Air China: Management Discussion of August Operating Data

During August 2012, international and domestic passenger traffic and the number of passengers carried maintained growth year-over-year. All indicators registered an increase on a month-over-month basis except for a slight drop in the regional number of passengers carried. As for cargo, year-over-year increases continued both in Revenue Freighter Tonne Kilometres (RFTK) and freighter tonnage carried for outstanding performance in regional routes. Only international routes recorded a slight decrease on a month-over-month basis.

Passenger capacity, measured in Available Seat Kilometres (ASK), in August rose 6.8% year-over-year while passenger traffic, measured by Revenue Passenger Kilometres (RPK), increased by 4.3%. Capacity and RPK on domestic routes increased by 5.7% and 1.6% year-over-year respectively. Capacity on international routes grew by 9.5% year-over-year, with RPK increasing by 9.8%. Capacity on regional routes decreased by 3.4%, while RPK declined by 5.1%. The passenger load factor was 84.2%, a decrease of 1.9 percentage points year-over-year. For domestic routes and regional routes, the passenger load factor decreased by 3.4 and 1.5 percentage points respectively while that of international routes increased slightly by 0.2 percentage point.

Cargo capacity, measured in Available Freighter Tonne Kilometres (AFTK) increased by 8.4% year-over-year in August. Revenue Freighter Tonne Kilometres (RFTK) and freighter tonnage carried climbed by 10.6% and 10.3%, respectively compared with August 2011. The cargo load factor was 59.0%, an increase of 1.2 percentage points year-over-year.

Air China launched the Shanghai-Lanzhou route (four flights a week) starting 12 August.

During the month, Air China purchased a total of 313,000 tonnes of jet fuel at an average price of RMB6,935 per tonne, a year-over-year drop of 10%. The average jet fuel purchase price at international airports was RMB6,538 per tonne, and the average purchase price of jet fuel for international flights at the top six Chinese airports was RMB 6,492 per tonne, a decrease of 4% and 10% year-over-year respectively. The average jet fuel purchase price for domestic flights was RMB7,246 per tonne, a substantial drop of 12% compared with August of last year.

Starting from 1 August, the purchase price of domestic jet fuel increased by RMB96 per tonne.

During the month, the Company added four aircraft, including one A320, one A321, one A330 and one B737 aircraft. As at the end of August, Air China operated a fleet of 322 aircraft.