited (including Kunming Airlines Company Limited), Shandong Aviation Group Company Limited (including Shandong Airlines Co., Ltd.), Air Macau Company Limited, Beijing Airlines Company Limited, Dalian Airlines Company Limited, Air China Inner Mongolia Co., Ltd., Aircraft Maintenance and Engineering Corporation, Air China Import and Export Co., Ltd., Chengdu Falcon Aircraft Engineering Service Co., Ltd., Air China Shantou Industrial Development Company; and its joint ventures mainly include Sichuan Services Aero-Engine Maintenance Co., Ltd, Beijing Aero-Engine Services Co., Ltd. and GA Innovation China Co., Ltd. Moreover, the associates of Air China include Cathay Pacific Airways Limited and Tibet Airlines Co., Ltd.

With the goal of becoming "the world's leading airline", Air China remains committed to the mission of "put safety first, serve passengers with credibility, convenience, comfort and choice, maintain stable development, help employees achieve success and fulfill corporate responsibilities", advocates the values of "people-oriented, accountable, excelling efforts and enjoyable flights" and positions the brand as "professional and reliable with both international quality and Chinese temperament". The "Air China Miles" programme of Air China is the oldest frequent flier programme in China, under which all members of the frequent flier programmes of Air China family carriers have been consolidated into the brand of "Phoenix Miles".

Contents

Corporate Information

REGISTERED CHINESE NAME:

中國國際航空股份有限公司

ENGLISH NAME:

Air China Limited

REGISTERED OFFICE:

1st Floor-9th Floor 101

Building 1

30 Tianzhu Road

Shunyi District

Beijing, the PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG:

5th Floor

CNAC House

12 Tung Fai Road

Hong Kong International Airport

Hong Kong

WEBSITE:

www.airchina.com.cn

DIRECTORS:1

Mr. Ma Chongxian

Mr. Wang Mingyuan

Mr. Cui Xiaofeng

Mr. Patrick Healy

Mr. Xiao Peng

Mr. Xu Niansha*

Mr. He Yun*

Ms. Winnie Tam Wan-chi*

Mr. Gao Chunlei*

SUPERVISORS:

Mr. Xiao Jian

Mr. Wang Mingzhu

Mr. Li Shuxing

Ms. Lyu Yanfang

Ms. Guo Lina

* Independent Non-executive Directors

LEGAL REPRESENTATIVE OF THE COMPANY:

Mr. Ma Chongxian

JOINT COMPANY SECRETARIES:

Mr. Xiao Feng

Mr. Huen Ho Yin

AUTHORISED REPRESENTATIVES:

Mr. Ma Chongxian

Mr. Xiao Feng

LEGAL ADVISERS TO THE COMPANY:

DeHeng Law Offices(as to domestic laws)

Jingtian & Gongcheng LLP(as to overseas laws)

INTERNATIONAL AUDITOR:

Deloitte Touche Tohmatsu

Registered Public Interest Entity Auditors

H SHARE REGISTRAR AND TRANSFER OFFICE:

Computershare Hong Kong Investor Services Limited

Rooms 1712-1716, 17th Floor, Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

LISTING VENUES:

Hong Kong, London and Shanghai

1 For details of changes in Directors of the Company during the Reporting Period and up to the date of this annual report, please refer to page 60 of this annual report.

Chairman's Statement

2024 REVIEW

2024 marked the 75th anniversary of the founding of New China and served as a critical year for achieving the goals and tasks outlined in the "14th Five-Year Plan". Over the past year, under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we thoroughly implemented the guiding principles of the 20th National Congress of the Communist Party of China (CPC) and the Second and Third Plenary Sessions of the 20th CPC Central Committee as well as the resolutions and deployments of the CPC Central Committee and the State Council. The Group, focusing on enhancing core functions and improving core competitiveness, while upholding the Party's comprehensive leadership, insisting on deepening reforms and pursuing high-quality development, has achieved new progress in various areas, including safety, operating performance, service and reform, taking significant strides toward building a world-class enterprise.

Ensuring stringent safety management for stable and secure operations. The Group thoroughly implemented General Secretary Xi Jinping's key directives on safety production and civil aviation, taking concrete actions to ensure "Two Absolute Safeties (兩個絕對安全)". The Group formulated a dedicated safety production work plan, steadily advanced the three-year action plan for fundamental improvements in work safety and carried out comprehensive self-inspections and corrective measures for major hidden safety hazards, thus driving the dynamic elimination of hidden safety hazards. The Group continued to enhance the development of five major systems: safety management, flight training, aircraft maintenance, operation management, risk identification and hidden hazard investigation, while further strengthening the safety foundation and enhancing safety capabilities. Through meticulous production and operational coordination, the Group strengthened oversight and control over safety processes, ensuring that flight operations were dynamically aligned with support capabilities. In 2024, the Group recorded 2.95 million safe flight hours, representing a year-on-year increase of 17%, and successfully completed major aviation transport support missions, including major charter flights, the Paris Olympics, the Forum on China-Africa Cooperation, and the evacuation of Chinese nationals from Lebanon.

Focusing on enhancing development quality and continuously improving operating quality and performance. The Group made every effort to strengthen financial outcomes, achieving quantitative growth and qualitative improvements in production and operating performance. By "consolidating existing capacity and expanding incremental capacity", the Group significantly increased its effective capacity. Over the year, the Group's available seat kilometers (ASK) reached 356.1 billion, representing a year-on-year increase of 22%. The Group actively supported national diplomacy initiatives by accelerating the resumption and opening of new international routes, doubling the Group's international capacity compared to the previous year. The Group established a resource management mechanism to maximise aircraft utilization and strived to enhance aircraft operational usage efficiency, leading to a year-on-year increase in daily aircraft utilisation rates. The Group intensified marketing innovation by implementing a quarterly product release mechanism, refining its inbound

tourism product system and organising a series of campaigns celebrating the 30th anniversary of "Phoenix Miles", so as to further strengthen brand influence. Amid intensifying industry competition, the Group reinforced yield management and maintained a leading position in yield level. The Group pursued rigorous income and efficiency management and cost control, continuously expanded financing channels, and achieved notable results through refined financial management and oversight.

Fulfilling Our Mission and Responsibility to Serve the Nation's Priorities with Greater Efficacy. We fully supported the development of domestically produced civil aircraft, marking a significant milestone in the large-scale operation of such aircraft. With the C909 and C919 aircraft soaring through the skies adorned with the national flag, the Group aspired to become the world's first operator of the C929. In alignment with the national regional development strategy, the Group actively promoted the construction of hub networks, increasing capacity concentration in key markets such as Beijing-Tianjin-Hebei, Chengdu-Chongqing, Guangdong-Hong Kong-Macao and the Yangtze River Delta. The Group accelerated the development of Beijing Capital Airport and Chengdu Tianfu International Airport into international hubs, optimising network structures and improving the quality of hub operation. Continuing to strengthen its "Belt and Road" route network, the Group expanded its coverage to 29 countries and operating 65 flight routes. The Group is dedicated to rural revitalisation, with its targeted assistance efforts earning the highest rating from the SASAC for seven consecutive years. Committed to green and low-carbon development, the Group made steady progress toward achieving carbon peaking, and initiated the routine use of domestically produced sustainable aviation fuel on designated flights.

Enhancing service excellence with care and dedication. Guided by our "people-centered" development philosophy, we focused on the objectives of the "Year of Quality and Efficiency Enhancement for Civil Aviation Services", striving to deliver high-quality services that meet customer expectations. Adhering to the principles of "customer-oriented, problem-oriented and value-oriented" services, the Group concentrated resources on establishing a customer service centre and further refined its professional service management system. Key systems, such as full-process passenger service notification and in-flight meal reservation, were successfully launched, steadily advancing the digital transformation of services. The Group further improved its customer service mechanism to better understand customer needs, design and deliver tailored products, thereby promoting continuous growth in customer value.

Strengthening Party leadership and Party building to ensure new achievements in high-quality development. The Group remains committed to high-quality Party building as a cornerstone for high-quality development, fully embracing its responsibilities and missions as a national flag carrier. The Group rigorously implements the "Two Consistencies (兩個一以貫之)" approach, ensuring the comprehensive strengthening of Party leadership while enhancing corporate governance. The Group further optimised organisational structures in key areas, reinforced the development of a robust cadre talent pipeline, and continuously improved team vitality. The Group remains steadfast in advancing comprehensive and strict governance of the Party, fostering a clean and upright political environment that serves as a solid foundation for promoting high-quality development and accelerating the construction of a world-class enterprise.

As 2025 marks the final year of the "14th Five-Year Plan" and a pivotal transition to the "15th Five-Year Plan", we will uphold the fundamental principle of seeking progress while maintaining stability. The Group will continue to shoulder its political responsibility for operational safety, strengthen strategic support capabilities, and accelerate the development of new business models. By pursuing high-quality developmentand accelerating the construction of a world-class enterprise with tangible outcomes, the Group will make new and greater contributions to building a great country and advancing the grand cause of national rejuvenation!

Ma Chongxian

Chairman

Beijing, China

27 March 2025

Summary of Financial Information

(RMB'000)

Notes:

(1) EBITDA represents earnings before finance income and finance costs, exchange gains/losses, income tax, share of profits or losses of associates and joint ventures, depreciation and amortisation as computed under IFRS Accounting Standards.

(2) EBITDAR represents EBITDA before deducting lease expenses on aircraft as well as other lease expenses.

(RMB'000)

Summary of Operating Data

The following is the operating data summary of the Company, Shenzhen Airlines (including Kunming Airlines), Shandong Airlines, Air Macau, Beijing Airlines, Dalian Airlines and Air China Inner Mongolia.

Fleet Information

During the year of 2024, the Group introduced a total of 36 aircraft, including four A320 series aircraft, 19 B737 series aircraft, three C919 aircraft, nine C909 aircraft and one business jet, and phased out a total of 11 aircraft, including three A330 series aircraft, six A320 series aircraft, one B737 series aircraft and one business jet.

As at the end of 2024, the Group had a total of 930 aircraft with an average age of 9.90 years, of which the Company operated a fleet of 504 aircraft in total, with an average age of 9.60 years. The Company introduced 22 aircraft and phased out 13 aircraft.

Details of the fleet of the Group are set out in the table below:

Note: Please refer to the actual operation for the introduction and phase-out of the Group's fleet in the future.

Business Overview

SAFE OPERATION

The Group remained committed to strictly implementing the comprehensive national security concept and adhering to the political mandate of "Two Absolute Safeties (兩個絕對安全)". It made every effort to achieve the objectives of the three-year action plan for fundamentally improving work safety, with a focus on the "Year of Tackling Hidden Hazards". Rigorous investigations and rectifications of major hidden safety hazards were carried out, emphasising immediate corrective actions and ensuring the dynamic elimination of hidden hazards. The Group continued to strengthen the development of five key systems: safety management, flight training, aircraft maintenance, operation management, risk identification and hidden hazard investigation. To establish a "Holistic Safety (大安全)" framework, the Group built a long-term safety management mechanism, promoted voluntary incident reporting and advanced the digital transformation of various business systems. Meticulous oversight was applied to flight operations, ensuring smooth seasonal flight adjustments, efficient peak-season scheduling and comprehensive safety inspections. The Group successfully introduced the C919 aircraft and provided high-quality operational support, ensuring seamless dynamic alignment between flight operations and support capabilities. Strict management of dangerous goods air transport was maintained, including the successful verification of transportation licenses. The Group continued to strengthen aviation security measures and organised annual security assessments for international flight routes. It implemented targeted measures to address disruptive passenger behavior, and successfully passed the CAAC's aviation security audit.

Air China recorded over 20 million consecutive safe flight hours, and was awarded the "Two-Star Diamond Award for Flight Safety (飛行安全鑽石二星獎)" by the CAAC. The Group successfully completed a number of major aviation transport support missions, including the Spring Festival travel rush, the Two Sessions, the Paris Olympics, the Forum on China-Africa Cooperation, and the evacuation of Chinese nationals from Lebanon. During the Reporting Period, the Group recorded 2.95 million safe flight hours and safely transported 155 million passengers, maintaining an overall stable and safe operational environment on an ongoing basis.

ENHANCING OPERATING PERFORMANCE

In 2024, the global economy maintained overall growth, while China's economy showed a general recovery and improvement. The recovery process of the civil aviation market also accelerated. Seizing market opportunities, the Company focused on improving financial outcomes while ensuring safe operations. Fleet efficiency was enhanced through meticulous production planning. The Company strengthened capacity and pricing management to stabilise yield quality, enforced strict cost controls to drive efficiency and reduce expenses, and continuously improved operating quality and performance, achieving a significant year-on-year reduction in losses.

Focusing on its annual production and operational targets, the Group remained committed to increasing capacity, maintaining pricing and competing for market share. By actively improving aircraft utilisation, closely monitoring market trends and seizing opportunities, the Group achieved notable progress in enhancing financial outcomes. The Group tapped into the potential of connecting flight markets, targeted key market shares, refined base pricing, and made precise capacity allocations. The Company continuously optimised product design and refined marketing controls, enhancing product offerings such as up-selling strategies and inbound travel packages for foreign passengers to drive targeted sales. A multi-faceted approach was adopted to boost flight revenue. The Group strengthened ancillary revenue streams, implementing refined management of competitive products such as seat selection services. Upholding a customer-centric approach, the Group deepened engagement with high-value customers and launched the "Business Travel Prime Zone (商旅專區)", a one-stop service platform for corporate clients, ensuring seamless access to exclusive benefits. Furthermore, the Group amplified marketing innovation, established a quarterly product release mechanism and organising a series of campaigns to celebrate the 30th anniversary of "Phoenix Miles", further strengthening Air China's brand influence. The Group deepened the integration of passenger and cargo operations, driving year-on-year growth in passenger and cargo transportation revenue.

The Group implemented strict cost control measures in line with the requirements of "intensification, coordination and refinement". The Group optimised the matching of aircraft types and routes with market demand to manage operating costs and enhanced precision management of resource utilization efficiency to ensure effective cost control. The Group strengthened fund management, optimised its debt structure and reduced financial expenses. The Group focused on improving labor productivity at all levels and maintaining a balanced approach to labor cost management, in order to effectively expanding profitability potential.

ENHANCING SERVICE

Guided by a "people-centred" development philosophy, the Group remained focused on passenger needs, continuously upgrading service standards and quality. The Group introduced innovative service products, improved the full-process travel experience, and enhanced service delivery capabilities, driving a comprehensive upgrade in service quality.

The Group elevated its service quality, systematically enhanced service standards at all levels, laying a solid foundation for delivering high-quality service. Focusing on the travel needs of "first-time flyers", the Group pioneered the industry's first customised service for first-time passengers, offering comprehensive travel guides, ground instructions and in-flight assistance to ensure full coverage of their needs. Attention to service details was emphasized, with the introduction of the "Travel with Care" series. The in-flight Wi-Fi and Internet platforms were revamped with updated entertainment content and layouts to meet the diverse needs of passengers. The Group actively catered to passengers' needs and local culinary cultures, and launched "Light Dishes on the Clouds (雲饗輕食)", "Sky-high Seafood(萬尺鱘鮮)" and a variety of regional specialty meal sets. On the C919 aircraft, the Group unveiled Air China's exclusive, first-of-its-kind in-flight seat and cabin interior design, along with dedicated cabin announcements, in-flight entertainment programs and amenities. The Group optimised and upgraded Air China Express Routes to eight routes, strengthened collaboration across the Air China family carriers, and leveraged key resources to enhance the express route experience.

The Group optimised passenger compensation standards in irregular situations, improving the overall service experience during irregular flights. The Group refined voluntary ticket change policies, upgraded the ticket purchase protection, and continued to improve ticketing services for passengers. The Group newly introduced full-process luggage tracking services at 12 overseas terminals, enabling cross-company baggage inquiries among Air China family carriers. The Group expanded the booking permissions for five special services within the Air China family on mobile platforms, along with membership services and convenient functions, thereby enhancing passenger mobile service experience. A full-process service information notification system was launched, ensuring that passengers receive more comprehensive and accurate information. The Group introduced an in-flight meal reservation management system, enabling personalised meal selections for passengers. The Group established a service expert team, selecting 157 specialists to provide core support for future standard upgrades, quality improvements, and other service enhancement initiatives.

DIGITAL TRANSFORMATION

To comprehensively advance digital transformation, the Group optimised the organisational framework for digital transformation and enhanced its operational mechanisms. Focusing on three key business areas, namely safety operations, marketing services and management collaboration, the Group continuously improved safety performance, precision marketing capabilities, the end-to-end travel experience for passengers and the efficiency of management collaboration. In addition, the Group promoted the integration of "technology, business and management", leveraging the full potential of data to drive efficiency and enhance quality.

In terms of safety operations, the Group accelerated promotion and deepened the application of its global ground flight support platform, which enabled visualised flight monitoring and support, intelligent flight scheduling and mobile frontline operations, significantly enhancing flight ground support capabilities. The Group also expedited the development of the operation monitoring platform, optimising the process for end-to-end operational monitoring and special situation handling. In the realm of marketing services, the Group adopted a customer-centric approach, leveraging digital technology to drive innovation in marketing models, business models and service quality improvements. With the second phase of business model innovation, the Group comprehensively upgraded the user-friendliness, convenience and smoothness of its website sales and services, creating a one-stop digital air travel platform to strengthen precision marketing and diversified product management capabilities. The Group launched an in-flight meal reservation management system, offering new services to passengers. Starting in September 2024, the system undergoes trial operations on six routes, including Beijing-Sanya and Beijing-Chongqing, providing passengers with personalised services such as ordering, selecting or cancelling meals. The Group advanced the development of intelligent customer service systems to improve the efficiency of passenger services. In the area of management collaboration, the Group vigorously promoted digital transformation in human resources, financial management and internal controls, enhancing the effectiveness of internal management process.

RISK PREVENTION AND CONTROL

The Group continued to refine its integrated collaboration mechanism of "upholding the rule of law, reinforcing internal controls, preventing risks and promoting compliance". The risk prevention and control system was further improved, enabling the Group to proactively and prudently address various risks through comprehensive measures, ensuring that risks in all aspects remain controllable and within manageable limits.

The Group solidified its risk assessment mechanism, enhancing the foresight and predictability of risk forecasting. The Group conducted in-depth analysis of major operating risks on an annual basis and implemented comprehensive measures to address them. The Group improved the precision of risk quantification, and actively built a monitoring and early-warning system for material operating risks, employing tiered and rolling monitoring with closed-loop management for key risk factors. The mechanism for evaluating risks in major decision-making has been strengthened, continuously improving the quality of evaluations and proactively preventing and mitigating risks. Risk assessment was deeply integrated into corporate reforms, core tasks and major project management. The Group refined its risk prevention and control collaboration mechanism, with the Audit and Risk Management Committee (the Supervision Committee) regularly reviewing reports on risk management, internal controls and compliance. Senior management actively supervised key risk control efforts, ensuring a prudent and sound response to various risks. The Group continued to establish and improve the three lines of defense in risk control and compliance management, reinforcing the responsibility mechanism for risk prevention and control. Strict tiered and layered risk management is enforced, with risk mitigation responsibilities clearly assigned to specific roles and individuals, enhancing the Group's ability to manage risks throughout the entire process.

CORE COMPETENCE ANALYSIS DURING THE REPORTING PERIOD

Strong brand advantage

Air China positioned its brand as "professional and reliable with both international quality and Chinese temperament". By virtue of the immense historical heritage, Air China strives to create perfect travel experience and help passengers to stay safe by upholding the spirit of phoenix of being a practitioner, promoter and leader for the high-quality development of the aviation transportation industry in the PRC. While pursuing outstanding performance through innovation and excelling efforts, the Company is also committed to leading the industrial development and establishing itself as a "National Brand". By maintaining its world-class safety operation performance and leading comprehensive operating strengths in Mainland China, the Group has extensive brand recognition and excellent brand reputation.

In 2024, the Group adhered to the goal of accelerating the development into a world-class enterprise with a "distinctive brand", and concentrated its resources on establishing the Brand and Quality Management Department, which introduced new momentum into the development of the brand strengths. Actively launching brand communication, the Group planned and carried out brand activities in relation to major annual events, organized a series of activities for the inaugural flight of Air China's C919 and the participation of C919 in the 13th Macau Business Aviation Exhibition. It participated in the China Brand Fair, the China-Eurasia Expo, Zhuhai Airshow, the Western China International Fair for Investment and Trade, the China International Travel Mart, and the CATA Aviation Conference at a high level. It placed advertisements of brand image on selected channels to enhance brand awareness and brand reputation. In addition, it strengthened domestic and international social media communication, and launched in-depth brand promotion for key markets such as Europe, North America and Japan.

According to the ranking list released by the World Brand Lab, Air China ranked no. 280 in the "World's Top 500 Brands" in 2024 and no. 25 in the "China's 500 Most Valuable Brands" with a brand value of RMB259.695 billion, maintaining a leading position in the domestic aviation service industry.

Market leader of the Beijing hub

In 2024, basing itself on the domestic cycle, the Group actively promoted hub construction in a bid to implement the national regional development strategy by continuing to increase the concentration of investment in the transportation capacity in the four-pole regional clusters of Beijing-Tianjin-Hebei, Chengdu-Chongqing, Guangdong-Hong Kong-Macau and the Yangtze River Delta. The Group accelerated the hub development of Beijing Capital International Airport and Chengdu Tianfu International Airport, improved the network structure and enhanced the hub operation quality. Air China has achieved an average of 746 scheduled flights per day at Beijing Capital International Airport.

At the same time, Air China continued to focus its resources and efforts on accelerating the optimization of hub functions, enhancing the operation efficiency and quality assurance of services, constantly improving its route network. During the Reporting Period, in addition to increasing its investment, Air China meticulously developed well-established express route products and strong express route brands. It continued to develop 8 express routes between Beijing-Chengdu, Beijing-Shenzhen, Beijing-Guangzhou, Beijing-Shanghai, Beijing-Chongqing, Beijing-Hangzhou, Beijing-Xiamen and Chengdu-Shenzhen, with a total number of flights amounted to approximately 120 flights per day.

Balanced and complementary route network

In 2024, the Group proactively supported national key strategies and advanced high-standard opening-up. Adhering to the principle of "Four Maximizations" as always in the implementation of production organization, it steadily pushed forward the opening and resumption of international flights, and continuously improved the "Belt and Road" related route network layout. Focusing on the construction of route networks among Beijing-Tianjin-Hebei, the Yangtze River Delta, the Guangdong-Hong Kong-Macau Greater Bay Area and the Chengdu-Chongqing Dual-Economic Circle, the Group seized the development opportunities of core hubs and bases in the region. Furthermore, it further deepened collaboration among Air China family carriers to achieve complementary network advantages and enhance the overall core competitiveness of Air China family carriers. As of the end of Reporting Period, the Group operated 847 passenger routes, including 657 domestic routes and 190 international and regional routes, covering 45 countries and regions.

The Group continued to serve for the national "Going Global" strategy by actively promoting the resumption and launch of "Belt and Road" related routes. The number of executed "Belt and Road" related routes reached 65, involving 29 countries and 37 cities, and the number of flights exceeded that of the same period in 2019. During the Reporting Period, Air China launched seven new "Belt and Road" related routes, including Beijing-Riyadh, Beijing-Dhaka, Chengdu-Milan, Urumqi-Moscow, Urumqi-Tbilisi, Shanghai-Hanoi, and Beijing-Xi'an-Minsk. On the domestic front, serving for the national strategy of expanding domestic demand, Air China efficiently coordinated its production organization and continued to expand its effective capacity deployment in the domestic market. In 2024, its domestic available seat kilometers (ASK) grew by 49% compared to 2019.

High quality customer base

In line with the Company's strategy for hub network, the Group is positioned in the mid-to-high-end business mainstream traveler market and currently has the most valuable traveler base in China. As at the end of the Reporting Period, the number of "Phoenix Miles" members has exceeded 94.172 million, revenue contributed by frequent fliers accounted for 53% of the Company's air passenger revenue, and the total number of users of Air China APP have reached 27.58 million. As at the end of the Reporting Period, the total number of corporate customers amounted to 7,078.

MAJOR SUBSIDIARIES AND ASSOCIATES AND THEIR OPERATING RESULTS

Note: As at the end of the Reporting Period, CNACG is a wholly-owned subsidiary of CNAHC. Accordingly, CNAHC is directly and indirectly interested in 53.71% of the shares of the Company.

During the Reporting Period, the operating results of the major subsidiaries and associates of the Company were as follows:

The fleet information and operating data of the major subsidiaries and associates of the Company were as follows:

* Note: As at the end of the Reporting Period, Beijing Airlines operated a fleet of three entrusted business jets and one self-owned business jet with an average age of 9.30 years. During the Reporting Period, in terms of business charter service, Beijing Airlines completed 221 flights, representing a year-on-year decrease of 28.94%; it completed 767.32 flying hours, representing a year-on-year decrease of 29.78%; it carried a total of 2,004 passengers, representing a year-on-year decrease of 14.51%.

OVERVIEW OF CHINA'S AIR TRANSPORT INDUSTRY

In 2024, the civil aviation industry's transportation turnover reached a total of 148.52 billion tonne kilometres, 730 million passengers carried and 8.982 million tonnes of cargo and mail carried throughout the year, representing a year-on-year growth of 25%, 17.9% and 22.1% respectively, and a growth of 14.8%, 10.6% and 19.3% compared to 2019, respectively. International passenger flights increased to 6,400 flights/week, recovering to 84% of the pre-pandemic level, while international cargo and mail traffic increased by 29.3% year-on-year. With the addition of 19 new destinations in the "Belt and Road" member countries, passenger carried from China to Central Asia, Western Asia and Europe exceeded the 2019 level, with growth of 152.4%, 49.5% and 25.7%, respectively.

According to CAAC forecast, the civil aviation industry is expected to achieve a transportation turnover of 161 billion tonne kilometers, a passenger transport volume of 780 million and a cargo and mail transport volume of 9.5 million tonnes in 2025. Efforts will be made to accelerate the recovery of international flights, with the goal of restoring the number of international flights to more than 90% of the pre-pandemic level.

OPERATIONAL PLAN

The Company has identified the following key priorities for 2025: (1) to firmly establish the concept of safe development and shoulder the political responsibility for safety operations; (2) to accelerate the improvement of the quality and efficiency of core business operations, continuously enhancing profitability; (3) to continuously strengthen strategic support capabilities, uphold fundamental principles while breaking new ground, and comprehensively deepen reforms; (4) to fully enhance the passenger service experience, striving to build brand value advantage; (5) to comprehensively strengthen the Party's leadership and Party building, persistently enforce discipline, and combat corruption.

OUTLOOK

Industry Landscape and Trends

1. China's Civil Aviation Serving National Development Strategies

The civil aviation industry, as a strategic sector, consistently aligns with and serves the nation's overarching development goals. The industry is accelerating the construction of aviation hubs while enhancing air transport capabilities to drive coordinated regional economic growth. Through expanding global aviation networks, it has actively established and increased flight frequencies to countries along the Belt and Road routes, facilitating enhanced connectivity and economic cooperation. The aviation sector plays a pivotal role in technological innovation, contributing to breakthroughs in indigenous technologies such as China's domestically-developed large aircraft and advancing research and innovation in aircraft maintenance and other industry-wide technological developments. This promotes deeper integration between scientific innovation and industrial applications. To meet evolving consumer demands, the industry continues to innovate its service offerings and elevate service quality standards, thereby improving the overall travel experience for passengers. Furthermore, it is actively developing a modern integrated transportation system by steadily promoting multimodal transport solutions and expanding the aviation market's service coverage.

2. China's Civil Aviation Passenger Transport Will Return to Natural Growth

The fundamental trend of China's economy stabilizing and improving in the long term remains unchanged, and China's development is still in a period of strategic opportunity. Relying on the super-sized domestic demand market formed by a population of 1.4 billion, efforts will be made to build a new development pattern with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. The market potential is enormous, and the prospects for civil aviation demand are optimistic. In 2025, China's civil aviation will adhere to coordinating both domestic and international markets, while expanding transport scale, further enhancing the industry's profitability level.

3. Competitive Landscape of China's Aviation Market

China's aviation market is expected to experience steady growth and continuous transformation. On the demand side, with the national economy recovering and improving, the industry's development foundation will become more solid, the domestic passenger market will grow steadily, the international passenger market will recover at a faster pace, and Chinese airlines will play a more important role in the global aviation market. On the policy side, the continuous implementation of various development policies will effectively stimulate domestic demand potential, especially in boosting household consumption, which will provide demand momentum for the subsequent development of civil aviation. On the industry side, the CAAC is advancing a series of reform measures to strengthen the foundation for industry development, enhance the international competitiveness of aviation hubs, and guide domestic airlines to adopt differentiated operations, thereby reducing homogeneous competition in the civil aviation market.

Company Development Strategy

During the 14th Five-Year Plan period, the Group will adhere to the development goal of "accelerating the development into a world-class aviation transportation group with global competitiveness". The Company will focus on four strategic directions: hub network, balanced passenger-cargo development, cost leadership, and brand strategy. Efforts will be concentrated on key areas such as enhancing safety management, optimising market layout, adjusting resource structure, upgrading products and services, driving digital innovation, and promoting green and low-carbon development to advance its operations.

Safety Management Reaches New Heights. The safety management system, flight training system, aircraft maintenance system, and operational management system will be further improved. The safety control mechanism will be more robust, safety management efficiency will continue to rise, and responsibility implementation will be more clearly defined. During the 14th Five-Year Plan period, the Group will maintain a high level of safe operations.

Market Layout Optimization Gathers New Advantages. Adhering to serving national strategies and major policy decisions, the Group will optimise its base market layout under the new development paradigm of dual domestic and international circulation, highlighting strengths and key areas to gather new competitive advantages. The core network structure of the four-corner diamond and four-pole clusters will be further refined, and the network synergy within Air China family carriers will continue to deepen.

Resource Structure Adjustment Presents a New Outlook. Core resources will be better aligned with market characteristics, establishing long-term advantages in fleet development. The efficiency of flight and human resource allocation will be optimised, and the alignment of maintenance and investment layouts with core business development will be continuously strengthened.

Product and Service Upgrades Reach New Levels. The quality of products and services will be significantly improved, with service features becoming more prominent. An efficient and integrated standard system will be established, ensuring smoother full-process service support and more efficient collaboration across business segments.

Digital Innovation Development Enters a New Stage. Scientific and technological innovation management system will be improved, with innovation gradually becoming a core pillar of the Group's development. The effectiveness of innovation-driven development will be more pronounced, breakthroughs in digital transformation will be achieved, and key progress will be made in digital platform construction.

Green and Low-Carbon Development Demonstrates New Achievements. The energy conservation and environmental protection management system will operate more efficiently. Pollution and carbon reduction measures will be more effective, pollution prevention achievements will be more significant, carbon emissions and carbon asset management will become more professional, and participation in social welfare activities will be more extensive.

Management's Discussion and Analysis of Financial Position and Operating Results

The following discussion and analysis are based on the Group's consolidated financial statements and the notes thereto prepared in accordance with the IFRS Accounting Standards and are designed to assist the readers in further understanding the information provided in this report so as to better understand the financial conditions and results of operations of the Group as a whole.

REVENUE

During the Reporting Period, the Group's revenue was RMB166,699 million, representing an increase of RMB25,599 million or 18.14% as compared with last year. Among which, air traffic revenue was RMB159,203 million, representing an increase of RMB24,521 million or 18.21% as compared with last year; other operating revenue was RMB7,496 million, representing a year-on-year increase of RMB1,077 million or 16.79%.

REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS

AIR PASSENGER REVENUE

During the Reporting Period, the Group recorded an air passenger revenue of RMB151,789 million, representing an increase of RMB21,272 million over the previous year. Among the air passenger revenue, the increase of capacity contributed an increase of RMB28,373 million in the revenue, and the increase of passenger load factor led to an increase of RMB14,392 million in the revenue, while the decrease of passenger yield resulted in a decrease in revenue of RMB21,493 million. The Group's capacity, passenger load factor and yield per RPK in 2024 are as follows:

AIR PASSENGER REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS

AIR CARGO AND MAIL REVENUE

During the Reporting Period, the Group's air cargo and mail revenue was RMB7,414 million, representing an increase of RMB3,249 million as compared with last year. Among them, the increase of capacity contributed an increase of RMB1,287 million in the revenue, while the increase of cargo and mail load factor resulted in an increase in revenue of RMB1,085 million, and the increase of yield of cargo and mail resulted in an increase of RMB877 million in the revenue. The capacity, cargo and mail load factor and yield per RFTK in 2024 are as follows:

AIR CARGO AND MAIL REVENUE CONTRIBUTED BY GEOGRAPHICAL SEGMENTS

OPERATING EXPENSES

During the Reporting Period, the Group's operating expenses were RMB171,801 million, representing an increase of 17.98% from RMB145,612 million of last year. The breakdown of the operating expenses is set out below: