Spring Airlines Communication Materials

May 2020

Contents

1. Company Overview
2. Fleet and Network
3. Operation Statistics and Financials

11. Company Overview

Company Overview
CAPSE 2019 Best Low-Cost
Airline2018 Most potential
development of Airline
Employer

Strategic goal: "Become a competitive Low-Cost Carrierthat is internationalized, offers good value for themoney, and offers passengers a safe, low cost, on-time,
convenient and pleasant flying experience."

CAPSE 2017 Best Airline
2016 Skytrax Best LCC inChina
2016 CAPA Best LCC in Asia
Pacific Region

2014-2015 Shanghai
Advanced Enterprises
No. 2 ranking in CAA's
safety and financial
assessment (2014)
China Tourism Awards (BestLow-cost Airline) (2015)

 Established in Shanghai in 2004, Spring Airlines launched its first flight in 2005.
首家低成本
航线网络分
After restructuring 航空公司
into a joint-stock limited
liability
company in December 2010,布广泛
the company went public on 21 January 2015 in A-share market. It currently has
916.73mn shares after IPO in Jan. 2015 and placement in Feb. 2018.
 Since that first flight in 2005, the company has launched more than 100 domestic
routes providing round-trip service between Shanghai, Shenyang, Shijiazhuang,Shenzhen, Yangzhou, Ningbo, Kityall, Lanzhou base and all of China's major
cities except Beijing. In 2010, the company began openning international andregional routes. It has now launched above
60 international and regional routes
持续扩大机linking Shanghai and other main bases as队规模well as tier 2/3 cities to Hong Kong,Macau, Taiwan, and main cities in Northeast and Southeast Asia.
 As the end ot 1Q-2020 , total assets reached Rmb30.0bn.Net profit was RMB
1.84bn and -0.23bn at the end of 2010 and 1Q-2020.
 The company currently operates a fleet of 96 A320 aircrafts at the end of 1Q2020, the biggest all-Airbus fleet among China's private sector airlines.

3

Development History

Spring Airlines isestablished

Introduces its firstAirbus A320 jet to
be bought outrightSpring Airlines' flight
simulator is put into
operation, further
improving flight safety
and quality

18 July − 10-year
anniversary of inaugural
flight; onboard local
area network Wi-Fi
system successfullyrolled out on
Xiamen/Shenzhen/Guangzhou flights departingfrom Shanghai

Aug 2014

July 2015

Spring Airlines
Japan launches
two non-stoproutes between
China and Japan:
Tokyo-Wuhan andTokyo-Chongqing

A-share Placement
Rmb 3.5 bn

Feb 2018
Feb 2016

March 2009
Nov 2004

Jun 2016
Oct 2015
Sept 2011

Jan 2015

Spring Airlines Japan isestablished, with Spring
Airlines holding a 33%
stake

21 January − Spring
Airlines stages A-share
IPO, celebrates byringing the opening bellat the Shanghai Stock
Exchange

July 2005
Makes inaugural
flight, marking theofficial start ofoperations for China's
first low-cost carrier

Share capital isincreased to 800m
shares throughconversion of thecapital reserve fundIssued RMB 2.3 bn
corporate bonds,
listing in SSE

4

Shareholding Structure
A-share shareholding diagram （By the end of 1Q-2020）

Wang Zhenghua, 23
other individuals andTianshan AssetManagement

WangZhenghua and23 otherindividuals

Shanghai Spring
International Travel
Service (Group)

ShanghaiSpringChartered
Flight Travel
Service54.98%

3.74%

Employee
Investment
Platform 1

Employee
Investment
Platform 2

Shanghai
Chunxiang
Investment

Shanghai
Chunyi
Investment

2.61%

1.55%

Public37.09%

Stock
IncentivePlan

0.03%

Spring Airlines Co., Ltd.
Acting in concert

Stock Incentive Plan

Zhenghua Wang, who is the actual controller of the company, holds 21.46% shares indirectlythrough 2 legal entities.

5Operational Model One aircraft model − the Airbus A320

Simplicity

Two "ones"– Using just one aircraft model and engine type lets Spring Airlines lower

LCC

costs for aircraft and supplies through centralized procurement; also
lower inventories.
– Makes maintenance work easier to manage; simplifies training of pilots,
aircraft crew and cabin crew.

 One cabin section − Economy class– This can result in 15-20% more passenger seats compared to an A320

with a typical two-classes configuration, which means a lower cost peravailable seat kilometer (CASK).
– Since Sept 2015, Spring Airlines introduced A320 with new cabin
configuration amounting to 61 aircrafts currently that increases thenumber of seats to 186 from 180 without reducing the space between
rows, driving further efficiency gains.

 High Passenger Load Factor

Efficiency

Two "highs"– Passenger load factor (PLF) has been averaged above 90.8%, around880bps above Big3 SOEs average of 82.0% for regular flights in 2019.
– For local airports, high PLF means substantial amounts of extra passenger
traffic, which contributes to rapid growth in airport throughput. This has
prompted local airports and governments to offer many types of support,such as landing fee reductions/exemptions, route subsidies, etc.

 High aircraft utilization– The company maintained a daily aircraft utilization hours above 11.2 hours

in 2019, significantly higher than the industry average.
6

Operational Model

LCC

Efficiency

Two "lows"

Simplicity

 Low marketing overhead: independent information systems– The company has distribution and booking systems that are independent
from Travel Sky, which minimizes sales expenses and other related cost
incurred during the ticket sales process. It also strengthens theindependence of the company's sales activities and its control over sales
channels.
– Except for chartered flights/block space, e-commerce channel mixed had
an 91.9% contribution in 2019 including 33.1% from APP on mobile
terminal, of which WeChat mini program became the channel with thehighest growth rate.
– The company continuously upgrades the loyalty membership program.
The number of senior members increased by 66 times yoy.
– In 2019, Spring Airlines‘ sales expenses was Rmb0.0060 per available
seat kilometer (ASK), declined by 10.4% yoy− much lower than theaverage for A-share listed airlines.
 Low administrative overhead– The company has significantly reduced labor costs and routine expenses
for administrative staff through strict budget management, scientificperformance assessments and rational limits on the ratio of employees toaircraft.
– In 2019, Spring Airlines' administrative expenses was Rmb0.0042 perASK, decreased by 19.7% yoy, much lower than the average for A-sharelisted airlines.

7Operational Model Differentiated service

LCC

Efficiency

Ancillary revenue

Simplicity– Unlike full service airlines, Spring Airlines adopts a differentiated service
policy whereby passengers can pay extra for additional services, such as
inflight food and beverages, overweight baggage, express boarding(including seat selection) and insurance, which gives customers moreautonomy and convenience throughout the entire service process, fromticket booking to payment, boarding and flying.
– In the field of aviation media, the company continued to actively explore theadvertising media service business, and the overall aircraft spraying
business achieved rapid growth in 2019
– In 2019, vigorously developed the retail business and gradually transfer fromthe main cabin scene to the online scene to realize the two-way conversion
between high-frequency and low-frequency consumption. Cooperated with
Chunqiu payment, Tencent, Jingdong and other online payment platforms tobreak through mobile payment without internet in the air.

8

2. Fleet and Network

Fleet Expansion
Fleet scale and structure of last 3 years

The company signed
aircraft purchaseagreement with Airbus on
Dec. 3, 2015 to purchase60 aircrafts of A320NEO
Family, including 15
A321NEO and 45
A320NEO with rights toconvert into A321 NEO.
The aircrafts areexpected to be delivered
during 2019 to 2023

A321NEO, single economy
class with 240 seats, will bedelivered from 2020. The
company will also consider
to convert more A320NEO
into A321NEO

3-year Fleet scale and expansion plan

120
150

100
80603040201354950

120
90

3540

1

11140

40

43456002016

2017

Purchase

2018

Financial leasing

2019

2020Q113212010530

Operational leasing

The company owns A320 fleet of 96 aircrafts, 61 ofwhich have 186seats each and the others have 180
seats each at the end of Q1-2020

The average age of the planes 5.2 years

The aircrafts delivered in the future are all 186 seats

02020

Expense of aircraft purchase(USD 100m)
108.3

2021

2022

2020

2021

2022

Delivered

12 A320

15 A320

12 A320

Lease expire

2711Total

1215

1286.46The company has submitted aircraft delivery
plan to NDRC and CAAC,

The actual number and progress of aircraft
delivery will be adjusted continuously
according to the approval of the NDRC andCAAC, combined with the actual deliverycapacity of Airbus as well as the developmentof the Covid-19 epidemic.

44202020



2021

2022

The catalogue price of A320CEO is USD 106
million each and the price of A320NEO is USD
115million, according to Airbus website

10Operation Bases
The hub of East China is based in theShanghai base, Yangzhou in Jiangsu
Province and Ningbo in Zhejiang
Province, serving the Yangtze River
Delta regional economic integration
construction.
The hub of South China is based inShenzhen and Jieyang serving GBA.
The hub of North China is based inShijiazhuang serving the integration
construction of Beijing, Tianjin andHebei. The hub of Northeast China isbased in Shenyang. Lanzhou andXi'an airports with new capacity
deployment in 2019 becomes themilestone of developing the northwest
region, meanwhile, the company will
also gradually increase the capacity
in Southwest China.

Lanzhou
AirportHeilongjiang

Shijiazhuang
Airport

Jilin

Xinjiang

Shenyang
AirportLiaoning
Inner Mongolia

Qinghai

NingxiaGansu

BeijingYangzhouAirportTianjin
Hebei
ShanxiShandongShanxi Henan
Tibet

Jiangsu
Anhui

Chongqing

Shanghai

Hubei

SichuanZhejiangShanghai Hongqiao
Airport, Shanghai
Pudong Airport

Hunan Jiangxi

GuizhouYunnan

New Base

Guangxi

FujianGuangdong

TaiwanNingboAirportHong Kong

Regional Base
For international routes, the company
Jieyang Airport
Hainanhas set Bangkok, Osaka and Jeju as
Province where Base locatedShenzhen Airport
overnight bases. Backed by thedomestic network, the company
targets and keeps expanding in The company will continue to construct network under current bases distribution, decreasesoutheast Asia and northeast Asia
routes deviation from bases, increase the frequency of routes to/from the bases, enhance themarket.

maintenance and operation capability at the bases, keep the balanced deployment between
the domestic and overseas market.

11Routes Network（by the end of 2019）
The overall structure of thecompany has been relatively stablein 2019, and the domestic andinternational capacity is morebalanced. More additionaldomestic capacity was deployed in
new bases in the last 3 years
because of the limited additional
resources in the high-tier markets,
which is expected to be improved
with more and more opportunities
released in the next few years.

哈尔滨长春长白山乌鲁木齐

敦煌

呼和浩特包头

承德

沈阳

札幌大连

烟台
石家庄 天津威海东营青岛东京济南茨城济州岛邯郸徐名古屋
州
延安
南淮安
高松 大阪
盐城
洛阳 郑州通南阳 合肥 扬州
西安佐贺
上海浦东
广元
上海虹桥
十堰 武汉
南京
绵阳
恩施
杭州
宁波
重庆
常德
温州
南昌
黔江

太原

兰州

成都

贵阳
安顺

Thailand, Japan and South Korea
are still the three largest
destination countries as always,among which, Thailand route still
contributes most capacity withlower growth rate however. Japanand Korea routes enjoy fast growth
because of relationshipimprovement and Jeju routes
contribution.

张家口昆明
西双版纳
仰光遵义长沙 井冈山怀化晋江邵阳厦门
桂林
揭阳广州
深圳南宁
珠海
香港
北海
湛江 澳门

福州

台北

高雄

清迈
三亚
泰国曼谷素叻他尼

金边

柬埔寨暹粒

普吉岛
甲米
沙巴州

Shanghai&Shenzhen domestic routes
Shijiazhuang,Shenyang&Lanzhou
domestic routes
Yangzhou,Ningbo&Jieyang domestic
routesBangkok,Osaka & Jeju
Other domestic and international routes

新加坡

13

Routes Network
Routes Structure

Capacity by region

240(passenger-kilometer hundred millions)

60,000210

13

343,707

180
150

7120

52

8

69

20

52

40,000

90

60

100

39,691

38,96534,68320,000

144

128

113

33,40030,248

10,1569,362

7,9055,731

2019Q1

2020Q130002017

2018
Domestic
国内航线



2019
Int’l
国际航线

2018
Domestic

HK, Macao &港澳台航线
TaiwanAs of 2019, the company operated 210 routes,128
domestic, 69 international and 13 regional routes.

International Routes Structure
2017

2020Q1

Int'lRegional

In 2019, total ASK increased by 12.2% yoy, with domestic, international andregional increasing by 10.0%, 16.5% and 14.7%, accounting for 64.1%, 32.6% and3.3% respectively.

Domestic Routes Structure
10,000In 2019, ASK of Thailand, Japan and Korea, increased by
18.2% yoy, accounting for 82.8% of the total international
capacity.

8,000

The capacity in Japan increased rapidly because of therelationship improvement and Tokyo Olympic Games sothat ASK increased by more than 60% yoy.

4,000

(passenger-kilometer hundred millions)
8,682

7,522

ASK of Shijiazhuang

6,000
4,425
3,737

2,000

Cambodian routes were optimized and Phnom Penh
capacity increased.
There were 28 domestic cities of departure and 18
overseas destinations by the end of 2019.

2019

Airport ,Shenyang Airport and石家庄正定机场+沈阳桃仙机场+Lanzhou Airport (2nd tier bases)兰州中川机场可用座位公里（百万人公里）
ASK of Yangzhou Airport,
扬州扬泰机场+宁波栎社机场+揭Ningbo Airport & Jieyang Airport阳潮汕机场可用座位公里（百万(new bases)人公里）

02018



2019

In 2019, ASK increased by 15.4% and 18.4% yoy in second-tier bases andnew bases, accounting for 31.2% and 15.9% comparing with 29.9% and14.8% in 2018.

13

3. Operational Statistics andFinancials

Operational Statistics
Fleet and Passenger Number

ASK & RPK(# of aircraft, Pax in millions)(Unit in millions)
60,00012093100
8096838176

43,70740,0006040201720

2018
Fleet Number201939,691

20,0002253

2019Q1

2020Q1

10,156 9,362 7,905
5,73102017

33,40030,24838,96534,6830
2017

2018

2019

Domestic

Passenger Number

Daily Utilization Hours (Available)

Int'l

2019Q1

2020Q1

Regional

Passenger Load Factor(Hours)
100%

12.4

92.7%
11.6
11.05

11.27

11.48

91.5%
89.0%
88.0%

11.57
90% 90.6%
87.6%

10.8

86.2%
80%

92.4%
90.8%

92.7%
92.2%
92.0%

88.…
88.0%

84.0%

91.2%
72.6%
72.5%
72.5%
70.0%

10.070%

8.98

9.2

60%

8.4
2017

2018

2019

2019Q1

2020Q1

2017
Overall2018

2019

Domestic

2019Q1Int'l

2020Q1

Regional

15

Revenue and Profit
Operating Revenue

Other revenue(RMB in millions)(RMB in millions,)

24000
15
16000

1214,804

13,114
10,971

6
3,640

2,384

8.44

30

2018

Passenger Revenue

2019

2019Q1

Cargo Revenue

2020Q1

2017

Others

11.05

17.2%
12.1%

1,332

0.82

1.59

0.54
2020Q1

2019Q1Government Subsidy(RMB in millions)

2,000
9.7%
11.5%

12.4%
11.4%

20%

13.0%

180

172.0

166.0

154.3

10%

120

1,503 1,689

1,262

2019

0.30

Revenue and Net Profit per Aircraft(RMB in millions, %)

11.5%

2018
Routes Subsidy

Net Profit & Net Margin400

10.340

2017

1,200

2.49

1.83

98000

2.69

1,8380%

-9.6%

627

1,27047560-13.0% -10%
17.7

21.4

19.0-309 -228
(400)

-20%

2017

2018

Reported Gross Profit

2019

2019Q1

2020Q1

Reported Net Profit

02017
Revenue per aircraft

2018

2019

Net Profit per aircraft16

Yield & Unit Cost and Expenses
Passenger Yield

Unit Cost(RMB in Yuan)

0.40

0.341

0.350

0.60
0.50

(RMB in Yuan)

0.37
0.35
0.32

0.30

0.41 0.52
0.46
0.46
0.41
0.38
0.41 0.390.40
0.36
0.380.37
0.34
0.35
0.30
0.36

0.38

0.300

0.300

0.297

0.297

0.269
0.252

0.250
0.203

0.20

0.304

0.289

0.204

0.201

0.205

0.200

0.10
0.150

0.00
Overall

Domestic

2016

2017

Int'l

2018

2019Q1

2016

Regional

2017

2018

unit cost

2020Q1

Structure of COGS

2019

2019Q1

2020Q1

unit cost ex-fuelSelling & G&A & R&D Expenses per ASK(%)(RMB in Yuan)
0.012

2019

32.6

15.8

18.8

19.0

3.9 2.4 6.3
0.009
0.008

2018

34.0

15.4

18.8

16.8

0.006

4.3 2.9 6.1

0.007
0.005

0.004
0%

10%

20%

30%

40%Jet duel
Payroll
Maintainings
Civil aviation construction fund

50%60%

70%

80%

90% 100%

Lease & Depreciation
Landing fee
Crew training and cmpensation fee
Others

0.006

0.003

0.004
0.003

0.002

0.006
0.005

0.007
0.004
0.004

0.002

0.000
2017

2018

Selling expenses

2019
G&A expenses

2019Q1

2020Q1R&D expenses

17

Solvency & Foreign Currency Exchange Analysis
Current Ratio & Quick Ratio

Asset Liability Ratio(RMB in Yuan)

(%)
1.42

1.50
1.22

1.32
1.30
1.20

1.12

70.00

1.40

1.10 1.08

1.10

60.00
58.92

1.00

49.86

48.86

50.00

51.27

48.78
0.50
2017

2018

2019

2019Q1

2020Q140.00
2017

CR

EBITDA Interest Coverage Ratio

2018

2019

2019Q1

2020Q1

Foreign Currency Exchange Analysis(RMB in Yuan)

12.00
10.08
10.00

USD Liability
Proportion

USD
Exposure

USD Sensitivity（+10%）

2018

21.2% -77.137,896

5,785,342

2019

9.0%

-1,991,409

9.96

8.95
8.48
8.00

6.00
2016

2017

2018

2019

26,552,119

18

Thank you!