ChinaSouthernAirlinesCompanyLimited

2015 CorporateSocialResponsibilityReport

STATEMENT OF THE GENERAL MANAGER .......................................................................................4

1 . ABOUT US ....................................................................................................................................7

1.1 Corporate Profile ................................................................................................................7

1.2 Corporate Governance .......................................................................................................9

1.3 Corporate Culture............................................................................................................ 10

2. RESPONSIBILITIES ...................................................................................................................... 12

2.1 Concept of responsibility ................................................................................................. 12

2.2 Management of Responsibility........................................................................................ 12

2.3 Identification of Major Issues .......................................................................................... 13

2.4 Communication with Stakeholders ................................................................................. 16

2.5 Opportunities and Challenges ......................................................................................... 19

2.6 Planning for Social Responsibility Management ............................................................. 20

3. SAFETY ....................................................................................................................................... 21

3.1 Safety System .................................................................................................................. 21

3.2 Risk Management ............................................................................................................ 21

3.3 Safety Audit ..................................................................................................................... 22

3.4 Voluntary Safety Reporting System................................................................................. 23

3.5 Fulfilment of Safety Responsibilities ............................................................................... 24

3.6 Safety Performance ......................................................................................................... 27

4. ENVIRONMENT .......................................................................................................................... 29

4.1 Environmental Philosophy............................................................................................... 29

4.2 Environmental Policies .................................................................................................... 29

4.3 Use of Resources ............................................................................................................. 30

4.4 Harmless Processing of Waste......................................................................................... 31

4.5 Flying Green..................................................................................................................... 33

4.6 Avocation of Environmental Protection .......................................................................... 36

4.7 Active Response to Climate Change ................................................................................ 36

5. Customers and Employees ........................................................................................................ 38

5.1 Attention to Customers ................................................................................................... 38

5.2 Care for our Employees ................................................................................................... 42

5.3 Health and Safety ............................................................................................................ 49

6. Society ....................................................................................................................................... 50

6.1 Special flights ................................................................................................................... 50

6.2 Caring for People ............................................................................................................. 53

6.3 Culture and Education ..................................................................................................... 57

6.4 Caring for Children........................................................................................................... 59

6.5 Volunteers in Action ........................................................................................................ 60

7. Business Operation.................................................................................................................... 62

7.1 Economic Performance.................................................................................................... 62

7.2 Protection of Shareholders’ Rights and Equity................................................................ 62

7.3 Business Ethics................................................................................................................. 63

7.4 Risk Management ............................................................................................................ 64

7.5 Supply Chain Management.............................................................................................. 66

7.6 Serving “One-Belt, One-Road” and Promoting Economic Development ........................ 67

STATEMENT OF THE GENERAL MANAGER

2015 was final year in the “12th Five-year Plan”. The external environment was

exceptionally difficult and arduous in 2015. Nevertheless, we have upheld our

responsibilities and successfully achieved our objectives through innovating systems,

seizing opportunities and tackling the challenges. During the entire “12th Five-year Plan”

period, we have effectively improved our overall competitiveness. We are operating theworld’sfifthlargestfleetwithatotalpassengerthroughputrankedthethirdintheworld.

Wehaveachievedremarkableresultsinourreformanddevelopmentandarewellpoisedto

becomingaworld-classinternationalnetworkcarrier.Overthelastyear,wehaveseenthe

followingaccomplishments:

Intermsofsafetymanagement,weconsistentlyupheldtheprincipleofsafetyfirst,strongly

focused on the fulfilment of responsibilities; we insisted on attention to details, fully

grasped lessons learnt from unsafe events occurred internally and externally, and

constantlystrengthenedtheawarenessofregulationsandunderstandingofbottom-lines.In

addition,weperformedcomprehensiveinspectionandeliminationofsafetyhazardshence

effectively reducedsafety loopholes.Throughout theyear,wehavecompleted2.2million

flight hours; our accumulated safe flight hours has now reached 15.72 million. We also

recorded 10,166 hours of general aviation flights. We continued to hold the best safety

recordofallChinesecarriersofaconsecutive194-monthofflightsafetyand258-monthof

aviationsecuritywhilealsoensuringfiresafetyandpublichealthandsafety.

In termsofenvironmentalprotection,wepracticed thephilosophyofgreendevelopment,

continuedinourinvestmentstofleetoptimization,aircraftretrofit,routeoptimization,low-

carbon travel and theuseofnewenergy sources inorder to reduce energy consumption

andemission.In2015,weachievedatotalfuel-savingof25,000tonsandareductioninCO2

emissionof78,000tons.

Intermsofpassengerservices,anumberofunfortunateincidentsthatgainedwidepublic

attention occurred. We responded to these incidents with our utmost sincerity, and

constructedastandardserviceprocedureaiming toenhanceour servicecompetency and

qualitytospecialtasksandtopassengerswithspecialneeds.OurCustomerCareCentrewas

founded in 2015,whichhas taken over allmajor and complex customer complaints. The

totalnumberofcomplaintsreceivedin2015sawa9.3%reductionoverthefigurein2014.

In terms of care to our employees, we increased investment and efforts in perfecting

employeebenefitsandpolicyonleaveandactivelyimprovedtheworkandlivingfacilities.

WemaximizedtheeffectsoftheLaborUnionandtheCommunistYouthLeagueandcarried

outselectionofModelWorker,YouthAwardandvariousculturalandsportsactivities.We

also introduced the “Three-year Training Program for New Employees” and paid close

attentiontoretireeshencebuildingaharmoniousworkenvironment.

Intermsofbusinessoperations,weproactivelyrespondedtothechallengeofasubstantial

depreciationofRMB.Wecompletedatotalturnoverof22.48billionton-kilometer,agrowth

of13.19%;carried109millionpassengers, an increaseof8.43%over2014.Our revenue

recordedan increaseof2.91%andthetotalprofitgrewby3.26billionRMB.Atthesame

time,weexpandedthecoverageofe-commercemeetingwiththerequirementto“Increase

the share of direct-sales and reduce commission toGDS” by SASAC.Wewere the first in

discontinuingthepaymentofdomesticbasiccommissiontosalesagents,thepercentageof

direct-saleincreasedto32.3%,anadditionof13.5percentagepointoverlastyear.

In terms of fulfilment of social responsibility,we successfully completed commemorative

activities of “The 70th anniversary day of the victory of the Chinese people's war of

resistanceagainstJapaneseaggression”,andtheflightsupportsto“The60th Anniversaryof

theFoundingofXinjiangUygurAutonomousRegion”,“The50th AnniversaryoftheFounding

ofTibetAutonomousRegion”andthetwonationalconferencesoftheNPCandtheCPCC,as

well as other major operations such as the transportation of peace-keeping forces,

earthquakerescue,evacuationof overseaChinese.Thisyear,werecordedatotalnumberof

57,000hoursofvolunteerworktoover300,000people,our“Bringhappinessandwarmth

back home” program saw the participation of 3,800 volunteers and admin staff over the

past two years, accumulated to over 30,000 hours of service to 350,000 passengers and

4,500unaccompaniedminors,elderly,pregnantwomenandotherpassengerswithspecial

needs.In2015,thisprogramreceivedaGoldAwardfromthe2ndChinaYoungVolunteerServiceProgramContest.

Furthermore,inordertoenhanceourcommunicationwiththepublicandcomprehensively

understand public demand for social responsibility, we conducted large-scale surveys in

2015 collecting nearly 10,000 comments and suggestions from passengers, investors,

partners,suppliers,NGOs,governmentsandmedia.Meanwhile,wealsoheldourfirstever

PublicOpenDaytocontinuouslystrengthencommunicationwithstakeholders,increaseour

operationtransparency.

Aswehavesteppedin2016,ChinaSouthernisatanewstageofdevelopment inthefirst

yearof the “13th Five-yearPlan”.The “13th Five-yearPlan”period is thedecisive stage in

finishing building a moderately prosperous society in all respects, it is a strategic

opportunity for the transformation of China’s civil aviation industry, and also the critical

stageforChinaSouthern’stobecomeaworld-classcarrier.ChinaSouthernwilladapttothe

new situation, newchanges andnew requirements in thisnewera.Withpositive actions

and innovative spirits,wewill build ahealthy, efficient andmore competitivenewChina

Southern.AnewChinaSouthernthat iscaring,responsible,ethical,dedicated,honestand

credible;anewChinaSouthernthatisforthepeople.

ABOUTTHISREPORT

This is the 9th Social Responsibility Report of China Southern Airlines Company Limited

(the“Company”).ThisreportisfortheperiodfromJanuary1,2015 toDecember31,2015.

ThecontentofthisreportcoverstheCompanyanditssubsidiaries.Inthisreport,theuseof

"we","theCompany","ChinaSouthern"or"CSA"referstoChinaSouthernAirlinesCompany

Limited,anditswhollyownedandcontrolledsubsidiaries.

References

Thisreporthasbeenpreparedinaccordancewith thefollowing:

GuidelinesConcerningState-ownedEnterprises’FulfillingSocialResponsibilitiespublishedbytheState-ownedAssetsSupervisionandAdministrationCommission(SASAC);

Guidelines on Sustainable Development Information Disclosure for Companies Listed in theShanghaiStockExchangepublishedbytheShanghaiStockExchange;

Environmental,SocialandGovernanceReportingGuide publishedbytheHKEx,

G4Sustainability ReportingGuidelines(GRI 4.0).

Sourceofdata

Datausedinthisreportweresourcedfrominternalstatistics,documents andmaterials.The

Board of Directors of the company and all directors hereby guarantee that this report

containsno false records,misleading statementsormajoromission.Thedirectors accept

jointandseveral liabilities for the truthfulness, accuracyandcompletenessof this report.

ThisreportiscertifiedbyBureauVeritas.

Availabilityofthisreport

ThisreportispublishedinChineseandEnglish,andinprinted anddigitalformat.Ifthereis

any inconsistencyorambiguitybetween theEnglishversionand theChineseversion, the

Chineseversionshallprevail. Formoreinformationonourcorporatesocialresponsibilities,

or to view and download this report, please visit:

www.csair.com/en/about/static/shehuizerenbaogao.shtml

ThepublicationofChinaSouthern’scorporatesocialresponsibility(CSR)reportstartedin

2007. We were the first airline company in China to publish CSR report. We at China

SouthernbelievethatCSRwillhelpthegeneralpublictobetterunderstandourviewsand

actionsintheareaofcorporatesocialresponsibility,andwillpromotecommunicationand

interaction between China Southern and the wider public, which in turn will help both

China Southern and the society in materializing a harmonious win-win situation and

sustainabledevelopment.

1 . ABOUT US

China Southern was founded in 1995, and was listed in both HKEx and NYSE in 1997

followed by Shanghai Stock Exchange in 2003. Our primary business scope covers the

provision of scheduled and non-scheduled domestic, regional and international air

transportation services for passengers, freight, mail and baggage. China Southern is the

largest airline company in China in terms of fleet size, number of routes and annualpassenger throughput. China Southern is headquartered at No. 278, Jichang Road,

Guangzhou,GuangdongProvinceofP.R.China.Itsofficialwebsiteiswww.csair.com.

1.1 Corporate Profile

1.1.1Ataglance

Thecompanylogo ofChinaSouthern isabluetailembeddedwithredkapok.Itisthe first

airlineintheworldtooperateboththeBoeing787DreamlinerandtheAirbusA380. China

Southern operates over 2500 flights operated by China Southern to destinations in 38

countries and regions in the world providing close to 300,000 seats on a daily basis.

Through close cooperation with other SkyTEAM member airlines, its route network

expandsto1057 globaldestinationsconnecting179 countriesandregions.

1.1.2Visionandmission

ChinaSouthern aims tobecustomers’ firstchoiceandemployees’ favorite airlines. Itwill

continue to base in China, focus on Asia-Pacific and connect theWorld while delivering

sustainable economic values with global impact and become the airlines that is best in

China,topinAsiaandwell-knownintheWorld.

1.1.3Organizationalstructure

ChinaSouthernoperates15branchesofXinjiang,Northern,Beijing,Shenzhen,Heilongjiang,

Jilin,Dalian, Hubei,Hunan,Guangxi, Hainan,Shanghai,Xi’an,ZhuhaiHelicopterandTaiwan;

aswell as 6 controlled subsidiaries of XiamenAirlines, GuizhouAirlines, Henan Airlines,

Shantou Airlines, Zhuhai Airlines and Chongqing Airlines. In addition, 25 domestic sales

officescanbefoundinmajorChinesecitiessuchasChengdu,HangzhouandNanjing;and67

overseassalesofficeslocatedincitiesincludingNewYork,SanFrancisco,LosAngeles,Paris,

London,Amsterdam,Dubai,Sydney,Vancouver,TokyoandSeoul.

1.1.4Fleetsize

AircraftType NumberofAircraft

B787 16

B777-300ER 7

B777F 12

B77A 4

B757 17

B747F 2

B737-800 240

B737-700 50

B737-300 3

A380 5

A330-300 19

A330-200 16

A321 79

A320 128

A319 43

E190 26

Total 667

*AsofDecember31,2015

1.1.5Routenetwork

China Southern operates an extensive route network with its key hubs at Guangzhou,

Beijing, Urumqi and Chongqing. Its network development strategies focus on the

strengtheningofdomesticservices,expandingcoverageinAsiaandincreasingconnections

to Europe, America, Oceania and Africa. New routes have been added to the network in

2015. Intercontinental services including Guangzhou-San Francisco, Guangzhou-Nairobi,

Guangzhou-Wuhan-Rome and Guangzhou-Christchurch were launched; services between

Guangzhou and the Southeast Asia, Australia and New Zealandwere also optimized and

increased in their frequencies. In 2015, China Southern operates a network of over 800

passenger and freight routes that consist of 600 domestic routes, 160 international and

regionalroutes,and16 freighterroutes.Thetotalseatkilometer providedtointernational

serviceshasexceeded30% atitspeak.ChinaSouthernadded122newdomesticroutes,32

international/regionalroutesin2015.Wenowserve261destinationswith1032routes.

1.1.6Highlightsofnewintercontinental serviceslaunchedin2015

TheGuangzhou– SanFranciscoservicewasinauguratedonJune22,markingthefirstnon-

stop direct connection of south China and San Francisco. China Southern now provides

directservices to fourNorthAmericanhubsofLosAngeles,NewYork,SanFranciscoand

Vancouver. The new direct service to San Francisco is a key measure taken by China

SoutherntoupgradeitsstrategicpositioningintheNorthAmericanmarket.Withadditional

frequenciesaddedtoLosAngelesandNewYork,ChinaSouthernisnowoperating70flights

aweek to theNorthAmerica,makingGuangzhou theNo. 1 gateway fromSouthChina to

NorthAmerica.

ChinaSouthernreturnedtotheAfricanmarketonAugust5withthenon-stopGuangzhou-

Nairobiservice.Thelaunchofthisserviceisanimportant measuretorealizeofagreements

reachedbetweenChineseandAfricanleadersonimprovingaviation cooperationbetween

thetworegionsandstreamlinecross-nationalcommunications.Itisalsoakeymilestoneof

China Southern in seizing development opportunities and further strengthening its

internationalization strategy.

Two intercontinental routes of Guangzhou – Christchurch and Guangzhou – Rome via

Wuhanwere both launchedonDecember16.TheChristchurchservicebecamethefirstand

only non-stop connection to the South Island of New Zealand operated by a mainland

carrier; while the Rome service marked the first service to Italy by China Southern,

connectingthebeginning(Guangzhou)andtheend(Rome)oftheMaritimeSilkRoad.With

the launch of Rome service, China Southernnow connectswith 8 destinations in Europe

coveringmostofthetopEuropeantouristdestinations.ChinaSouthernhasalsoincreased

frequenciestoAustraliaandNewZealandofferingarecord-breaking67flightsperweek.

1.2 Corporate Governance

Sinceitsfoundation,ChinaSouthernhasstrictlyabidedbyrelevantnationalandlocallaws

andregulationsandhascontinued itseffortinimprovingthegovernancestructures.Ithas

regulatedandspecifieddutiesandobligationsfordifferentpartiesinadditiontothesetting

upofasoundinternalcontrolsystem.Thesemeasureshaveallbeenincludedincorporate

documents and regulations such as the Articles of Association, Rules of the Shareholders

Meeting,RulesoftheBoardofDirectors,and RulesoftheSupervisoryCommittee.

ChinaSouthernhasformulateditsArticlesofAssociation andcorporategovernancepolicies

based on the regulations in Hong Kong, New York and Shanghai where the Company is

listed. Its internal control regulations and practices are also in line with relevant laws,

regulationsandstandards,includingtheSarbanes-OxleyActoftheUnitedStatesofAmerica.

TheShareholdersMeetingisthehighestgoverningbodyoftheCompany;itisthedecision

makingbodyofmajor issues including the rulesofoperationsandplans for investments;

approval for profit distribution and lossmake-up proposals; election and replacement of

directors and supervisors and the determination of their remunerations; and the

amendmentstotheArticlesofAssociation.

TheBoardofDirectorsoftheCompanyanswerstotheShareholdersMeeting.Thedutiesof

the Board of Directors include the preparation of annual financial budget and account;

proposal of profit distribution and lossmake-up; decision on acquisition and disposal of

assetsandventureinvestmentprojectsasauthorizedbytheShareholdersMeeting.

Audit Committee, Remuneration and Appraisal Committee, Nomination Committee and

Strategic Decision-making Committee are operating under the Board of Directors. More

than half of the members of the aforementioned committees are independent and non-

executive directors. Particularly, the Audit Committee is composed entirely of non-

executive directors. All committees under the Board of Directors are established and

operatedinfullcompliancewiththeirgoverningrulesandregulations.

The Supervisory Committee is formed by representatives of the shareholders and the

employees. Representatives of the shareholders are elected and recalled by the

Shareholders Meeting; representatives of the employees are elected by the employees

democratically.

1.3 Corporate Culture

China Southern started building corporate culture in the beginning of the 1990s. On the

basis of the shared wisdom and values of all members of China Southern, in 2008, we

defined our core values. Our core corporate values consists of five elements, these are:

Customer First, Respecting Talents, Striving for Excellence; Continuous Innovation and

ReturntoSociety.Ourmissionof“LetChinaSouthernbecomecustomers’ firstchoiceand

employees’ favorite” isalsoembeddedinsuchvalues.TheChinaSouthern cultureiscreated

as theconceptualsupport to thecompany’sstrategic transformationand improvementof

its overall level of management. Our corporate culture enhances the solidarity of our

colleagueswhile fostering aharmoniouswork environment. It is the reflectionof today’s

accomplishmentandanexpressionofdriving force, andalsomirrors thedirectionofour

developmentintothefuture.

1.4.1 KeyBusinessPerformancein2015

Keyperformances

In2015,ChinaSouthernoperated2.2millionsafe flighthours,an increaseof8.91%over

last year andmaintained 258 consecutivemonths of aviation security.We carried nearly

110million passengers in year 2015, a growth of 8.43%, aswell as 1.51million tons of

freight and mail, a growth of 5.46%. Our total turnover has reached 22.39 billion ton-

kilometer,achievinganincreaseof13.19%.

Mainawards

“Cross-straitEnterprisewithOutstandingContributionAward”

“FastestGrowingBusinessAward”bytheChineseChamberofCommerceofNewZealand

“CharityStarChart•BestPracticeinCharitableActivitiesofPublicListedCompanies”

Thefirst“ExcellenceinHumanCare”awardinGuangdongProvince

Airbus“A330TopOperationalExcellenceAward”

“OutstandingAirlinesofAsia”byNowTravelAsia

ThemostprestigiousawardsinChina’slogisticssector,the“GoldFlyingHorseAward”and“Top100BrandValueofLogisticsEnterprises”

The “Bring happiness andwarmth back home” program received aGoldAward from the2ndChinaYoungVolunteerServiceProgramContest

First Prize in the National Contest of Innovation and Modernization in Management of

TransportationEnterprises

ChinaSouthernhadgainedrapiddevelopmentduringthe12th “Five-yearPlan”periodfrom

2010to2015.Overthepast5years,thekeyindicatorsofpassengerthroughput,freightand

mailthroughputandtotalturnoverhadincreasedfrom76.46million,1.12milliontonsand

13.1billionton-kilometerto109million,1.51milliontonsand24.2billionton-kilometer,an

averageyearlygrowthof7.4%,6.2%and11.3%.Ourfleetsizehadgrownfrom413to667

becomingthefifthlargestfleetintheworld.Numberofwidebodyaircraftgrewfrom30to

67,becomingthesecondlargestwidebodyfleetinChina.

Firstly,ChinaSouthernpersisted intheprincipleof“SafetyFirst”.Ourflightcrewhadgrown

from4,080to7,465from2010to2015;weintroducedaseriesofinnovativeconceptsand

technologies and became the first airline in China to achieve an accumulated safe flight

hoursof15million.

Secondly,wepersisted instrategic transformation.Wecontinuedtoexplore,practiceand

perfect strategic transformation; our “Canton Route” was created from scratch and has

evolved from a mere concept to being rather well-known. Our international transfer

passengernumbergrewby187%.Wearecontinuingourinternationalizationprocessona

paththatwascreatedbyus.

Thirdly,wepersistedinreformandinnovation.ChinaSouthernsawreformandinnovation

asthepowerhousetoouroperation,andstrivedtobuildourowncompetitiveadvantage.Theimplementationsofoverallbudgetmanagement,adaptationofnewITtechnologyand

raisingstandardsinservicelevelhelpedusinupliftingouroverallcapability.

Fourthly,we persisted in putting people first.Weupheld the principle of reliance to our

employees and returning to our employees while consolidating synergies across the

company.Wealsoattachedgreat importance tocustomerfirstandconstantlyprioritizing

socialvalues,creatingatime-honoredbrand.

2. RESPONSIBILITIES

Through continuous exploration and refinement,we have integrated themanagement of

social responsibilitywithourwiderbusinessstrategies, corporatecultureandday-to-day

operations.We strive to engagewith our stakeholders responsibly, continue to drive the

harmonious development between the corporate and the society, as well as the

environment.Wealsoendeavortomaximizesocialvaluewithasustainabledevelopment.

2.1 Concept of responsibility

China Southern has been consolidating social responsibility with corporate strategy,

constructing a social responsibility conceptual framework that is based on delivering

economic benefits for shareholders; creating social values for the society; delivering

services for customers; creating opportunities for employees; and flying green for the

environment.

As aproudmemberofSkyTEAM,ChinaSouthernalongwithothermember airlineshave

draftedaCorporateSocialResponsibilityStatement.ThisstatementsetsouttheSkyTEAMcommitments. China Southern as part of the alliance is committed to ensuring that our

developmentaimsforhighperformancenotonlyfromafinancialstandpoint,butalsofrom

asocialandenvironmentalperspective.Formoreinformationonthestatement,please visit:

http://www.skyteam.com/en/About-us/People-and-planet/

As the foundation to the fulfilment of social responsibility, China Southern perseveres in

complyingwith the business ethics of lawful employment, lawful operation, honesty and

faithfulness, adhesion topublicly recognizedbusiness codeof conduct and the respect to

businesscredibility.Asamainrepresentationoffulfillingoursocialresponsibility,weare

persistently building a harmonious and mutually beneficial relationship with our

communities.As akeytargetofsocialresponsibility,westrivetoreduceourimpacttothe

environment, and are participating in the global attempt to resolve the dilemma of

environmentanddevelopment.

2.2 Management of Responsibility

China Southern attaches great importance to themanagement of social responsibility. A

completeframeworkofcorporatesocialresponsibility(CSR)managementthattallieswith

ChinaSouthern’sobjectiveshasbeenestablished.ThisframeworkcontainsconceptofCSR,

CSR strategies, annual plan, projects implementation, audit and assessment. CSR overall

planninghasbeenincludedinthedrawingofChinaSouthern’sfive-yearplan,andisbeing

reviewedandadjustedinthethree-yeardynamicplan.TheCSRannualplanningisreflected

in theannualassignmentsofvarious functionssuchas safety, service,salesandmarking,

and operations, and is assessed by the audit office at the end of each year. The

establishment of our CSR management framework is key to improving the level of CSR

managementandtherealizationofCSRstrategicgoals.

Strategies ofresponsibilities:

Ensuresafeflightoperation;improveoperationalquality

Reinforceenvironmentalprotection;achievesustainabledevelopment

Enhancesocialharmony;increasecorporatevalue

Plans ofresponsibilities:

Drawingofannualplan;Specificationofobjectives;Clarificationofresponsiblebodies

ProjectImplementation:

Reductioninenergyconsumptionandemission;Reductionincostandincreaseofefficiency;

Strategic cooperation; Stable business operation; Technology innovation; Service

improvement;Caringfortheemployees;Charityandsocialwork.

Performanceassessment:

Post-factum assessment; End-of-year assessment; Results feedback; “Carrot-and-Stick”

measures

2.3 Identification of Major Issues

InaccordancewiththerequirementsstipulatedinGRI4.0Sustainability ReportingGuidelines,

(hereafterreferstoasG4)andESGofHKEx,ChinaSouthernforthefirsttimeinitiatedthe

practice of identification of major issues. In conjunction with the characteristics of the

industryandourownsituation,wehaveidentifiedasetofissuesthataremostrelatedto

ourbusinessoperationsandthosethathave,ormaypotentiallyhavegreatimpactstoour

stakeholders as key points in our fulfilment of responsibilities and communication with

stakeholders.

2.3.1Identifyingrelevantissues

Inconnectionwithourscopeofbusiness,wehaveconsolidatedthe46CSRissuesraisedin

theguidelinesofG4.Wehavealsoaddedanumberof issuesthatarenotrequiredbythe

guidelinebutarecloselyrelatedtothedevelopmentofChinaSouthern.Atotalnumberof34

CSR issues in 4 main categories have been identified as the foundation of analysis and

discussion.

2.3.2Methodsofidentification

Accordingtointernationalpractice,theidentificationofmajorissuesistobeexpandedon

two dimension of “Stakeholders” and “Corporate businesses”. China Southern realized

major issue analysis through communications with stakeholders and management

workshops.Ourcommunicationswithstakeholdersstartedprimarilyfromthepointofview

ofourstakeholdersevaluatingthelevelofsignificanceofeachCSRissue;themanagement

workshops started from the point of view of business operation evaluation the level of

significanceofthesamesetofCSRissues.

Communicationwithstakeholders

ThestakeholdersofChinaSouthernincludeinvestors,government,customers,employees,

industry associations, partners, community, specialists, media and other players in the

industry. Improving communication with stakeholders and promoting participation of

stakeholders is a critical aspect of managing corporate social responsibility. Through

quantitative and qualitative analyses, China Southern attempted to find out how our

stakeholders understand and evaluate the performance of China Southern on corporate

social responsibility. The results of communicationswill help China Southern to list CSR

issuesofdifferentcategoryintheorderofsignificance.

In2015,ChinaSouthernconductedresearchbyquestionnaire surveys,groupdiscussions

andone-to-oneinterviewtounderstandtheviewsandevaluationsofstakeholdersonCSR

issues.

Means ofcommunication andtotal number ofparticipants

Category ofstakeholders

Remarkonnumberofparticipants

QuestionnairesurveyValidresponses:7,834

All 459internalrespondents;7,375externalrespondents

Groupdiscussion22participants

Internal 10

External 12

One-to-oneinterview11interviewees

Government 1

Industryassociation

2

Partner 2

Other players intheindustry

1

Specialist 1

Supplier 1

Institutionalinvestor

1

Community 2

Managementworkshops

ChinaSouthernheldmanagementworkshopswith16seniormanagersof ChinaSouthern

withthesubjectoflevelofsignificanceofCSRissues.These16seniormanagerscamefrom

different divisions with different business sectors and have provided us with their

evaluationonthesignificanceofCSRissues.

2.3.3Resultsofsignificanceanalyses

Theresultsareshowninthematrixbelow.“Levelofsignificancetobusiness”and“Levelof

significance to stakeholders” are plotted on x-axis and y-axis respectively. When the

indicators appear in the same quadrant, a Matrix for Significance Analysis is created.

Throughourinvestigation,25CSRissuesareofgreatimportancetoChinaSouthern,which

means China Southern shouldmonitor andmanage such issueswhile disclosing relevant

information.

ListofcorporatesocialresponsibilitymajorissuesofChinaSouthern

Category Issues

Overallbusinessoperation 1.Compliancetolawandregulations

2. Establishment of a mechanism for appeals ofcorporatesocialresponsibilityrelatedissues

Economical 4. Continuation in the improvement of economicperformanceandfinanceperformance7. Establishment of an appropriate procurementprocessandfinerelationshipwithsuppliers

Social Productresponsibility

8.Reductioninflightdelay

9.Assuranceofpassengerhealthandsafety10.Attentionofpassengersatisfactionrate

11.Appropriatenessinmarketingandpromotion

12.Protectionofpassengerprivacy

13.Optimizationinpassengerexperience

15.Anti-corruptionLabor anddignity atwork

17. Establishment of a complete internalcommunication system ensuring a smoothcommunicationchannelbetweenmanagementandalllevelsofemployees

18 Protection of employee health and safety atwork

19Supporttoemployeetrainingandeducation

20Ensuringmulti-backgroundofemployees,equalopportunityandequalpayforequalwork

21 Attention to employee remuneration andbenefits

Labor relatedhuman right

22Investmenttoincreaseemployees’rights

23Nodiscrimination

issues 24Nochildlaborandforcelabor

Environmental 27 Attention to amount of resource used and theuseofrecyclablematerials

28Increaseinenergyefficiency

29Reductioninwaterconsumption

31Controlgreenhousegasemission32Attention to safe sewage treatment andwastedisposal

33 Sufficiency in the resources invested toenvironmentalprotection

34 Assistance to airports and authorities in thereductionofaircraftnoisepollution

Missingthematrix

Our stakeholders perceived that most even all of the CSR issues are of “significant” or

“highly significant” categories. Inwhich, “Compliance to law and regulation” received thehighest evaluation of significance in the categories of overall business operation and

economic issues; “Passengerhealthandsafety”and “Employeehealthand safety”are the

twomostsignificantindicatorsunderlaborrelatedissues.Intermsofenvironmentalissues,

carbonemission,energyuseandmaterialrelatedissuesareofgreatersignificance.Wewill

givethisissues particularattentioninthefollowingsections.

2.4 Communication with Stakeholders

Havingastable,openandtransparentcommunicationmechanismwithourstakeholdersis

animportantmeansinChinaSouthern’simplementationofCSRandthepromotionofCSR

awareness.The aviation industryhasnumerous stakeholders, in communicatingwith the

stakeholders, China Southern not only benefit the others through our own act of

responsibility,butalsowishestoextentthephilosophyofsocialresponsibilitygloballyby

influencingmoreenterprisesandindividuals.

[LINK]:ChinaSouthernPublicOpenDay

China Southern held Public Open Day in 2015 to improve communication with our

stakeholdersandincreasetransparencyofourbusinessoperations.

OnDecember29,more than60residentrepresentativesandjournalistsfromnationaland

provincialmainstreammedia visited China Southern on the PublicOpenDay. Theywere

introducedwithdetailofoperationsupport,flightcrewtraining,productandservices.They

werealso invitedtovisithowaflightwasoperatedandjoinedapre-flightbriefingwiththe

flightcrew.Somerepresentativeshavealsoexperiencedon-boardfirst-aidandemergency

evacuationtrainings.Suchactivityhasdeepenedunderstandingbetweenthegeneralpublic

andChinaSouthern.Inthefuture,ChinaSouthernwillorganizeregularOpenDayactivitiesandinvitemorepeopletovisitChinaSouthernandtounderstandCNS.

Stakeholder Concerns ExpectationsMeans ofcommunication

Maintasksin2015

Investors Protection ofshareholders’benefits;

Operationresults;

Corporategovernance;

Strategicplanning

Acontinuousandstable return oninvestment;

Healthycorporategovernancestructure;

Completeinformationdisclosuresystem;

Risk preventionsystem

Regular reportsandannouncements;

General meeting ofshareholders;

Meetings of BoardofDirectors;

Meetings ofSupervisoryBoard

Releasedannualandquarterly resultsreports;

Held Meetings ofBoard of Directorsand Meetings ofSupervisoryBoard

Government Facilitation oflocal economicdevelopment;

Provisionofjobopportunities;

Environmentalprotection

Legaloperation;

Increase in taxcollection;

Increase inemployment;

Energy savingand emissionreduction;

Cleanoperation

Specialreports;

Visits andinvestigations;

Projectcooperation;

Workingmeeting;

Statisticalreports

Participated in the2015 ChinaInternationalTourism Expoorganized by thePeople’sGovernment ofGuangdongprovinceand supported byGuangdong BureauofTourism

Customers Flightsafety;

Servicequality;

Productprice;

Communicationchannels andeffects

Continuoussafety;

Qualityservice;

Reasonableprice;

Quick andattentiveresponse tocustomercomplaints andsuggestions

Chain-of-contactservice;

Customerfeedback;

Customer relationmanagement;

Onlineservice

EstablishedCustomer CareCentre realizing anintegratedcollection, trackingand responsesystem ofcomplaints to alldivisions

Employees Humanresourcepolicy;

Careerpath;

Protection ofemployees’rights;

Participation tocorporateoperation

Effectivecommunications;

Improvetraining;

Improveemployeebenefits;

Open, fair andhealthy humanresourcepolicy

EmployeeRepresentativesGeneralMeeting;

LaborUnion;

Suggestion, forum,letterbox;

Training

IntroducedProfessionalDedication Surveyacross flightattendants and airmarshals;

Implemented 7,503training projects to300,000participants;

70% trainingcoveragerate

Suppliers Credibility;

Competency

Ethicaloperation;

Mutualbenefit;

Co-development

Businessnegotiations;

Meetings anddiscussion ofcontracts,agreements,trainings andtechnologies

China Southernsenior managementkept closeinteraction andcommunicationwithprimary supplierssuch as Boeing andAirbus

Financialinstitutes

Credibility;

Developmentprospects;

Financialstatus;

Performance ofkeyindicators

Enhance debt-repaymentability;

Reducerisk

Contractnegotiations;

Business meetingsanddiscussions

Launched mileageaccrual cooperationwith SociétéGénérale andAgriculturalBankofChina

Community Harmoniouscommunity;

Environmentalprotection;

Sharing ofdevelopmentgains

Establishment ofa communicationand interactionmechanism;

Increase input tocharity

“10-Fen” CareFoundation;

Charitableactivities;

Volunteerworks

Built readingcornersandreadingrooms for studentsofremoteareasandresidents withspecial needs underthe “Bookcase ofDreams”projects

Specialists Managementprocesses;

Regulationsandstandards;

Handbooksandprocedures

Completeinternalprocedures;

Increaseresistance toexternalrisk

Communications,interviews andvisits

Invited industryspecialists todiscuss flighttechnique,maintenance andengineering, carbontrading and othertopics

Media Corporatesocialresponsibility;

Environmentalprotection;

Brandimage

Establishment ofinformationdisclosurechannels;

Timelyexpression of thevoice of ChinaSouthern

Press conferenceand journalistforum

Held various pressconference atinauguralflights;

Invited US PressRepresentatives tovisitChinaSouthern

Otherplayers intheindustry

Faircompetition;

Industryprospects;

Innovation indevelopment

Faircompetition;

Friendlycooperation;

Healthy andharmoniousindustrydevelopment

Forum andconferences;

Communications

China Southern,XiamenAirlinesandKLM signed theAgreement ofDeepening inAllianceCooperationinShanghai

2.5 Opportunities and Challenges

Nowadays,thedevelopmentofCSRisintensifyingandareshowingnewcharacteristicsand

trend.Internationally,implementingCSRhasbecomeanimportantmeansforasustainable

developmentoftheglobaleconomy.Theinternationalsocietyhasraisedtheirrequirement

andconstraintstotheimplementationofCSRofglobalenterprises.Thestandardizationand

legalization of CSR has become a new issues and a new direction. Domestically,

implementingCSRisnowaneffectivemeasureforenterprisestoadopttothe“NewNormal”

of economic development and to boost competitiveness. The society is imposing an

increasingly high expectations of sustainable development in economic, social and

environmentalperspectives.Allplayersfromgovernmentbodiestoindustrieshaveactively

takenactionsinimplementingtheirCSRandpracticesustainabledevelopment.

Withregardtothenewtrendandnewrequirements,whetherit istoadopttothechanges

inoperationalenvironmentandsupervisorypolicies;orto focusontheneedsofourown

development,wemustraisethestandardsandlevelofourworksinimplementingCSRby

perfectioninsystemandincreaseininvestment.

In accordance with our operational situation, in 2015, China Southern reviewed our

performance in the implementation of CSR, and conducted a SWOT analysis aiming to

continuouslyincreaseourcompetitivenessandcultivatingournewcompetitiveedge.

SWOTAnalysisofCorporateSocialResponsibility

Strengths WeaknessesGradually enhanced concept andawarenessofCSR;

EstablishedclearCSRstrategicplan;

Established “10-Fen” Care Foundationproviding sufficient resources for theimplementationofCSR;

ArichcultureinCSRpractices

Unaccomplished CSR managementsystem;

Performance evaluation, methods andstandardsofCSRtobeimproved;

Inadequate competence of CSRmanagementcomparedtothesizeofthecompany

Opportunities ThreatA growing understanding of CSR in thesociety;

IncreasinglycompleteCSRstandards;

ExpandingcooperationintheareasofCSR

A growing requirement of CSR in thesociety;

CSRhasbeenraised tonationalstrategyin many countries, which poses higherrequirement to the implementation ofCSR;

Difficulties in achieving certain CSRtargetsduetotechnicalconstraints

2.6 Planning for Social Responsibility Management

ChinaSouthernwill gradually establish and complete a social responsibilitymanagement

system.

1. ToestablishafullCSRleadershipbodyandexecutionbody.

2. To construct a normalized communication mechanism between internal and

external parties. To realize thehorizontal and vertical unification acrossdifferent

division, different profession and different levels. To homogenize business

operationsandcorporatesocialresponsibilityoperations.

3. To complete the overall deployment of corporate social responsibility, the

deepeningofworkandthesystemofresponsibilityimplementation.

3. SAFETY

Safetyisthecornerstonetotheexistenceanddevelopmentofanairlinescompany.Itisthe

primary social responsibility of China Southern. In addition, safeguarding the health and

safety of our passengers is also the most concerned issue of our stakeholders. China

Southern always treats safety as treading on thin ice, we at China Southern have been

adheringtooursafetyphilosophyof“Safetyfirst,Peopleforemost”,andhavebeenstriving

tofulfil oursafetyvaluesofbeing“scientific,people-oriented,standardizedandsustainable”.

Weupholdtheprincipleof“Safetyhasnoending,everydayisanewstart”,andpropagate

thissafetyprincipletoouremployeesandpassengersinordertoachieveourultimategoal

of“Zeroaccident”.

3.1 Safety System

China Southern has formulated a relatively comprehensive safety management system,

covering operation, business and management elements. The Safety Management

Committee(SMC)isthehighestauthorityoversafetymanagement, theSafetyandQualitySupervision Division is the functioning body in charge of safetymanagement and safety

supervision.Eachdepartmenttakesfullresponsibilityforitsownsafetyperformance.The

GeneralManager of each department is the principle person-in-chargewho assumes full

responsibility for the safety performance; the head of safety management in each

departmentistherepresentativeofsafetyandqualitymanagement,andeachemployeeis

accountableforthesafeoperationathis/herownpost.

3.2 Risk Management

ChinaSouthernpositionsriskmanagementatthecenterofoursafetymanagementsystem,

proactivelypreventsandcontrolsassociatedrisks.Weestablishedadaily,weekly,monthly

andquarterly close-loopsafety supervisionsystem for riskcontrolandmitigation from a

safetyinformationmanagementperspective.Theexecutionofeachriskmitigationmeasure

iscontrolledbysupervisionorder.

Dailyreport.Dailyreportisdistributedwithsafetyissuescollectedandconsolidatedfrom

alloperationalsectorsinthecompany.

Weeklyreview.Eachweek,anevaluationreviewwillbecarriedouttospecificsafetycases

selectedfromdailyreports.

Monthlysummary.Asafetymanagementsummaryiscarriedouteachmonth.

Quarterlyranking.Arankingisproducedaccordingtosafetyperformanceofeachoperation

units.

Database of risk sources. In consideration of evaluations by specialists, safety risks from

daily reports and weekly reviews are selected and stored in the database for internal

sharinginordertofurtherenhancetheabilityinriskcontrol.

In2015,ChinaSouthernimplementedoverallsafetyriskpreventionandcontrolacrossthe

company. Includingthe issuanceofmonthlysafetyriskanalysisandsafetyeducationcase

study;adjustmenttoquarterlysafetyreviewanddiscussionaccordingtosafetyevaluation

mode;implementationofspecificriskassessmenttokeyareassuchasnewroutes,special

airports, airworthiness and maintenance, general aviation, aviation security, cabin

management and the transportation of dangerous goods. We have also used multiple

platforms, such as WeChat to provide dynamic safety alert, and provided specialized

supervision,helpanddiscussionwithunitsthathavehigherdegreesofsafetyrelatedissues.

3.3 Safety Audit

3.3.1IOSAaudit

IOSA, the IATA Operational Safety Audit is an internationally-recognized and accepted

evaluationsystemdesignedtoassesstheoperationmanagementandcontrolsystemsofan

airlines. Its scope of evaluation includes organizational management, flight operation,

operational control, aircraft maintenance, cabin operation, ground support, freight

transportationandaviationsecurity.

AllmembersoftheIATAareIOSAregisteredandmustremainregisteredtomaintainIATA

membership. As required by the IOSA, all companies included in the IOSA registrymust

undergoauditseverytwoyears.ChinaSouthernreceivedtheinitialIOSAauditin2006,and

hassinceundergoneanumberoffollow-upaudits.OurcurrentvalidityintheIOSAregistry

endsonApril28,2016.ChinaSouthernsuccessfullycompletedthemostrecentauditatthe

endofNovember,2015.

3.3.2ISAGOaudit

ISAGO,theIATASafetyAuditforGroundOperationswasdevelopedbasedonthesuccessful

application of IOSA. Similar to IOSA, ISAGO provides assessment to all ground handling

companiesworldwide. The aimof ISAGO is to reduce accidents, incidents and injuries in

ground operations, improve operational safety and lower operational costs. As China

Southern isagroundhandling serviceprovideratGuangzhouandUrumqi,weapplied to

undergo ISAGO audits. In 2015, China Southern ground handling at both stations have

successfully completed ISAGOaudits andhencebecomeaccreditedserviceproviders. For

anygroundhandlingserviceprovider,havingaccreditationfromISAGOisbeneficialtothe

improvement of its own safety management system and improve quality of safety

operations.

3.3.3Internalsafetyaudit

China Southern established internal safety audit project following the successful

experiences and thebestpracticesof IATAaudit projects.We issuedSafetyAuditManual

andauditchecklist,developedonlineelectronicauditsystem;trainedinternalauditorand

conductedinternalaudittoallbranchcompaniesandoperationbaseseverytwoyears.Any

deficienciesandissuesidentifiedduringinternalsafetyauditmustberectifiedandtracked

by auditee. This internal audit system has shown positive effect to safety improvement.

Accordingtointernalsafetyauditschedule,in2015,wehavecompletedinternalauditsto8

branchcompanies.

3.4 Voluntary Safety Reporting System

TheVoluntarySafetyReportingSystemisdesignedtoencouragethevoluntaryreportingof

anyinformationrelatedtosafetyinordertohelpusindiscoveringandidentifyingpotential

hazardstopreventtheoccurrenceofincidentsandaccidents,aswellastoachievethegoal

of continuance in optimization and perfection of safety management system. China

Southern provisionally introduced the Voluntary Safety Reporting System in 2013 and

officiallylaunchedthesystemwithdetailedmeasuresofimplementationin2015.

ThescopeoftheVoluntarySafetyReportingSystemcoversanyunsafeevents,deviationsin

organizationalmanagement andpotential hazards that is not covered in the Compulsory

Reporting System.We designed aweb-based open portal allowing anonymous reporting

fromall employees.All reportsarekept in strictest confidentiality.We trace andprocess

eachreport,andproviderewardtoreportswithexceptionalvalues.

This Voluntary Safety Reporting System encourages our employees to not only focus on

safety hazards in their own work, but also on any safety hazards upstream to or

downstreamfromtheirpositiononthechainofoperation.BytheendofDecember31,2015,

333validVoluntarySafetyReportshavebadbeenreceived.

[CASE]:VoluntarySafetyReport

Subject:AlerttotheprovisionofTortoiseJellyaspartofon-boardmeals

Content:Safetyadvice

Description:AflightoperatedonFebruary8,loadfactor100%,highpercentageofchildren.

MealsforthisflightwasprovidedwithTortoiseJelly,howevernowarninginformationwas

giventotheusebychildren.Thiswasaseveresafetyhazard.Thechiefpurseroftheflight

madeaspecialannouncementalertingtheintakeofTortoiseJellybychildren.

Comments and suggestions: Avoid Tortoise Jelly as part of on-board meals. If provided,

writtenwarningmustbeaccompaniedtoreduceriskofchoking.

Feedbackonresults:Thankyouforyoursuggestions!CabinDivisionhasissuedguidanceto

CateringDivisionwithregardtothepotentialriskofTortoiseJelly.CabinDivisionsuggested

to avoid Tortoise Jelly, aswell as other food items thatmay be potentially hazardous to

children. Clear written warnings must be accompanied should such food item is

unavoidable.

3.5 Fulfilment of Safety Responsibilities

FlightsafetyistheparamountconcernofChinaSouthern.ChinaSouthernaimstocontinue

ourefforts in revisingsafetymanagementapproachesandbuildingasolidsafetysupport

system and long-term safety structure ensuring that flight safety is the foundation of

passengers’trust.

3.5.1Flightsafety

In2015,ChinaSouthernpaidcloseattention to flightsafetymanagementregulationsand

strengthened safety regulations trainings and assessments. Case studies of safety

regulationswerecarriedout toenhanceunderstanding among flight crews.Wealsopaid

closeattentiontotheriskcontrolofflightoperations,highlightingtherisksassociatedwith

complicatedweather,mechanicalfailureandthelaunchofnewroutes,andhavedeveloped

effectivemeasureswhileincreasingeffortsinanalysesandadvocacy.Meanwhile,wehave

intensified alerts to operational risk ensuring the competence of each flight crewmeets

operationalrequirements.Riskscreeningofnewlyappointedcaptainsandnewcadetpilots

havealsobeen intensified tominimize theriskassociatedwithmismatch inqualification.

We have increased our attention to flight techniques, tightened up procedures and

standards for the trainings of new captains and cade pilots ensuring conformation to

operationstandards.Qualificationsofallpilotshavebeentracedandupdatedtoeliminate

anyhazardscausedbyerrors inqualifications.Lastbutnot least,wegavestrongfocusto

flighttrainingwithadditionalattentivegiventotheprogressandqualityofnewcadets.We

have also tightened up assessment standards of the promotion of First Officers, and

perfectedtheassessmentstandardsofthepromotionofcaptainsandinstructors.

Oursafeflighthoursexceeded15millionhoursonOctober28,2015,keepingourindustry

leadingposition.

3.5.2Cabinsafety

Numerous in-flight turbulence events occurred in 2015.With regard to such events, the

CAAC issuedurgent notices requiring the strengthening of cabin safety to all carriers. As

statedinthenotice,safetyisthefirstconcernofflight,andensuringcabinsafetyisthefirst

responsibilityofcabinoperation.On-boardsafetyprecedeson-boardservices.

Documentsshowthatweatherduring theperiodsfromafter take-off toreachingcruising

altitude,andthestartofdescendtolandingaremostunpredictable.Instabilityandchange

of wind direction and speed is very common during the change of altitude, hence cause

turbulence.CAACrequiresthat“allserviceprocedurestobecompletedinthedurationfrom

20minutesaftertake-offto30minutesbeforefinaltouch-down”and“nomealservicetobe

providedafter theaircraft has entered intodescend”. Inflight servicemustmakeway for

safetyinthiscritical50minutes.

Following the requirement of CAAC, China Southern reviewed service procedures of all

flights with flight times of less than 2 hours, and have adjusted service items on flights

operatedatdifferenttimeofday.Inordertoensureallserviceitemscanbecompleted30

minutes before landing, China Southern revised service procedures to a proportion of

flightsof less than2hours, andoptimized inflight supplies of foodandbeverage.Part of

theseflightsnowprovidelightrefreshmentsinsteadofhotmealservices.

Asmoreandmorepeoplechoosetofly,wehavemorepassengerswithnopreviousflying

experienceswhoarecurioustocabinequipment.Wehavewitnessedanincreasingnumber

ofmis-operationof cabin emergency equipment, such as cabindoors. In connectionwith

these incidents,we revised thewarning signs throughout the cabins.Newly designedbi-

lingualwarningsignshavebeenpostedatcabindoors,emergencyexitsandlavatorydoors

topreventmis-operationbypassengers.Inaddition,wehaveissuedGuidancetoCabinDoor

OperationSafety tostrengthenriskmanagementofcabindoors.

3.5.3Maintenancesafety

Through analyzing historical unsafe events, the Maintenance and Engineering (M&E)

DivisionofChinaSouthernraisedthe“Arrangement– Procedure– Standard”(APS)safety

management system as the core starting point of safety management in M&E. ChinaSouthernmaximallyreducedsafetyrisksindailymaintenanceworksbyidentifyingsafety

risksandformingoperationguidelinesinaccordingwiththeAPSscheme.TheM&Esafety

management system has transformed from “results-oriented” to “process control” and

“management at source”. China Southern M&E has developed over 700 APS projects

coveringallaircrafttypesinoperation.

[LINK]: Judgedbyfleetsizeandoperationreliability,ChinaSouthernwasawardedAirbus

“A330 Top Operational Excellence Award”, becoming the first Chinese carrier being

awardedthisprize.

3.5.4Aviationsecurity

Inrecentyears, theglobalanti-terrorismsituation is increasinglygrim.Therequirements

imposedbycivilaviationandimmigrationauthoritiesofmanycountrieshavebecomemore

stringent. In order to regulate duty standards on international flights, 730 Air Marshal

Certificate holders at Guangzhouunderwent special trainings. All airmarshalsmust pass

the assessment in order to operate international flights. Furthermore, China Southern

promoted theHandbookofTerroristAttackPrevention viaWeChat platform to thegeneral

publicaimingtoraisepublicawarenessofreactiontoterroristattacks

3.5.5Groundsafety

In 2015, China Southern eliminated the occurrence of serious road transport accidents,

theftofvehiclesandmechanicalaccidents.InstructorsfromtheTrafficPolicewereinvited

toconductroadsafetytrainingstovehiclemanagementstaffanddriversinGuangzhou.

3.5.6Transportationofdangerousgoods

China Southern closely monitors safety issues associated with the transportation of

dangerous goods (DG).Wehave formulated stringent policy for the transportation ofDG

with a comprehensive risk evaluation. Firstly, we perform vigorous examination on the

qualification of transportingDG at each site. China Southern has signedAgreementofthe

TransportationofDangerousGoods withairportsathomeandabroadtovigorouslyexamine

the qualifications held by handling agents and managing the operations by standards.

Currently, China Southern has 65 DG transportation sites, 39 in China and 26 overseas.

Thesesitescoverallcargoroutes.Secondly,westrengthenedtrainingsofDGtransportation

management.Atthemomentwehave78DGinstructorswhocanprovidetrainingstocargo

operators,passengercheck-inagents,andflightandcabincrewmembers.Thirdly,wehave

maintainedcloseliaisonwithDGaccreditationagents.AsthetypesofDGarecomplex,for

accurate identification, China Southern closely cooperates with 12 cargo transportation

accreditation agents in Beijing, Shanghai and Guangzhou requesting their assistances in

appraising the type of goods and the issuance of appraisal reports to ensure correct

loadingsofcargo.Fourthly,we implement strictcontrolofDG transportation. Inorder to

preventshippersdeclaringDGasregulargoods,ChinaSouthernontheonehandincreasedthe efforts in advocating DG transportation, posting notices and guidelines of DG

transportationatcargocollectioncounters;ontheotherhand,wealsostrictly implement

regularvisitsandinspectionstocargohandlersandagents,andrequestrectificationtoall

problemsfound.

3.5.7Emergencymanagement

China Southern pay close attention to emergency management. In order to increase the

proficiency in handling emergency situation and improving management level under

emergency circumstances, China Southern hasheldmultiple emergency drillswith flight,

M&Eandgroundsupportunits inaccordancewithCAACstandards.ChinaSouthern flight

CZ3081 from Guangzhou to Bangkok diverted to Sanya Fenghuang International Airport

due to fire on July 3, our cabin crew member performed emergency evacuation in full

compliancetothestandardprocedures.Allpassengersandcrewwereevacuatedsafelywith

onlyafewpassengerssufferedminorbruisesduringevacuation.

3.5.8Passengerhealth

ChinaSouthernaimstosafeguardpassengerandpublichealthandsafetythroughvarious

means including weekly release of Monthly Epidemic Newsletter, enhancement in cabin

disinfection, issuance of epidemic response measures and health and safety advocacy

activities.Werecordedzeropassengerinfectioncasein2015.

2015 saw the outbreak of Middle Eastern Respiratory Syndrome (MERS). The epidemic

situationworsenedsinceJune2.Inresponsetothis,ChinaSouthernimmediatelyissuedthe

NoticeofPreventionandControlofMERSEpidemic,preventingthecommunicationofMERS

throughairtravel.Meanwhile,wehavefurtherincreasedcabindisinfection,providedMERS

prevention package and thermometer on-board, and also in particularmonitored health

situations of passengers travelling from Seoul. Prevention kits were distributed to cabin

crew, ground service and cabin cleaning teams who were subject to close contact with

passengersandaircraft.

3.5.9Safetyinspection

ChinaSoutherncontinuedthe“Preventingoversightsandopposingviolationsofregulation”

safetyprogram in2015.After the explosionofdangerous goods inTianjinonAugust12,

China Southern held two sessions of urgent SafetyManagement Committeemeetings on

August 17 and September 1 respectively.Noticeon the ImplementationofComprehensive

SafetyInspection andSupplementaryNoticesontheImplementationofComprehensiveSafety

Inspection and Further Deepening of the Management of the Transportation of Dangerous

Goods were issued soon after the meetings, followed by the implementation of

comprehensive safety inspection and special inspection of dangerous goods. This

comprehensive inspection lasted for 20 days, 274 inspectors were dispatched to 16

professional fields in38units, andhad identified1,768 issues.Allmajor issues identified

were analyzed anddiscussed on-the-spotwith responsible unitswhile rectification plans

wereproposedwith specific timeofcompletion.Meanwhile, a recordanddocumentation

systemhasbeenestablishedtoimplementatime-limitsafetyhazardresolvingmechanism

3.5.10Raisingsafetyawareness

China Southern has been active in the advocacy of safe air travel aiming to raise public

safetyawarenessandincreaseunderstandingofsafety.Forinstance,wefurtherexplained

thereasonsbehindalltherequirementsprintedonthesafetyinformationcardsintheseat

pockets, explained the reason for the banning of using electronic equipment inflight, the

correct procedures at emergency evacuations so as to gain more cooperation from our

passengersandtoeliminatesafetyhazards.

[CASE]: On the day of the “2015 National Safety Operation Advocacy Day”, our flight

attendantssurprisedpassengerswaitingatShenzhenAirportwithaflashmobdance.After

successfully gaining passengers’ attention, a team of pilots, cabin attendants and ground

servicestaffapproachedsurroundingpassengerstointroducesafetyinformation.

3.6 Safety Performance

Wehave safelyoperated 716,000flights totalinga2.2 millionsafeflighthoursin2015,and

the accumulated safe flight hours reached 15.72 million with 258 months of aviation

security.

Category Item 2015

SafetyIndicatorsof2015Incidentper10,000flighthour 0.034Maintenance incident per10,000 0.036

flighthourSeriousmaintenanceincidentper10,000flighthour

0.012

N.B. For definitions of indicators used in this table, please refer to CAAC’s CivilAircraft

FlightIncident(MH/T2001-2013)standards.

CategoryFlight hour(million)

Date ofCompletion

Number of eachmillion-safe-flight-hour and their dateofcompletion

3 April,20064 May,20075 June,20086 July,20098 March,201110 September,201212 January,201413 October,201415 October,2015

Category YearChinaSouthern

Nationalaverage

Incident per 10,000flighthour

2005 0.130 0.3902006 0.064 0.3402007 0.065 0.3002008 0.064 0.2802009 0.089 0.3202010 0.008 0.3842011 0.000 0.3742012 0.036 0.4252013 0.020 0.3832014 0.012 0.0512015 0.034

N.B.The above is only inclusiveof incidents causeddirectly by China Southern, excludes

manufacturerandaccidentreasons.TheabovedoesnotincludeXiamenAirlines.

4. ENVIRONMENT

Protectingtheenvironmentthatweare living in isvital tothedevelopmentandfutureof

thehumanrace.Asaresponsibleenterprise,wearecommittedtostandingbyourvaluesof

“Green flying, green consumption and green innovation”.We are persevering in pushing

reduction in energy consumption and emission, taking green development as a critical

meansofaddressingourenvironmentalresponsibilitiesandthesustainabledevelopmentof

thecompany.

4.1 Environmental Philosophy

Environmentalissuesarecrucialtothesustainabledevelopmentofthehumansociety.We

are closely following the adverse impact that a sharp increase in Greenhouse Gas (GHG)

emission has on climate change and biodiversity. We are actively responsive to interim

goalsandactionsadvocatedbytheUnitedNation,ICAO,IATAandSkyTEAMwithregardto

sustainable business development, as well as policies on energy saving and emission

reduction formulated by the Chinese government. We are taking proactive measures inaddressing our environmental impacts by increasing efficiency of energy utilization and

reducing emission of GHG, undertaking our responsibilities in environmental protection,

ecologicalbalanceandsustainabledevelopment.

4.2 Environmental Policies

ChinaSouthernpublished itsCorporatePolicyofEnvironmentalProtection in2007,aiming

to continuously increase the level of environmental management through correct policy

guidance.

a. Fullycomplywithenvironmental codesofpractice setbynationalauthorities,meeting thegoal oflowemission,andlowenergyconsumption.

b. Ourcommitmenttoenvironmentalprotectionisbasedonpragmaticpracticesandachievableobjectives.

c. Actively raising environmental awareness of the employees, encouraging employees’participationinenvironmentalprotectionactions.

d. Ensure the transparency and accessibility of our action plans, and disclose internalenvironmentalprotectioninformationtostakeholders.

e. Workingcloselywiththeexpectationofstakeholders.

f. Inclusionandsupervision oftheenvironmentalperformanceofsubsidiaries.

Aspartofourwiderenvironmentstrategy, in2015,wedeployedmultiple innovativeand

technical means to the areas of fleet modernization, aircraft retrofit, route optimization,

low-carbonairtravelandtheuseofnewenergy.Wehavealsoactivelyparticipatedinthe

emission-reductionmarket inordertoachieveenergysavingandemissionreduction.

4.3 Use of Resources

The aviation industry is a critical industry in terms of energy consumption and carbon

emission.ChinaSouthernhasenhancedenergymanagementandhasformulatedaprimary

energy management system in order to continuously increase the share of renewable

energyandcleanenergy,controlemissionofgreenhousegases.

4.3.1Energyconsumption

The consumption of resources in China Southern’s operations are split across two

categories,namelyenergyandwater.Energyconsumptionconsistsof fossil-based jet fuel

andfuelusedongroundoperation,suchasgasoline,dieselandelectricity.In2014,jetfuel

accounted for the greatmajority of all energy consumed. China Southern consumed6.77

milliontonsofjetfuelin2015;directemissionofcarbondioxidefromtheburningofjetfuel

was21.31 milliontons;ourwaterconsumptionwas 5.61 milliontons.

2015 energyconsumptionstatisticsbycategory

CategoryQuantity(tons)

EquivalentStandard Coal(tons)

Share(%)

EquivalentCO2 Emission(tons)

Share(%)

Jet-fuel 6767504.70 9957706.42 99.10 21317639.81 98.91

Gasoline 5437.40 8000.59 0.08 16468.68 0.08

Diesel 6834.17 9958.07 0.10 21439.67 0.10

Coal 3100.00 2214.33 0.02 6448.00 0.03

Electricity181 000.8(thousandkWh)

22233.48 0.22 109521.14 0.51

Naturalgas29 168.5(thousandm3)

38794.11 0.39 63149.80 0.30

Liquefied gas 665.38 1140.66 0.01 1962.87 0.01

Others 5320.00 7827.85 0.08 16758.00 0.08

Total —— 10047875.51 100 21553387.97 100

4.3.2Energyefficiency

The main energy efficiency indicators of China Southern in 2015 are: Total energy

consumptionwasequivalentto10.05milliontonsofstandardcoal. Collectivefuel-burnof

allaircrafttypewas0.30kgperton-kilometer.

Overallenergyefficiencyhasbeenmaintainedwithinthetargetzonefrom2011to2015.

Year Collectiveton-kilometer Fuel-burn(kg)2011 0.292012 0.302013 0.302014 0.302015 0.30

4.4 Harmless Processing of Waste

4.4.1Disposalofpackagingmaterials

As an air transport company, the most common packaging materials that need to be

disposedofaretheplasticandpaperpackagesofon-boardmealsandbeverage.Allofthese

packagingmaterialsareforone-timeuseonly,onaveragewecollectapproximately50,000

pieces of such wastes each day. In consideration of the technological and hygiene

requirementsforinflightcateringandtoensurefoodsafetyon-board,ChinaSouthernfully

complies with national standards GB11680-89 Hygiene Standards of Paper for Food

Packaging Use and GB27589-2011 Paper Packaging Boxes for Food in the packaging

procurementprocessofpackaging.Qualifiedrecyclingserviceprovidersarecommissioned

todisposeofallpackagingmaterials,andChinaSouthernisabletotracethedestinationsof

the collectedwastes.The standard procedure of packagingwaste disposal is: Centralized

collection ofwastematerials – Separation of packagingmaterials – Centralized storage –

Collectionanddisposalbyqualifiedserviceproviders.

[LINK]:Reusablebagsforinflightsupplies

Assingle-timeplasticbagshaveadverseeffecttotheenvironment,in2015,ChinaSouthern

started to use reusable non-plastic bags for inflight supplies. Different types of inflight

supplies are packaged in reusable bags of different colors. This is the first attempt of

“Managementbycolor”amongChinesecarriers.

4.4.2Cabinwastedisposal

Rigorous measuresareinplaceforcabinwastemanagement.

Firstly, specialized service providers are commissioned to handle cabin waste. We have

commissioned certified service providers to handle waste. It is clearly stated in the

commissionagreement that the serviceprovidermustbe inpossessionofplace (landfills

thatareapprovedby regulatoryauthoritiesoragreementwithsuch landfills), equipment

andprofessionals.It isalsostatedthatwastecollectedareonlypermittedtobereusedas

rawmaterialsandnottobesoldasfinalproducts.

Secondly,separatewastecollectionanddisposalisinplace.Aftersterilization,solidwastes

are sorted for reusing and recycling. Liquid-solid separation process are applied to non-

solidwastes, solidifiedwastes are then transported for specialized handlingwhile liquid

wastesarefullytreatedbeforeallowingtobedischarged.

4.4.3Disposalofindustrialwaste

Workscarriedoutduringaircraftoverhaul isamaincontributor to industrialwaste.The

mainindustrialwasteproducedarewastewaterandusedoil.

China Southern uses purpose-built treatment plants for industrial wastewater. All

wastewater are collected and transported through special pipes andpumps to treatment

plantsforharmlesstreatments.

Treatments of wastewater are disaggregated to three levels. The primary level removes

floating solids in wastewater by oil filtration, grill, neutralization and air flotation. The

secondarylevelremovescolloidsanddissolvedorganicpollutantsuchasCOD,BODandoil

by the application of Sequencing Batch Reactor Activated Sludge Process, which has a

removal rate of over 90%. The tertiary level further processes non-degradable organic

substancesanddissolvablemineralsbysandfiltrationandactivatedcarbonfiltration.

Treatedwastewater are then emitted to the treatment plant at the airport aftermeeting

emission standards. A qualified third-party inspector is also commissioned to carry outwaterqualitytestonwastewaterproducedbyChinaSouthern.

The treatment of used oil is conducted in strict compliance to the Law of the People’s

RepublicofChinaonthePreventionandControlofEnvironmentalPollutionbySolidWaste.

Thedetailedprocessis:Usedoilfromeachmaintenanceworkshopsandremainingoilfrom

aircraft fuel tank – Collection using special vehicles and tanks – Application for the

transportationofusedoiltolocalenvironmentalprotectionbureau– Transfertoqualified

used oil treatment service providers – Assistance to the service providers for the

transportationofusedoil.

4.4.4Noisecontrol

Themain sourceofnoisepollution is the highdecibel noise generatedby the runningof

aircraft engines. In order to reduce noise pollution, China Southern mainly took the

following three measures. Firstly, at the procurement of engines, China Southern would

purchase engine types that are lower in noise level and emission level with priority.

Secondly, at ground engine testing, China Southern applied the international practice of

constructing stream diversion and silencer facilities for engine ground testing to ensure

noise pollution level meets the Emission Standard for Industrial Enterprises Noise at

Boundary.Thirdly,ataircrafttake-offandlanding,ChinaSouthernusesoptimizedrunway,

optimized path and noise-reduction flight operation procedure to further reduce noise

pollution.

4.5 Flying Green

4.5.1Fleetmodernization

Fleet modernization is one of the most important measures in materializing our

environmentalgoals.Overtheyearswehavebeenreplacingagedaircraftwithnewerones,

increasingfuelefficiencyhencereducingadverseimpacttotheenvironment.Neweraircraft

enjoy a greater safety margin, higher fuel efficiency and lower noise emission. In 2015,

ChinaSouthernintroduced58newaircraft,retired3agedaircraft.Theaverageageofour

fleetwas6.3 yearsasofDecember31,2015.

Age ofaircraft

Number of aircraft in2014

Share

0-3 211 31.6%3-6 168 25.2%6-9 111 16.6%9-12 91 13.6%12-15 45 6.7%Over15 41 6.1%

[LINK]:China Southern launchedcabin retrofit project for10A320aircraft in2015.This

project will install new lightweight seats throughout the cabin. This retrofit will add 14

extraseattoeachaircraftwhilethetotalweightofcabinseatscanbereducedbymorethan

200kg.Itisprojectedthateachretrofittedaircraftwillhaveafuelsavingcapabilityof34.31

tons.

4.5.2Retrofitting ofwinglets

Oneofthemeasuresinreducingfuel-burnandCO2 emissionistheinstallationofwinglets.

2015sawthecompletionofsix 737NGaircraftwithwingletsretrofitted.Accordingtoactual

operationaldata,aircraftwithretrofitted winglets mayachieveanincreaseoffuelefficiency

of up to 1.32%, translated to a reduction of 110 tons of fuel per aircraft per year, and a

subsequent reduction in CO2 emission of 350 tons per aircraft per year. We started

retrofittingwingletstoour737NGfleetin2011andhavenowaddedwingletsto96737NG

aircraft.Allofour737NGarenowfittedwithwinglets.

4.5.3In-housedevelopmentofWeight-and-Balancesystem

China Southern started to develop our own Weight-and-Balance (W&B) system for

passengerandcargoin2010.TheCargoW&BSystembecameoperativeinMay2014,while

thePassengerW&BcameintooperationinMay2015.Whileensuringsafetyandefficiency,

this system isable to reduce fuelconsumption from twoaspects.First is to resolveover-

fueling by increasing the accuracy in load prediction, second is to optimize Centre-of-

Gravity of aircraft by pre-determined objective functions. This system is estimated to

producenearly10,000tonsoffueleveryyear.

[LINK]:ChinaSouthern’s“ResearchandApplicationofNextGenerationWeightandBalance

System” was awarded Second Prize in the National Contest of Innovation and

Modernization inManagementofTransportationEnterprisesinDecember2015.

4.5.4Accuratepayloadreportingandsubmission

Theamountof fuel foreachflight iscalculatedbasedontheweightsofpassenger, freight

andmail,whichisknownasthepayloadofaflight.Ifpayloadisover-estimated,theamount

of fuel requiredwill consequentiallybeover-estimated.Thisadditionalpartof redundant

fuel alsocarriesaweight, thecarryingof thispartofweight subsequentlyalsoconsumes

fuel, hence the “fuel consumed by carrying fuel”. The more accurate the estimation of

payloadgets,thelessamountoffuelisneededtocarryextrafuel.Buildingontheresultsof

previouseffortsinvestedtoincreaseaccuracyofpayloadestimation,ChinaSouthernfurther

deepened fuel management in 2015. A Payload Accuracy Task Force was formed to

implementpayloadreportingandsubmissionaccuracy improvementtasksonflightswith

intermediatestopsandatmainfocuscitiesinChina.ByDecember,theaveragevarianceof

payloadestimationshadbeenreducedto3.23tons,whichisequivalenttoanannualsaving

of4,786.32tonsoffuel.

4.5.5OptimizationofaircraftCentre-of-Gravity

StudiesshowthatthemoreforwardtheCentre-of-Gravity(COG)locates,themoreliftforce

isneededtomaintainbalance.Moreliftmeansmoredrag.AccordingtoNewton’sLawsof

Motion,theincreaseofdragneedsmorethrust,henceanincreaseinfuelconsumption.The

optimization of aircraft COG is an effective way of reducing drag and reducing fuel

consumption.

China Southern continued research onCOG and fuel consumption reduction in 2015.We

havedetermined theoptimalboundariesofCOG for all aircraft types andset recognition

patternofoptimalfuelconsumptionzone.AGuidelineforOptimizationofCOGandReduction

ofPayloadFuelhasbeenissuedforthe implementationof fuelsaving.ACOGoptimization

contestwasalsoorganized.In2015,thesuccessrateofCOGcontrolhadbeenmaintainedat

60-70%.

4.5.6Refinedfuelmanagement

In order to further enhance a refinedmanagement of fuel and better implement energy

savingandemissionreduction,ChinaSouthernhasformedaFuelManagementLeadership

Team in 2015 aggregating all fuel related works across the company. This team is

responsible for the organizational management, decision-making management, design of

standard procedures and the division of functions. A Fuel Management Office operates

under the Leadership Team, which is responsible for the formulation, revision and

enforcementofdetailedmeasures,andisalsoresponsibleforsupervisingandcoordination

variousunits.

4.5.7Routeoptimization

Therationalityofroutechoiceaffects theoverall fuelconsumptionof thecompany.CAAC

officially inaugurated the Guangzhou-Lanzhou Airspace Optimization Plan in April, 2015.

China Southern prepared carefully for the implementation of this plan and formulated

detailed measures to support the operation in the optimized airspace. Navigational

Database has been updated in accordance to this plan. All flights operated through this

airspaceonthedayofinaugurationhadbeencloselymonitored.Flightroutesofover300

ChinaSouthernflightsarebenefitedbythisplan,theseflightsaremainly fromairportsin

thePearlRiverDeltatoXinjiangandChongqing, aswellasflightsfromGuiyangandother

airportsinSouthwestChinaandEuropeflightsfromGuangzhou.

Routeoptimizationin2015

Type ofRoute

Number of flightswith optimizationpotential

Number of flightsoptimized

Percentage ofoptimization

Flight timesaving(hrs)

TemporaryRoute

90318 43362 48.01% 2612

Optimizedroute

75580 38409 50.82% 2910

Total 165898 81771 49.29% 5522

4.5.8Systemreal-timeanalysis

Real-timeInflightTake-offPerformanceAnalysisSystemwas implementedtotwoaircraft

typesofBoeing777and737inMarch,2015.Previously,dispatchersmustrelyonAircraft

WeightManualsandinconsiderationofthetemperatureandspeedofwindtocalculatethe

flight data for take-off. After the implementation of this system, dispatchers can now be

providedwiththelatestandmostaccuratedeparturedatafromtheairport.Inaddition,this

systemalso increasesaccuracy inpayloadestimatesothatextrafuelconsumptioncanbe

avoided. Meanwhile, this system provides flexible engine thrust calculation allowing

minimumthrust,uponensuringsafetytobeselectedattake-offinordertoreduceengine

wearandfuel-burn.

4.5.9ThelaunchofChinaSouthern’sfirstchargingstationforelectricvehicles

The firstchargingstation forelectricvehicleswascompletedandput intouse inOctober

2015.Thisstationcannowprovidereliablechargingsolutiontoourfleetofelectricvehiclesand will also support our future plan of replacing conventional vehicles with electric

vehicles.

The charging station is located inour cargo area at GuangzhouAirportwith 26 charging

docksfor26electricvehiclestobechargedatthesametime.Eachelectricvehiclehasan

average daily operation hour of 4.5, and the consumption of electricity is 4 kWh. As

comparison,diesel-poweredforkliftconsumes2.7litersoffueleachother,consideringthe

currentpricesofelectricityanddiesel,eachelectricvehiclecanproduceasavingof21,600

RMBperannumandareductionofCO2 emissionof8tons.

4.6 Avocation of Environmental Protection

4.6.1Protectionofanimalrights

ChinaSouthern flightCZ683, the “LoveElephant” tookoff fromGuangzhou toNairobi on

December10.The flightwasdecoratedwithelephant figuresand thecabin screenswere

displaying“LoveElephant”videos.Allof thecabincrewmemberswerewearingelephant

badgesandtheinflightmagazinesallfeaturedelephant-themefrontcovers.

Thiswastheworld’sfirst“LoveElephant”themeflight introducedbyChinaSouthernand

TecentInc.Thisflightaimstoappealtopeopletorejectillegalivorytrade,toloveanimals

andtoprotectourcommonhome.ApartfromoperatingonGuangzhou-Nairobiflights,this

“LoveElephant”flighthasalsobeenoperatingonvariousdomesticandinternationalroutes

toraiseawarenessofmorepassengersandtoinvolvemorepassengersintotheprotection

ofanimalrights.

4.6.2Advocacyoflow-carbonlifestyle

Inordertoadvocatethephilosophyofenergysavingandenvironmentalprotection,China

Southern holds Energy Saving Advocacy Week every year. This year, the theme to the

advocacy week was “Green Transportation Leads the Modernization of the Transport

Industry”.We promoted energy saving knowledge throughWeChat platform.Meanwhile,

we also sought suggestions from our employees with regard to energy saving, which

receivedseveralhundredsofideas.Wewillselectfeasibleonesfromthispoolofideasand

putintoimplementation.

[LINK]: The young volunteers of Xinjiang Branch held an environmental protection

advocacyactivitywith thenameof “Theworld isourhome, let’sall loveher”. Inorder to

highlightthekeythemeofenergyreductionandlow-carbonlifestyle,thevolunteerscycled

around the airport area of Urumqi to appeal to the public. They have also collected

signatures from colleagues, set up battery recycle boxes and distributed reusable non-

plasticshoppingbagstoencouragealow-carbonlifestyle.

4.7 Active Response to Climate Change

Government representativesofnearly200 countries, large enterprises,NGOsgathered in

ParisinDecember2015whereCOP21washeld.TheParisAgreementwasreachedwithan

aim to control the world’s emission of greenhouse gases. This agreement calls for a

maximumincreaseof2℃of globalaveragetemperatureascomparedwithpre-industrial

levels,andstrivestocontroltoincreasetowithin1.5℃.

Asoneofthemeanstocontrolgreenhousegasemissions,carbontradinghasgainedmore

andmoreattentionfromtheinternationalcommunity.ChinaSouthernisactivelyinvolved

incarbontrading,intendingtorespondtoclimatechangethroughmarketmechanisms.

4.7.1CloselymonitoringtheprogressofICAOCarbonTrading

ICAOplanstointroduceacarbontradingprogramthatinvolvesall internationalflightsin

2016,whichistobeformallyimplementedin2020.Thisprogramwillreplacetheunilateral

EU carbon trading program. The goal of the program is to achieve carbon neutral of all

internationalflightsafter2020.ChinaSouthernpayscloseattentiontotheprogressofthe

programandactivelystudytheimpactsassociatedwiththisprogram.

4.7.2ActivelyparticipatinginGuangdongCarbonTrading

ThepilotcarbontradingschemeofGuangdongstartedin2013.Airtransportenterprisesin

Guangdong (excluding Shenzhen) have been involved to this scheme at the end of 2015.

China Southern actively communicates with relevant agencies via e-mail, face-to-face

seminarsandconferencestoprovideindustryrecommendationsandcompleteallworksas

required.

4.7.3CloselymonitoringtheprogressofNationalCarbonTrading

Thecivilaviationindustrybecameoneofthefirstgroupofindustriestobeincludedinthe

2017National CarbonTrading Scheme in September 2015. In order to adopt to the new

state of operation, we have actively participated in industry seminars and professional

forumswhilepayingcloseattentiontonationalpolicydevelopments.Wehavealsotrackedstudiesonaviationcarbontradingsystemdesign,technicalstandardsandotherissues;also

offeredadvices andsuggestionstorelevantauthoritiestoshareexperienceinpractices.

4.7.4AttentiontoGuangdongCarbonGSP

July 2015, the Guangdong Provincial Development and Reform Commission released a

CarbonGeneralizedSystemofPreference(GSP)pilotprograminGuangdong.Thisprogram

aimstoattractmoresmallbusinessesandthepublictoparticipateinlow-carbonactivities

andtocultivatealow-carbonlifestyle.ChinaSouthernpayscloseattentionandisengaging

in active communication with the Guangdong Provincial Development and Reform

Commission to understand the basic principles and progress of implementation of the

carbon GSP program, as well as the possibility of connecting carbon GSP with airline

companies.

5. Customers and Employees

CustomersandemployeesarethetwomostimportantgroupsofpeopletoChinaSouthern.

TheirsatisfactionarethecornerstonetothedevelopmentofChinaSouthern.Customersand

employees are also of themost concern to our stakeholders. In the survey of CSRmajor

issuessurvey,itemsrelatedtocustomersandemployeeshavethehighestshareofall.We

willthereforereportthesemajorissues.

5.1 Attention to Customers

China Southern strengthens communications and interactions with our customers, and

identifyaspectswhereourservicequalitycanbeimprovedfromwithin.Meanwhile,wealso

make use of advanced technologies to help us in delighting customerswith our services,

providing them with good value-for-money, hence creating a win-win situation and

harmoniousdevelopment.

5.1.1Attentiontocustomersatisfaction

China Southern always highly value customer experience. We review our products and

servicesfromacustomerperspective,constantlyfocusonthechangingneedsofcustomers

and provide a product design that is closer to customer and closer tomarket needs.We

ensurecustomers’voicesareheardandattendedto,andimproveourservicequalitybased

oncustomersuggestions.

Collectionofcustomerfeedbacks

Collection of customer feedbacks from various channels – Classification and sorting of

feedbacks – Allocation of feedbacks to their corresponding divisions – Proposal of

improvement measures by each divisions with timeline – Feedback on improvement –

Debriefingonresolvedissues

Customersatisfaction survey

ChinaSouthernincreasedourfocusoncustomersatisfactionin2015.Inadditiontoexisting

feedbackchannels,our customerswillnowreceiveSMSmessageasking forevaluationof

servicequalityaftereachconversationwithourcallcenter.Lesssatisfactoryfeedbacksare

now traced and followed-up by our customer service representatives. Suggestions and

recommendationsaredocumentedandsubmittedforfurtherreview;specificserviceitems

willbeimprovedand/oraddedaccordingtocustomerfeedbacks.

Inaddition,wehavebeencloselymonitoringpassengerevaluationsonSkytrax,aUK-based

air transport service consultancy specializing in airline service quality surveys.We have

implementedasatisfactionassessmentsystembycategorizingpassenger commentsinto8

areas of cabin service, food and beverage, cabin equipment, IFE, delay and cancellation,

departure andarrival, transfer service andbaggage service.Monthly analyses are carriedoutitembyitemtoformulateimprovementplans.

5.1.2Attentiontocustomercomplaints

Wehavefurtherstreamlinedandstandardizedthecustomercomplaintresponseprocedure,

includingtheestablishmentofthestandardforcomplainthandlingandaremedialsystem.

Weactivelyresolvecomplaintsandincreasecustomersatisfactionthroughastandardized

compensationregime.

Standardizationofcomplainthandling

In order to further standardize the quality of service complaint management workflow,

effectively control complaint handling process and improve customer satisfaction, China

Southernestablishedaservicequalitycomplaintsmanagementprocedure.Weaimtoavoid

theworseningofcomplainedcasesthroughahierarchicalcomplaintshandlingsystem.All

customercomplaintsarereceivedbyourCustomerComplaint Centre.Eachcaseisentered

into the Customer Complaint and Feedback System. This system sends each case to its

correspondingdivisionandrequiresaresponsewithin5workingdays.Allevidence,proof

andstatementsarerequiredtobeuploadedtothesystemforrecordingpurpose.Monthly

customer complaint handlingmeeting is held to share complaint handling situations and

developappropriateimprovementmeasures.

In 2015, China Southern issued Guideline for the Handling of Passenger Special

Circumstances, Notices on the Clarification of Handling General Service Deficiencies, and

HandbookandGuidelineforHandlingCommonComplaints.Thesedocumentshaveprovided

clear guidelines to frontline staff on the handling of common complaints and special

circumstancesonthespot.

Standardizationofpassengercompensation

China Southern has established a passenger compensation standard offering appropriate

compensation to passengers who have been affected adversely. In addition tomonetary

compensation,wehavealsoarrangedvalue-addedservicesforpassengers,suchaswaiving

chargesoncertainvalue-addedservicesoroffercertainserviceitemsthatapassengermay

needatnoadditionalcost.

In 2015,we launched amonetary compensation to customer complaintsmechanism and

issued the RegulationonMileageCompensation toCustomerComplaints. Trials of mileage

compensation for cabin hardware defects on long-haul international services have been

carriedout.

[CASE]:ThefoundingofCustomerCareCentre

Inordertostrengthenourattentiontocustomercareandcomplainthandling,wefounded

the Customer Care Centre in 2015, realizing a company-wide integrated complaint

collection, traceandfeedbacksystem.Thiscenteraimsat improvingcustomerexperience

byprofessionalhandlingofcomplaints.

5.1.3Implementationofdemandsurvey

In 2015, we have further increased our focus on understanding customer needs. We

conducted surveys on various platforms such asWeChatand our officialwebsite. 14,000

questionnaires have been collected with different subjects on IFE, cabin air quality and

delay service. These surveys have provided solid evidence support to our launching

improvedIFEproducts,addingcabinfragranceandimprovingdelayservices.

[CASE]:Cabinairqualitysurvey

ChinaSoutherninitiatedacabinairqualitysatisfactionsurvey.Only30%ofallrespondents

weresatisfiedwithcabinairquality.Afteranalyzingover4,000responses,weestablisheda

findingthatunpleasantodoranddrynessarethemaincausetothislowsatisfactionrate.In

responsetothisneed,wehavelaunchedaCabinAirQualityImprovementProgram,various

fragranceproductshavebeentestedatdifferentvenuesandwehavenowestablishedour

ownstandardcabinfragranceproduct.

5.1.4Protectionofcustomerprivacy

ChinaSouthernrespectsandprotects customerprivacy. Inorder toensureour staffwho

have access to passenger data to safeguard passenger personal information and flightrecords,ChinaSouthernhas formulatedPassengerDataProtectionAgreementandall such

staff are bound by this agreementwhere the principle and responsibilities of the use of

passengerdataareclearlystipulated.Intheeventofillegaldatadisclosure,ChinaSouthern

reservestherighttotakelegalactions.Asaresult,nodataleakageoccurredin2015.

5.1.5Performances

ChinaSouthernhasimplementedaseriesofmeasurestooptimizepassengerexperience.

Classification Item Actions Targets

Groundservice

Baggage

Implemented baggagetransportationrectification.Issued assessment standards forbaggage arrival time atGuangzhou

Reduce baggagerelated complaintrate;Reduce waitingtime at baggagereclaim

Flightdelay

Upgraded delay informationprovision;Self-service printing of delaycertificate and ticketendorsementatGuangzhouhub;Amendment to the Measures ofImplementation for Service toSchedule-interrupted Flights,clarified meal and

Improve serviceduringflightdelaythroughinformationprovision, serviceon-the-spot andcompensation

accommodation standards atflightdelayandcancellation.

Passengerswith specialneeds

Introducedthe“Wecareforyourjourney with China Southern”product series for passengerswithspecialneeds.China Southern tailor-madeSpongeBob gift set for childrentravelling on long-haulinternationalflights

Additionalattentionandcareto passengerswith specialneeds

Transfer

Introduced a “Fast-track” serviceat Guangzhou. PassengersdepartingGuangzhou forSydney,Melbourne,BrisbaneandLondonare provided with Fast-trackvouchertoenjoyFast-track lanesatdestinationairports

Reduce waitingtime atimmigration

Check-inOnline check-in, mobile check-inand SMS check-in introduced toanadditional58airports.

Provide moreconvenientservices

Cabinservice

IFE

Introduced Chinese productionson-boardpremierservice.IncreasednumbersofHollywoodblockbusters and latest Chinesefilms.IntroducedKidsChannel

Improve IFEexperience;Increasesatisfactionrate

CleanlinessAttention to working standardsand attitudes among cabincleaningteam.

Improve cabinsanitationlevel

Inflightdining

Invited celebrity chef from NewZealand to design menu forAucklandflights.Introduced meal pre-orderserviceviasmartphoneAPPs

Increasesatisfaction tomeals andbeverages on-board

Pre-flightdining

AddedHalalfoodinInternationalBusinessandFirstClassLoungesatGuangzhouBaiyunAirport.Addedbilingual ingredients labelforHalalfood.

Providepersonalizedmealservicesinairportlounges

Marketing andsalesservices

Marketing andsalesmode

Established a new interactivemodeofserviceandmarketing.Adjusted service standard tobetter accommodate marketneeds.

Increasematchingbetween serviceand marketingproducts

Membershipservice

Upgraded validity terms andconditionsofmileage.GoldandSilverTiermemberscannow enjoy automatic 100%mileage validity extension; Blue

Increasemembershipsatisfactionrate

Tier members can register formileagevalidityextension.

Paymentmethod

Added payment via Q-R code onofficewebsite.PassengersarenowabletoscanaQ-R code generated at thepayment stage and completepaymentviaWeChat Pay ontheirsmartphones.

Increase diversityof paymentmethods;Provide a moreconvenientpaymentexperiences

According to our statistics, young children flying on China Southern’s long-haul

internationalservicesareincreasingyearbyyear.Asaresponsetopassengerrequests,on

December29,westartedtoofferouryoungtravelerspecialgiftsetstoallyoungchildren

flyingonlong-haulinternationalservices.ChinaSouthernisthefirstcarrierinChinatooffer

giftsetstochildrenon-board.Thisyear’sgiftsetcomewithathemeof“Happyflightswith

China Southern and SpongeBob”. We hope to bring fun and happiness to their journey

throughthehealthy,happy,friendlyandpassionatecartoonfigureofSpongeBob.

Type Item 2014 2015

Serviceindicators

Flightpunctualityrate* 74.13% 67.91%

Validcomplaintrate* 0.034% 0.040%

Throughcheck-inrate 97.1% 99.16%

Baggageerrorrate* 0.089% 0.0168%

*Fordefinitionandreferencedata,pleaserefertomaterialsissuedbytheCAAC.

5.2 Care for our Employees

Our employees are the creators of China Southern values and the providers of China

Southern services. They are the foundation and the essential to the development of the

company. The 70,000 employees of China Southern are located in nearly one hundred

differentplaceswithinandoutsideChina.ChinaSouthernhasestablishedacompletesetof

human resource management system covering facets of remuneration, recruitment,

promotion and vacation leaves. This system ensures the openness, fairness and just in

humanresourcemanagementsothatouremployeescangrowthwiththe companyinorder

forouremployeestogrowwiththecompany.

5.2.1Overallemployeestatistics

ChinaSouthernestablishedandimprovesanemployeedatacollectionandstatisticssystem.

The totalnumberofemployeeofChinaSouthernwas71,897 in2015, including940non-

Chinese employees, the average age of our employees was 33. In 2015, China Southern

receivedvoluntaryresignationsfrom1,047employeesandrecruited4,193newemployees.

We have unfortunately seen two deaths in the line of duty, and have recorded a work-

relatedinjuryrateof3.18‰*.

*This rate is the ratio of the number of injured persons and total number of employees,

excludingXiamenAirlines.

Employeedistributionbyregion:

Region Male Female Total

Guangzhou 10562 10500 21062

China,exceptGuangzhou

30223 20610 50833

Overseas 477 710 1187

Total 41262 31820 73082

Employeedistributionbyeducationlevel:

Educationlevel Count Percentage

Postgraduate 2035 2.78%

Universitydegree 28132 38.49%

Associatedegree/Diploma

23055 31.55%

Vocational schooldiplomaandbelow

19860 27.17%

Total 73082 100.00%

Employeedistributionbyfieldandgender:

FieldMale Female

TotalCount Percentage Count Percentage

Flight 5088 6.96% 39 0.05% 5127

Service 5314 7.27% 12607 17.25% 17921

Administration 4420 6.05% 1604 2.19% 6024

Operationcontrol 868 1.19% 295 0.40% 1163

Maintenance andengineering

7394 10.12% 691 0.95% 8085

IT 463 0.63% 255 0.35% 718

Marketingandsales 1696 2.32% 2677 3.66% 4 373

Miscellaneous 3910 5.35% 2887 3.95% 6797

Professional 2398 3.28% 2936 4.02% 5334

functions

Others 9711 13.29% 7829 10.71% 17540

Total 41262 56.46% 31820 43.54% 73082

5.2.2Humanresourcepolicy

Inorder toadapt to theneedsof strategic transformationand internationalization,China

Southernhasestablishedapost-basedhumanresourcepolicystructure.ChinaSouthernis

exploringandestablishingstrategiesofhumanresourceplanning,performanceevaluation,

training, career paths and salary policy, aiming to formulate a close-loop management

system,enablingthetransformationofroleofhumanresourcemanagement.

Salaryandwelfarepolicy

ThesalaryandwelfarepolicyofChinaSouthernisfoundedupontheprincipleof“legal,fair,

efficient, and harmonious”, based on post value, guided by labor market average andcenteredonperformanceevaluation.

Post wage. Post wage consists of basic wage and performance-related pay. Basic wage

reflects thedifferencebetweencriticalpostsandgeneralposts, aswell as corepostsand

non-coreposts;whereasperformance-relatedpaymatchesthefinancialperformanceofthe

companyaswellasperformanceofindividualemployee.Furthermore,ChinaSouthernhas

alsosetincentivestodifferentposts.

Insurances and pension. In compliance with rules and practices imposed by local

authoritiesindifferentoperatingregion,ChinaSoutherncontributestocompulsorymedical

insurance, work-related injury insurance, unemployment insurance, maternity insurance

and endowment insurance, as well as mandatory Housing Provident Fund (HPF). China

Southern has also provided corporate annuity fund and supplementary commercial

accidentandmedicalinsurances.

Welfare.Inaccordancewithnationalandlocalregulations,ChinaSouthernhasprovidedits

employees a welfare package consists of annual leave, home leave, marital leave and

maternityleave.

China Southern has completed the salary andwelfare unification across the company in

2015.AllemployeesofChinaSouthernarenowenjoyequalpayforequalwork.The“Equal

Pay forEqualWork”principle is reflected in theamendment to corporate regulationson

remuneration,leaveandinsurances.Inthefuture,wewillcontinuetoincreaseourinputto

providingmorebenefitsandwelfaretoouremployees.

Protectionofrights

Full compliance to all laws and regulations. We are strictly obedient to international

treaties and national laws, respect and protect human rights that are recognized by

internationalstandards,andarenotinvolvedinanysuchbehaviorsthatareinviolationand

disregardtohumanrights.

Systematicprotectionofemployees’statutoryrights.WestrictabidebytheEmployment

Contract Law and corporate regulations, endeavor to eliminate all kinds of forced labor,

child laborandemployment relateddiscriminations.We treat eachoneofour colleagues

with fairness, standardized employment management procedure, and have executed

employment contract extension management program. 100% of our employees are

protected by employment contracts in 2015. The coverage of collection employment

contract also reached 100% in 2015. The execution of employment contract ensures the

rightsofeachandeveryemployeeareprotectedundertheLaborLaw.

Protectionofspecialrightsoffemaleemployees.FollowingthearrangementsofAll-China

Federation of Labor and the CAAC Federation of Labor, China Southern continued to

promote the building of Mother’s Room providing special care to female employees.

Mother’s Room is a specially designed breastfeeding rooms that are private, safe,

comfortableandsanitary.Fridge forbreastmilk,changing tables,sittingareasandpower

suppliesareequippedintheMother’sRoom.In2015,ChinaSouthernopened23Mother’s

Roomsacrossthecompany.

[CASE]:ThetwoMother’sRoomofChinaSouthernXinjiangBrancharelocatedinTerminal

3ofUrumqiAirportandintheofficebuildingofthebranchcompany.ThesetwoMother’s

Roomsprovidedpregnantandlactationemployeesaspecialplaceforexchangingchildcare

experiencesandstoringbreastmilk.TheMother’sRoominTerminal3ofUrumqiAirport

alsoprovidesbreastfeedingplacesforpregnantandlactationtravelers.

5.2.3Internalcommunication

ChinaSouthernbelievesthataneffectiveinternalcommunicationsystemcanachievegreat

resultwithlittleeffort.ChinaSouthernactivelyoutreachouremployeesandlistentotheir

suggestions and recommendations by formulation of a smooth internal communication

channels. We have also enhanced a democratic management style to promote a more

scientificandreasonabledecision-makingprocess. In2015,we tookavarietyof formsof

internal communication to realize a two-way communication from top down and from

bottomup.

Meetings

Meeting is the most common type of internal communication seen in a company. Our

regularweeklyGeneralManagerWorkingMeetinglistenstothereportsandplansfromall

divisionsandprovidecommentsonimportantmatters.MidyearWorkingMeetingisheldin

August of every year, while the AnnualWorkingMeeting and Employee Representatives

General Meeting are held in January of the next year. Furthermore, Quarterly Working

Meetingsareheldeverythreemonthsforimportantbusinesssectorsofsafety,serviceand

financemanagement.Forthesectorsthatrequirehigherprofessionalbackground,suchas

flight, operations, maintenance and catering, we organize regular special discussion

seminars,symposiums,debateandforumsinordertoenhanceprofessionalcompetencyof

ouremployees.Wealsohaveregularcross-divisionprojectworkingmeetings.Withineach

division, regular working meetings, democratic consultation meetings are also held to

ensuresufficientcommunication.

[CASE]:ChinaSouthernheldaCabinAttendantProfessional SkillContestin2015.Arecord-

breaking11,169flightattendantsparticipatedinthelargestprofessionalskillcontestinthe

historyofChinaSouthern.

Surveys

Survey is another importantmeansof internal communication. Surveys aremore flexible

andallowmoreopportunitiesforrespondentstofreelyexpresstheiropinions.

In order to understand true opinions of our employees to the company, China Southern

launchedaProfessionalDedicationSurveytocabinattendantsandairmarshalscollecting

feedbacksontheirpeer,corporatebusinessoperation,corporatemanagement,jobreturns

and work environment. 12,000 responses have been received. This was the first

Professional Dedication Survey taken in China Southern, which have provided valuable

insights and materials for corporate management decision-making and reform in

management.

[CASE]:ChinaSouthernCabinDivision launchedLetterBoxofEmployeesVoices in2015,

collecting feedbacks on difficulties, thoughts and suggestions from cabin staff. Ground

Service Division introduced the “We are family” activity with a theme of “Respect” and

“Attention”.Publicmailboxandsuggestionboxhavebeensetuptocollectfeedbacksfrom

employees, questionnaire evaluations have also been distributed to all members at the

GroundServiceDivision.

Useofmultiplemeansofcommunicationtools

China Southern promotes internal information sharing, corporate culture publicity,

awareness of core operation projects and corporate management efficiency through

multiplemeans of communication tools including mass email, Office Automated System,

WeChat publicaccountof“YouthatChinaSouthern”,ChinaSouthernDaily,ChinaSouthern

TVandinternalinstantmessages.

[LINK]:CabinDivisionlaunched“FlightManagementStar”,“SafetyStar”and“ServiceStar”

contests in January 2015. These activities aimed at innovating management style,

strengthenprofessionalacceptanceandpride.

5.2.4Recruitmentoftalents

China Southern respects talents. Externally, we expanded our recruitment channels and

optimized the introduction of various talents; internally, we promoted job-based human

resourcemanagementandcreatedsmoothinternaljobtransfer.

OptimizationofGraduateRecruitmentSchemeofgroundpositions.

In addition to the change in cabin attendant recruitment procedure, China Southern has

continued adjustment in the procedure of recruiting university graduates for ground

positions. Receiving divisions have been involved throughout the recruitment process in

ordertoincreasesatisfactionofthereceivingdivision.Forinstance,wehaveimplemented

the second “Kapok Camp” ground position internship program, and recruited excellent

graduates from Sun Yat-sen University, South China University of Technology, Xiamen

University,WuhanUniversity,Xi’anJiaotongUniversityandDalianUniversityofTechnology

inadvance.

Enhanceemployerbrand-building

ChinaSouthern launched “ChinaSouthernCampusClub”atSunYat-senUniversity, South

ChinaUniversityofTechnologyandXiamenUniversity.Thisbrandedclubwillbeextended

toWuhanUniversity,Xi’anJiaotongUniversityandDalianUniversityofTechnologyinthe

future.

Buildingasmoothinternaltransferchannel

China Southern has formulated Employee InternalTransferRegulations (Interim), and no

longerrestrictsinternaltransferduetostatus.Wehaveestablishedatransferpolicythatis

based on job requirement and conditions hence directing rational and orderly internal

transfer.

5.2.5Trainingsystem

In 2015, China Southern implemented key projects, strengthened the formation of basic

management system and training system, and also transformed the practice of training

management, hence improved our training quality and efficiency. It is expected to have

completed7,503trainingprojectsin2015forover300,000employeesacrossthecompany,

thetrainingcoveragerateisatapproximately70%.

Formationoftrainingsystemformanagement

Through continuous exploration and practices in the past 5 years, China Southern has

provisionally completed theCorporateManagementTrainingSystemScheme. This scheme

illustrates a framework for the provision of various trainings to management teams at

operational, administrative and executive levels for their appointment and promotion as

well as other special trainings during their terms of appointment on amulti-level,multi-

phaseandmulti-areabasis.

Strengtheningtheformulationoftrainingsystem

China Southern formulated a management system for internal part-time instructors

resolvingaseriesof issuesrelated to theselection,appointment,deployment,assessment

and motivation of part-time instructors. This system has built a solid foundation for a

standardizedmanagement and a stable, healthy and orderly development of our teamof

part-timeinstructors.

ImplementationofThree-yearTrainingProgramforNewEmployees

OurThree-yearTrainingProgramforNewEmployeeshaveincludedemployeeswhojoined

China Southern within 3 years and are below the age of 30. Amentor-mentee advisory

schemehasbeensetuptoimprovetrainingsofbusinessethicsandpracticalskillsaswellas

providingpersonalcareandattentiontoournewemployees.

[CASE]: China Southern Cabin Division introduced a young cabin attendant training

program– “STAFF”,whichcontains fivecoreelementsofProfessionalcompetence(Skill),

General quality (Quality), Professional values (“A”-value), Motivation of professional

development (Fighting)andPersonalcare(Family).

5.2.6Servingouremployees

StaffServiceCentre

TheStaffServiceCentre(SSC)ofChinaSouthernwas foundedonFebruary27,2004. It is

theserviceproviderspeciallydesignedtomeettheneedsofouremployees.Theirmissions

are“StaffServiceCentreservesstaff”and“Careforyourneeds,attendtoyourbenefits”.The

SSC now offers 27 service products to our employees. In 2015, the SSCWeChatpublic

account had nearly 10,000 followers, and provided over 100,000 services. SSC aims to

increase employees’ sense of belonging through the provision of value-added and

innovativeservices.

Culturalandrecreationalactivities

China Southern offers a diversified range of cultural and recreational activities to our

employees,suchastalentcontests,sportsgames,readingclubs,photographycompetition,

calligraphy and painting appreciation series and many more. These activities have

promoted cultural sense among our frontline employees and have created a positive

harmoniousatmosphere.

[CASE]: China Southern held a talent contest at the Staff Service Centre in the terminal

buildingofGuangzhouBaiyunAirport.Organized2015“AnkangCup”EmployeeBasketball

Tournament

Creatingaharmoniousatmosphere

ChinaSouthernstrivestocreateharmoniousatmosphereatworkplaceviavariousmeans.

Firstly,wecontinuedtocarryoutthe“WarmthinWinter;BreezeinSummer”program.This

summer,ChinaSoutherninvested10millionRMBinthepurchaseofcoolbeveragesandthe

improvement of frontline working environment, solving real difficulties faced by our

frontlineemployeesduringthesummerheat.Secondly,wecontinuedtomakegooduseof

our Mutual Fund for relieving the financial challengers due to serious illness of our

employees. In 2015, ourMutual Fund provided assistance of 353,000RMB to 9 families.

Thirdly,wecontinuedtocareforouryoungeremployees.Inordertohelpsingleemployees

to find their other half, this year, we further improved our internal dating website and

addedaWeChat serviceplatform.

[CASE]:398newemployeeswhojoinedChinaSouthernin2015heldtheirowngalashowof

“Meeting thebestofyourselfatChinaSouthern”on July24, theday theycompleted their

inductiontraining.Theyamazedtheaudiencewithdazzlingperformancesofpoetryreading,

singing,dancingandmanymore.Thisgalahavealsopromotedtheportrayingoftheirself-

images and facilitated communications between new employees and their more senior

colleagues.

5.3 Health and Safety

In2015,ChinaSouthern tookmultipleapproaches toensure thehealthandsafetyofour

passengers,employeesandthepublic.

Introductionofanewalcoholtestingsystem

ChinaSouthernintroducedanewalcoholtestingsystemin2015ensuringallmembers of

thecrewaretestedbeforeeachflight.Meanwhile,wehaveissuedtheProcedureforOn-the-

spotTreatmentofFlightCrewAlcoholAbnormality.10casesofalcohollevelexceedinglimit

were found and treated on-the-spot since the implementation of the new procedure.

Number of violation cases have continued to reduce, and the no-alcohol-before-flight

awarenessamongflightcrewmembershavebeenfurtherstrengthened.

Healthriskassessmentofflightcrew

China Southern established a flight crew health risk assessment system which has

integrated the conceptof riskmanagement intodailyhealthmanagementof flight crews.

This system ensures the state of health of our flight crew are in compliance to the

requirementoftheirlicenseandsafeoperationofflights.

Counsellingservicetoflightcrew

WehaveactivelyrespondedtotheFlightCrewMentalHealthCarePrograminitiatedbythe

CAAC by providing assessment and early intervention to flight crewmembers whomay

havementalhealthissues.

Tightenreviewofpassengerwithseriousillness

Witharesponsibleattitudetoallofourpassengers,westrictlyreviewwhetherapassenger

whoissufferingfromseriousorcommunicableillnessissuitableforflying.134passenger

weredeniedboarding.Werecordednodeathofpassengerson-boardin2015.

Foodsafety

China Southern food safety monitoring covers all of Guangzhou ensuring zero food

poisoningcase.Allcateringoutposts inGuangzhouaresubjecttoregulartestsofcoliform

group. We aim to guarantee food safety at all catering outposts that provide food andbeverageservicestoouremployees.

Watersafetymonitoring

ChinaSouthernconductsannualtestonchemicalindicatorsofwatersampleobtainedfrom

ourwaterstationinGuangzhou.15testindicatorsincludingmercuryandleadhaveallmet

thenationalstandards.Meanwhile,weposestrictregulationsandprocedurestooperators

atwaterstationensuringwaterqualityon-boardouraircraft.

6. Society

Airtransportisthefastestmodeoftransportthat reducesthetemporaldistancebetween

twoplaces,henceincreasestheefficiencyofdealingwithmajorevents.Thismeansthatthe

aviationsectormustbehighlysociallyresponsible.Embracingtheadvantageofbeinginthe

aviation sector, China Southern takes and active role in social development andmeet its

commitmenttosocialresponsibilities.

6.1 Special flights

Whilemaintaining a sound financial performance,we are alsocommitted to fulfillingour

responsibilities to the society. For many years, China Southern undertook a number of

majoremergencyairtransportmission,suchasemergencyevacuationofChinesenationals,

earthquake rescue, repatriation of suspects, and received wide public recognition and

respect.

6.1.1Earthquakerescue

Earthquake rescue is a race with time. The catastrophes of earthquake are everyone’s

concernatChinaSouthern.Wearehighlyresponsiveandrapidincontributingoureffortsto

theactionsofrescuemissionandpost-disasterrelief,formulatingsupportplanandprepare

aircraft for rescue operations in the first instance. Ourmost experienced flight crew are

assignedtosuchmission,relevantdepartmentsareworkingtogetherseamlesslytocreate

themostsynergyinordermakesurethatnotimeiswastedbeforeourrescueflightscan

take-offtothesitesofdisaster.

RescueinNepal

April 25, a Richter-magnitude 8.1 earthquake hit Nepal. China Southern immediately

initiatedthecontingencyplanandwerecloselyliaisingwithKathmanduTribhuvanAirport.

Twoevening flightswereoperated thesamenightafterre-openingof theairport,andan

additional flightwasoperatedon the followingdayon topof the2scheduled flights.419

passengers returned home safelywhile 21members of the Blue Sky Rescue (BSR)were

transportedtoKathmanduforhumanitariantasks.

[LINK]:ChinaSouthernhadmaintainedclosecontactwithlocalofficesandairportafterthe

earthquake.FlightscheduleswereadjustedaccordingtotheoperationalstateofTribhuvan

Airport while passengers and the general public had been provided with real-time

informationandalertsviaourWeibopage,websiteandWeChatplatforms.

Supportstorescueteam

AsrequestedbytheUN,theCanadianMedicalAssistanceTeam(CMAT)hadparticipatedin

therescuetasksin Nepal.CMATmadearequesttoChinaSouthernofficeinVancouveron

April30statingtheirplantotravelonChinaSouthernflightsviaGuangzhoutoNepal.CMAT

hadalsonotifiedChinaSouthernthattheyalsoneededtransportationfor600kgofmedical

supplies.ChinaSouthern’sVancouverofficerespondedquicklyandhadsecuredthelowest

priceforCMAT.DedicatedgroundsupportwereprovidedtoCMATonthedayofdeparture,

all36checkedluggagewereprotectedbyChinaSouthern’sspecialluggagecoversandwere

transportedwithBusinessClasspriority.

ChinaSouthern’sactofdutywasreportedandpraisedby localmedia includingCBC,CTV

andGLOBALTV.

RescueinXinjiang

JiayituoGelakeVillageofPishanCounty inXinjiang is situatedby theTeklimakanDesert,

andissufferingfrominhabitablenaturalenvironment.Nearlyhalfofthehouseholdsofthis

village are living in poverty, and their sole income source rely on a small amount of

livestockandfruittrees.AsanenterpriseoftheXinjiang-Aidscheme,ChinaSouthernsenta

special task force of 5 members to this village in 2014. This task force have lived and

workedwithlocalvillagersandhavebeenstrivingtoassistlocalhouseholdsindeveloping

theireconomy.AnearthquakehitthisregiononJuly3whilethetaskforcewasvisitinglocal

families. The task force immediately organized evacuation and informed offices of China

Southern’sXinjiangBranch.Anemergencyresponsemeetingwasheldthatsameafternoon

at Xinjiang Branch and rescue tasks were set out to ensure that the rescue team and

supplies would reach the affected area in the first instance. Meanwhile, Xinjiang Branch

startedtoadvocatefordonationsamongallbranchcompaniesandsubsidiaries.Over500cartonsofrescuesuppliesweightedat8743kghadbeencollectedinjustafewdays.OnJuly

12,anewdrinkingwatertankwasbuiltwiththehelpofourtaskforceat thevillageand

wasabletoprovidestablesourceofdrinkingwaterduringtheimpact.

[LINK]:Driedapricotisanimportantsourceofincomeforlocalhouseholds.Startedin2014,

China Southern made use of our own resources and helped the transportation of dried

apricotsforthelocalcommunities.2014alonesawthesaleofover15tonsofdriedapricots.

This work was continued in 2015 and we have provided additional assistances to the

villages including picking of apricots, re-building of houses that were collapsed in the

earthquakeandtheinstallationofmoderndryingplants.

6.1.2Escortofsuspects

ChinaSouthernoperatedaspecialflightCZ8624fromJakartatoGuangzhouonNovember

10.Passengersonboardthisflightincluded39suspectsofalargetelecomfraudgroupwho

werearrestedbythepoliceforceinIndonesia.ChinaSouthernhassmoothlycompletedthis

flightofescortingsuspectsbacktoChinaafter15hoursofovernightcollaborationwithall

teams.

[LINK]:ChinaSouthernrespondedquicklyandtreatedwithhighestpriorityafterreceiving

request of special transportation from the Ministry of Public Security and other

departments.Appropriateaircraft,airpolice,airmarshalandflightcrewwereselectedwith

aspecialcontingencyplannedpreparedforthistask.

6.1.3Transportationforpeacekeepingforce

Unlike theordinarycharter flights,peacekeepingcharter flightsareusually long-hauland

heavyloaded,specialattentionneedstobemadetoroutechoice,preparationofspareparts,

weather and choice of intermediate stops. China Southern has successfully operated 108

charter flights forthepeacekeepingforcesince2015,transporting13,512passengersand

226.5 tons of supplies. Someof the key flightswere operated to countries such as Saudi

Arabia, Malaysia, South Sudan, Sudan, Mali, Thailand, Tajikistan, Liberia, Burundi andIndonesia.

[CASE]:CZ3001with130peacekeepingforcetookofffromUrumqionApril2,andarrived

safelyat thecapital cityof Juba inSouthSudan.Thismarked thebeginningofa seriesof

charter flight operations for the peacekeeping force. Upon receiving the order, China

Southern tackled operational difficulties caused by a 24-hour long heavy snowfall,

coordinatedwithvariousoperationandsupportdepartmentsandformulatedcontingency

plans.Anoptimal flight routeof 19,000kmwitha flight timeof25.5hourswasdesigned

whichonlyrequirestechnicalstopatUrumqiandSharjah.

6.1.4Responsetobreakingevents

TyphoonsLin-faANDChan-hom hit south and east China coast in successionduring July.

China Southern held multiple typhoon joint-action meetings and quickly formulated

response mechanism. 354 flights were cancelled or combined and 6 direct flight

applicationsweremadeinordertominimizetheimpactofthesetyphoons.

VolcanoMount Sinabung in Sumatra erupted in the beginning of August, and the entire

regionofBaliinIndonesiawasaffected.DenpasarAirportwasclosedforthreedays.China

Southern monitored the situation closely and provided make-up flights in the earliest

possibletimeslotafterthereopeningoftheairport.

The first flight after the terrorist attack in Paris took off at 6:20amonNovember 15, 26

hoursaftertheattack.AssecuritylevelatParisCharles-de-Gaullewasheightenedafterthe

attackonNovember13,passengerswerefacedwithmuchlengthenedwaitingtimeatthe

airport. ChinaSouthernParisofficeprovidedassistance topassengerswhoneeded to re-

schedule or refund of their tickets, and assigned dedicated staff at the airport to help

passengersduringsecuritychecks.Specialarrangementstoticketconditionsweremadefor

passengers holding tickets issued prior to November 13 with travel dates between

November 14 and 20, re-schedule and refund were accommodated at no extra cost to

passengers.

6.1.5SafeguardingpassengertransportationduringChineseNewYear

ChineseNewYear is thebusiestseasonofChinaSouthern’soperation.During the40-day

longpassengertransportationpeakfromFebruary4toMarch15,ChinaSouthernoperated

over 66,000 flights, an increase of 5800 flight from last years.We have carried over 10

millionpassengers,achievinganincreaseof9%overlastyear’sfigure.

TheChineseNewYearperiodwasratherlateonthelunarcalendarof2015,anaccumulated

demandofwintersemesterbreakofstudents,home-returningduringtheholidayseasonof

migrant workers and both domestic and abroad travelers have increased the passenger

number drastically. During the 7-day national holiday, over 10,000 domestic and

international flights were operated by China Southern, 1.7 million passengers were

transported.February25alonesawnearly300,000passengerstravelingonChinaSouthern

flights.

[LINK]:Forthestay-behindchildren,“home”iswheretheirparentsare.ChinaSouthernand

SouthernMetropolisDaily had jointly initiated the “Fly to the south, spend New Year in

GuangzhouandShenzhen”program.Thisprogramprovided2000 freeair tickets to stay-behind children from their places of abode in Hubei, Jiangxi, Guizhou, Sichuan and

ChongqingtoGuangzhouorShenzhensothattheycouldreunitewiththeirparentsduring

thefestival.

[CASE]:“Bringhappinessandwarmthbackhome”

The“Bringhappinessandwarmthbackhome”programisavolunteeringserviceprovided

by China Southern volunteers and administration staff during peak travel seasons. This

programofferssupporttoourfrontlinestaffandprovideshome-returningpassengerswith

ease, happiness and warmth. In the past two years, 3800 staff have participated in the

programprovidinghelptoover350,000passengerswithatotalservicehourofover30,000.

In addition, assistance were also provided to 4500 unaccompanied minors, elderly,

pregnantwomenandotherpassengersthatrequirespecialattention.

ThisprogramreceivedaGoldAwardfromthe2nd ChinaYoungVolunteerServiceProgram

Contest.

6.2 Caring for People

China Southern feels eternal gratitude to the communities that it operates with. China

Southernowes itsexistenceanddevelopment to the society.Givingback to thesociety is

thereforeandnaturalchoiceandanincumbentcommitment ofChinaSouthern.Takingthe

advantageoftheaviationsector,wefocusoureffortsonhelpingthecommunities,especially

onthegroupsthatrequireextraattention,assistingthemintheirchallengingsituations.

6.2.1Transportationoflivingorgans

Thelongesttransportationofheart

ChinaSouthernflightCZ6378carryingalivingheartfewfromGuangzhoutoChangchunon

July4.Thisflightcoveredadistanceofnearly3000kmandtheentireprocesstooklessthan

6hours.ReportedlythiswasthelongestdistancealivinghearthastravelledinChina.

In themorning of July 4, China Southern received a phone call from Anzhen Hospital of

Beijing. The heart from a legitimate donor needed transportation from Guangzhou to

Changchunon-boardChinaSouthernflightCZ6378whichwasscheduledtodepartat16:40.

A livingheartcanonly last for6hoursafter leaving thedonor’sbody,but the flight time

alone is4hours. Inotherwords, thegroundtransportationatbothdepartureandarrival

endsmustnotexceed2hours,howevertheusualcheck-inprocedurefordomesticflightis

atleast1to1.5hours.Itseemedalmostamissionimpossible,anydelayintheprocessmay

deprivealife-savingopportunityofthepatient.

Time is the most importance resource. After receiving the task, several departments of

China Southern started their joint-actions. The CAACwas contacted to apply for priority

dispatchatGuangzhouBaiyunAirport.AsX-Rayatsecuritycheckwillharmthelivingheart,

China Southern coordinatedwith security control at BaiyunAirport to exempt the organ

fromX-Rayscreening.ChinaSouthernalsocoordinatedinternallytobringthearrivaltimeofthepreviouslyhalfanhourearlier.

[LINK]:12-minutegroundprocedure

The Supervisor-on-duty of the day Mr. Liu Jinlong of China Southern’s Ground Support

Departmentpreparedalldocumentsandprocedures inadvanceanddid trials inorder to

determinetheoptimalroutefromcheck-incountertothegate.Hewasatpositionat15:00

that afternoon. The doctor with the organ arrived at 16:03. Mr. Liu quickly verified his

identity,confirmeddocumentsfromthehospitalandprintedboardingpasses.Mr.Liutook

thedoctortothepre-arrangedgreenchannelatsecuritycheckandpassedallprocedures

smoothly.Anelectriccartwasalreadywaitingoutsidethesecuritychannelandthedoctor

wasdrivento thegate.Theentireprocedure fromthemoment thedoctor’sarrivalat the

airporttohisboardingtheflighttookonly12minutes.CZ6378tookonat16:30aheadof

scheduleandlandedsafelyat20:26,14minutesaheadofschedule.

Emergencytransportationofbloodsamplesforsufferingsisters

ChinaSouthernreceivedaphonecallfromalocalmediaofDalianat9amonAugust13,that

an 11 year-old girl and her 6 year-old sister are both suffering from congenital

rachioscoliosisandtalipesequinus.TheyoungersisterwasbeingtreatedatXieheHospital

in Beijing at the time andmet a consultation team of doctors visiting from the U.S. The

consultationteamaskedforthebloodsampleoftheoldersisterandneededthesampleto

arrivewithin4hours.Asthiswascriticaltowhetherthesistersmaybeabletostandupand

walkuprightinthefuture,theirfamilieswereveryanxiousandcalledthemediaforhelp.

After understandingthesituation,ChinaSouthernactedimmediately.Thenexttwoflights

fromDaliantoBeijingwasscheduledtodepartat10:10and13:30respectively, theflight

timewas1hour.However,takingthe13:30flightwouldmeanthatthearrivalof theblood

sampleexceedingthe4-hourlimitwhilethetimeleftfortakingthe10:10flightwasonly70

minutes,andthebloodsamplewasyettoarrive.TimewaspressingandtheChinaSouthern

teamwasendeavoringwithalldepartmentstominimizetimeneededforthetransitionof

thebloodsample.

The blood sample arrived in time and flight CZ6129 took off ahead of schedule. After 2

hours,thesamplearrivedatXieheHospitalinBeijing.TheU.S.teamofdoctorswasamazed

bythespeedandefficiencycreatedbyChinaSouthern.

RelayfromDaliantoShanghai,fulfillingagirl’sdreamofartificialear

FlightCZ6523fromDaliantoShanghaitookoffaheadofscheduleatnoononMarch11in

orderhelpTongtong,a littlegirlwhowassufferingfromcongenitalanotia.Tongtongwas

born with congenital ear deformity and her hearing ability was severely impaired. A

researchinstituteinShanghaiofferedtohelpTongtongreconstructanearwithherownrib

cartilageafterreadingherstoryinthenews.ChinaSouthernDalianBranchtreatedthiscase

with high priority andmade sure that her rib cartilage reached the institute in Shanghai

within6hours.

ViceDirectorofWuxiPeople’sHospitalDr.ChenJingyupostedaWeibo onOctober4that

hishospitalhadacquireda donatedlunginGuangxiat3amthatmorning,themedicalteam

plannedtoflytoWuxionthe8:20ChinaSouthern’sflightfromGuangzhou,butduetotrafficcongestion themedical teamarrivedatGuangzhouBaiyunAirport at 8:05.Unfortunately

even with his prior notification, his team was still denied boarding by China Southern

groundstaffatGuangzhou.

HisWeibo post evoked constant focus from the general public. China Southern did not

ignoreordivertthisincidentbutrespondedpromptly,andsincereapologiesweremadeto

Dr. Chen and his team for not being able to assist. China Southern has in fact provided

seamlessassistancetonumerousmedicalteams,includingDr.Chen,intheirtransportation

oflivingorgans.ChinaSouthernisindeepadmirationtothelive-savingspiritofthemedical

practitioners and is also proud of our experience in providing support to the medical

practitioners. As Dr. Chen raised in hisWeibo post, China Southern is in full support of

establishingGreenChannels for the transportationoforgans.ChinaSouthernhas takena

leading action in launching a fast-track channel between Guangzhou and Wuxi People’s

Hospital for transporting living organs in order to ensure timely and effective

communicationofinformation.Inthefuture,ChinaSouthernwilllaunchGreenChannelsfor

thetransportationoforgansacrossallbranchesandsubsidiaries.Transportationof living

organs for medical use, especially via aviation requires the cooperation of several

authorities and departments, and must be in accordance with relevant aviation safety

regulations, therefore a state-level transportationprocedureshouldbe established.China

Southerniswillingtoparticipateintheformulationofsuchstandardprocedureandtocare

formorehumanlives.

6.2.2Caringforpassengersmedicalemergencies

PassengersafetyisofparamountconcernofChinaSouthernduringmedicalemergenciesof

passengers on-board.This is a core responsibility standard that China Southern uploads,

even though flight return and diversion may incur additional operating cost. For China

Southern, live prevails all. In the meantime, China Southern would like to express our

gratitude to the understanding and support given by all other passengers during such

incidents.

March5. Shortlyafter take-off, apassengeron-boardCZ6761called forhelp toourcabin

crew. This passenger was diagnosed with renal failure and was suffering from physical

abnormality induced by strain. The cabin crew took the pulse of the passenger andwas

closelymonitoringthesituationduringtheflight.Thecaptainoftheflightcontactedmedical

supportatWuhanairportand thispassengerwas taken immediately to thehospitalafter

landing.

May 29. 10minutes after take-off, a 20-month old child on-boardCZ3357 en-route from

WuhantoShenzhenhadamedicalemergency.ThecaptaindecidedtoreturntoWuhanand

hadarrangedmedicalsupport.Fortunately,astheflightreturnedintime,thechildwasable

togettreated.Theguardianofthischildhadonepieceofcheckedluggage,ourgroundstaff

atWuhantookcareoftheluggageandcarriedtothehospitalwhilethepassengerwasinthe

hospitalaccompanyingthechild.FlightCZ3357tookoffagainafterashortstay.

September 26. CZ6381 just took off from Guiyang heading to Hangzhou. 5minutes after

take-off,apassengerMr.Listartedtofeeldizzy,shortofbreathandpale.Thechiefpurser

checkedthepassengerandmovedthepassengertofirstclasswhilecallingformedicalhelp

on-board.Unfortunately,therewasnomedicalprofessionalstravelingonthatflight,hencethecaptaindecided todivert to thenearestairportatChangsha.Wewere informed later

thatMr.Liwasdiagnosedofacutecoronaryocclusion,andwassavedthankstothetimely

diversion.

November13.Apassengerhadaseveremedicalemergencyon-board flightCZ3773 from

Nanning to Taiyuan. The crew initiated theOn-boardMedical Emergency Procedure and

haddecidedtodiverttoXi’an.Ambulancewaspre-arrangedandthepassengerwastakento

treatmentintime.

December 4. A passenger suffering fromHepatitis suddenly had an onset. The On-board

MedicalEmergencyProcedurewas initiated, thecrewenquiredthemedicalhistoryofthe

passenger,providedoxygen,broadcastedformedicalprofessionalsandrequesteddiversion.

At11:38,theEmergencyProcedurewasinitiated.A&Ecenterwascalledandfullsupportin

placein6minutes.At11:51,theflightdivertedandlandedatGuangzhou.Ambulanceand

medical team ready on the apron. At 11:57, medical team boarded the aircraft andtransferred the passenger onto the ambulance. At 12:16, the passenger arrived at the

hospital. Family members of the passenger kindly declined China Southern’s offer of

accompanying the passengers to the hospital. All remaining passenger disembarked the

aircraft, aircraft underwent sterilization. At 13:27, flight CZ6629 took off again for

Hangzhou.

For emergencies, such as passenger medical emergency on-board, China Southern has

establishedasetofprocedures.Main steps including firstly theconfirmationofdiversion

airport; secondly the discharge of fuels to avoid overweight at landing; and thirdly the

preparation of first-aid treatment, such as arranging ground support, cabin and flight

departmentstocooperatewiththeon-boardteamtoassistthepassenger(s)afterlanding.

Theaveragecostofadiversionorareturnrangesfrom80,000to100,000RMB.TakeA320

as anexample, anemergencydiversionof such aircraftwould incuran additional cost of

100,000RMB.Thiscostwillrisesignificantlyifdiversionisrequiredonaflightoperatedby

widebodyaircraft.

In2015alone,ChinaSouthernroughlydivertedorreturned99flights,onaverageoneflight

hadtobedivertedorreturnedduetomedicalemergencyofpassengeron-boardlessthan

every4days.

[VOICE]: As reported bymedia,Mr. Zhang flewwith China Southern flight CZ6101 from

ShenyangtoBeijingonNovember,9.Mr.Zhangsufferedfromsevereabdominaldiscomfort

5minutesaftertake-off.Heimmediatelycalledthecabincrew,howevercabincrewmember

suggested that thismay be caused by change in air pressure and did not treat the case.

HoweverthepaininMr.Zhang’sabdomenworsenedincreasingly,theflightcrewarranged

for ambulance at Beijing Airport. Unfortunately, the cabin crew and the ambulance staff

wereindisputeoverwhoshouldcarrythepassengersfromtheaircraft,andMr.Zhangwas

forcedtoclimbdownthestaircaseintotheambulanceundergreatpain.

Withregardtothisunfortunateincident,ChinaSouthernpubliclyapologizedtoMr.Zhang

onourofficialWeibo pageonNovember23,andinternalinvestigationwasalsocommenced.

In the afternoon of November 24, a special meeting was held requesting all relevant

departments to review all service regulations and procedures and to improve servicequality management. Regarding the problem occurred at coordinating with ground A&E

staff, China Southern will review the case and take lessons learnt to improve

communicationswithexternaldepartments andoptimizeourpracticeprocedures.

6.3 Culture and Education

Contributingtothecultureandeducationinthecommunitiesthatweareoperatinginisour

engagement to our stakeholders, and is our respect to global code of conduct and our

commitmentto preservecommunitycharacterandculturediversity.Wehighlyfocusonthe

developmentofcultureandeducation.

6.3.1“10-Fen”CareFoundation

Our“10-Fen”CareFoundationwasfoundedonMay13,2005.Thenameofthisfoundation

hastwomeanings:ontheonehand,“10-Fen”indicatesthatweinject10Fen(0.1RMB)with

every ticket sold into the foundation; on the other hand, it also represents our full

commitmenttooursocialresponsibilitiesandoursupporttocharitywork.

Throughout2015,thefoundationhasfundednumerouseducationalprojectstoGuangzhou

Civil Aviation College, Guangdong University of Foreign Studies, Chongqing University,

Hunan University, Civil Aviation Flight University of China, Jilin University, Tianjin

University, Dalian Maritime University, Jinan University, Guizhou University, Zhengzhou

University and Northeast University of Forestry. A total amount of 1 million RMB

earthquakerelieffundwasdonatedtotheofPishanandMoyucountiesinXinjiang.

6.3.2“BookcaseofDreams”

The “Bookcase of Dreams” program is co-founded by China Southern Young Volunteer

Association and “10-Fen”CareFoundation in2014. It aims toprovide reading spaces for

studentslivinginremoteregionsandresidentsofspecialcommunities.

In January 2014, over 1000 books were delivered to the new library at Cenyin Primary

SchoolofLong’eVillage,LipingCounty,GuizhouProvincebyvolunteersofChinaSouthern.

In March, volunteers visited Guizhou again and delivered books, stationary and school

uniformsto178studentsofWeiminPrimarySchoolofMaochangTown,DafangCountyin

thenorthofGuizhouProvince.Thevolunteershavealsohelpedconstructionofanewwater

tankrelieving thedifficulties inaccessingcleandrinkingwater facedby localstudents. In

June,ourteamofvolunteersvisitedYujiaoSchoolofNanxiTown,PuningCityofGuangdong

Province bringing “Bookcase of Dreams” program to Puning area together with the

greetingsandcarefromChinaSouthernfamily.

The “BookcaseofDreams” started again in2015. InMarch,Reading-cornerprogramwas

launched for a public housing estate in Jinshazhou, Guangzhou. This program was

immediatelyfollowedbytheReading-cornerprogramatTianbeiPrimarySchoolofTianxin

Town, Heyuan City. 17 chests of 1311 books were delivered to the students in the less

developed hilly areas of Heyuan City. In June, Reading-corner was launched in Liujia

Primary School of Long’e Village, Liping County of Guizhou Province. Volunteers visited

localstudents,understoodtheirdifficultiesinoperationandbroughtovermorebooksand

supplies. In July, volunteers visitedTianxinTown, LongchuanCounty ofHeyuanCity and

deliveredover1,200bookstoQingshangPrimarySchool,whereaReading-cornerwasalso

launched.

In2015,the“BookcaseofDreams”programwasawardedthe“BestPracticeofCharitable

ProjectsbyPublicListedCompanies”andwasalsoawardedSilverPrize inthe“2nd China

YoungVolunteeringServicesProjectContest”.

[LINK]:Buildingdreamsfor twoyears,ChinaSouthernhascollectedover100,000RMBof

funds, over 10,000 books and launched 8 reading-corners under the name of China

Southern “Bookcase of Dreams”. An estimated of over 2,000 students and left-behind

children and over 1,500 low-income households and physically challenged people have

beenbenefitedbytheprogram.Inthemeantime,morethan10pairsofone-to-onesupport

coupleshavebeencreated.

6.3.3Integratingintooversealocalcommunities

ParticipationtotheDutchFlowerParade2015

The68th FlowerParadewasheldinAmsterdamonApril25.Thisannualparadeattracteda

large volume of local residents and tourists. China Southern made its first debut at the

paradebecomingtheonlyChineseenterpriseshowcasingarichlydecoratedparadevehicle.

Driverswearingcaptain’suniformandtheDutchcabinattendantsofChinaSouthernwere

aneye-catchingsightattheparade.

SponsoringFerryRaceonAustralianDay

A ferry sponsored by China Southern won the annual Ferry Race on Australian Day on

January 26. The Ferry Race is one of the traditional activities during the Australian Day

celebration.ChinaSouthernhasalsosponsoredtheSydneyFestival,becomingaLeadership

CorporatePartnerandtheOfficialAirlinesPartnerforthethirdconsecutiveyear.

SponsoringtheChinatownFoodandCultureFestivalinMauritius

AsinvitedbyChineseEmbassyintheRepublicofMauritius,ChinaSouthernparticipatedin

the11th ChinatownFoodandCultureFestivalwhichwasheldfromApril27toMay3asa

maincorporatesponsor.ThisFoodandCultureFestivalisheldyearlyinAprilandMay,and

hasbeenthelargestcarnivaleventofthelocalChinesecommunityfor10years.Thisevent

attracts many local residents and tourists, and has a high impact factor in Mauritius,

especiallyamongtheChinesecommunity.Thekeythemeofthiseventisthepresentationof

Chinesecuisineandculture.Localmedia includingTV,radioandnewspapersalwaysgive

widecoverageduringthisevent.

SendinggreetingbyFlashMobinHeraldSquare,NewYork

On June 25, 30 dancers fromall overNewYork quietly gathered atHerald Square. They

started dancing in T-shirts with vivid red Kapoks. A group of China Southern flight

attendants holding red Kapoks emerged in the crowd and distributed the flowers to

passers-by. This was a special event organized by China Southern in promoting the

additionalNewYorkservicewhilebringingourkindwishestofellowNewYorkers.

6.4 Caring for Children

6.4.1Parent-kidSummerReadingDay

On July23– 24,ChinaSouthernandMcDonald’sorganizeda seriesof refreshingParent-

Kids Summer Reading Day events at Guangzhou Baiyun International Airport. Uncle

McDonald’sarrivedat the sceneand joinedouryoungpassengerswith interactivegames

andintroducedthewonderfulworldofreadingtothechildren.

6.4.2ACharitableA380flight

A flight from Beijing to Guangzhou operated by one of our A380 welcomed a group of

specialguestsonJune9.ThisgroupoflovelykidsareschoolchildrenattheGuang’aiCharity

Schoolof Beijingwhohadneverflownbeforeandwerelongingforanexperienceintheair.

JointlyinvitedbyChinaSouthernandAirbusChina,ChinaSouthernfulfilledthisdreamfor

themon-boardtheA380.

ThischaritableactaimedtoprovidemoreopportunitiesforthechildrenatGuang’aiCharity

School to get in touch and explore the outsideworld. China Southern also advocatesour

societytooffermorecareandattentiontothisparticulargroupofchildren.

[LINK]:BeijingGuang’aiCharitySchoolisanon-for-profitcharityeducationinstitutionthat

provideshomeandeducationforhomeless, forsaken,physicallychallengedandorphaned

children,aswellaschildrenlivinginextremepoverty.

[CASE]: The football team in the micro-film Dream from the heart appeared in football

tournament

Still remember the group of kids who ran in desert pursuing their football dreams? As

introducedinour2014CSRReport,thefootballteamofKavakVillagePrimarySchool,Moyu

County, Hotan Prefecture of Xinjiang who was the original story behind the micro-film

Dreamfromtheheart,hasmade theirwayoutofXinjiangand flewto Jinzhou inLiaoning

provincecompetinginthe5th “StaroftheFutureCup”NationalU12FootballTournamentin

2015.TheaverageageofthisdreamteamofKavakVillagewas10,and wastheonlynon-

professionalU12country football team invited tocompete in this tournament.Theyhave

achieved6wins,2tiesand2lossesandrankedthefourthallbytheirowneffort.Tireless

trainingspaidoff, theyhaveperfectly interpretedwhat actions cando to achievingone’s

dream.

6.5 Volunteers in Action

Indicator NumberNumber of volunteeringactivities

1,812

Total number ofparticipatingvolunteers

23,853

Totalservicehour 56,817Totalservicerecipients 316,520Numberoflong-termone-to-onesupportpairs

1,268

In 2015, China Southern volunteers provided nearly 57,000 hours of services to over

300,000people;1268pairsoflong-termone-to-onesupportgrouphavebeencreated.

BEIJING:YoungvolunteersofBeijingBranchvisitedYanjingLittleSwanCharitySchoolon

June30anddonatedsuppliesfortheuseofteachingandincanteenanddormitories.Thisis

BeijingBranch’sfourthconsecutiveyearofvisittothisschoolsince2012.

HAINAN:VolunteersofHainanBranchvisitedchildreninSanyaGuangmingLianjieCentre

forChildrenofBrainDysfunction.Theyassistedthestaffatthecenterintakingcareofthe

children,massaging theirspinesandhelpedthechildren inotherrehabilitationexercises.

Theyhavealsodonatedsuppliessuchassoymilkmachines.

HUBEI: Volunteers of Hubei Branch continued to carry out the “Young Kapok in School”

program. This programbrought social etiquette and safetyworkshops tomiddle schools

and primary schools inWuhan hoping to enrich the school live of children and broaden

theirhorizons.Sincethelaunchofthisprogram,thevolunteershavevisited8schoolsand

conducted12workshops,coveringnearly1,000schoolchildren.

HUNAN: The volunteer team, “Kapok – Small Helps” of Hunan Branch visited the local

community of the branch office in March. This marked the opening of a series of

volunteeringEnglishtutoringprogram.VolunteerswithCET-6andProCET-8qualifications

providedfreeEnglishtutoringtochildrenoflow-incomefamiliesusingtheiroff-dutyhours.

Thisprogramwasverywellreceivedbytheparentsinthecommunity.

SHENZHEN: The volunteers of Shenzhen Branch initiated visits to children with special

needs. They have established a long-term relationship with Nanshan Care Centre for

ChildrenwithSpecialNeedsandlauncheda“ChinaSouthernShenzhenBranchCareStation”

inthecenter.Throughtheestablishmentofthisstation,adiversifiedrangeofservicesand

supportshavebeenprovidedtothechildrenatthecenter.

XINJIANG:AfreeshuttlebusserviceteamwasestablishedbyyoungvolunteersofXinjiang

BranchonMarch5.Theserviceteamhasbuiltagreenchannelfrompassengerstravelling

fromthebusterminusattheairporttothedeparturehallofterminals1,2and3.

LIAONING: Young volunteers of Northern Branch visited Shenyang Tongze Centre for

Autistic Children. They brought along care from China Southern family with supplies

donatedthroughinternalcharitablegrouppurchaseactivities.

7. Business Operation

Itisthebasicresponsibilityofanenterprisetocontinuecreateeconomicvaluesandensure

inflation-proofingandappreciationofstate-ownedassets.Thefulfilmentofcorporatesocial

responsibilityduringbusinessoperationiscrucialforaprudentoperationof anenterprise,

it is also critical for its risk management and sustainable development. The economic

performanceofanenterprise isno inconflictwithsocialandenvironmentalbenefits,butrather the fulfilment of social and environmental commitments of an enterprise is a

powerhousetoitsdevelopment.

7.1 Economic Performance

The development of aviation industry is interdependent, mutually promotive and

interactionalwithsocio-economicdevelopment.Theaviationindustryisacatalysttosocio-

economic developmentintermsofgrowthofGDP,provisionofemploymentopportunities,

developmentofsupportingindustries,improvementofpeople’slivingstandardsandmany

more. China Southern’s global network and businessmean that a stable operation of the

companyprovidesstrongsupporttoourobjectivesofservingthelocalsocietyandboosting

sustainabledevelopmentofregionaleconomies.

In2015,ChinaSouthernachievedatotalrevenueof111.47billionRMB,andcreatedanet

profitof3.85billionRMBfortheshareholders.Atotalamountof9.28billionRMBhadbeen

contributedtovarioustaxesandfunds.

7.2 Protection of Shareholders’ Rights and Equity

China Southern upholds an ethical business operation, vigorously implement laws and

regulations stipulated by the state and attach great importance to the disclosure of non-

financialinformation.ChinaSouthernstrivestoprotectthethreerightsoftheshareholders,

namely the right to return-on-investment, right to information and right to participation

and supervision;we also endeavor to return our shareholderswith sustainable business

performances.

Right to Information. China Southern has strengthened day-to-day communication with

shareholders.WeareholdingresultspressconferenceinHongKongonanannualbasis;we

are continuing our effort in improving our website and are keeping an accessible

communication channel with our small-to-medium investors while providing relevant

feedbackchannel.Weregularlyreleaseweekly,monthlyandquarterlyresultsandfeedthe

suggestions and recommendations collected from our shareholders back to the

managementinordertoimprovethestandardofoperation.

Righttoreturn-on-investment.ChinaSouthernhasalwaysbeenfocusingonmaximizingthe

equity of our shareholders and maintaining continuous and stable cash dividends. We

provided cash dividends to shareholders in the past three years of 2013 to 2015 in the

percentagesof19.8%,22.1%and20.38%respectively.

Righttoparticipationandsupervision.Generalmeetingofshareholdersandonlinevoting

arethetwomainmethodsusedtoincreaseandencourageourshareholderstoparticipate

in the decision making process of various management issues. We have also addedstipulations in ourArticles of Associationwith regard to shareholders’ right to nominate

directors.

[CASE]:TheConnectedTransactionJointConferenceSystem

ChinaSouthernhasestablisheda jointconferencesystemforanyconnected transactions,

which is administeredbyLegal, Financial,Audit and theOfficeof Secretaryof theBoard.

This system is assessed and audited on a regular basis to ensure the fairness and

transparencyofthesystem.

7.3 Business Ethics

China Southern’s commitment: Operate by law; manage by regulations; be honest and

credible;fairplay

In order to regulate the business conduct and support a just and fair market, China

Southern sees compliance to antitrust regulations as an important corporate policy.

Through refining mechanisms and institutions, we have proliferated our policies on the

compliance with antitrust regulations to all key positions and have embedded the

assessment of compliance with antitrust regulations in our day-to-day operations. We

ensure that the companyparticipates inmarket competition in a fair and lawfulmanner

withthesystemofantitrustriskmanagement.

ChinaSouthernhasestablishedtheOfficeforAntitrustRiskPrevention,whichisincharge

of formulating preventive measures, assessing legal risks associated with antitrust

regulations, and the works on exemption declaration. We have issued the Regulation of

Antitrust Legal Risk Management, which has further clarified the responsibilities and

authorities of relevant departments, risk assessment process and responsive procedures.

We have issued the Guideline of the Compliance with Antitrust Regulations, which has

identified prohibited actions and suggested issues that worth noting, hence providing a

clear guide to conduct for relevant departments. Last but not least, we have also

consolidated trainings oncompliancewithantitrustregulationsandmadesuch traininga

yearlyroutinesession,whichcoverskeypersonnelatpricing,salesandalliancecooperation.

[CASE]:In2015,ChinaSoutherninvitedlegalcounsellorsspecializedinantitrustlawsfrom

leading international law firm to conduct trainings of antitrust laws for staff of related

positions in Commercial Steering Committee, Cargo Division and Legal Division. The

counsellors have also organized Q&A sessions targeting issues encountered in daily

operations. These trainings provided in-depth case studies and analysis of mitigation

measurestoraiseawarenessofrelatedstaffandincreaseriskpreventionlevel.

7.4 Risk Management

Riskmanagement is theact ofmanagement toprevent theoccurrenceof risks througha

seriesofactionsofrisk identification, riskestimation, risk takingandriskmonitoring.By

takingacombinedmethodofinternalriskmanagementandexternalauditandsupervision,

ChinaSouthernhasgraduallyenhancedtheabilityinriskpreventionandcontrol,especially

in the areas of business operation, legal and anti-corruption. A full set of feasible and

practicalcontingencyplanshavebeenformulatedtoreducetheprobabilityofincurrenceof

lossesandalsotominimizetheleveloflossesshouldariskoccur.

7.4.1Managementstructure

In terms of organizational structure, China Southern has established a 3-tier risk

managementsystemthatcomprisesindividualdepartmentsresponsiblefortheirrespective

risks,Office forComprehensiveRiskManagementandInternalAuditDivision. Intermsof

risk identification,we focus primarily on the strategic,market, operational, financial and

legal risks that are closely related to the internal and external business environment,

especially in theareasof fleetplanning, internationalization,oilmarket, rateofexchange,

high-speedrail,anti-trustandlaborpolicies.Intermsofimplementation,wehaveformeda

risk management close-loop structure through a corporate level process of risk

identification, assessment, mitigation, improvement and feedback. In terms of culture

building,we focusonconsistent riskmanagement traininganda reportingsystem to the

management of change of risk and requirement, aiming to raise the awareness of risk

amongtheentireworkplace.

7.4.2Managementofbusinessoperationrisks

TheRenminbiexperiencedsubstantialdevaluationin2015.Ontopofthis,ChinaSouthern

wasalsofacedwiththeadversecircumstancesoftighteninginfinancingandthepurchase

of foreign currencies.We planned ahead and optimized our debt structure by means of

earlyrepaymentandbroadeningoffinancingchannels.Wewereabletokeepourfinancing

cost and risks of foreign exchange rate under control while ensuring our capital needs.

Firstly, we strived to reduce capital cost and repay loans with higher interest rates.

Secondly,weactivelyadjustourdebtstructureinordertopreventfinancialrisks.Thirdly,

wemade use of flexible leasing and financing tools to ensure the capital needs for fleet

acquisition.Wehaveachieveda0.2%reductioninoverallfinancialleasecapitalcostwhile

safeguarding theneedofdebt restructure. Fourthly,wehaveaggressivelybroadenedour

financingchannelsandadvancedtheestablishmentofoverseafinancingplatformsoasto

meetouroverseafinancingneeds.

Meanwhile,wehavealsostrengthenedinternalauditandimprovedsystemconstruction.99

amendmentsandadditionshavebeenmadetothefinancialsystem,afurther52itemswere

abolished inordertoplugloopholesandtopreventsystematicrisks.

7.4.3Managementoflegalrisks

ChinaSouthernhasstructuredacompliancemanagementsystemthatcorrespondsto the

actualneedsofthecompanyandcanreflectourowncharacteristics.Weusedpreventionof

legalrisks,comprehensiveriskmanagementandinternalcontrolmanagementasthebasic

means and core components of promoting the construction of a company that is legally

compliant.

In2015,China Southerndetermined9major risksof the year through identification and

assessment, and has accordingly formulated relevantmanagement and controlmeasures

while conducting dedicated risk management at 11 work units. A chain of legal risk

preventionmechanismhasbeenform.Firstly,theoversealegalriskpreventionmechanismhas been getting more and more mature. As the internationalization process of China

Southern deepens, China Southern has adjusted the management of international legal

affairs from matrix system to centralized system, which can more effectively utilize

resources and ensure major projects and key areas can be monitored and tracked by

designated human resources. Secondly, we have strengthened the formulation of

regulationsintheareasofmarketingandsales,capitalmanagement,biddingandinvitation-

to-bidandengineeringprojects. In2015,ChinaSouthernhas formulatedoramended the

Rules forManagingAgreementwithPassengerGeneral SalesAgents, RegulationsofCapital

Management(Interim),DetailedRegulationofCo-approvalofCapitalUse(Interim),Measures

for the Implementation of Procurement Management (Provisional), and the Handbook of

BasicConstructionEngineeringManagement.

7.4.4InternalControlAssessment

In 2015, the scope of China Southern’s internal control evaluation has covered 100% ofgross operating revenue and over 98%of overall asset value in the consolidated Annual

ReportunderIFRS.Anaccumulatednumberof254keybusinessproceduresand5,110sub-

procedures have been evaluated, 5,100 flowcharts have been formed and 254 risk and

control matrices have been established. 8,196 risk control points have been validated

throughtheevaluationprocess.

7.4.5Riskmanagementofworkingwithnocorruption

TheCentralInspectionTeamprovidedfeedbacktoChinaSoutherninFebruary2015.China

Southern has since continued internal inspection and related remedial measures. The

inspection team identified a number of issues in the operational areas of sales and

marketing, purchasing,maintenance, construction projects and financialmanagement, as

well as deficiencies in the act of cleaning up four forms of undesirableworking styles of

formalism, bureaucratism, hedonism and extravagance, and on the facet of selection and

appointment ofmanagement.With regard to these problems identified by the inspection

team,ChinaSouthernhasstrengthenedorganizationandleadershipinthisarea,deepenedinternal inspection and correction, and has sustained the high-pressure atmosphere and

effortsinpromotingtheworkofinspectionandrectification.Thoroughinvestigationshave

beencarriedouttoanycaseorpersonnelwhowerefoundinbreachofthelawordiscipline

with zero tolerance. Such information have been disclosed to the general public in

accordancewiththerequirementoftheCentralInspectionTeamandregulationsforpublic

listedcompanies.

ChinaSouthernhasearnestlyimplementedtherectificationandremedialworks.Firstly,we

have strengthened organizational leadership, further classified and sorted our business

processes;wehavedevelopedspecialrectificationplansandheldimplementationmeetings

for marketing, freight, infrastructure construction and the Office of Letters and Visits.

Secondly,wehavetargetedinvestigationsonthecasesofshareownershipinpassengerand

freight general sales agents of our management, marketing and sales personnel. 12,945

personnel have undergone this investigation, 23 violations were found and treated in

compliancetoregulations.Thirdly,long-termmechanismhasbeenformulated.Wehavein

particular reviewed,perfectedand sorted riskpoints inover100 regulations such as the

DetailedMeasuresofImplementationforFinancialPurchases andthe ManagementMeasures

fortheRemunerationandBusinessExpenditureswhilesuggestingpreventivemeasures.

ChinaSouthernhascontinuouslyintensifiedsupervisionandinspectionandhasimproved

restraining mechanism on the use of power. Firstly, we have conducted performance

supervisionontheimplementationofthe“ThreeImportanceandOneGreatness”decision-

making system.We have comprehensively found out the establishment, implementation

and supervision of the “Three Importance and One Greatness” system, and formulated

remedialmeasures to issues identified. Secondly, the “Eight Rules” have been vigorously

implemented. We have taken special investigation and clean-up targeting the stubborn

issues including dining using corporate fund, corporate vehicle made for private use,

oversea visits, seniormanagement remuneration, expenditure of corporate fund and the

excessiveuseofofficespaces.

Education and awareness-raising were also implemented within the company. We have

madeuseoftheinternetplatformtoincreasepropagandaofworkwithoutcorruption.Q&A

sessions and trainings have been conducted on various platforms of Office Automated,

internalmediaandWeChat.Meanwhile,wehaveorganized403lecturesessionsfor16,678

personnelinconnectionwithmostrecentanti-corruptiontrendandcasestudiesinorderto

strengthenthesenseofresponsibilityamongourstaff.

ChinaSouthernwill takethe inspectionandrectificationasanopportunitytobuilda fine

Party culture and keep its organization clean through these remedialmeasures, andwill

further transform theworkingstyle of itsemployees, further refine rulesandregulations

and further standardize the operation of the company in order to eliminate the soil that

breeds corruption and to create an upstanding environment for the deepening of reform

andthesustainableandhealthydevelopmentofthecompany.

7.5 Supply Chain Management

In order to strengthen management on corporate procurement and purchase, China

Southernsetup theCorporateProcurementManagementCommittee in2015.Allexisting

procedures, documents and systems of procurement management on all hierarchy have

beenreviewedandre-organized.Wehaveimprovedthelevelofprocurementmanagement

byrestructuringtheprocurementmanagementregulatorysystembasedontheprinciples

ofquality,efficiencyandintegrity.

There are three levels in the procurement management system. First is the Rule of

ProcurementManagement. This document stipulates on the top level the basic principles,

methods and practices of procurement in China Southern. Second is the Measures of

Implementation for Procurement Management, which provides practical procedures and

standards on the operational level. The third are the detailed implementationmeasures

formulatedbyeachdivisionandworkunit,whichstateclearlytheresponsibilitiesandsteps

tobefollowedontheimplementationlevel.Thisnewprocurementsystemstrengthensthe

approachofpublicbiddingatprocurement.Foracertainnumberofprojects thatarenot

suitable for pubic bidding, this system requires clear statement of purpose and such

projectstoundergoapprovalprocedures.Atthesametime,asupervisionandcross-check

andbalancemechanismhasbeenformulatedtoclarifythemainresponsibilityoneverystep.

A Measures for Supervising Procurement (Interim) has also been issued to refine the

requirement and procedure at supervisory works. In 2015, various supervision and

inspection offices within China Southern have participated in 1378 procurement

supervisionprocesses.

China Southern issued the Notice of Requirement for the Disclosure of Procurement

Information stipulatingthechannelofinformationdissemination.Throughouttheyear,all

1739 procurement projects valued at over 200,000RMB have been released for pubic

bidding.TheseinformationwerereleasedonthewebsitesofChinaSouthernProcurement

andBidding,ChinaProcurementandBidding,InternationalBiddingNetworkofChina.This

has reflected a substantial increase in the percentage of procurement projects for public

bidding.

Intermsofcorporatesocialresponsibilityofthesuppliers,ChinaSouthernissuedSupplier

CodeofConduct in2013,regulationourcooperationwithsuppliersonaspectsofbusiness

operation,socialandenvironmental.Wearealsoopentosuggestionsandrecommendations

fromoursuppliers.In2015,weconductedquestionnairesurveyto113suppliers,collecting

feedbacksontheimportanceofcorporatesocialresponsibility.Wealsointendtoraiseour

suppliers'awarenessoncorporatesocialresponsibilityandincreasetheirunderstandingin

beingasociallyresponsiblecorporate.Inthefuture,thisSupplierCodeofConductwillform

partoftheannextoprocurementagreement.ChinaSouthernwillselectsociallyresponsible

supplierswithpriority.

7.6 Serving “One-Belt, One-Road” and Promoting

Economic Development

Party Secretary Xi Jinping raised the strategic initiative of constructing the “Silk Road

EconomicBelt”andthe21st Century“MaritimeSilkRoad”,inshort,the“One-Belt,OneRoad”.

This initiative has been very well received by the international community and gained

support from countries along the route. As raised in the Report on the Work of the

Government2015, China is set to foster a new environment of all-round opening up, and

promote cooperation in the construction of "One-Belt, One-Road". China Southern will

activelyseizetheopportunitiesbroughtbythe"One-Belt,One-Road"initiative.

China Southern has a strong foundation of route network. In terms of hub construction,

GuangzhouCityofGuangdongProvince is thestartpointof the "MaritimeSilkRoad"and

Xinjiang is a strategic location on the Silk Road while Guangdong and Xinjiang are two

importanthub in theChinaSouthernnetwork.Onourdomesticnetwork,ChinaSouthern

hasbranchofficesandservesalargeshareoftheaviationmarketin8outof14provinces

thataresituatedalong"One-Belt,One-Road".Onourinternationalnetwork,ChinaSouthern

has strong presence in "One-Belt, One-Road" regions of South Asia, South East Asia,

Southern Pacific, Central Asia andWest Asia. In 2015, China Southern inaugurated new

intercontinentalservicestoNairobi,RomeandChristchurchandregionalservicestoKota

Kinabalu and Nha Trang, further raised our coverage to "One-Belt, One-Road" countries.

Nairobi, Rome and Kota Kinabalu are all important cities along "One-Belt, One-Road".

NairobiisthecapitalcityofKenya,thefinancialcenterandmediacenterofEastAfrica.Itis

alsowheretheHeadquartersofUN-HABITATandUNEParelocatedandthelargestaviation

marketof Kenya.Previously,ChinaSouthernhadbeenservingtheAfricanmarketviacode-

sharecooperationwithKenyaAirways,aSkyTEAMmember.WiththelaunchoftheNairobi

service,ChinaSouthernwillbuildasolidfoundationfortheopeningofmoreAfricanservice

by Chinese carriers andbetter serving leisure and business travelers betweenChina and

Africa. The new Guangzhou-Wuhan-Rome service connects the agricultural industry in

Central and West China with Food and Agricultural Organization in Rome, promoting

communicationbetweenCentral- SouthChinaandmoreUNorganizations.

In 2014, China Southern carried nearly 4.5 million passengers on "One-Belt, One-Road"

routes,inyearlyincreaseof15.1%.In2015,ChinaSouthernoperated96routesto52cities

in34countriesalong"One-Belt,One-Road"with544weeklyflights,ayear-on-yearincrease

of 12%.The "One-Belt,One-Road" regionhas an economy scaleof21 trillionU.S.Dollars

and takes up 24% of the world's freight and service export. The "One-Belt, One-Road"

countriesareindesperateneedofconsolidationanddevelopmentinaviationandlogistics.

A comprehensive route network and convenient transport will facilitate the booming of

regional economy. China Southern will take this opportunity to speed up the network

expansion and become an important catalyst to the development of the "One-Belt, One-

Road"initiative.