2016 Annual Results

Under IFRS

2

Financial data included in this presentation is prepared under IFRS.

Unless otherwise specified, the unit for cost and income is RMB million.

“Regions” or “Regional” used herein refers to Hong Kong, Macau and

Taiwan.

Transportation revenue mentioned herein includes income from co-

operational routes.

This presentation contains certain forward-looking forecast and outlook.

These opinions are based on certain assumptions, which are subject to

change. The actual results may deviate materially from the forecast.

Disclaimer

1. Industry Circumstances and Results Overview

Favorable Factors

Chinese economy maintained medium-high speed growth; optimization in industrial structure steadily promoted; proportion of consumption out of GDP further increased

State strategy such as “one road one belt”and gradual deregulation policies released industry development space

Reform of state-owned enterprises stimulates inner vitality

Paid vacation and VISA policies promoted rapid growth of consumer demand of air travelling

Further enhancement in direct sales ability and direct sales proportion reduced agency costs

Oil price remained at low level

Unfavorable Factors

As global economic growth slowed down, Chinese economy growth faced downward pressure

Geopolitics risks and violent terrorist incidents affected traffic demand

Competition in international air traffic markets was aggravated

High-speed railway route diverted air traffic

Exchange rate fluctuation caused exchange loss

Insufficient demand in overall cargo business

4

Industry Circumstances in 2016

Data Overview 2016 2015 YOY

Revenue 104,375 99,244 5.2%

Operation Profit 12,486 12,625 -1.1%

Gross margin percentage 12.0% 12.7% -0.8pt

EBITDAR 30,474 28,314 7.6%

Exchange losses 3,543 4,987 -29.0%

Income tax 1,542 624 147.1%

PBT 6,497 5,667 14.6%

Net profit (attributable to shareholders of theCompany)

4,498 4,537 -0.9%

Number of aircraft 581 535 8.6%

ATK (Million) 28,002 25,203 11.1%

Passenger Load Factor 81.2 80.5 0.7pt

Daily utilization rate (hours) 9.72 10.03 -3.1%

Person per aircraft 126 129 -2%

Cost per ATK (RMB Yuan, fuel excluded) 2.58 2.63 -1.9% 5

Results Overview

2. Marketing Performance

13.5%

0.7pt

14.5%

-6.8% -7.2%

6.3%

ASK PLF RPK RRPK (ex.

Fuel)

RRPK (fuel

included)

Revenue

(fuel

included)

Capacity Breakdown

Dome

stic

65.5%

International

30.9%

Regional

3.6%

Revenue Breakdown

Trend of PLF and Unit Revenue (fuel surcharges excluded)

YoY Changes of Major Passenger Business Indicators

7

Domes

tic

62.8%

International

34.5%

Regio

nal

2.7%

79.8%79.2% 79.6%

80.5%81.2%

0.57 0.52 0.52 0.52

0.48 0.45 0.41 0.42 0.42 0.39

77%

79%

81%

83%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2012 2013 2014 2015 2016

PLF RRPK RRSK

Passenger Business

Domestic,

62.8%International,

34.5%

Regional,

2.7%

7.0%

0.9pt

8.2%

-2.0% -2.6%

5.4%

ASK PLF RPK RRPK (ex.

fuel)

RRPK (fuel

included)

Revenue

(fuel

included)

Capacity Breakdown

YoY Changes of Major Domestic Passenger Business Indicators

Strengthened hub network construction, grasped the opportunity of new slots, and further strengthened the market share in core markets;

Supply and demand generally in balance, PLF increased slightly; affected by bottlenecks in first-tier airports, major expansion in capacity was in second-tier and third-tier cities, and yield level decreased slightly;

Adjusted route structure to deal with the influence of high-speed railway.

8

Total of Shanghai,

Kunming, Xi'an,

Beijing , 76.3%

Others, 23.7%

Domestic Passenger Business

YoY Changes of Major International Passenger Business Indicators

29.3%

15.4%

10.1%

26.5%

12.9%

5.9%

North America

Europe

Oceania

Southeast Asia

Japan

Korea

Domestic

62.8%

International

34.5%

Regional

2.7%

Speeded up building international network, launched new routes and added frequencies to Europe, America, and Oceania;

Outbound tourism brought advantage to the company, and demand of international market was strong, PLF increased slightly;

Competition in international market intensified, and the company increased the sales in transfer passengers, ticket price declined but generally in line with our expectation.

9

Capacity Breakdown

International Passenger Business

28.8%

0.5pt

29.6%

-15.6% -15.6%

9.5%

ASK PLF RPK RRPK (ex.

Fuel)

RRPK (fuel

included)

Revenue

(fuel

included)

1.9% 1.4pt3.8%

-1.1%

-5.4%

-1.9%

ASK PLF RPK RRPK (ex.

Fuel)

RRPK (fuel

included)

Revenue

(fuel

included)

YoY Changes in Major Regional Passenger Business Indicators

Hong

Kong,

50.3%

Macau,

8.6%

Taiwan,

41.1%Hong Kong

Macau

Taiwan

Domestic

62.8%

International

34.5%

Regional

2.7%

Capacity in regional market maintained stable,

and PLF rose slightly;

Made adjustment in capacity structure and

pricing mechanism according to market

demand, enhanced sales organizations and

products, intensified passenger-attraction.

10

Capacity Breakdown

Regional Passenger Business

6.8%

-3.4pt

0.2%

7.4%

-6.3% -6.1%

AFTK FLF RFTK RRFTK (ex.

Fuel)

RRFTK (fuel

included)

Cargo

Revenue

(fuel

included)

Revenue Proportion

Cargo Revenue Breakdown

YOY Changes of Major Cargo Business Indicators

11

Demand of cargo market remained weak; cargo revenue decreased

Grasped market opportunity, actively adjusted capacity; implemented passenger-cargo linkage, and enhanced transfer business; enhanced direct sales and increased operating yield

Low oil price brought advantage to cargo business

Sold the share of logistics company at a premium, concentrated on passenger business in the future

Passenger

Business

93.4%

Cargo

Business

6.6%

Freighter

52.0%

Belly

48.0%

Cargo Business

3. Operation Highlights

Optimizing fleet structure

Strengthening hub network construction

Improving key operation indicators

Improving customer experience and brand images

Expanding international business and cooperation

Promoting LCC development

Completed A-share private placement

13

*Average age of passenger aircraft is 5.4 years

300

400

500

600

2012 2013 2014 2015 2016

Major models Others

• Prop of Major Models Increased

• Ordered New Generation Wide-body Aircraft

• 20*A350-900 • 15*B787-9

Fleet End of 20152016 End of

2016In Out

Passenger Aircraft

526 72 -26 572

B777-300ER 9 7 16

A330 Series 51 51

B737 Series 211 35 -12 234

A320 Series 243 30 -8 265

B767 6 6

Regional Aircraft

6 -6 0

Freighters 9 9

Total 535 72 -26 581

Fleet status by the end of 2016

Optimizing Fleet Structure

84.1%

87.%92.6%

97.4%

96.1%

巩固枢纽建设

Strengthened market position

Further strengthened market position in Shanghai,

Kunming and Xi’an and maintained top market shares

in these markets.

Number of transfer passengers increased by 24.2% YoY

and revenue increased by 21.4%.

Beijing

Xi’an

Kunming

Shanghai

Market Shares (Passenger Turnover)

14

Shanghai-Beijing dual hub structure

As we will take new Beijing airport as our major base,

Beijing will become our second biggest strategic hub

besides Shanghai, and Beijing-Shanghai dual core hub

structure will be formed. The overall project construction

is steadily in progress.

Picture: Planning of New Beijing Airport

Hub network construction

Top 10 Domestic Markets

Top share

1Shanghai

(2 airports) √

2Beijing

(2 airports)

3 Guangzhou

4 Chengdu

5 Shenzhen

6 Kunming √7 Xi’an √8 Chongqing

9 Hangzhou

10 Xiamen

49% 46%

41.78 billionDirect sales revenue largely

increased by 47.5%, accounting for

48.7% of passenger revenue, and

increased by 13pt YOY.

2.18 billionCoverage of Preferred Seats and

multimodal transport expanded,

revenue from reformed passenger

business reached 2.18 billion, with

a YOY increase of 46%.

Direct Sale Revenue Proportion

Value-added Services Revenue

increased byExpand

E-commerce

Frequent Flyers

Frequent flyers reached 29.2

million, YoY increase of 10.7%

New users reached 13.9

million, YoY increase of 351%

13.9 million

29.20 million

Improving Key Operation Indicators

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Launched Platinum

CardLaunched “Eastern Miles”

platinum card, built exclusive

high-end service brand.

Platinum card members

reached 5 thousands by the

end of 2016.

Improve Customer Experience and Brand Images

Air-network and self-

serviceAir-network function realized in 53

long-term wide-body aircraft;

promoted self-check-in in domestic

and international terminals, and

domestic self-check-in rate reached

62%; online check-in covered 220

sites all over the world.

Enhance lounge

constructionBuilding/rebuilding 37 lounges in

13 large airports; Pudong

flagship lounge which is the

biggest lounges in domestic

airport – and Beijing, Hong

Kong alliance lounge came into

service.

Honors AwardedGolden Bauhinia’s Award for

“Best Innovative Listing Company”

for 5 consecutive years and

“Best Listed Company with

Investment Value in 13th 5 years” ;

“Best Chinese Airline” of 8th and

9th TTG ; CAPA’s aviation award

for Excellence in 2016

Expanding International Business & Cooperation

Paris

Shanghai

Sydney

Atlanta

New Shanghai- Amsterdam

New Shanghai- Prague

New Shanghai-Madrid

New Shanghai-St. Petersburg

New Shanghai-Chicago

Other Members of

SkyTeam Alliance:

London Moscow

Rome

Melbourne

Vancouver

Los Angeles

Toronto

New York

Airline network reached 1,062

destinations in 177 countries

by connecting partner of

SkyTeam Alliance.

Started joint cooperation with Qantas in

Shanghai-Sydney route, and conducted code-

sharing in other 69 routes. The two parties

shared both domestic lounges.

KLM joined the joint

cooperation of Air France and

China Eastern from 2016.7.1

Cooperation network extended to Canada,

Mexico, Southeast Asia and South America,

and code-sharing 252 routes in total.

FrankfurtSan Francisco

Hawaii

Auckland

Unit cost per seat decreased YOY by

5.5%

Proportion of direct sales revenue increased to

66%

Ancillary revenue reached approx. 90 million, with a YOY increase of

85%

Promoting LCC Transformation

Passenger Load Factor increased

6pt

Annual revenue of 4.23 billion, with a YOY increase of 7.2%

Annual net profit of 470 million,with a YOY increase of 78%

19

Cosco

Others

Ctrip

China

Air Fuel

79.8%

75.3%

2015 2016

-4.5pt

• Issued 1.33 billion shares to 4

subscribers with total proceeds

of RMB8.55 billion

• Debt-asset ratio of the Company

lowered by 4.5pt, net asset value

per share increased by 22.6%,

and the asset-debt structure

further optimized

• Ctrip subscribed for 465 million A-shares of

the Company at total price of RMB3 billion

Built the pattern of Airline-Internet

• Built new model of OOTA (online offline travel

agent) and enhance the competitiveness through

industrial chain by cooperating with Ctrip;

• Two parties centralized predominance in channels,

R&D and marketing, to conduct comprehensive

cooperation in areas of low-cost travelling, IT

service, e-commerce, etc.

Private placement completed,

introduced C-trip as strategic investor

Completed A-share Private Placement

Debt-asset ratio decreased

2.59

3.17

2015 2016

Net asset value per share

increased

+22.6%

A-share private placement completed

Unit : Rmb

4. Financial Performance

99,244

3,194

1,865

405 - 704 371

104,375

95,000

98,000

101,000

104,000

107,000

2015 Domestic

Passenger (ex. fuel

surcharges)

International and

Regional

Passenger (ex. fuel

surcharges)

Cargo (ex. fuel

surcharges)

Fuel Surcharges Other (ex. Income

from cooperative

routes)

2016

21

Revenue Change

22

Cost Items 2016 2015 YOY

Aircraft fuel 19,626 20,312 -3.4%

Take-off and landing charges 12,279 10,851 13.2%

Depreciation and amortization 12,154 10,471 16.1%

Wages, salaries and benefits 18,145 16,459 10.2%

Aircraft maintenance expenses 4,960 4,304 15.2%

Food and beverages 2,862 2,469 15.9%

Aircraft operating lease rentals 4,779 4,254 12.3%

Sales and marketing expenses 3,133 3,651 -14.2%

Indirect operating expenses 6,051 5,503 10.0%

Others 7,900 8,345 -5.3%

Total operating expenses 91,889 86,619 6.1%Total operating expenses

（fuel excluded）72,263 66,307 9.0%

Cost per ATK（RMB, fuel excluded）

2.58 2.63 -1.9%

Major Costs

23

4,537

5,131

686 -1,428

-1,683

-1,686

518

-1,677 1,444 -918

-426

4,498

1,000

4,000

7,000

10,000

2015 Revenue Aircraft fuel Take-off

and landing

Depreciation

and

amortization

Wages,

salaries

and benefits

Sales and

marketing

Other

operating

costs

Exchange Income tax Others 2016

Net Profits Change

The asset-debt ratio largely decreased

带息负债73.1%

非带息负债26.9%

Strong Operating Cash Flows

24,893

-37,180

4,634

24,325

-27,800

11,083

2016 2015

Net cash flows from operating activities

Net cash flows from investing activities

Net cash flows from financing activities

% of USD debts as of

Dec. 31, 2015

73%

% of USD debts as of

Dec. 31, 2016

45%

Prop of USD debts largely decreased

Asset Structure and Cash Flow

Interest-Bearing

Liabilities

73.6%

Non-Interest-Bearing

Liabilities

26.4%

Interest-bearing liabilities

Non-interest-bearing liabilities

Decreased28pt

79.8%

75.3%

70%

75%

80%

2015 2016

% of equity

% of total liabilities

Interest-Bearing Liabilities structure

5. Future Prospects

26

Prospects

Steady adjustment of Chinese economy structure, continuous implement of state strategies like “One Belt One Road” and rapid urban construction create favorable environment for the traffic demand of the aviation industry;

Intensified competition in domestic market due to industrial resource bottleneck, geopolitics risks will influence market demand in certain area during certain period;

Taking the chance of reform of state-owned enterprises to explore reform in mechanism and innovation in business model;

Strengthening of hub network function and the stable promotion of intra-industry and cross-industry strategic cooperation will constantly improve comprehensive competitiveness;

Continuous optimization of fleet structure, cost control and increase in direct sales ability will further reduce unit operating cost;

Disposed cargo business and concentrate on passenger business;

International oil price is expected to be remain steady;

Locking exchange rate for certain amount of USD debts to reduce the risk of exchange rate fluctuation.

Allocation of Increased Capacity in 2017

Guidance of Capacity Growth in 2017

27

Prospects - Capacity

Fleet Plan2017 Plan 2018 Plan

In Out In Out

Passenger Aircraft 73 -18 67 -15

B773 4

A330 Series 7 8 -10

B737 Series 35 -15 37 -1

A320 Series 27 -1 16

B787 4

A350 2

B767 -2 -4

Total 73 -18 67 -15

Capex(Aircraft only)

2017 2018

(100 million) 291 323.1

1%

16%

8%

10%

Regional

International

Domestic

Total

Domestic,

40.0%

Internatio

nal, 59.7%

Regional,

0.3%

DomesticInternationalRegional

Q&AIR Team

Tel : +86 21 2233 0928

+86 21 2233 0922

Email: ir@ceair.com

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