CONTINUING CONNECTED TRANSACTIONS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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

(Stock Code: 00753)

CONTINUING CONNECTED TRANSACTIONS

Reference is made to the 2018 Circular in relation to the continuing connected transactions of the Company. At the 2018 EGM, the Independent Shareholders approved certain continuing connected transactions of the Company and their relevant annual caps for the three years ending 31 December 2021 which are required to be approved by the Independent Shareholders under the Shanghai Listing Rules. The Company expected certain continuing connected transactions set out in the 2018 Circular will continue to be conducted after 31 December 2021, therefore the Company will continue to comply with Chapter 14A of the Hong Kong Listing Rules for such continuing connected transactions to be conducted in the next three years (i.e. from 1 January 2022 to 31 December 2024) in accordance with the Hong Kong Listing Rules.

On 29 October 2021, the Board approved the continuing connected transactions set out in this announcement and the annual caps for each of them for the three years ending 31 December 2022, 2023 and 2024.

As each of the applicable Percentage Ratios (other than the profits ratio) of the continuing connected transactions (excluding the de minimis continuing connected transactions) set out in this announcement, on an annual basis, is higher than 0.1% and less than 5.0%, they therefore fall under Rule 14A.76(2)(a) of the Hong Kong Listing Rules. Accordingly, these continuing connected transactions are subject to the reporting, announcement and annual review requirements under Chapter 14A of the Hong Kong Listing Rules, but are exempted from the Independent Shareholders' approval requirement.

- 1 -

However, pursuant to the Shanghai Listing Rules, the Company will seek the Independent Shareholders' approval for the continuing connected transactions under the Government Charter Flight Service Framework Agreement, the Comprehensive Services Framework Agreement, the Properties Leasing Framework Agreement, the Construction Project Commissioned Management Framework Agreement and the Media Services Framework Agreement.

A circular containing, among other things, details of the continuing connected transactions set out in this announcement will be despatched to the Shareholders on or before 12 November 2021.

1. INTRODUCTION
   Reference is made to the 2018 Circular in relation to, among other things, the continuing connected transactions of the Company. At the 2018 EGM, the Independent Shareholders approved certain continuing connected transactions of the Company and their relevant annual caps for the three years ending 31 December 2021 which are required to be approved by the Independent Shareholders under the Shanghai Listing Rules. The Company expected certain continuing connected transactions set out in the 2018 Circular will continue to be conducted after 31 December 2021, therefore the Company will continue to comply with Chapter 14A of the Hong Kong Listing Rules for such continuing connected transactions to be conducted in the next three years (i.e. from 1 January 2022 to 31 December 2024) in accordance with the Hong Kong Listing Rules.
   On 29 October 2021, the Board approved the continuing connected transactions set out in this announcement and the annual caps for each of them for the three years ending 31 December 2022, 2023 and 2024.
2. PARTIES AND CONNECTED RELATIONSHIP BETWEEN THE PARTIES
   The Company, whose principal business activity is air passenger, air cargo and related services, conducts continuing connected transactions with the following parties:
3. • CNAHC
     CNAHC directly holds 40.98% of the Company's shares and holds 10.72% of the Company's shares through its wholly-owned subsidiary CNACG, and is a controlling shareholder of the Company. Therefore, CNAHC is a connected person of the Company as defined under the Hong Kong Listing Rules. As at the date of this announcement, The State-owned Assets Supervision and Administration Commission of the State Council is a controlling shareholder and de facto controller of CNAHC. CNAHC primarily operates all the state-owned assets and state-owned equity interests invested by the State in CNAHC and its invested entities, aircraft leasing and aviation equipment and facilities maintenance businesses.

- 2 -

• CNAMC
  CNAMC is a wholly-owned subsidiary of CNAHC and is therefore a connected person of the Company as defined under the Hong Kong Listing Rules. CNAMC is primarily engaged in media and advertising business.
• CNACD
  CNACD is a wholly-owned subsidiary of CNAHC and is therefore a connected person of the Company as defined under the Hong Kong Listing Rules. CNACD is primarily engaged in businesses such as entrusted asset management, real estate development and construction project implementation and supervision.

3. CONTINUING CONNECTED TRANSACTIONS

3.1. Government Charter Flight Services

The Company (as the carrier) and CNAHC (as the charterer) entered into the Government Charter Flight Service Framework Agreement on 29 October 2021.

Description of the transaction:

Pursuant to the Government Charter Flight Service Framework Agreement, CNAHC shall use the charter flight services of the Company (the "Government Charter Flight Services") for fulfilling its government charter flight assignments.

The parties agreed that the parties will determine the price for the Government Charter Flight Services through arm's length negotiations between the parties based on the cost incurred by the carrier in providing the Government Charter Flight Services adding a reasonable profit (the reasonable profit margin generally ranges from 5% to 10%). The costs include direct costs and indirect costs. The initial term of the Government Charter Flight Service Framework Agreement is from 1 January 2022 to 31 December 2024. Upon expiration of the initial term, the Government Charter Flight Service Framework Agreement may be renewed automatically for successive terms of three years each, subject to the compliance with the requirements of the Hong Kong Listing Rules/the Shanghai Listing Rules and the approval procedures required under the Hong Kong Listing Rules/the Shanghai Listing Rules. During the term of the Government Charter Flight Service Framework Agreement, either party may terminate the Government Charter Flight Service Framework Agreement on any 31 December by giving the other party at least three months' written notice.

- 3 -

Reasons for the transaction:

As the national flag carrier in China, the Company has historically provided government related charter flight services to State leaders, government delegates, national sports teams and cultural envoys. As the designated government charter flight carrier, the Company has gained significant brand recognition. Pursuant to the Government Charter Flight Service Framework Agreement, the Company may generate revenue from such transactions based upon the cost-plus charging method.

Historical amounts and proposed caps:

Set forth below is a summary of the historical annual caps, the actual amounts and the proposed annual caps for the amount payable by CNAHC for the Company's provision of the Government Charter Flight Services:

	Historical Annual Caps		Historical Actual Amounts		Proposed Annual Caps
						Unaudited
						historical	Estimated
				Actual annual	Actual annual	amount	annual amount
	Annual cap for	Annual cap for	Annual cap for	amount for the	amount for the	for the period	for the	Annual cap for	Annual cap for	Annual cap for
	the year ended	the year ended	the year ending	year ended	year ended	from 1 January	year ending	the year ending	the year ending	the year ending
	31 December	31 December	31 December	31 December	31 December	to 30 June	31 December	31 December	31 December	31 December
Transaction	2019	2020	2021	2019	2020	2021	2021	2022	2023	2024
Amount payable by CNAHC for the	RMB900 million	RMB900 million	RMB900 million	RMB487 million	RMB425 million	RMB0 million	RMB450 million	RMB900 million	RMB900 million	RMB900 million
Company's provision of the Government
Charter Flight Services

Due to the irregular and unpredictable demand for government charter flights and the sudden outbreak of the pandemic in 2020, there had been a decrease in the international charter flight business after the implementation of the "Five-One" policy for international flights by the Civil Aviation Administration, resulting in lower-than-expected revenue from the charter flight business of the Company from 2019 to 2021.

Basis for the annual caps for the next three years:

In arriving at the above annual caps, the Directors have considered the historical and expected transaction amount for the same type of transactions as set out in the table above. As China further enhances its influence in the world, and the global impact of the Covid- 19 pandemic will gradually diminish in the future, it is expected that government's overseas visits will gradually resume and continuously increase from 2022 to 2024, and the annual caps for the revenue generated from government charter flights are expected to be maintained at RMB900 million for each year from 2022 to 2024.

- 4 -

3.2. Comprehensive Services

The Company and CNAHC entered into the Comprehensive Services Framework Agreement on 29 October 2021.

Description of the transaction:

Pursuant to the Comprehensive Services Framework Agreement:

• The Group accepts CNAHC Group's appointment to provide CNAHC Group with products or services including but not limited to retiree management services, human resources services (including general, servicing and consulting services in respect of personnel employment, archival information, salaries and benefits, social insurance and employee services), information technology services, procurement services, training services, air passenger transportation agency services and in-flight supplies.
  For the relevant products or services provided by the Group to CNAHC Group, the price to be charged by the Group will be determined after arm's length negotiations between the parties on the basis of the costs of the Group adding a reasonable service fee (generally ranging from 3% to 10% of the costs) and/or with reference to the price for the same type of products or services provided by the Group to other parties under non-related(non-connected) transactions.
• CNAHC Group was appointed by the Group as the provider of ancillary production services or the administrator of supply services of the Group for which CNAHC Group shall provide the following products or services to the Group including but not limited to (provided that the provider has obtained the relevant qualifications and certifications):
• 1. on-boardcatering and food supply management services on global flights;
  2. operation and management services of office buildings;
  3. property management services in office buildings and the regions at which the office buildings are located including but not limited to Beijing, Chengdu, Chongqing, Shanghai, Hangzhou, Guangzhou, Wuhan and Hohhot; and the services of which include but not limited to cleaning services, plantation services, laundry services, parking management services, procurement and repair services, energy management and other services;
  4. support services for resident group, support services for delayed flights passengers and scenario mileage payment products;

- 5 -