|   |  ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|--------------------------------------------------------------------------------------|

|   |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|------------------------------------------------------------------------------------------|

|   |  ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|---------------------------------------------------------------------------------------------|

| Title of each class                      |   | Name of each exchange on which registered |
|---------------------------------------------------------|--------|-------------------------------------------------------------------------|
|                                                    |   |                                                                    |
| Ordinary H Shares of par value |   | New York Stock Exchange, Inc.                       |
| RMB1.00 per share                             |   |                                                                    |
| represented by American                       |   |                                                                    |
| Depositary Receipts                                |   |                                                                    |

| SEC 1852 (05-06) |   | Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| U.S. GAAP  ̈ |   | International Financial Reporting Standards þ |   | Other  ̈ |
|------------------|--------|----------------------------------------------------|--------|--------------|
|             |   | as issued by the International Accounting          |   |         |
|             |   | Standards Board                                    |   |         |

----

|                                                                  | Page      |
|-----------------------------------------------------------------------|-----------|
|                                                                  |      |
| FORWARD-LOOKING STATEMENTS                                            |   5  |
|                                                                  |      |
| INTRODUCTORY NOTE                                                     |   5  |
|                                                                  |      |
| GLOSSARY OF AIRLINE INDUSTRY TERMS                                    |   6  |
|                                                                  |      |
| PART I                                                                |   7  |
|                                                                  |      |
| ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.        |   7  |
|                                                                  |      |
| ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.                      |   7  |
|                                                                  |      |
| ITEM 3. KEY INFORMATION.                                              |   7  |
|                                                                  |      |
| Selected Financial Data                                               |   7  |
|                                                                  |      |
| Capitalization and Indebtedness                                       |   9  |
|                                                                  |      |
| Reasons for the Offer and Use of Proceeds                             |   9  |
|                                                                  |      |
| Risk Factors                                                          |   10 |
|                                                                  |      |
| ITEM 4. INFORMATION ON THE COMPANY.                                   |   16 |
|                                                                  |      |
| History and Development of the Company                                |   16 |
|                                                                  |      |
| Business Overview                                                     |   17 |
|                                                                  |      |
| Organizational Structure                                              |   33 |
|                                                                  |      |
| Property, Plant and Equipment                                         |   34 |
|                                                                  |      |
| ITEM 4A. UNRESOLVED STAFF COMMENTS.                                   |   35 |
|                                                                  |      |
| ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.                 |   35 |
|                                                                  |      |
| Critical Accounting Policies                                          |   35 |
|                                                                  |      |
| Recently Pronounced International Financial Reporting Standards       |   36 |
|                                                                  |      |
| Overview                                                              |   36 |
|                                                                  |      |
| Certain Financial Information and Operating Data by Geographic Region |   37 |
|                                                                  |      |
| Operating Results                                                     |   38 |
|                                                                  |      |
| Liquidity and Capital Resources                                       |   44 |
|                                                                  |      |
| Contractual Obligations and Commitments                               |   46 |
|                                                                  |      |
| Research and Development, Patents and Licenses, etc.                  |   45 |
|                                                                  |      |
| Trend Information                                                     |   45 |

----

| Off-Balance Sheet Arrangements                             |   46 |
|------------------------------------------------------------|-----------|
|                                                       |      |
| ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.        |   46 |
|                                                       |      |
| Directors, Senior Management and Employees                 |   46 |
|                                                       |      |
| Compensation                                               |   50 |
|                                                       |      |
| Board Practices                                            |   52 |
|                                                       |      |
| Employees                                                  |   53 |
|                                                       |      |
| Share Ownership                                            |   54 |
|                                                       |      |
| ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS. |   54 |
|                                                       |      |
| Major Shareholders                                         |   54 |
|                                                       |      |
| Related Party Transactions                                 |   55 |
|                                                       |      |
| Interests of Experts and Counsel                           |   58 |
|                                                       |      |
| ITEM 8. FINANCIAL INFORMATION.                             |   58 |
|                                                       |      |
| Consolidated Statements and Other Financial Information    |   58 |
|                                                       |      |
| Significant Changes                                        |   58 |
|                                                       |      |
| Legal Proceedings                                          |   58 |
|                                                       |      |
| Dividend Information                                       |   58 |
|                                                       |      |
| ITEM 9. THE OFFER AND LISTING.                             |   58 |
|                                                       |      |
| Offer and Listing Details                                  |   58 |
|                                                       |      |
| Plan of Distribution                                       |   60 |
|                                                       |      |
| Markets                                                    |   60 |
|                                                       |      |
| Selling Shareholders                                       |   60 |
|                                                       |      |
| Dilution                                                   |   60 |
|                                                       |      |
| Expenses of the Issue                                      |   60 |
|                                                       |      |
| ITEM 10. ADDITIONAL INFORMATION.                           |   60 |
|                                                       |      |
| Share Capital                                              |   60 |
|                                                       |      |
| Memorandum and Articles of Association                     |   60 |
|                                                       |      |
| Material Contracts                                         |   64 |
|                                                       |      |
| Exchange Controls                                          |   65 |
|                                                       |      |
| Taxation                                                   |   65 |

----

| Dividends and Paying Agents                                                                       |   69 |
|---------------------------------------------------------------------------------------------------|-----------|
|                                                                                              |      |
| Statement by Experts                                                                              |   69 |
|                                                                                              |      |
| Documents on Display                                                                              |   69 |
|                                                                                              |      |
| Subsidiary Information                                                                            |   69 |
|                                                                                              |      |
| ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                              |   69 |
|                                                                                              |      |
| ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.                                  |   71 |
|                                                                                              |      |
| PART II                                                                                           |   72 |
|                                                                                              |      |
| ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.                                         |   72 |
|                                                                                              |      |
| ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |   72 |
|                                                                                              |      |
| ITEM 15. CONTROLS AND PROCEDURES.                                                                 |   72 |
|                                                                                              |      |
| ITEM 16. RESERVED.                                                                                |   74 |
|                                                                                              |      |
| ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.                                                       |   74 |
|                                                                                              |      |
| ITEM 16B. CODE OF ETHICS.                                                                         |   74 |
|                                                                                              |      |
| ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                 |   74 |
|                                                                                              |      |
| ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE.                              |   74 |
|                                                                                              |      |
| ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.                 |   75 |
|                                                                                              |      |
| ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.                                    |   75 |
|                                                                                              |      |
| ITEM 16G. CORPORATE GOVERNANCE.                                                                   |   75 |
|                                                                                              |      |
| PART III                                                                                          |   77 |
|                                                                                              |      |
| ITEM 17. FINANCIAL STATEMENTS.                                                                    |   77 |
|                                                                                              |      |
| ITEM 18. FINANCIAL STATEMENTS.                                                                    |   77 |
|                                                                                              |      |
| ITEM 19. EXHIBITS.                                                                                |   77 |
|                                                                                              |      |
| Index to Exhibits                                                                                 |   77 |

----

|   | · | general economic and business conditions in markets where the Company operates, including changes in interest rates; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | the effects of competition on the demand for and price of our services; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | natural phenomena; |
|--------|--------|--------------------|

|   | · | actions by government authorities, including changes in government regulations, and changes in the CAAC’s regulatory policies; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Company’s relationship with China Southern Air Holding Company (the “CSAHC”); |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | uncertainties associated with legal proceedings; |
|--------|--------|--------------------------------------------------|

|   | · | technological development; |
|--------|--------|----------------------------|

|   | · | future decisions by management in response to changing conditions; |
|--------|--------|--------------------------------------------------------------------|

|   | · | the Company’s ability to execute prospective business plans; |
|--------|--------|--------------------------------------------------------------------|

|   | · | the availability of qualified flight personnel and airport facilities; and |
|--------|--------|----------------------------------------------------------------------------|

|   | · | misjudgments in the course of preparing forward-looking statements. |
|--------|--------|---------------------------------------------------------------------|

----

| Capacity Measurements                                            |   |                                                                                                                                                                    |
|------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |   |                                                                                                                                                                    |
| “available seat kilometers” or “ASKs”    |   | the number of seats made available for sale multiplied by the kilometers flown                                                                                          |
|                                                             |   |                                                                                                                                                                    |
| “available ton kilometers” or “ATKs”     |   | the tons of capacity available for the transportation of revenue load (passengers and cargo) multiplied by the kilometers flown                                         |
|                                                             |   |                                                                                                                                                                    |
| Traffic Measurements                                             |   |                                                                                                                                                                    |
|                                                             |   |                                                                                                                                                                    |
| “cargo ton kilometers”                               |   | the load in tons multiplied by the kilometers flown                                                                                                                     |
|                                                             |   |                                                                                                                                                                    |
| “revenue passenger kilometers” or “RPKs” |   | the number of passengers carried multiplied by the kilometers flown                                                                                                     |
|                                                             |   |                                                                                                                                                                    |
| “revenue ton kilometers” or “RTKs”       |   | the load (passenger and cargo) in tons multiplied by the kilometers flown                                                                                               |
|                                                             |   |                                                                                                                                                                    |
| Yield Measurements                                               |   |                                                                                                                                                                    |
|                                                             |   |                                                                                                                                                                    |
| “average yield”                                      |   | revenue from airline operations (passenger and cargo) divided by RTKs                                                                                                   |
|                                                             |   |                                                                                                                                                                    |
| “cargo yield”                                        |   | revenue from cargo operations divided by cargo ton kilometers                                                                                                           |
|                                                             |   |                                                                                                                                                                    |
| “passenger yield”                                    |   | revenue from passenger operations divided by RPKs                                                                                                                       |
|                                                             |   |                                                                                                                                                                    |
| “ton”                                                |   | a metric ton, equivalent to 2,204.6 pounds                                                                                                                              |
|                                                             |   |                                                                                                                                                                    |
| Load Factors                                                     |   |                                                                                                                                                                    |
|                                                             |   |                                                                                                                                                                    |
| “breakeven load factor”                              |   | the load factor required to equate scheduled traffic revenue with operating costs assuming that total operating surplus is attributable to scheduled traffic operations |
|                                                             |   |                                                                                                                                                                    |
| “overall load factor”                                |   | RTKs expressed as a percentage of ATKs                                                                                                                                  |
|                                                             |   |                                                                                                                                                                    |
| “passenger load factor”                              |   | RPKs expressed as a percentage of ASKs                                                                                                                                  |

|  Utilization               |   |                                                                      |
|---------------------------------|--------|---------------------------------------------------------------------------|
|                            |   |                                                                      |
| “utilization rates” |   | the actual number of flight and taxi hours per aircraft per operating day |
|                            |   |                                                                      |
| Equipment                       |   |                                                                      |
|                            |   |                                                                      |
| “expendables”       |   | aircraft parts that are ordinarily used up and replaced with new parts    |
|                            |   |                                                                      |
| “rotables”          |   | aircraft parts that are ordinarily repaired and reused                    |
|                            |   |                                                                      |
| Liquidity Ratios                |   |                                                                      |
|                            |   |                                                                      |
| “current ratio”     |   | current assets divided by current liabilities                             |
|                            |   |                                                                      |
| “quick ratio”       |   | current assets excluding inventories divided by current liabilities       |
|                            |   |                                                                      |
| Others                          |   |                                                                      |
|                            |   |                                                                      |
| “ADR”               |   | American Depositary Receipt                                               |

----

| “A Shares”  |   | Shares issued by the Company to investors in the PRC for subscription in RMB, with par value of RMB1.00 each                                                       |
|------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   |                                                                                                                                                               |
| “CAAC”           |   | Civil Aviation Administration of China                                                                                                                             |
|                         |   |                                                                                                                                                               |
| “CAOSC”          |   | China Aviation Oil Supplies Company                                                                                                                                |
|                         |   |                                                                                                                                                               |
| “CSRC”           |   | China Securities Regulatory Commission                                                                                                                             |
|                         |   |                                                                                                                                                               |
| “H Shares”  |   | Shares issued by the Company, listed on the Stock Exchange of Hong Kong Limited and subscribed for and traded in Hong Kong dollars, with par value of RMB1.00 each |
|                         |   |                                                                                                                                                               |
| “Nan Lung”       |   | Nan Lung Holding Limited (a wholly-owned subsidiary of CSAHC)                                                                                                      |
|                         |   |                                                                                                                                                               |
| “NDRC”           |   | National Development and Reform Commission of China                                                                                                                |
|                         |   |                                                                                                                                                               |
| “SA Finance”     |   | Southern Airlines Group Finance Company Limited                                                                                                                    |
|                         |   |                                                                                                                                                               |
| “SAFE”           |   | State Administration of Foreign Exchange of China                                                                                                                  |
|                         |   |                                                                                                                                                               |
| “SEC”            |   | United States Securities and Exchange Commission                                                                                                                   |

|                                        | Year ended December 31,                        |   |
|---------------------------------------------|---------------------------------------------------------------|--------|
|                                        | 2010US$                                                       |   | 2010RMB |   | 2009RMB |   | 2008RMB |   | 2007RMB |   | 2006RMB |   |
|                                        | (in millions, except per share data) |   |
|                                        |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Income Statement Data:         |                                                          |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenue                           |                                                          |   | 11,550 |   |   |   | 76,495 |   |   |   | 54,802 |   |   |   | 55,288 |   |   |   | 54,401 |   |   |   | 46,081 |   |
| Operating expenses                          |                                                          |   | (10,673 | ) |   |   | (70,685 | ) |   |   | (55,351 | ) |   |   | (61,767 | ) |   |   | (52,956 | ) |   |   | (45,899 | ) |
| Operating profit/(loss)                     |                                                          |   | 949 |   |   |   | 6,286 |   |   |   | 1,440 |   |   |   | (5,646 | ) |   |   | 1,881 |   |   |   | 663 |   |
| Profit/(loss) before taxation               |                                                          |   | 1,222 |   |   |   | 8,093 |   |   |   | 432 |   |   |   | (4,724 | ) |   |   | 2,879 |   |   |   | 227 |   |
| Profit/(loss) for the year                  |                                                          |   | 969 |   |   |   | 6,415 |   |   |   | 527 |   |   |   | (4,786 | ) |   |   | 2,032 |   |   |   | 104 |   |
| Profit/(loss) attributable to:              |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity shareholders of the Company          |                                                          |   | 875 |   |   |   | 5,795 |   |   |   | 330 |   |   |   | (4,823 | ) |   |   | 1,839 |   |   |   | 106 |   |
| Non-controlling interests                   |                                                          |   | 94 |   |   |   | 620 |   |   |   | 197 |   |   |   | 37 |   |   |   | 193 |   |   |   | (2 | ) |
| Basic and diluted earnings/(loss) per share |                                                          |   | 0.11 |   |   |   | 0.70 |   |   |   | 0.05 |   |   |   | (0.74 | ) |   |   | 0.28 |   |   |   | 0.02 |   |
| Basic and diluted earnings/(loss) per ADR   |                                                          |   | 5.26 |   |   |   | 34.85 |   |   |   | 2.33 |   |   |   | (36.75 | ) |   |   | 14.01 |   |   |   | 0.81 |   |

----

|                                                                               |   | Year ended December 31, |   |
|------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                               |   | 2010US$                           |   |   | 2010RMB |   |   | 2009RMB |   |   | 2008RMB |   |   | 2007RMB |   |   | 2006RMB |   |
|                                                                               |   | (in millions)                |   |
|                                                                               |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Balance Sheet Data:                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                          |   |                              | 1,570  |   |   |   | 10,404 |   |   |   | 4,343 |   |   |   | 4,649 |   |   |   | 3,824 |   |   |   | 2,264 |   |
| Other current assets                                                               |   |                              | 824    |   |   |   | 5,455 |   |   |   | 4,785 |   |   |   | 4,599 |   |   |   | 4,966 |   |   |   | 4,419 |   |
| Asset classified as held for sale                                                  |   |                              | -      |   |   |   | - |   |   |   | 529 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Property, plant and equipment, net                                                 |   |                              | 12,112 |   |   |   | 80,214 |   |   |   | 63,673 |   |   |   | 53,237 |   |   |   | 58,441 |   |   |   | 56,335 |   |
| Total assets                                                                       |   |                              | 16,796 |   |   |   | 111,232 |   |   |   | 94,750 |   |   |   | 83,042 |   |   |   | 82,006 |   |   |   | 75,689 |   |
| Bank and other loans, including long-term bank and other loans due within one year |   |                              | 1,408  |   |   |   | 9,324 |   |   |   | 17,452 |   |   |   | 22,178 |   |   |   | 24,948 |   |   |   | 23,822 |   |
| Short-term financing bills                                                         |   |                              | -      |   |   |   | - |   |   |   | - |   |   |   | 2,000 |   |   |   | - |   |   |   | - |   |
| Obligations under capital leases due within one year                               |   |                              | 250    |   |   |   | 1,654 |   |   |   | 1,431 |   |   |   | 1,781 |   |   |   | 2,877 |   |   |   | 3,091 |   |
| Bank and other loans, excluding balance due within one year                        |   |                              | 4,813  |   |   |   | 31,876 |   |   |   | 27,875 |   |   |   | 17,429 |   |   |   | 9,074 |   |   |   | 10,018 |   |
| Obligations under capital leases, excluding balance due within one year            |   |                              | 1,929  |   |   |   | 12,776 |   |   |   | 11,887 |   |   |   | 11,157 |   |   |   | 12,858 |   |   |   | 12,307 |   |
| Total equity                                                                       |   |                              | 4,562  |   |   |   | 30,213 |   |   |   | 13,262 |   |   |   | 9,479 |   |   |   | 14,310 |   |   |   | 11,752 |   |
| Number of shares (in millions)                                                     |   |                              | 9,818  |   |   |   | 9,818 |   |   |   | 8,003 |   |   |   | 6,561 |   |   |   | 4,374 |   |   |   | 4,374 |   |

|                                          |   | Year ended December 31, |      |
|-----------------------------------------------|--------|-------------------------|-----------|
|                                          |   | 2010                    |      |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Capacity                                      |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |
| ASK (millions)                                |   |                    | 140,498   |   |   |   | 123,441 |   |   |   | 112,767 |   |   |   | 109,733 |   |   |   | 97,059 |   |
| ATK (millions)                                |   |                    | 19,140    |   |   |   | 15,446 |   |   |   | 14,276 |   |   |   | 14,208 |   |   |   | 12,656 |   |
| Kilometers flown (thousands)                  |   |                    | 872,899   |   |   |   | 746,133 |   |   |   | 686,236 |   |   |   | 675,127 |   |   |   | 594,957 |   |
| Hours flown (thousands)                       |   |                    | 1,392     |   |   |   | 1,195 |   |   |   | 1,106 |   |   |   | 1,075 |   |   |   | 931 |   |
| Number of landing and take-offs               |   |                    | 686,223   |   |   |   | 616,296 |   |   |   | 556,914 |   |   |   | 543,789 |   |   |   | 481,810 |   |
| Traffic                                       |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| RPK (millions)                                |   |                    | 111,328   |   |   |   | 93,002 |   |   |   | 83,184 |   |   |   | 81,727 |   |   |   | 69,582 |   |
| RTK (millions)                                |   |                    | 13,104    |   |   |   | 10,067 |   |   |   | 9,200 |   |   |   | 9,250 |   |   |   | 8,071 |   |
| Passengers carried (thousands)                |   |                    | 76,456    |   |   |   | 66,281 |   |   |   | 58,237 |   |   |   | 56,903 |   |   |   | 49,206 |   |
| Cargo and mail carried (tons)                 |   |                    | 1,117,000 |   |   |   | 862,000 |   |   |   | 835,000 |   |   |   | 872,000 |   |   |   | 819,000 |   |
| Load Factors                                  |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger load factor (RPK/ASK) (%)           |   |                    | 79.2      |   |   |   | 75.3 |   |   |   | 73.8 |   |   |   | 74.5 |   |   |   | 71.7 |   |
| Overall load factor (RTK/ATK) (%)             |   |                    | 68.5      |   |   |   | 65.2 |   |   |   | 64.4 |   |   |   | 65.1 |   |   |   | 63.8 |   |
| Breakeven load factor (%)                     |   |                    | 65.3      |   |   |   | 68.1 |   |   |   | 73.8 |   |   |   | 64.8 |   |   |   | 65.1 |   |
| Yield                                         |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Yield per RPK (RMB)                           |   |                    | 0.62      |   |   |   | 0.54 |   |   |   | 0.61 |   |   |   | 0.61 |   |   |   | 0.60 |   |
| Yield per cargo and mail ton kilometers (RMB) |   |                    | 1.70      |   |   |   | 1.63 |   |   |   | 1.96 |   |   |   | 1.87 |   |   |   | 1.89 |   |
| Yield per RTK (RMB)                           |   |                    | 5.66      |   |   |   | 5.26 |   |   |   | 5.86 |   |   |   | 5.75 |   |   |   | 5.57 |   |
| Fleet                                         |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| — Boeing                                |   |                    | 208       |   |   |   | 194 |   |   |   | 179 |   |   |   | 177 |   |   |   | 159 |   |
| — Airbus                                |   |                    | 191       |   |   |   | 157 |   |   |   | 133 |   |   |   | 119 |   |   |   | 103 |   |
| — McDonnell Douglas                     |   |                    | 12        |   |   |   | 16 |   |   |   | 25 |   |   |   | 25 |   |   |   | 36 |   |
| — Others                                |   |                    | 11        |   |   |   | 11 |   |   |   | 11 |   |   |   | 11 |   |   |   | 11 |   |
| Total aircraft in service at period end       |   |                    | 422       |   |   |   | 378 |   |   |   | 348 |   |   |   | 332 |   |   |   | 309 |   |
| Overall utilization rate (hours per day)      |   |                    | 9.6       |   |   |   | 9.4 |   |   |   | 9.1 |   |   |   | 9.4 |   |   |   | 9.5 |   |
| Cost                                          |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating cost per ATK (RMB)                  |   |                    | 3.69      |   |   |   | 3.58 |   |   |   | 4.33 |   |   |   | 3.73 |   |   |   | 3.63 |   |

----

| Period               |   | Period End |         |   | Average (1)(RMB per US$) |   |         | High   |   |   | Low    |   |
|----------------------|--------|-----------------|--------------|--------|------------------------------------|--------|--------------|--------|--------|--------|--------|--------|
|                 |   |            |         |   |                               |   |         |   |   |   |   |   |
| Annual Exchange Rate |   |            |         |   |                               |   |         |   |   |   |   |   |
|                 |   |            |         |   |                               |   |         |   |   |   |   |   |   |   |   |   |
| 2006                 |   |            | 7.8041       |   |                               |   | 7.9723       |   |   |   | 8.0702 |   |   |   | 7.8041 |   |
| 2007                 |   |            |  7.2946 |   |                               |   |  7.6058 |   |   |   | 7.8127 |   |   |   | 7.2946 |   |
| 2008                 |   |            | 6.8225       |   |                               |   | 6.9477       |   |   |   | 7.2946 |   |   |   | 6.7800 |   |
| 2009                 |   |            | 6.8259       |   |                               |   | 6.8307       |   |   |   | 6.8470 |   |   |   | 6.8176 |   |
| 2010                 |   |            | 6.6000       |   |                               |   | 6.7696       |   |   |   | 6.8330 |   |   |   | 6.6000 |   |

| (1) | Determined by averaging the rates on the last business day of each month during the relevant period. |
|-----|------------------------------------------------------------------------------------------------------|

| Period                            |   | High   |   |   | Low    |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
|                              |   |   |   |   |   |   |
| Monthly Exchange Rate             |   |   |   |   |   |   |
| October 2010                      |   |   | 6.6912 |   |   |   | 6.6397 |   |
| November 2010                     |   |   | 6.6892 |   |   |   | 6.6330 |   |
| December 2010                     |   |   | 6.6745 |   |   |   | 6.6000 |   |
| January 2011                      |   |   | 6.6364 |   |   |   | 6.5809 |   |
| February 2011                     |   |   | 6.5965 |   |   |   | 6.5520 |   |
| March 2011                        |   |   | 6.5743 |   |   |   | 6.5483 |   |
| April 2011 (up to April 21, 2011) |   |   | 6.5477 |   |   |   | 6.4920 |   |

----

----

----

----

----

----

----

----

----

----

----

|   |   | Passenger carried  |   |   | Cargo and MailCarried (tons) |   |   | Total traffic(tons kilometers) |   |
|--------|--------|-------------------------|--------|--------|---------------------------------------------|--------|--------|------------------------------------------|--------|
| Year   |   | Total(in millions) |   |   | Increase(decrease)overpreviousyear (%) |   |   | Total(inthousands)                       |   |   | Increase(decrease)overpreviousyear (%) |   |   | Total(in millions) |   |   | Increase(decrease)overpreviousyear (%) |   |
| 2008   |   |                    | 58.24  |   |                                        |   | 2.3    |                                     |   |   | 835.0 |   |   |   | (4.2 | ) |   |   | 9,200.0 |   |   |   | (0.5 | )  |
| 2009   |   |                    | 66.28  |   |                                        |   | 13.8   |                                     |   |   | 862.0 |   |   |   | 3.2 |   |   |   | 10,067.0 |   |   |   | 9.4 |   |
| 2010   |   |                    | 76.46  |   |                                        |   | 15.4   |                                     |   |   | 1,117.0 |   |   |   | 29.6 |   |   |   | 13,104.0 |   |   |   | 30.2 |   |

----

----

| Model                |   | Number ofAircraft |   |   | Average age(years) |   |   | AveragePassengerCapacity |   |
|----------------------|--------|------------------------|--------|--------|-------------------------|--------|--------|--------------------------|--------|
| Boeing 777-200A      |   |                   | 4      |   |                    |   | 14.72  |                     |   |   | 373 |   |
| Boeing 777-200B      |   |                   | 6      |   |                    |   | 12.37  |                     |   |   | 282 |   |
| Boeing 757-200       |   |                   | 25     |   |                    |   | 12.17  |                     |   | 192/197/204 |   |
| Boeing 747F          |   |                   | 2      |   |                    |   | 8.54   |                     |   |   | n/a |   |
| Boeing 737-800       |   |                   | 95     |   |                    |   | 3.55   |                     |   | 160/163/170 |   |
| Boeing 737-700       |   |                   | 46     |   |                    |   | 6.32   |                     |   | 120/128/138 |   |
| Boeing 737-300       |   |                   | 25     |   |                    |   | 16.37  |                     |   |   | 137/145 |   |
| Boeing 777F          |   |                   | 5      |   |                    |   | 0.70   |                     |   |   | n/a |   |
| Airbus 319-100       |   |                   | 44     |   |                    |   | 4.38   |                     |   |   | 121 |   |
| Airbus 300-600       |   |                   | 4      |   |                    |   | 16.29  |                     |   |   | 271 |   |
| Airbus 320-200       |   |                   | 69     |   |                    |   | 5.72   |                     |   |   | 151/156 |   |
| Airbus 321-200       |   |                   | 57     |   |                    |   | 3.08   |                     |   |   | 178/182 |   |
| Airbus 330-200       |   |                   | 9      |   |                    |   | 3.63   |                     |   |   | 216/256 |   |
| Airbus 330-300       |   |                   | 8      |   |                    |   | 2.59   |                     |   |   | 283 |   |
| McDonnell Douglas 90 |   |                   | 12     |   |                    |   | 13.25  |                     |   |   | 154 |   |
| Embraer 145 Jet      |   |                   | 6      |   |                    |   | 6.32   |                     |   |   | 50 |   |
| ATR-72               |   |                   | 5      |   |                    |   | 13.59  |                     |   |   | 57 |   |
|                 |   |                   |   |   |                    |   |   |                     |   |   |   |   |
| Total                |   |                   | 422    |   |                    |   |   |                     |   |   |   |   |

| Model                        |   | CapitalLease |   |   | OperatingLease |   |   | AverageRemainingLease Term |   |
|------------------------------|--------|--------------|--------|--------|----------------|--------|--------|---------------------------------|--------|
| Boeing 777-200A and 777-200B |   |         | 0      |   |           |   | 4      |                            |   |   | 1.93 |   |
| Boeing 757-200               |   |         | 0      |   |           |   | 5      |                            |   |   | 0.87 |   |
| Boeing 737-700               |   |         | 9      |   |           |   | 15     |                            |   |   | 4.37 |   |
| Boeing 737-800               |   |         | 12     |   |           |   | 42     |                            |   |   | 5.10 |   |
| Boeing 737-300               |   |         | 0      |   |           |   | 4      |                            |   |   | 1.34 |   |
| Boeing 777F                  |   |         | 2      |   |           |   | 0      |                            |   |   | 8.90 |   |
| Airbus 319-100               |   |         | 6      |   |           |   | 30     |                            |   |   | 5.19 |   |
| Airbus 320-200               |   |         | 18     |   |           |   | 14     |                            |   |   | 6.61 |   |
| Airbus 321-200               |   |         | 13     |   |           |   | 20     |                            |   |   | 7.98 |   |
| Airbus 330-200               |   |         | 5      |   |           |   | 2      |                            |   |   | 7.54 |   |
| Airbus 330-300               |   |         | 0      |   |           |   | 8      |                            |   |   | 9.66 |   |
| Total                        |   |         | 65     |   |           |   | 144    |                            |   |   |   |   |

----

----

----

----

----

----

----

----

|   |   | Passenger carried          |   |   | Cargo and MailCarried (tons) |   |   | Total traffic(ton kilometers) |   |
|--------|--------|---------------------------------|--------|--------|---------------------------------------------|--------|--------|-----------------------------------------|--------|
| Year   |   | IndustryTotal(in millions) |   |   | Group’sShare(% of total)    |   |   | IndustryTotal(inthousands)              |   |   | Group’sShare(% of total) |   |   | IndustryTotal(in billions) |   |   | Group’sShare(% of total) |   |
| 2006   |   |                            | 159.7  |   |                                        |   | 30.8   |                                    |   |   | 3,494 |   |   |   | 23.4 |   |   |   | 30.6 |   |   |   | 26.4 |   |
| 2007   |   |                            | 185.8  |   |                                        |   | 30.6   |                                    |   |   | 4,018 |   |   |   | 21.7 |   |   |   | 36.5 |   |   |   | 25.3 |   |
| 2008   |   |                            | 192.5  |   |                                        |   | 30.3   |                                    |   |   | 4,076 |   |   |   | 20.5 |   |   |   | 37.7 |   |   |   | 24.4 |   |
| 2009   |   |                            | 230.5  |   |                                        |   | 28.8   |                                    |   |   | 4,455 |   |   |   | 19.3 |   |   |   | 42.7 |   |   |   | 23.6 |   |
| 2010   |   |                            | 267.7  |   |                                        |   | 28.6   |                                    |   |   | 5,630 |   |   |   | 19.8 |   |   |   | 53.8 |   |   |   | 24.3 |   |

----

|              |   |                                         |   |   | Cargo and Mail      |   |   |                                        |   |
|-------------------|--------|----------------------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------------------|--------|
| Airport           |   | Passenger carried(% of total) |   |   | Carried(% of total) |   |   | Departing flight(% of total) |   |
| Beijing           |   |                                         | 17.29  |   |                          |   | 13.56  |                                        |   |   | 17.07 |   |
| Guangzhou         |   |                                         | 51.08  |   |                          |   | 28.16  |                                        |   |   | 50.90 |   |
| Shanghai Pudong   |   |                                         | 9.79   |   |                          |   | 5.58   |                                        |   |   | 10.57 |   |
| Shanghai Hongqiao |   |                                         | 14.73  |   |                          |   | 18.15  |                                        |   |   | 14.82 |   |
| Shenzhen          |   |                                         | 29.35  |   |                          |   | 18.09  |                                        |   |   | 27.73 |   |
| Chengdu           |   |                                         | 13.29  |   |                          |   | 14.15  |                                        |   |   | 12.64 |   |
| Kunming           |   |                                         | 15.76  |   |                          |   | 17.82  |                                        |   |   | 14.85 |   |
| Xi’an       |   |                                         | 19.56  |   |                          |   | 23.36  |                                        |   |   | 18.83 |   |
| Hangzhou          |   |                                         | 35.09  |   |                          |   | 29.93  |                                        |   |   | 34.38 |   |
| Chongqing         |   |                                         | 24.74  |   |                          |   | 27.27  |                                        |   |   | 23.92 |   |

|      |   |                                               |   |   | Cargo and Mail      |   |   |                                        |   |
|-----------|--------|----------------------------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------------------|--------|
| Airport   |   | Passenger carried(% of total ) |   |   | Carried(% of total) |   |   | Departing flight(% of total) |   |
| Changsha  |   |                                               | 39.23  |   |                          |   | 50.75  |                                        |   |   | 38.37 |   |
| Wuhan     |   |                                               | 43.79  |   |                          |   | 51.38  |                                        |   |   | 40.22 |   |
| Sanya     |   |                                               | 29.05  |   |                          |   | 31.59  |                                        |   |   | 28.74 |   |
| Haikou    |   |                                               | 28.22  |   |                          |   | 27.74  |                                        |   |   | 25.85 |   |
| Zhengzhou |   |                                               | 51.29  |   |                          |   | 58.83  |                                        |   |   | 47.98 |   |
| Nanning   |   |                                               | 35.87  |   |                          |   | 35.59  |                                        |   |   | 33.10 |   |
| Guilin    |   |                                               | 41.15  |   |                          |   | 51.38  |                                        |   |   | 39.90 |   |
| Zhuhai    |   |                                               | 50.33  |   |                          |   | 56.08  |                                        |   |   | 22.35 |   |

----

----

| Name of company                                  |   | Place and date ofestablishment/operation |   | Proportion ofownershipinterest heldby the Company |   |
|------------------------------------------------------------|--------|---------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
| Shantou Airlines Company Limited                           |   | PRC July 20, 1993                        |   |                                                                  | 60     | % |
| Zhuhai Airlines Company Limited                            |   | PRC May 8, 1995                          |   |                                                                  | 60     | % |
| Xiamen Airlines Company Limited                            |   | PRC August 11, 1984                      |   |                                                                  | 60     | % |
| Guizhou Airlines Company Limited                           |   | PRC November 12, 1991                    |   |                                                                  | 60     | % |
| Chongqing Airlines Company Limited                         |   | PRC June 16, 2007                        |   |                                                                  | 60     | % |
| Guangzhou Nanland Air Catering Company Limited             |   | PRC November 21, 1989                    |   |                                                                  | 55     | % |
| Guangzhou Baiyun International Logistics Company Limited   |   | PRC July 23, 2002                        |   |                                                                  | 61     | % |
| Xinjiang Civil Aviation Property Management Limited        |   | PRC February 12, 2002                    |   |                                                                  | 51.8   | % |
| China Southern Airlines Group Air Catering Company Limited |   | PRC December 25, 2003                    |   |                                                                  | 100    | % |
| Nan Lung International Freight Limited                     |   | Hong Kong October 1, 1996           |   |                                                                  | 51     | % |
| Beijing Southern Airlines Ground Service Company Limited   |   | PRC April 1, 2004                                  |   |                                                                  | 100    | % |

----

|                                                           |   |                                                    |   | Proportion of ownershipinterest held by |   |
|----------------------------------------------------------------|--------|---------------------------------------------------------|--------|-------------------------------------------------------------|--------|
| Name of company                                      |   | Place and date ofEstablishment/operation |   | Groupeffectiveinterest                                      |   |   | TheCompany |   |   | Subsidiaries |   |
| Guangzhou Aircraft Maintenance Engineering Company Limited     |   | PRC October 28, 1989                                    |   |                                                        | 50     | % |   |   | 50 | % |   |   | — |   |
| China Southern Airlines Group Finance Company Limited          |   | PRC June 28, 1995                                       |   |                                                        | 34     | % |   |   | 21.1 | % |   |   | 12. 9 | % |
| Sichuan Airlines Corporation Limited                           |   | PRC August 28, 2002                                     |   |                                                        | 39     | % |   |   | 39 | % |   |   | — |   |
| Zhuhai Xiang Yi Aviation Technology Company Limited            |   | PRC July 10, 2002                                       |   |                                                        | 51     | % |   |   | 51 | % |   |   | — |   |
| Southern Airlines Culture and Media Co.,Ltd.                   |   | PRC May 13, 2004                                        |   |                                                        | 40     | % |   |   | 40 | % |   |   | — |   |
| China Southern West Australian FlyingCollege Pty Limited       |   | Australia January 26, 1971                              |   |                                                        | 48.12  | % |   |   | 48.12 | % |   |   | — |   |
| Guangzhou China Southern Zhongmian Dutyfree Store Co., Limited |   | PRC September 29, 2006                                  |   |                                                        | 50     | % |   |   | 50 | % |   |   | — |   |

|      |   | Land(in square meters) |      |   | Buildings(in square meters ) |   |
|-----------|--------|----------------------------------|-----------|--------|----------------------------------------|--------|
|      |   | Owned                            |      |   | Leased                                 |   |   | Owned |   |   | Leased |   |
| Guangzhou |   |                             | 1,172,531 |   |                                   |   | 99,670 |   |   |   | 679,408 |   |   |   | 11,463 |   |
| Shenzhen  |   |                             | 246,397   |   |                                   |   | — |   |   |   | 105,040 |   |   |   | — |   |
| Zhuhai    |   |                             | 170,062   |   |                                   |   | — |   |   |   | 18,791 |   |   |   | — |   |
| Changsha  |   |                             | 173,745   |   |                                   |   | 6,629 |   |   |   | 70,338 |   |   |   | 12,536 |   |
| Zhengzhou |   |                             | 425,336   |   |                                   |   | — |   |   |   | 56,915 |   |   |   | — |   |
| Haikou    |   |                             | 5,265     |   |                                   |   | 1,711 |   |   |   | 83,923 |   |   |   | 20,917 |   |
| Wuhan     |   |                             | 16,712    |   |                                   |   | 47,882 |   |   |   | 29,893 |   |   |   | 44,282 |   |
| Nanyang   |   |                             | —   |   |                                   |   | — |   |   |   | 18,156 |   |   |   | 60,035 |   |
| Sanya     |   |                             | 106,680   |   |                                   |   | — |   |   |   | 16,968 |   |   |   | — |   |
| Shenyang  |   |                             | 135,455   |   |                                   |   | 103,715 |   |   |   | 101,224 |   |   |   | 6,674 |   |
| Dalian    |   |                             | —   |   |                                   |   | 14,403 |   |   |   | 20,290 |   |   |   | 33,597 |   |
| Jilin     |   |                             | 134,488   |   |                                   |   | 65,076 |   |   |   | 42,312 |   |   |   | 7,767 |   |
| Harbin    |   |                             | 2,499     |   |                                   |   | 286,871 |   |   |   | 36,925 |   |   |   | 25,513 |   |
| Xinjiang  |   |                             | —   |   |                                   |   | 559,416 |   |   |   | 122,890 |   |   |   | 3,396 |   |
| Guilin    |   |                             | 120,705   |   |                                   |   | — |   |   |   | 53,080 |   |   |   | 6,805 |   |

----

|      |   | Land(in square meters) |    |   | Buildings(in square meters) |   |
|-----------|--------|----------------------------------|---------|--------|---------------------------------------|--------|
|      |   | Owned                            |    |   | Leased                                |   |   | Owned |   |   | Leased |   |
| Xiamen    |   |                             | 782,070 |   |                                  |   | — |   |   |   | 512,197 |   |   |   | 23,557 |   |
| Shantou   |   |                             | 36,931  |   |                                  |   | 53,000 |   |   |   | 61,468 |   |   |   | 2,773 |   |
| Zhuhai    |   |                             | 99,306  |   |                                  |   | — |   |   |   | 57,730 |   |   |   | 1,800 |   |
| Guizhou   |   |                             | 259,879 |   |                                  |   | — |   |   |   | 106,245 |   |   |   | 2,032 |   |
| Chongqing |   |                             | 82,449  |   |                                  |   | — |   |   |   | 6,785 |   |   |   | 4,519 |   |

----

----

|                                   |   | Year ended December 31, |    |   | 2010 vs. 2009% increase |   |   | 2009 vs. 2008% increase |   |
|----------------------------------------|--------|----------------------------------------|---------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|
| Traffic                                |   | 2010                                   |    |   | 2009                                   |   |   | 2008                                   |   |   | (decrease) |   |   | (decrease) |   |
| RPK (million)                          |   |                                   |    |   |                                   |   |   |                                   |   |   |   |   |   |   |   |
| Domestic                               |   |                                   | 94,014  |   |                                   |   | 80,697 |                                   |   |   | 70,619 |   |   |   | 16.5 |   |   |   | 14.3 |   |
| Regional                               |   |                                   | 1,788   |   |                                   |   | 1,337  |                                   |   |   | 1,139 |   |   |   | 33.7 |   |   |   | 17.4 |   |
| International                          |   |                                   | 15,526  |   |                                   |   | 10,968 |                                   |   |   | 11,426 |   |   |   | 41.6 |   |   |   | (4.0 | ) |
| Total                                  |   |                                   | 111,328 |   |                                   |   | 93,002 |                                   |   |   | 83,184 |   |   |   | 19.7 |   |   |   | 11.8 |   |
| RTK (million)                          |   |                                   |    |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                               |   |                                   | 9,715   |   |                                   |   | 8,342  |                                   |   |   | 7,392 |   |   |   | 16.5 |   |   |   | 12.9 |   |
| Regional                               |   |                                   | 171     |   |                                   |   | 126    |                                   |   |   | 110 |   |   |   | 35.7 |   |   |   | 14.5 |   |
| International                          |   |                                   | 3,218   |   |                                   |   | 1,599  |                                   |   |   | 1,698 |   |   |   | 101.3 |   |   |   | (5.8 | ) |
| Total                                  |   |                                   | 13,104  |   |                                   |   | 10,067 |                                   |   |   | 9,200 |   |   |   | 30.2 |   |   |   | 9.4 |   |
| Passengers carried (thousand)          |   |                                   |    |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                               |   |                                   | 69,727  |   |                                   |   | 61,130 |                                   |   |   | 53,063 |   |   |   | 14.1 |   |   |   | 15.2 |   |
| Regional                               |   |                                   | 1,573   |   |                                   |   | 1,276  |                                   |   |   | 1,220 |   |   |   | 23.3 |   |   |   | 4.6 |   |
| International                          |   |                                   | 5,156   |   |                                   |   | 3,875  |                                   |   |   | 3,954 |   |   |   | 33.1 |   |   |   | (2.0 | ) |
| Total                                  |   |                                   | 76,456  |   |                                   |   | 66,281 |                                   |   |   | 58,237 |   |   |   | 15.4 |   |   |   | 13.8 |   |
| Cargo and mail carried (thousand tons) |   |                                   |    |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                               |   |                                   | 874     |   |                                   |   | 750    |                                   |   |   | 713 |   |   |   | 16.5 |   |   |   | 5.2 |   |
| Regional                               |   |                                   | 12      |   |                                   |   | 9      |                                   |   |   | 11 |   |   |   | 33.3 |   |   |   | (18.2 | ) |
| International                          |   |                                   | 231     |   |                                   |   | 103    |                                   |   |   | 111 |   |   |   | 124.3 |   |   |   | (7.2 | ) |
| Total                                  |   |                                   | 1,117   |   |                                   |   | 862    |                                   |   |   | 835 |   |   |   | 29.6 |   |   |   | 3.2 |   |

----

|                                 |   | Year ended December 31, |    |   | 2010 vs. 2009% increase |   |    | 2009 vs. 2008% increase |   |
|--------------------------------------|--------|----------------------------------------|---------|--------|-----------------------------------|--------|---------|-----------------------------------|--------|
| Capacity                             |   | 2010                                   |    |   | 2009                              |   |    | 2008                              |   |   | (decrease) |   |   | (decrease) |   |
| ASK (million)                        |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 117,383 |   |                              |   | 105,379 |                              |   |   | 93,384 |   |   |   | 11.4 |   |   |   | 12.8 |   |
| Regional                             |   |                                   | 2,353   |   |                              |   | 1,916   |                              |   |   | 1,790 |   |   |   | 22.8 |   |   |   | 7.0 |   |
| International                        |   |                                   | 20,762  |   |                              |   | 16,146  |                              |   |   | 17,593 |   |   |   | 28.6 |   |   |   | (8.2 | ) |
| Total                                |   |                                   | 140,498 |   |                              |   | 123,441 |                              |   |   | 112,767 |   |   |   | 13.8 |   |   |   | 9.5 |   |
| ATK (million)                        |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 13,890  |   |                              |   | 12,425  |                              |   |   | 10,985 |   |   |   | 11.8 |   |   |   | 13.1 |   |
| Regional                             |   |                                   | 269     |   |                              |   | 219     |                              |   |   | 200 |   |   |   | 22.8 |   |   |   | 9.5 |   |
| International                        |   |                                   | 4,981   |   |                              |   | 2,802   |                              |   |   | 3,091 |   |   |   | 77.8 |   |   |   | (9.3 | ) |
| Total                                |   |                                   | 19,140  |   |                              |   | 15,446  |                              |   |   | 14,276 |   |   |   | 23.9 |   |   |   | 8.2 |   |
| Load Factors                         |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger load factor (RPK/ASK) (%)  |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 80.1    |   |                              |   | 76.6    |                              |   |   | 75.6 |   |   |   | 4.6 |   |   |   | 1.3 |   |
| Regional                             |   |                                   | 76.0    |   |                              |   | 69.8    |                              |   |   | 63.6 |   |   |   | 8.9 |   |   |   | 9.7 |   |
| International                        |   |                                   | 74.8    |   |                              |   | 67.9    |                              |   |   | 64.9 |   |   |   | 10.2 |   |   |   | 4.6 |   |
| Overall                              |   |                                   | 79.2    |   |                              |   | 75.3    |                              |   |   | 73.8 |   |   |   | 5.2 |   |   |   | 2.0 |   |
| Overall load factor (RTK/ATK) (%)    |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 69.9    |   |                              |   | 67.1    |                              |   |   | 67.3 |   |   |   | 4.2 |   |   |   | (0.3 | ) |
| Regional                             |   |                                   | 63.6    |   |                              |   | 57.7    |                              |   |   | 55.0 |   |   |   | 10.2 |   |   |   | 4.9 |   |
| International                        |   |                                   | 64.6    |   |                              |   | 57.1    |                              |   |   | 54.9 |   |   |   | 13.1 |   |   |   | 4.0 |   |
| Overall                              |   |                                   | 68.5    |   |                              |   | 65.2    |                              |   |   | 64.4 |   |   |   | 5.1 |   |   |   | 1.2 |   |
| Yield                                |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Yield per RPK (RMB)                  |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 0.62    |   |                              |   | 0.53    |                              |   |   | 0.59 |   |   |   | 17.0 |   |   |   | (10.2 | ) |
| Regional                             |   |                                   | 0.85    |   |                              |   | 0.75    |                              |   |   | 0.84 |   |   |   | 13.3 |   |   |   | (10.7 | ) |
| International                        |   |                                   | 0.58    |   |                              |   | 0.55    |                              |   |   | 0.67 |   |   |   | 5.5 |   |   |   | (17.9 | )  |
| Overall                              |   |                                   | 0.62    |   |                              |   | 0.54    |                              |   |   | 0.61 |   |   |   | 14.8 |   |   |   | (11.5 | )  |
| Yield per RTK (RMB)                  |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 6.20    |   |                              |   | 5.36    |                              |   |   | 5.90 |   |   |   | 15.7 |   |   |   | (9.2 | )  |
| Regional                             |   |                                   | 9.29    |   |                              |   | 8.30    |                              |   |   | 9.23 |   |   |   | 11.9 |   |   |   | (10.1 | ) |
| International                        |   |                                   | 3.84    |   |                              |   | 4.52    |                              |   |   | 5.47 |   |   |   | (15.0) |   |   |   | (17.4 | )  |
| Overall                              |   |                                   | 5.66    |   |                              |   | 5.26    |                              |   |   | 5.86 |   |   |   | 7.6 |   |   |   | (10.2 | )  |
| Financial                            |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger revenue (RMB million)      |   |                                   |    |   |                              |   |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                             |   |                                   | 58,155  |   |                              |   | 43,033  |                              |   |   | 41,854 |   |   |   | 35.1 |   |   |   | 2.8 |   |
| Regional                             |   |                                   | 1,521   |   |                              |   | 1,000   |                              |   |   | 952 |   |   |   | 52.1 |   |   |   | 5.0 |   |
| International                        |   |                                   | 9,028   |   |                              |   | 6,026   |                              |   |   | 7,606 |   |   |   | 49.8 |   |   |   | (20.8 | ) |
| Total                                |   |                                   | 68,704  |   |                              |   | 50,059  |                              |   |   | 50,412 |   |   |   | 37.2 |   |   |   | (0.7 | )  |
| Cargo and mail revenue (RMB million) |   |                                   | 5,436   |   |                              |   | 2,908   |                              |   |   | 3,501 |   |   |   | 86.9 |   |   |   | (16.9 | ) |

----

|                                             |   | 2010             |   |   | 2009       |   |   |             |   |
|--------------------------------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                                             |   | Operatingrevenue |   |   | Percentage |   |   | Operatingrevenue |   |   | Percentage |   |   | Change inrevenue |   |
|                                             |   | RMB million |   |   | %          |   |   | RMB million |   |   | % |   |   | % |   |
| Traffic revenue                                  |   |             | 74,140 |   |       |   | 96.9   |             |   |   | 52,967 |   |   |   | 96.7 |   |   |   | 40.0 |   |
| Including: Passenger revenue                |   |             | 68,704 |   |       |   |   |             |   |   | 50,059 |   |   |   |   |   |   |   | 37.2 |   |
| – Domestic                                 |   |             | 58,155 |   |       |   |   |             |   |   | 43,033 |   |   |   |   |   |   |   | 35.1 |   |
| – Hong Kong, Macau and Taiwan              |   |             | 1,521  |   |       |   |   |             |   |   | 1,000 |   |   |   |   |   |   |   | 52.1 |   |
| – International                            |   |             | 9,028  |   |       |   |   |             |   |   | 6,026 |   |   |   |   |   |   |   | 49.8 |   |
| Cargo and mail revenue                           |   |             | 5,436  |   |       |   |   |             |   |   | 2,908 |   |   |   |   |   |   |   | 86.9 |   |
| Other operating revenue                          |   |             | 2,355  |   |       |   | 3.1    |             |   |   | 1,835 |   |   |   | 3.3 |   |   |   | 28.3 |   |
| Mainly including: Commission income         |   |             | 469    |   |       |   |   |             |   |   | 342 |   |   |   |   |   |   |   | 37.1 |   |
|  Ground services income                     |   |             | 390    |   |       |   |   |             |   |   | 320 |   |   |   |   |   |   |   | 21.9 |   |
|  Expired sales in advance of carriage       |   |             | 664    |   |       |   |   |             |   |   | 350 |   |   |   |   |   |   |   | 89.7 |   |
|                                             |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating revenue                          |   |             | 76,495 |   |       |   | 100.0  |             |   |   | 54,802 |   |   |   | 100.0 |   |   |   | 39.6 |   |
| Less: fuel surcharge income                      |   |             | (5,583 | )      |       |   |   |             |   |   | (1,986 | ) |   |   |   |   |   |   |   |   |
|                                             |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating revenue excluding fuel surcharge |   |             | 70,912 |   |       |   |   |             |   |   | 52,816 |   |   |   |   |   |   |   |   |   |

|                   |   | 2010           |   |   | 2009        |   |   |           |   |
|------------------------|--------|----------------|--------|--------|-------------|--------|--------|----------------|--------|
|                   |   | Trafficrevenue |   |   |        |   |   | Trafficrevenue |   |   |   |   |   | Changein traffic |   |
|                   |   | RMBmillion     |   |   | Percentage% |   |   | RMBmillion     |   |   | Percentage% |   |   | revenue% |   |
| Passenger Revenue      |   |           | 68,704 |   |        |   | 92.7   |           |   |   | 50,059 |   |   |   | 94.5 |   |   |   | 37.2 |   |
| Cargo and Mail Revenue |   |           | 5,436  |   |        |   | 7.3    |           |   |   | 2,908 |   |   |   | 5.5 |   |   |   | 86.9 |   |
| Traffic revenue        |   |           | 74,140 |   |        |   | 100.0  |           |   |   | 52,967 |   |   |   | 100.0 |   |   |   | 40.0 |   |

|                        |   | 2010             |   |   | 2009       |   |   |             |   |
|-----------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                        |   | Passengerrevenue |   |   | Percentage |   |   | Passengerrevenue |   |   | Percentage |   |   | Change inpassengerrevenue |   |
|                        |   | RMB million |   |   | %          |   |   | RMB million |   |   | % |   |   | % |   |
| Domestic                    |   |             | 58,155 |   |       |   | 84.7   |             |   |   | 43,033 |   |   |   | 86.0 |   |   |   | 35.1 |   |
| Hong Kong, Macau and Taiwan |   |             | 1,521  |   |       |   | 2.2    |             |   |   | 1,000 |   |   |   | 2.0 |   |   |   | 52.1 |   |
| International               |   |             | 9,028  |   |       |   | 13.1   |             |   |   | 6,026 |   |   |   | 12.0 |   |   |   | 49.8 |   |
|                        |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger revenue           |   |             | 68,704 |   |       |   | 100.0  |             |   |   | 50,059 |   |   |   | 100.0 |   |   |   | 37.2 |   |

----

|                                        |   | 2010       |   |   | 2009       |   |   | Change inoperatingexpenses |   |
|---------------------------------------------|--------|------------|--------|--------|------------|--------|--------|---------------------------------|--------|
|                                        |   | RMBmillion |   |   | Percentage |   |   | RMBmillion                      |   |   | Percentage |   |   | Percentage |   |
| Flight operations                           |   |       | 38,593 |   |       |   | 54.6   |                            |   |   | 29,296 |   |   |   | 52.9 |   |   |   | 31.7 |   |
| Mainly including: Jet fuel costs            |   |       | 23,492 |   |       |   |   |                            |   |   | 16,390 |   |   |   |   |   |   |   | 43.3 |   |
| Operating lease charges                     |   |       | 5,298  |   |       |   |   |                            |   |   | 5,123 |   |   |   |   |   |   |   | 3.4 |   |
| Flight personnel payroll and welfare        |   |       | 3,420  |   |       |   |   |                            |   |   | 2,622 |   |   |   |   |   |   |   | 30.4 |   |
| Maintenance                                 |   |       | 5,586  |   |       |   | 7.9    |                            |   |   | 4,446 |   |   |   | 8.0 |   |   |   | 25.6 |   |
| Aircraft and traffic servicing              |   |       | 10,968 |   |       |   | 15.5   |                            |   |   | 9,169 |   |   |   | 16.6 |   |   |   | 19.6 |   |
| Promotion and sales                         |   |       | 5,555  |   |       |   | 7.9    |                            |   |   | 4,170 |   |   |   | 7.5 |   |   |   | 33.2 |   |
| General and administrative                  |   |       | 2,266  |   |       |   | 3.2    |                            |   |   | 1,844 |   |   |   | 3.3 |   |   |   | 22.9 |   |
| Impairment on property, plant and equipment |   |       | 212    |   |       |   | 0.3    |                            |   |   | 26 |   |   |   | 0.1 |   |   |   | 715.4 |   |
| Depreciation and amortisation               |   |       | 7,061  |   |       |   | 10.0   |                            |   |   | 5,971 |   |   |   | 10.8 |   |   |   | 18.3 |   |
| Others                                      |   |       | 444    |   |       |   | 0.6    |                            |   |   | 429 |   |   |   | 0.8 |   |   |   | 3.5 |   |
|                                        |   |       |   |   |       |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                    |   |       | 70,685 |   |       |   | 100.0  |                            |   |   | 55,351 |   |   |   | 100.0 |   |   |   | 27.7 |   |

----

|                                             |   | 2009             |   |   | 2008       |   |   |             |   |
|--------------------------------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                                             |   | Operatingrevenue |   |   | Percentage |   |   | Operatingrevenue |   |   | Percentage |   |   | Change inrevenue |   |
|                                             |   | RMB million      |   |   | %          |   |   | RMB million      |   |   | % |   |   | % |   |
| Traffic revenue                                  |   |             | 52,967 |   |       |   | 96.7   |             |   |   | 53,913 |   |   |   | 97.5 |   |   |   | (1.8 | ) |
| Including: Passenger revenue                |   |             | 50,059 |   |       |   |   |             |   |   | 50,412 |   |   |   |   |   |   |   | (0.7 | ) |
| – Domestic                                 |   |             | 43,033 |   |       |   |   |             |   |   | 41,854 |   |   |   |   |   |   |   | 2.8 |   |
| – Hong Kong, Macau and Taiwan              |   |             | 1,000  |   |       |   |   |             |   |   | 952 |   |   |   |   |   |   |   | 5.0 |   |
| – International                            |   |             | 6,026  |   |       |   |   |             |   |   | 7,606 |   |   |   |   |   |   |   | (20.8 | ) |
| Cargo and mail revenue                           |   |             | 2,908  |   |       |   |   |             |   |   | 3,501 |   |   |   |   |   |   |   | (16.9 | ) |
| Other operating revenue                          |   |             | 1,835  |   |       |   | 3.3    |             |   |   | 1,375 |   |   |   | 2.5 |   |   |   | 33.5 |   |
| Mainly including: Commission income         |   |             | 342    |   |       |   |   |             |   |   | 317 |   |   |   |   |   |   |   | 7.9 |   |
| Ground services income                           |   |             | 320    |   |       |   |   |             |   |   | 250 |   |   |   |   |   |   |   | 28.0 |   |
| Expired sales in advance of carriage             |   |             | 350    |   |       |   |   |             |   |   | 276 |   |   |   |   |   |   |   | 26.8 |   |
|                                             |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating revenue                          |   |             | 54,802 |   |       |   | 100.0  |             |   |   | 55,288 |   |   |   | 100.0 |   |   |   | (0.9 | ) |
| Less: fuel surcharge income                      |   |             | (1,986 | )      |       |   |   |             |   |   | (8,197 | ) |   |   |   |   |   |   | (75.8 | ) |
|                                             |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating revenue excluding fuel surcharge |   |             | 52,816 |   |       |   |   |             |   |   | 47,091 |   |   |   |   |   |   |   | 12.2 |   |

----

|                   |   | 2009           |   |   | 2008       |   |   |           |   |
|------------------------|--------|----------------|--------|--------|------------|--------|--------|----------------|--------|
|                   |   | Trafficrevenue |   |   | Percentage |   |   | Trafficrevenue |   |   | Percentage |   |   | Changein trafficrevenue |   |
|                   |   | RMBmillion     |   |   | %          |   |   | RMBmillion     |   |   | % |   |   | % |   |
| Passenger Revenue      |   |           | 50,059 |   |       |   | 94.5   |           |   |   | 50,412 |   |   |   | 93.5 |   |   |   | (0.7 | ) |
| Cargo and Mail Revenue |   |           | 2,908  |   |       |   | 5.5    |           |   |   | 3,501 |   |   |   | 6.5 |   |   |   | (16.9 | ) |
| Traffic revenue        |   |           | 52,967 |   |       |   | 100.0  |           |   |   | 53,913 |   |   |   | 100.0 |   |   |   | (1.8 | ) |

|                        |   | 2009             |   |   | 2008       |   |   |             |   |
|-----------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                        |   | Passengerrevenue |   |   | Percentage |   |   | Passengerrevenue |   |   | Percentage |   |   | Change inpassengerrevenue |   |
|                        |   | RMB million |   |   | %          |   |   | RMB million |   |   | % |   |   | % |   |
| Domestic                    |   |             | 43,033 |   |       |   | 86.0   |             |   |   | 41,854 |   |   |   | 83.0 |   |   |   | 2.8 |   |
| Hong Kong, Macau and Taiwan |   |             | 1,000  |   |       |   | 2.0    |             |   |   | 952 |   |   |   | 1.9 |   |   |   | 5.0 |   |
| International               |   |             | 6,026  |   |       |   | 12.0   |             |   |   | 7,606 |   |   |   | 15.1 |   |   |   | (20.8 | ) |
|                        |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger revenue           |   |             | 50,059 |   |       |   | 100.0  |             |   |   | 50,412 |   |   |   | 100.0 |   |   |   | (0.7 | ) |

----

|                                        |   | 2009       |   |   | 2008       |   |   | Change inoperatingexpenses |   |
|---------------------------------------------|--------|------------|--------|--------|------------|--------|--------|---------------------------------|--------|
|                                        |   | RMBmillion |   |   | Percentage |   |   | RMBmillion                      |   |   | Percentage |   |   | % |   |
| Flight operations                      |   |       | 29,296 |   |       |   | 52.9   |                            |   |   | 34,982 |   |   |   | 56.6 |   |   |   | (16.3 | ) |
| Mainly including: Jet fuel costs            |   |       | 16,390 |   |       |   |   |                            |   |   | 23,086 |   |   |   |   |   |   |   | (29.0 | ) |
|  Operating lease charges               |   |       | 5,123  |   |       |   |   |                            |   |   | 4,527 |   |   |   |   |   |   |   | 13.2 |   |
|  Flight personnel payroll and welfare  |   |       | 2,622  |   |       |   |   |                            |   |   | 2,490 |   |   |   |   |   |   |   | 5.3 |   |
| Maintenance                                 |   |       | 4,446  |   |       |   | 8.0    |                            |   |   | 4,890 |   |   |   | 7.9 |   |   |   | (9.1 | ) |
| Aircraft and traffic servicing              |   |       | 9,169  |   |       |   | 16.6   |                            |   |   | 8,476 |   |   |   | 13.7 |   |   |   | 8.2 |   |
| Promotion and sales                         |   |       | 4,170  |   |       |   | 7.5    |                            |   |   | 3,491 |   |   |   | 5.7 |   |   |   | 19.5 |   |
| General and administrative                  |   |       | 1,844  |   |       |   | 3.3    |                            |   |   | 2,041 |   |   |   | 3.3 |   |   |   | (9.7 | ) |
| Impairment on property, plant and equipment |   |       | 26     |   |       |   | 0.1    |                            |   |   | 1,884 |   |   |   | 3.1 |   |   |   | (98.6 | ) |
| Depreciation and amortisation               |   |       | 5,971  |   |       |   | 10.8   |                            |   |   | 5,746 |   |   |   | 9.3 |   |   |   | 3.9 |   |
| Others                                      |   |       | 429    |   |       |   | 0.8    |                            |   |   | 257 |   |   |   | 0.4 |   |   |   | 66.9 |   |
|                                        |   |       |   |   |       |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                    |   |       | 55,351 |   |       |   | 100.0  |                            |   |   | 61,767 |   |   |   | 100.0 |   |   |   | (10.4 | ) |

----

----

|                                          |   | 2011               |   |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015andafterwards |   |   | Total  |   |
|-----------------------------------------------|--------|--------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|--------|--------|--------|
|                                          |   | (RMB million) |   |
| Acquisition of aircraft and related equipment |   |               | 20,445 |   |   |   | 20,033 |   |   |   | 15,980 |   |   |              | 10,720 |   |   |   | 6,731 |   |   |   | 73,909 |   |
| Others                                        |   |               | 2,283  |   |   |   | 423    |   |   |   | -      |   |   |              | -      |   |   |   | - |   |   |   | 2,706 |   |
| Total capital commitments                     |   |               | 22,728 |   |   |   | 20,456 |   |   |   | 15,980 |   |   |              | 10,720 |   |   |   | 6,731 |   |   |   | 76,615 |   |

----

|                                    |   |   |    |   | As of December 31, 2010Payment due by period |   |   |     |   |   | As ofDecember31, 2009 |   |
|-----------------------------------------|--------|--------|---------|--------|---------------------------------------------------------------------------------|--------|--------|----------|--------|--------|---------------------------------|--------|
|                                    |   | Total  |    |   | Lessthan1 year                                                             |   |   | 1-3years |   |   | 3-5years                        |   |   | After 5years |   |   | Total |   |
|                                    |   |   |    |   |                                                                            |   |   |     |   |   |                            |   |   |   |   |   |   |   |
| Short-term bank loans (note 1)          |   |   | 3,594   |   |                                                                            |   | 3,594  |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | 11,094 |   |
| Long-term bank and other loans (note 1) |   |   | 39,872  |   |                                                                            |   | 6,380  |     |   |   | 18,139                          |   |   |   | 5,059 |   |   |   | 10,294 |   |   |   | 36,014 |   |
| Bills payable                           |   |   | 104     |   |                                                                            |   | 104    |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | 3,207 |   |
| Obligations under capital leases        |   |   | 15,921  |   |                                                                            |   | 2,015  |     |   |   | 3,736                           |   |   |   | 3,881 |   |   |   | 6,289 |   |   |   | 15,812 |   |
| Operating lease commitments             |   |   | 25,977  |   |                                                                            |   | 4,068  |     |   |   | 7,563                           |   |   |   | 6,150 |   |   |   | 8,196 |   |   |   | 30,366 |   |
| Aircraft purchase commitments (Note 2)  |   |   | 73,909  |   |                                                                            |   | 20,445 |     |   |   | 36,013                          |   |   |   | 17,451 |   |   |   | - |   |   |   | 65,843 |   |
| Other capital commitments               |   |   | 2,706   |   |                                                                            |   | 2,283  |     |   |   | 423                             |   |   |   | - |   |   |   | - |   |   |   | 1,861 |   |
| Total                                   |   |   | 162,083 |   |                                                                            |   | 38,889 |     |   |   | 65,874                          |   |   |   | 32,541 |   |   |   | 24,779 |   |   |   | 164,197 |   |

| Name                |   | Position                                      |   | Gender |   | Age |
|---------------------|--------|-----------------------------------------------|--------|--------|--------|-----|
| Si Xian Min (1)     |   | Chairman of the Board, Non-executive Director |   | Male   |   | 54  |
| Li Wen Xin          |   | Non-executive Director                        |   | Male   |   | 61  |
| Wang Quan Hua       |   | Non-executive Director                        |   | Male   |   | 57  |
| Liu Bao Heng (2)    |   | Former non-executive Director                 |   | Male   |   | 61  |
| Tan Wan Geng        |   | Executive Director                            |   | Male   |   | 47  |
| Zhang Zi Fang       |   | Executive Director                            |   | Male   |   | 53  |
| Xu Jie Bo           |   | Executive Director                            |   | Male   |   | 46  |
| Chen Zhen You       |   | Executive Director                            |   | Male   |   | 59  |
| Wei Jin Cai (3)     |   | Independent Non-executive Director            |   | Male   |   | 61  |
| Ning Xiang Dong (3) |   | Independent Non-executive Director            |   | Male   |   | 45  |
| Wang Zhi (4)        |   | Former Independent Non-executive Director     |   | Male   |   | 69  |
| Sui Guang Jun (4)   |   | Former Independent Non-executive Director     |   | Male   |   | 50  |
| Gong Hua Zhang      |   | Independent Non-executive Director            |   | Male   |   | 65  |
| Lam Kwong Yu        |   | Independent Non-executive Director            |   | Male   |   | 67  |
| Sun Xiao Yi (5)     |   | Former Chairman of the Supervisory Committee  |   | Male   |   | 57  |
| Pan Fu (6)          |   | Chairman of the Supervisory Committee         |   | Male   |   | 48  |
| Li Jia Shi          |   | Supervisor                                    |   | Male   |   | 50  |
| Zhang Wei           |   | Supervisor                                    |   | Female |   | 45  |
| Yang Yi Hua         |   | Supervisor                                    |   | Female |   | 51  |
| Liang Zhong Gao     |   | Supervisor                                    |   | Male   |   | 55  |
| Ren Ji Dong         |   | Executive Vice President                      |   | Male   |   | 46  |
| He Zong Kai         |   | Executive Vice President                      |   | Male   |   | 60  |
| Liu Qian            |   | Executive Vice President                      |   | Male   |   | 47  |
| Dong Su Guang       |   | Executive Vice President                      |   | Male   |   | 57  |
| Chen Gang           |   | Executive Vice President                      |   | Male   |   | 45  |
| Zhang Zheng Rong    |   | Chief pilot                                   |   | Male   |   | 49  |
| Hu Chen Jie         |   | Chief Information Officer                     |   | Male   |   | 42  |
| Su Liang            |   | Chief Economist                               |   | Male   |   | 49  |
| Zhang He Ping (7)   |   | Former Chief Engineer                         |   | Male   |   | 58  |
| Chen Wei Hua        |   | Chief Legal Adviser                           |   | Male   |   | 45  |
| Xie Bing            |   | Company Secretary                             |   | Male   |   | 38  |

----

----

----

----

----

|                                |   | Directors’feesRMB’000 |   |   | Salaries,allowancesand benefitsin kindRMB’000 |   |   | DiscretionarybonusRMB’000 |   |   | RetirementschemecontributionsRMB’000 |   |   | TotalRMB’000 |   |
|-------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------------|--------|--------|--------------------|--------|
| Non-executive directors             |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |
| Si Xian Min                         |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Li Wen Xin                          |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Wang Quan Hua                       |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Liu Bao Heng                        |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Executive directors                 |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Tan Wan Geng                        |   |                              | -      |   |                                                          |   | 817    |                            |   |   | 150                                        |   |   |               | 61     |   |   |   | 1,028 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Zhang Zi Fang                       |   |                              | -      |   |                                                          |   | 778    |                            |   |   | 150                                        |   |   |               | 60     |   |   |   | 988 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Xu Jie Bo                           |   |                              | -      |   |                                                          |   | 706    |                            |   |   | 100                                        |   |   |               | 60     |   |   |   | 866 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Chen Zhen You                       |   |                              | -      |   |                                                          |   | 706    |                            |   |   | 100                                        |   |   |               | 59     |   |   |   | 865 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Supervisors                         |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Pan Fu                              |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Sun Xiao Yi                         |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Li Jia Shi                          |   |                              | -      |   |                                                          |   | 708    |                            |   |   | 100                                        |   |   |               | 58     |   |   |   | 866 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Zhang Wei                           |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Yang Yi Hua                         |   |                              | -      |   |                                                          |   | 368    |                            |   |   | 20                                         |   |   |               | 56     |   |   |   | 444 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Liang Zhong Gao                     |   |                              | -      |   |                                                          |   | 373    |                            |   |   | 20                                         |   |   |               | 57     |   |   |   | 450 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Independent non-executive directors |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Wang Zhi                            |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Sui Guang Jun                       |   |                              | 100    |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | 100 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Gong Hua Zhang                      |   |                              | 100    |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | 100 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Lam Kwong Yu                        |   |                              | 87     |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | 87 |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Wei Jin Cai                         |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Ning Xiang Dong                     |   |                              | -      |   |                                                          |   | -      |                            |   |   | -                                          |   |   |               | -      |   |   |   | - |   |
|                                |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Total                               |   |                              | 287    |   |                                                          |   | 4,456  |                            |   |   | 640                                        |   |   |               | 411    |   |   |   | 5,794 |   |

----

----

| – | The Group has a formal plan for the termination of employment or has made an offer to employees for voluntary redundancy, which will be implemented shortly; |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| – | The Group is not allowed to withdraw from termination plan or redundancy offer unilaterally. |
|---------|----------------------------------------------------------------------------------------------|

|   Name            |   | Number of Shares |   | ApproximatePercentageof the TotalNumber ofShares |   |
|------------------------|--------|----------------------------|--------|-----------------------------------------------------------------|--------|
|                   |   |                       |   |                                                            |   |
| CSAHC                  |   | 4,145,050,000A Shares      |   |                                                            | 42.22  | % |
|                   |   |                       |   |                                                            |   |   |
| HKSCC Nominees Limited |   | 1,749,455,398 H Shares     |   |                                                            | 17.82  | % |
|                   |   |                       |   |                                                            |   |   |
| Nan Lung               |   | 1,064,770,000 H Shares     | (1)    |                                                            | 10.85  | % |

| Name                   |   | Number of HShares |          |   | ApproximatePercentage ofthe TotalNumber of HShares |   |
|------------------------|--------|-----------------------------|---------------|--------|------------------------------------------------------------------------|--------|
|                   |   |                        |          |   |                                                                   |   |
| HKSCC Nominees Limited |   |                        | 1,749,455,398 |   |                                                                   |   | 62.59 | % |
|                   |   |                        |          |   |                                                                   |   |   |   |
| Nan Lung               |   |                        | 1,064,770,000 |   |                                                                   |   | 38.10 | % |

| (1) | Among the 1,064,770,000 H Shares held by Nan Lung, CSAHC had an interest in an aggregate of 31,120,000 H Shares through Asia Travel Investment Company Limited, a wholly-owned subsidiary of CSAHC in Hong Kong (representing approximately 1.11% of the total issued H Shares). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1) | On December 19, 2006, the Company entered into a master lease agreement with CSAHC with a term valid from January 1, 2006 to December 31, 2008 (“Lease Agreement”). The Company renewed the Lease Agreement with CSAHC on December 29, 2008. Pursuant to the Lease Agreement, CSAHC agrees to continue to lease to the Company certain parcels of land, properties, and civil aviation structures and facilities at existing locations in Guangzhou, Haikou, Wuhan, Hengyang, Jingzhou (previously known as “Shashi”) and Nanyang as well as some additional locations in Beijing, Shanghai, Changsha, Shenyang, Dalian, Harbin and Changchun, etc.. The Lease Agreement is valid from January 1, 2009 to December 31, 2011 and the annual rents payable to CSAHC under the Lease Agreement for 2009, 2010 and 2011 are RMB37,148,660, RMB39,006,093 and RMB40,956,397.65 respectively. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | The Company and CSAHC entered into an indemnification agreement dated May 22, 1997 in which CSAHC has agreed to indemnify the Company against any loss or damage caused by or arising from any challenge of, or interference with, the Company’s right to use certain lands and buildings. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | On January 10, 2008, the Company and CSAHC consolidated three previous agreements and entered into two lease agreements (the “Lease Agreements”), namely, the building lease agreement (the "Building Lease Agreement") and the land lease agreement (the “Land Lease Agreement”) for a fixed term of three years, commencing from January 1, 2008 to December 31, 2010. As provided for in the Land Lease Agreement and the Building Lease Agreement, the leased areas under the two agreements were changed to 1,104,209.69 square meters and 197,010.37 square meters respectively, and the annual rentals were adjusted to RMB21,817,145.00 and RMB48,474,632.77, respectively, for each of the years from 2008 to 2010. On February 14, 2011, the Company, based on its leasing requirements, renewed the Lease Agreements for additional terms of three years commencing from January 1, 2011 to December 31, 2013. The maximum annual aggregate amount of rent payable by the Company to CSAHC under the Land Lease Agreement and the Building Lease Agreement for each of the three years ending December 31, 2013 shall not exceed RMB 56,329,131 and RMB 42,975,542, respectively, payable on a semi-annual basis. The annual rental is determined after arm’s length negotiation between the parties and adjusted with regard to the current market rental standard set in accordance with the valuation prepared by Beijing Yintai Property Valuation Co., Ltd. (北京銀通安泰房地產評估有限公司) and the adjusted leased areas. The consideration will be funded wholly by the Company’s internal resources. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                |   | The Hong KongStock ExchangePrice per H Share(HK$) |       |   | The New YorkStock ExchangePrice per ADR(US$) |   |       | The ShanghaiStock ExchangePrice per A Share(RMB) |   |
|-------------------------------------|--------|---------------------------------------------------------------------------------|------------|--------|-----------------------------------------------------------------------|--------|------------|---------------------------------------------------------------------------|--------|
|                                |   | High                                                                            |       |   | Low                                                                   |   |       | High                                                                      |   |   | Low |   |   | High |   |   | Low |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Annual Market Prices                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2006 |   |                                                                            | 3.42       |   |                                                                  |   | 1.60       |                                                                      |   |   | 22.43 |   |   |   | 10.51 |   |   |   | 4.09 |   |   |   | 2.24 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2007 |   |                                                                            | 13.90      |   |                                                                  |   | 3.25       |                                                                      |   |   | 94.48 |   |   |   | 20.81 |   |   |   | 28.73 |   |   |   | 4.26 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2008 |   |                                                                            | 10.44      |   |                                                                  |   | 0.83       |                                                                      |   |   | 65.31 |   |   |   | 5.56 |   |   |   | 28.68 |   |   |   | 2.72 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2009 |   |                                                                            | 2.99       |   |                                                                  |   | 1.14       |                                                                      |   |   | 19.45 |   |   |   | 7.09 |   |   |   | 7.22 |   |   |   | 3.28 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2010 |   |                                                                            | 5.91       |   |                                                                  |   | 2.47       |                                                                      |   |   | 38.65 |   |   |   | 15.98 |   |   |   | 12.58 |   |   |   | 5.84 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Quarterly Market Prices             |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2009 |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First Quarter                       |   |                                                                            | 1.57       |   |                                                                  |   | 1.14       |                                                                      |   |   | 10.18 |   |   |   | 7.09 |   |   |   | 5.61 |   |   |   | 3.28 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Second Quarter                      |   |                                                                            | 2.40       |   |                                                                  |   | 1.62       |                                                                      |   |   | 15.45 |   |   |   | 10.67 |   |   |   | 6.33 |   |   |   | 5.11 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Third Quarter                       |   |                                                                            | 2.99       |   |                                                                  |   | 2.02       |                                                                      |   |   | 19.45 |   |   |   | 12.75 |   |   |   | 7.22 |   |   |   | 4.96 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fourth Quarter                      |   |                                                                            | 2.88       |   |                                                                  |   | 2.24       |                                                                      |   |   | 18.86 |   |   |   | 14.35 |   |   |   | 6.49 |   |   |   | 5.15 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal Year ended December 31, 2010 |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First Quarter                       |   |                                                                            | 3.57       |   |                                                                  |   | 2.47       |                                                                      |   |   | 22.57 |   |   |   | 15.98 |   |   |   | 7.55 |   |   |   | 5.84 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Second Quarter                      |   |                                                                            | 4.09       |   |                                                                  |   | 3.11       |                                                                      |   |   | 26.38 |   |   |   | 19.22 |   |   |   | 9.20 |   |   |   | 6.28 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Third Quarter                       |   |                                                                            | 4.61       |   |                                                                  |   | 3.06       |                                                                      |   |   | 29.86 |   |   |   | 19.98 |   |   |   | 8.48 |   |   |   | 6.00 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fourth Quarter                      |   |                                                                            | 5.91       |   |                                                                  |   | 4.34       |                                                                      |   |   | 38.65 |   |   |   | 28.18 |   |   |   | 12.58 |   |   |   | 8.64 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Monthly Market Prices               |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  October 2010                  |   |                                                                            | 5.91  |   |                                                                  |   | 4.54  |                                                                      |   |   | 38.65  |   |   |   | 29.09  |   |   |   | 12.58  |   |   |   | 8.64  |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November 2010                       |   |                                                                            | 5.70       |   |                                                                  |   | 5.10       |                                                                      |   |   | 36.65 |   |   |   | 33.02 |   |   |   | 12.10 |   |   |   | 8.90 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 2010                       |   |                                                                            | 5.58       |   |                                                                  |   | 4.34       |                                                                      |   |   | 36.18 |   |   |   | 28.18 |   |   |   | 9.74 |   |   |   | 8.81 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January 2011                        |   |                                                                            | 4.89       |   |                                                                  |   | 3.98       |                                                                      |   |   | 31.59 |   |   |   | 25.59 |   |   |   | 10.13 |   |   |   | 8.10 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 2011                       |   |                                                                            | 4.12       |   |                                                                  |   | 3.53       |                                                                      |   |   | 26.58 |   |   |   | 23.11 |   |   |   | 9.30 |   |   |   | 8.23 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 2011                          |   |                                                                            | 3.79       |   |                                                                  |   | 3.08       |                                                                      |   |   | 24.50 |   |   |   | 20.02 |   |   |   | 8.88 |   |   |   | 8.04 |   |
|                                |   |                                                                            |       |   |                                                                  |   |       |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| April 2011 (up to April 21, 2011)   |   |                                                                            | 3.54       |   |                                                                  |   | 2.73       |                                                                      |   |   | 27.11 |   |   |   | 20.77 |   |   |   | 8.72 |   |   |   | 7.76 |   |

----

----

| (1) | the right to attend or appoint a proxy to attend shareholders’ general meetings and to vote thereat; |
|-----|------------------------------------------------------------------------------------------------------------|

| (2) | the right to dividends and other distributions in proportion to the number of shares held; |
|-----|--------------------------------------------------------------------------------------------|

| (3) | the right of supervisory management over the Company’s business operations, and the right to present proposals or enquiries; |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

| (4) | the right to transfer, donate or pledge his shares in accordance with laws, administrative regulations and provisions of these Articles of Association; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | the right of knowledge and decision making power with respect to important matters of the Company in accordance with laws, administrative regulations and these Articles of Association; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | the right to obtain relevant information in accordance with the provisions of these Articles of Association, including: |
|-----|-------------------------------------------------------------------------------------------------------------------------|

|   | (i) | the right to obtain a copy of these Articles of Association, subject to payment of the cost of such copy; |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

|   | (ii) | the right to inspect and copy, subject to payment of a reasonable charge; |
|--------|------|---------------------------------------------------------------------------|

----

|   | (a) | all parts of the register of shareholders; |
|--------|-----|--------------------------------------------|

|   | (b) | personal particulars of each of the Company’s directors, supervisors, president and other senior administrative officers, including: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | (aa) | present name and alias and any former name or alias; |
|--------|------|------------------------------------------------------|

|   | (bb)  | principal address (residence); |
|--------|------------|--------------------------------|

|   | (cc)  | nationality; |
|--------|------------|--------------|

|   | (dd)  | primary and all other part-time occupations and duties; |
|--------|------------|---------------------------------------------------------|

|   | (ee)  | identification documents and their relevant numbers; |
|--------|------------|------------------------------------------------------|

|   | (c) | state of the Company’s share capital; |
|--------|-----|---------------------------------------------|

|   | (d) | reports showing the aggregate par value, quantity, highest and lowest price paid in respect of each class of shares repurchased by the Company since the end of last accounting year and the aggregate amount paid by the Company for this purpose; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | minutes of shareholders’ general meetings; and |
|--------|-----|------------------------------------------------------|

|   | (f) | interim and annual reports of the Company. |
|--------|-----|--------------------------------------------|

| (7) | in the event of the termination or liquidation of the Company, to participate in the distribution of surplus assets of the Company in accordance with the number of shares held; and |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | other rights conferred by laws, administrative regulations and these Articles of Association. |
|-----|-----------------------------------------------------------------------------------------------|

| (1) | to abide by these Articles of Association; |
|-----|--------------------------------------------|

| (2) | to pay subscription monies according to the number of shares subscribed and the method of subscription; |
|-----|---------------------------------------------------------------------------------------------------------|

| (3) | no right to return shares to the Company unless laws and regulations provide otherwise; and |
|-----|---------------------------------------------------------------------------------------------|

| (4) | other obligations imposed by laws, administrative regulations and these Articles of Association. |
|-----|--------------------------------------------------------------------------------------------------|

----

| (1) | where the Company issues, upon the approval by special resolution of its shareholders in general meeting, either separately or concurrently once every twelve months, not more than 20 percent of each of its existing issued Domestic Shares and Overseas Listed Foreign Shares; and |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | where the Company’s plan to issue Domestic Shares and Overseas Listed Foreign Shares at the time of its establishment is carried out within fifteen months from the date of approval of the competent securities authority of the State Council. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1) | when the number of Directors is less than the number of Directors required by the Company Law or two thirds of the number of Directors specified in the Articles of Association; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | when the accumulated losses of the Company amount to one third of the total amount of its share capital; |
|-----|----------------------------------------------------------------------------------------------------------|

| (3) | when shareholder(s) holding 10 percent or more of the Company’s issued and outstanding shares carrying voting rights request(s) in writing the convening of an extraordinary general meeting; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | when deemed necessary by the Board of Directors or as requested by the Supervisory Committee; |
|-----|-----------------------------------------------------------------------------------------------|

| (5) | More than one half of the independent directors propose to convene the meeting. |
|-----|---------------------------------------------------------------------------------|

----

| (a) | Pursuant to a Transfer Agreement dated September 28, 2009 and a Supplemental Transfer Agreement dated December 29, 2009 entered into between the Company and CSAHC, the Company agreed to sell and CSAHC agreed to acquire the 50% equity interest in Zhuhai MTU, a jointly controlled entity of the Company, at a consideration of US$235.47 million. The sale was approved by the Company’s shareholders in an extraordinary general meeting held on November 27, 2009. The sale was approved by the State Owned Assets Supervision and Administration Commission of the PRC and the Ministry of Commerce of the PRC subsequently, and the Company received the acquisition consideration from CSAHC in full in February 2010. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Pursuant to the Agreement entered into by and among the Company, CSAHC, Zhuhai MTU and MTU GmbH on September 28, 2009, the Company agreed to continue to perform certain existing obligations, in particular, the exclusive maintenance undertaking, under the JV Contract to ensure the continuity and stability of the business of Zhuhai MTU. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Pursuant to an A320 Series Aircraft Purchase Agreement dated January 20, 2010 between the Company and Airbus SNC, the Company will acquire 20 Airbus 320 series aircraft from Airbus SNC. According to the information provided by Airbus SNC, the catalogue price of an Airbus 320 aircraft is around US$76.9 million including price for airframe and engine. The aggregate consideration for the acquisition will be partly payable in cash and partly through financing arrangements with banking institutions. The Airbus aircraft will be delivered in stages to the Company from 2011 to 2013. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Pursuant to an aircraft acquisition agreement dated September 30, 2010 entered into between Xiamen Airlines Company Limited (“Xiamen Airlines”) and Boeing, Xiamen Airlines agreed to purchase from Boeing 10 Boeing B737 series aircraft. The aggregate catalogue price for those aircraft is around US$699 million, including price for airframe and engines. According to the information provided by Boeing, the aggregate consideration for the acquisition will be partly payable in cash by Xiamen Airlines, and partly through financing arrangements with banking institutions. The Boeing aircraft will be delivered in stages to Xiamen Airlines during the period commencing from 2015 to October 2016. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Pursuant to an aircraft acquisition agreement dated November 4, 2010 between the Company and Airbus S.A.S., the Company agrees to purchase 6 Airbus A330 aircraft from Airbus S.A.S. According to the information provided by Airbus S.A.S., the catalogue price of 6 Airbus A330 aircraft is US$1.205 billion, including price for airframe and engine. The aggregate consideration for the acquisition will be partly payable by cash and partly by financing arrangements with banking institutions. The 6 Airbus A330 aircraft will be delivered in stages to the Company during the period commencing from 2013 to 2014. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (f) | Pursuant to an aircraft acquisition agreement dated November 4, 2010 between the Company and Airbus S.A.S., the Company agrees to purchase 30 Airbus A320 series aircraft from Airbus S.A.S. According to the information provided by Airbus S.A.S., the catalogue price of 30 Airbus A320 series aircraft is US$2.575 billion, including price for airframe and engine. The aggregate consideration for the acquisition will be partly payable by cash and partly by financing arrangements with banking institutions. The 30 Airbus A320 series aircraft will be delivered in stages to the Company during the period commencing from 2012 to 2015. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | Pursuant to an agreement entered into in December, 2010 by and among the Company, Xiamen Jianfa Group Co., Ltd. and Hebei Investment, Hebei Investment agrees to inject a cash capital of RMB 1,460 million into Xiamen Airlines. Upon completion of the capital injections under the agreement, Hebei Investment will own 15% equity interest in Xiamen Airlines, the Company’s equity interest in Xiamen Airlines will decrease from 60% to 51%, and Xiamen Airlines will remain a subsidiary of the Company. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | dealers in securities or currencies; |
|--------|--------|--------------------------------------|

|   | · | traders in securities that elect to use a mark-to-market method of accounting for securities holdings; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | banks or other financial institutions; |
|--------|--------|----------------------------------------|

|   | · | insurance companies; |
|--------|--------|----------------------|

|   | · | tax-exempt organizations; |
|--------|--------|---------------------------|

|   | · | partnerships and other entities treated as partnerships for U.S. federal income tax purposes or persons holding ADRs through any such entities; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | persons that hold ADRs as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | U.S. Holders (as defined below) whose functional currency for tax purposes is not the U.S. dollar; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | persons liable for alternative minimum tax; or |
|--------|--------|------------------------------------------------|

|   | · | persons who actually or constructively own 10% or more of the total combined voting power of all classes of the Company’s shares (including ADRs) entitled to vote. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a citizen or resident of the United States for U.S. federal income tax purposes; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | a corporation, or other entity taxable as a corporation, that was created or organized in or under the laws of the United States or any political subdivision thereof; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an estate the income of which is subject to U.S. federal income tax regardless of its source; or |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | a trust if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect to be treated as a U.S. person. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | that gain is effectively connected with the conduct of a U.S. trade or business and, if an applicable income tax treaty so requires as a condition for you to be subject to U.S. federal income tax with respect to income from your ADRs, such gain is attributable to a permanent establishment that you maintain in the United States; or |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | you are a non-resident alien individual and are present in the United States for at least 183 days in the taxable year of the sale or other disposition and either (1) your gain is attributable to an office or other fixed place of business that you maintain in the United States or (2) you have a tax home in the United States. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | As of December 31, 2010 Expected maturity date |   |   | As of December 31,2009 |   |
|-------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|
|                                      |   | (RMB in millions)                                                       |   |   |                                  |   |   |   |   |
|                                      |   | 2011                                                                              |   |   | 2012                                  |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Totalrecordedamount |   |   | Fairvalue(2) |   |   | Totalrecordedamount |   |   | Fairvalue(2) |   |
| Fixed-rate bank and other loans in US$    |   |                                                                              | 260    |   |                                  |   | 203 |   |   |   | 168 |   |   |   | 171 |   |   |   | 423 |   |   |   | 122 |   |   |   | 1,347 |   |   |   | 1,386 |   |   |   | 772 |   |   |   | 795 |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest rate                     |   |                                                                              | 3.40   | %      |                                  |   | 3.40 | % |   |   | 3.41 | % |   |   | 3.41 | % |   |   | 3.48 | % |   |   | 3.35 | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate bank and other loans in US$ |   |                                                                              | 8,720  |   |                                  |   | 10,005 |   |   |   | 6,481 |   |   |   | 1,634 |   |   |   | 2,384 |   |   |   | 9,786 |   |   |   | 39,010 |   |   |   | 39,010 |   |   |   | 38,399 |   |   |   | 38,399 |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest rate                     |   |                                                                              | 1.66   | %      |                                  |   | 1.58 | % |   |   | 1.58 | % |   |   | 1.65 | % |   |   | 1.62 | % |   |   | 1.63 | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate bank and other loans in RMB |   |                                                                              | 344    |   |                                  |   | 325 |   |   |   | 171 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 840 |   |   |   | 840 |   |   |   | 6,153 |   |   |   | 6,153 |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest rate                     |   |                                                                              | 4.89   | %      |                                  |   | 4.98 | % |   |   | 4.99 | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate bills payable in RMB           |   |                                                                              | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,202 |   |   |   | 3,202 |   |
|                                      |   |                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest rate                     |   |                                                                              | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |

|   | (1) | These interest rates are calculated based on the year end indices. |
|--------|-----|--------------------------------------------------------------------|

|   | (2) | Fair value of debt instruments was estimated based on the interest rates applicable to similar debt instruments as of December 31, 2010 and 2009. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                 |   | As of December 31, 2010Expected maturity date |   |   |                                   |   |
|------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                 |   | (RMB in millions)                                                           |   |   | As of December 31, 2009 |   |
|                                                 |   | 2011                                                                        |   |   | 2012                                   |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Totalrecordedamount |   |   | Fairvalue(1) |   |   | Totalrecordedamount |   |   | Fairvalue(1) |   |
|                                                 |   |                                                                        |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate bank and other loans In US$               |   |                                                                        | 260    |   |                                   |   | 203 |   |   |   | 168 |   |   |   | 171 |   |   |   | 423 |   |   |   | 122 |   |   |   | 1,347 |   |   |   | 1,386 |   |   |   | 772 |   |   |   | 795 |   |
|                                                 |   |                                                                        |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate bank and other loans  In US$ |   |                                                                        | 8,720  |   |                                   |   | 10,005 |   |   |   | 6,481 |   |   |   | 1,634 |   |   |   | 2,384 |   |   |   | 9,786 |   |   |   | 39,010 |   |   |   | 39,010 |   |   |   | 38,399 |   |   |   | 38,399 |   |
|                                                 |   |                                                                        |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital commitment in US$                            |   |                                                                        | 20,445 |   |                                   |   | 20,033 |   |   |   | 15,980 |   |   |   | 10,720 |   |   |   | 6,731 |   |   |   | - |   |   |   | 73,909 |   |   |   | 73,909 |   |   |   | 65,843 |   |   |   | 65,843 |   |

| (1) | Fair value of debt instruments was estimated based on the floating interest rates applicable to similar debt instruments as of December 31, 2010 and 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| A. | Debt Securities |
|----|-----------------|

| B. | American Depositary Shares |
|----|----------------------------|

| C. | Other Securities |
|----|------------------|

| D. | American Depositary Shares |
|----|----------------------------|

| Persons depositing or withdrawing shares must pay:                                                                                                        |   | For:                                                                                                                                                                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| $5.00 (or less) per 100 ADSs (or portion of 100 ADSs)                                                                                                     |   | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates |
|                                                                                                                                                      |   |                                                                                                                                                                                                                       |
| $.02 (or less) per ADS                                                                                                                                    |   | • Any cash distribution to ADS registered holders                                                                                                                                                                    |
|                                                                                                                                                      |   |                                                                                                                                                                                                                       |
| A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs |   | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders                                                                        |
|                                                                                                                                                      |   |                                                                                                                                                                                                                       |
| $.02 (or less) per ADSs per calendar year                                                                                                                 |   | • Depositary services                                                                                                                                                                                                |
|                                                                                                                                                      |   |                                                                                                                                                                                                                       |
| Registration or transfer fees                                                                                                                             |   | • Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares                                                                   |

----

| Expenses of the depositary                                                                                                                                                                 |   | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)• Converting foreign currency to U.S. dollars |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                       |   |                                                                                                                                                   |
| Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes |   | • As necessary                                                                                                                                   |
|                                                                                                                                                                                       |   |                                                                                                                                                   |
| Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                                |   | • As necessary                                                                                                                                   |

| A. | Material Modifications to the Instruments Defining the Rights of Security Holders |
|----|-----------------------------------------------------------------------------------|

| B. | Material Modifications to the Rights of Registered Securities by Issuing or modifying any Other Class of Securities |
|----|---------------------------------------------------------------------------------------------------------------------|

| C. | Withdrawal or Substitution of A Material Amount of the Assets Securing Any Registered Securities |
|----|--------------------------------------------------------------------------------------------------|

| D. | Change of Trustees or Paying Agents for Any Registered Securities |
|----|-------------------------------------------------------------------|

| E.  | Use of Proceeds |
|----------|-----------------|

| (a) | Disclosure controls and procedures |
|-----|------------------------------------|

----

| (b) | Management’s annual report on internal control over financial reporting |
|-----|-------------------------------------------------------------------------------|

| (c) | Attestation of the Registered Public Accounting Firm |
|-----|------------------------------------------------------|

----

| (d) | Changes in internal control over financial reporting |
|-----|------------------------------------------------------|

|   |   | Audit Fees |              |   | Audit-RelatedFees |   |             | Tax Fees |   |   | Other Fees   |   |
|--------|--------|-----------------|-------------------|--------|-------------------|--------|------------------|---------------|--------|--------|-------------------|--------|
|   |   |            |              |   |              |   |             |          |   |   |              |   |
| 2009   |   | RMB             | 10.9 million |   |              | RMB    | 4.0 million |          |   | RMB    | 0.25 million |   |   | RMB  | 1.6 million |   |
|   |   |            |              |   |              |   |             |          |   |   |              |   |   |   |   |   |
| 2010   |   | RMB             | 9.0 million  |   |              | RMB    | 3.3 million      |          |   | RMB    | 0.25 million      |   |   | RMB | 2.0 million |   |

----

| NYSE corporate governance rules                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | The Company’s governance practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Director Independence A listed company must have a majority of independent directors on its board of directors. No director qualifies as “independent” unless the board of directors affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).  In addition, a director must meet certain standards to be deemed independent. For example, a director is not independent if the director is, or has been within the last three years, an employee of the listed company, or if the director has received, during any twelve-month period within the last three years, more than US$120,000 in direct compensation from the listed company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). |   | Director Independence The Company has complied with the relevant Chinese corporate governance rules and has implemented internal rules governing the independence and responsibilities of independent directors. The Company determines the independence of independent directors every year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Executive Sessions The non-management directors of each listed company must meet at regularly scheduled executive sessions without management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Executive Sessions No similar requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Nominating/Corporate Governance Committee Listed companies must have a nominating/corporate governance committee composed entirely of independent directors. The nominating/corporate governance committee must have a written charter that addresses the committee’s purposes and responsibilities which, at minimum, must be to: identify individuals qualified to become board members, consistent with criteria approved by the board, and to select, or to recommend that the board select, the director nominees for the next annual meeting of shareholders; develop and recommend to the board a set of corporate governance guidelines applicable to the corporation; and oversee the evaluation of the board and management, and evaluate the performance of the committee every year.                                                                                                                                                                                                                |   | Nominating/Corporate Governance Committee The Company has established a nominating committee.  As of December 31, 2010, the Nomination Committee consists of three members, Messrs Si Xian Min (non-executive Director), Wei Jin Cai (Independent non-executive Director) and Gong Hua Zhang (Independent non-executive Director).   Mr. Si Xian Min was appointed as the chairman of the Nomination Committee on December 29, 2010.   The responsibilities of the Nomination Committee are to make recommendations to the Board in respect of the size and composition of the Board based on the operational activities, assets and shareholding structure of the Company; study the selection criteria and procedures of directors and executives and give advice to the Board; identify qualified candidates for directors and executives; investigate and propose candidates for directors and managers and other senior management members to the Board. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Compensation Committee Listed companies must have a compensation committee composed entirely of independent directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Compensation Committee The Company has established a remuneration committee consisting of three members. As of December 31, 2010, the remuneration committee is chaired by independent non-executive Director Ning Xiang Dong with independent non-executive Director Gong Hua Zhang and non-executive Director Wang Quan Hua as members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

| The written charter of the compensation committee must state, at least, the following purposes and responsibilities:(1) review and approve the corporate goals associated with CEO’s compensation, evaluate the performance of the CEO in fulfilling these goals, and based on such evaluation determine and approve the CEO’s compensation level;(2) make recommendations to the board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to board approval;(3) produce a committee report on executive compensation as required by the SEC to be included in the annual proxy statement or annual report filed with the SEC.The charter must also include the requirement for an annual performance evaluation of the compensation committee.  |   | The responsibilities are similar to those stipulated by the NYSE rules, but the committee is not required to produce a report on the executive compensation or make an annual performance evaluation of the committee. The responsibilities of the remuneration committee are to approve the remuneration packages of Directors and senior management of the Group, and the Company’s “preliminary proposals on annual emoluments of the directors and senior management of the Group”. The remuneration committee is also responsible for assessing performance of executive director and approving the terms of executive directors’ service contracts.  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Audit Committee Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 of Exchange Act. It must have a minimum of three members, and all audit committee members must satisfy the requirements for independence set forth in Section 303A.02 of NYSE Corporate Governance Rules as well as the requirements of Rule 10A-3b (1) of the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Audit Committee The Board of Directors of the Company has established an audit committee that satisfies relevant domestic requirements and the audit committee has a written charter. As of December 31, 2010, the Audit Committee consists of three members, Mr. Ning Xiang Dong, Wei Jin Cai and Gong Hua Zhang, with Gong Hua Zhang being the Chairman of the Audit Committee.                                                                                                                                                                                                                                                                                        |
| The written charter of the audit committee must specify that the purpose of the audit committee is to assist the board oversight of the integrity of financial statements, the company’s compliance with legal and regulatory requirements, qualifications and independence of independent auditors and the performance of the listed company’s internal audit function and independent auditors.  The written charter must also require the audit committee to prepare an audit committee report as required by the SEC to be included in the listed company’s annual proxy statement as well as an annual performance evaluation of the audit committee.                                                                                                                                                    |   | The responsibilities of the audit committee are similar to those stipulated by the NYSE rules, but according to the domestic practices, the Company is not required to make an annual performance evaluation of the audit committee and the audit committee is not required to prepare an audit report to be included in the Company’s annual proxy statement.                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Shareholder Approval of Equity Compensation Plans Shareholders must be given the opportunity to vote on equity-compensation plans and material revisions thereto, except for employment incentive plans, certain awards and plans in the context of mergers and acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Shareholder Approval of Equity Compensation Plans The relevant regulations of China require the board of directors to propose plans and types of director compensation for the shareholders’ meeting to approve. The compensation plan of executive officers is subject to approval by the board and disclosed to the public upon the approval of the board of directors. The approval of director compensation and compensation plan of executive officers of the Company satisfies relevant domestic requirements.                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Corporate Governance Guidelines Listed companies must adopt and disclose corporate governance guidelines, involving director qualification standards, director responsibilities, director access to management and , as necessary and appropriate, independent advisors, director compensation, director orientation continuing education, management succession and annual performance evaluation of the board of directors, etc.                                                                                                                                                                                                                                                                                                                                                                                              |   | Corporate Governance Guidelines CSRC has issued the Corporate Governance Rules, with which the Company has complied.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Certification Requirements Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards and he or she must promptly notify the NYSE in writing of any material non-compliance with any applicable provisions of Section 303A. Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation as and when required by the interim Written Affirmation form specified by the NYSE.                                                                                                                                                                                                                                    |   | Certification Requirements There are no similar requirements under the domestic corporate governance rules in China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

| Exhibit No. |   | Description of Exhibit                                                                                                                               |
|------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1              |   | Restated and Amended Articles of Association of China Southern Airlines Company Limited (1)                                                                    |
|             |   |                                                                                                                                                           |
| 4.1              |   | Form of Director’s Service Agreement (2)                                                                                                                 |
|             |   |                                                                                                                                                           |
| 4.2              |   | Form of Non-Executive Director’s Service Agreement (3)                                                                                         |
|             |   |                                                                                                                                                           |
| 4.3              |   | Aircraft General Terms Agreement entered into by and between Airbus S.A.S. and China Southern Airlines Company Limited on January 20, 2010 (4)                 |
|             |   |                                                                                                                                                           |
| 4.4              |   | A320 Family Aircraft Purchase Agreement entered into by and between the Company and Airbus S.A.S. on January 20, 2010 (5)                                      |
|             |   |                                                                                                                                                           |
| 4.5              |   | A330-300 Aircraft Purchase Agreement entered into by and between the Company and Airbus S.A.S. on November 4, 2010*#                                           |
|             |   |                                                                                                                                                           |
| 4.6              |   | A320 Family Aircraft Purchase Agreement entered into by and between the Company and Airbus S.A.S. on November 4, 2010*#                                        |
|             |   |                                                                                                                                                           |
| 4.7              |   | Supplemental Agreement No. 1 to Purchase Agreement No. 3323 entered into by and between Xiamen Airlines and Boeing on September 30, 2010*                      |
|             |   |                                                                                                                                                           |
| 4.8              |   | Joint Venture Agreement entered into by and among the Company, Hebei Aviation Investment Group Co., Ltd. and Xiamen Jianfa Group Co. Ltd. on December 20, 2010 |
|             |   |                                                                                                                                                           |
| 4.9              |   | A Shares Subscription Agreement entered into by and between the Company and CSAHC on March 8, 2010 (6)                                                         |
|             |   |                                                                                                                                                           |
| 4.10             |   | H Shares Subscription Agreement entered into by and between the Company and Nan Lung Holding Limited on March 8, 2010 (7)                                      |
|             |   |                                                                                                                                                           |
| 4.11             |   | Transfer Agreement entered into by and among the Company, CSAHC, Zhuhai MTU and MTU Aero Engines GmbH on September 28, 2009 (8)                                |
|             |   |                                                                                                                                                           |
| 4.12             |   | Transfer Agreement entered into between CSAHC and the Company on September 28, 2009 for the disposal of 50% Equity Interest in Zhuhai MTU (9)                  |
|             |   |                                                                                                                                                           |
| 8.1              |   | Subsidiaries of China Southern Airlines Company Limited                                                                                                        |
|             |   |                                                                                                                                                           |
| 11.1             |   | Code of Ethics (included in Exhibit 4.1)                                                                                                                       |
|             |   |                                                                                                                                                           |
| 12.1             |   | Section 302 Certification of President                                                                                                                    |
|             |   |                                                                                                                                                           |
| 12.2             |   | Section 302 Certification of Chief Financial Officer                                                                                                      |
|             |   |                                                                                                                                                           |
| 13.1             |   | Section 906 Certification of President                                                                                                                    |
|             |   |                                                                                                                                                           |
| 13.2             |   | Section 906 Certification of Chief Financial Officer                                                                                                           |
|             |   |                                                                                                                                                           |

----

----

|   | CHINA SOUTHERN AIRLINES COMPANY LIMITED |
|--------|-------------------------------------------------------------|
|   |                                                        |
|   | /s/ Si Xian Min                                             |
|   | Name: Si Xian Min                                           |
|   |                                                        |
|   | Title: Chairman of the Board of Directors                   |

----

|                                                                                                |   | Page   |
|-----------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                |   |   |
| Report of Independent Registered Public Accounting Firm                                             |   | F-1    |
| Consolidated Income Statements                                                                      |   |   |
| for the years ended December 31, 2010, 2009 and 2008                                                |   | F-2    |
| Consolidated Statements of Comprehensive Incomefor the years ended December 31, 2010, 2009 and 2008 |   | F-4    |
| Consolidated Balance Sheets at December 31, 2010 and 2009                                           |   | F-5    |
| Consolidated Statements of Changes in Equity                                                        |   |   |
| for the years ended December 31, 2010, 2009 and 2008                                                |   | F-7    |
| Consolidated Cash Flow Statements                                                                   |   |   |
| for the years ended December 31, 2010, 2009 and 2008                                                |   | F-9    |
| Notes to Consolidated Financial Statements                                                          |   | F-11   |

----

----

|                                                                         |   | Note        |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------------------------|--------|-------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                         |   |        |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Operating revenue                                                            |   |        |   |             |   |   |             |   |   |             |   |
|                                                                         |   |        |   |             |   |   |             |   |   |             |   |   |   |   |
| Traffic revenue                                                              |   |  4     |   |             | 74,140 |   |             |   | 52,967 |             |   |   | 53,913 |   |
| Other operating revenue                                                      |   |  5     |   |             | 2,355  |   |             |   | 1,835  |             |   |   | 1,375 |   |
| Total operating revenue                                                      |   |        |   |             | 76,495 |   |             |   | 54,802 |             |   |   | 55,288 |   |
|                                                                         |   |        |   |             |   |   |             |   |   |             |   |   |   |   |
| Operating expenses                                                           |   |        |   |             |   |   |             |   |   |             |   |   |   |   |
| Flight operations                                                            |   |  6     |   |             | 38,593 |   |             |   | 29,296 |             |   |   | 34,982 |   |
| Maintenance                                                                  |   |  7     |   |             | 5,586  |   |             |   | 4,446  |             |   |   | 4,890 |   |
| Aircraft and traffic servicing                                               |   |  8     |   |             | 10,968 |   |             |   | 9,169  |             |   |   | 8,476 |   |
| Promotion and sales                                                          |   |  9     |   |             | 5,555  |   |             |   | 4,170  |             |   |   | 3,491 |   |
| General and administrative                                                   |   |  10    |   |             | 2,266  |   |             |   | 1,844  |             |   |   | 2,041 |   |
| Impairment on property, plant and equipment                                  |   |  20(g) |   |             | 212    |   |             |   | 26     |             |   |   | 1,884 |   |
| Depreciation and amortisation                                                |   |  11    |   |             | 7,061  |   |             |   | 5,971  |             |   |   | 5,746 |   |
| Others                                                                       |   |        |   |             | 444    |   |             |   | 429    |             |   |   | 257 |   |
| Total operating expenses                                                     |   |        |   |             | 70,685 |   |             |   | 55,351 |             |   |   | 61,767 |   |
| Other net income                                                             |   |  13    |   |             | 476    |   |             |   | 1,989  |             |   |   | 833 |   |
|                                                                         |   |        |   |             |   |   |             |   |   |             |   |   |   |   |
| Operating profit / (loss)                                                    |   |        |   |             | 6,286  |   |             |   | 1,440  |             |   |   | (5,646 | ) |
| Interest income                                                              |   |        |   |             | 93     |   |             |   | 68     |             |   |   | 103 |   |
| Interest expense                                                             |   |  14    |   |             | (1,265 | )      |             |   | (1,497 | )                |   |   | (1,987 | ) |
| Share of associates’ results                                           |   |  22    |   |             | 56     |   |             |   | 69     |             |   |   | (12 | ) |
| Share of jointly controlled entities’ results                          |   |  23    |   |             | 112    |   |             |   | 214    |             |   |   | 170 |   |
| Gain on sale of a jointly controlled entity classified as held for sale, net |   |  31    |   |             | 1,078  |   |             |   | -      |             |   |   | - |   |
| (Loss) / gain on derivative financial instruments, net                       |   |        |   |             | (30    | )      |             |   | 45     |             |   |   | (124 | ) |
| Exchange gain, net                                                           |   |        |   |             | 1,746  |   |             |   | 93     |             |   |   | 2,592 |   |
| Gain on deemed disposal of a subsidiary                                      |   |  23    |   |             | 17     |   |             |   | -      |             |   |   | - |   |
| Gain on sale of a jointly controlled entity                                  |   |        |   |             | -      |   |             |   | -      |             |   |   | 143 |   |
| Gain on sale of equity interest in subsidiaries                              |   |        |   |             | -      |   |             |   | -      |             |   |   | 37 |   |
|                                                                         |   |        |   |             |   |   |             |   |   |             |   |   |   |   |
| Profit / (loss) before taxation                                              |   |        |   |             | 8093   |   |             |   | 432    |             |   |   | (4,724 | ) |
| Income tax (expense) / benefit                                               |   |  16    |   |             | (1,678 | )      |             |   | 95     |             |   |   | (62 | ) |
| Profit / (loss) for the year                                                 |   |        |   |             | 6,415  |   |             |   | 527    |             |   |   | (4,786 | ) |

----

|                               |   | Note   |   | 2010             |   |   | 2009             |      |   | 2008             |   |
|------------------------------------|--------|--------|--------|------------------|--------|--------|------------------|-----------|--------|------------------|--------|
|                               |   |   |   | RMB million |   |   | RMB million |      |   | RMB million |   |
| Attributable to:                   |   |   |   |             |   |   |             |      |   |             |   |
| Equity shareholders of the Company |   |   |   |             | 5,795  |   |             |      | 330    |             |   |   | (4,823 | ) |
| Non-controlling interests          |   |   |   |             | 620    |   |             |      | 197    |             |   |   | 37 |   |
| Profit / (loss) for the year       |   |   |   |             | 6,415  |   |             |      | 527    |             |   |   | (4,786 | ) |
|                               |   |   |   |             |   |   |             |      |   |             |   |   |   |   |
| Earnings / (loss) per share        |   | 19     |   |             |   |   |             |      |   |             |   |   |   |   |
| Basic and diluted                  |   |   |   | RMB              | 0.70   |   |             | RMB  | 0.05   |             |   | RMB | (0.74 | ) |

----

|                                                                                  |   | Note   |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                  |   |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                                  |   |   |   |             |   |   |             |   |   |             |   |
| Profit / (loss) for the year                                                          |   |   |   |             | 6,415  |   |             |   | 527    |             |   |   | (4,786 | ) |
|                                                                                  |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Other comprehensive income for the year (after tax and reclassification adjustments): |   | 17     |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                                  |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Available-for-sale securities:                                                        |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| net movement in the fair value reserve                                                |   |   |   |             | (15    | )      |             |   | 30     |             |   |   | (192 | ) |
| Total comprehensive income for the year                                               |   |   |   |             | 6,400  |   |             |   | 557    |             |   |   | (4,978 | ) |
|                                                                                  |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Attributable to:                                                                      |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Equity shareholders of the Company                                                    |   |   |   |             | 5,789  |   |             |   | 349    |             |   |   | (4,988 | ) |
| Non-controlling interests                                                             |   |   |   |             | 611    |   |             |   | 208    |             |   |   | 10 |   |
| Total comprehensive income for the year                                               |   |   |   |             | 6,400  |   |             |   | 557    |             |   |   | (4,978 | ) |

----

|                                      |   | Note     |   | 2010             |    |   | 2009             |   |
|-------------------------------------------|--------|----------|--------|------------------|---------|--------|------------------|--------|
|                                      |   |     |   | RMB million |    |   | RMB million |   |
| Non-current assets                        |   |     |   |             |    |   |             |   |
| Property, plant and equipment, net        |   |  20 |   |             | 80,214  |   |             |   | 63,673 |   |
| Construction in progress                  |   |  21 |   |             | 10,069  |   |             |   | 18,059 |   |
| Lease prepayments                         |   |     |   |             | 1,605   |   |             |   | 516 |   |
| Interest in associates                    |   |  22 |   |             | 309     |   |             |   | 257 |   |
| Interest in jointly controlled entities   |   |  23 |   |             | 863     |   |             |   | 728 |   |
| Other investments in equity securities    |   |  24 |   |             | 166     |   |             |   | 166 |   |
| Lease deposits                            |   |     |   |             | 544     |   |             |   | 564 |   |
| Available-for-sale equity securities      |   |  25 |   |             | 80      |   |             |   | 93 |   |
| Deferred tax assets                       |   |  26 |   |             | 997     |   |             |   | 479 |   |
| Other assets                              |   |  27 |   |             | 526     |   |             |   | 558 |   |
|                                      |   |     |   |             | 95,373  |   |             |   | 85,093 |   |
|                                      |   |     |   |             |    |   |             |   |   |   |
| Current assets                            |   |     |   |             |    |   |             |   |   |   |
| Inventories                               |   |  28 |   |             | 1,355   |   |             |   | 1,256 |   |
| Trade receivables                         |   |  29 |   |             | 1,992   |   |             |   | 1,359 |   |
| Other receivables                         |   |     |   |             | 1,394   |   |             |   | 1,408 |   |
| Prepaid expenses and other current assets |   |     |   |             | 576     |   |             |   | 711 |   |
| Amounts due from related companies        |   |  37 |   |             | 138     |   |             |   | 51 |   |
| Cash and cash equivalents                 |   |  30 |   |             | 10,404  |   |             |   | 4,343 |   |
|                                      |   |     |   |             | 15,859  |   |             |   | 9,128 |   |
| Asset classified as held for sale         |   |  31 |   |             | -       |   |             |   | 529 |   |
|                                      |   |     |   |             | 15,859  |   |             |   | 9,657 |   |
|                                      |   |     |   |             |    |   |             |   |   |   |
| Current liabilities                       |   |     |   |             |    |   |             |   |   |   |
| Financial liabilities                     |   |  32 |   |             | 13      |   |             |   | 44 |   |
| Bank and other loans                      |   |  33 |   |             | 9,324   |   |             |   | 17,452 |   |
| Obligations under finance leases          |   |  34 |   |             | 1,654   |   |             |   | 1,431 |   |
| Trade and bills payable                   |   |  35 |   |             | 1,877   |   |             |   | 4,992 |   |
| Sales in advance of carriage              |   |     |   |             | 3,604   |   |             |   | 2,196 |   |
| Deferred revenue                          |   |  36 |   |             | 524     |   |             |   | 316 |   |
| Income tax payable                        |   |     |   |             | 1,985   |   |             |   | 44 |   |
| Amounts due to related companies          |   |  37 |   |             | 246     |   |             |   | 94 |   |
| Accrued expenses                          |   |  38 |   |             | 9,330   |   |             |   | 8,153 |   |
| Other liabilities                         |   |  39 |   |             | 3,768   |   |             |   | 3,376 |   |
|                                      |   |     |   |             | 32,325  |   |             |   | 38,098 |   |
|                                      |   |     |   |             |    |   |             |   |   |   |
| Net current liabilities                   |   |  49 |   |             | (16,466 | )      |             |   | (28,441 | ) |
|                                      |   |     |   |             |    |   |             |   |   |   |
| Total assets less current liabilities     |   |     |   |             | 78,907  |   |             |   | 56,652 |   |

----

|                                                            |   | Note     |   | 2010             |   |   | 2009             |   |
|-----------------------------------------------------------------|--------|----------|--------|------------------|--------|--------|------------------|--------|
|                                                            |   |     |   | RMB million |   |   | RMB million |   |
| Non-current liabilities and deferred items                      |   |     |   |             |   |   |             |   |
| Bank and other loans                                            |   |  33 |   |             | 31,876 |   |             |   | 27,875 |   |
| Obligations under finance leases                                |   |  34 |   |             | 12,776 |   |             |   | 11,887 |   |
| Deferred revenue                                                |   |  36 |   |             | 824    |   |             |   | 594 |   |
| Provision for major overhauls                                   |   |  40 |   |             | 1,173  |   |             |   | 953 |   |
| Provision for early retirement benefits                         |   |  41 |   |             | 118    |   |             |   | 148 |   |
| Deferred benefits and gains                                     |   |  42 |   |             | 1,015  |   |             |   | 1,080 |   |
| Deferred tax liabilities                                        |   |  26 |   |             | 912    |   |             |   | 853 |   |
|                                                            |   |     |   |             | 48,694 |   |             |   | 43,390 |   |
| Net assets                                                      |   |     |   |             | 30,213 |   |             |   | 13,262 |   |
|                                                            |   |     |   |             |   |   |             |   |   |   |
| Capital and reserves                                            |   |     |   |             |   |   |             |   |   |   |
| Share capital                                                   |   |  43 |   |             | 9,818  |   |             |   | 8,003 |   |
| Reserves                                                        |   |  44 |   |             | 16,896 |   |             |   | 2,348 |   |
| Total equity attributable to equity shareholders of the Company |   |     |   |             | 26,714 |   |             |   | 10,351 |   |
| Non-controlling interests                                       |   |     |   |             | 3,499  |   |             |   | 2,911 |   |
| Total equity                                                    |   |     |   |             | 30,213 |   |             |   | 13,262 |   |

----

|                                                                                     |   | Attributable to equity shareholders of the Company |   |   |    |   |   |       |   |
|-----------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|--------|---------|--------|--------|------------|--------|
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   | Retained |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   | profits / |   |   |   |   |   | Non- |   |   |   |   |
|                                                                                          |   | Share                                              |   |   | Share   |   |   | Fair value |   |   | Other |   |   | (accumulated |   |   |   |   |   | Controlling |   |   | Total |   |
|                                                                                          |   | capital                                            |   |   | premium |   |   | reserves   |   |   | reserves |   |   | losses) |   |   | Total |   |   | interests |   |   | equity |   |
|                                                                                          |   | RMB                                                |   |   | RMB     |   |   | RMB        |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                                                                          |   | million                                            |   |   | million |   |   | million    |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   | (Note (a)) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2008                                                                    |   |                                               | 4,374  |   |    |   | 5,325  |       |   |   | 183 |   |   |   | 607 |   |   |   | 1,374 |   |   |   | 11,863 |   |   |   | 2,447 |   |   |   | 14,310 |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in equity for 2008:                                                                   |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) / profit for the year                                                                  |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | (4,823 | ) |   |   | (4,823 | ) |   |   | 37 |   |   |   | (4,786 | ) |
| Other comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | (165 | ) |   |   | - |   |   |   | - |   |   |   | (165 | ) |   |   | (27 | ) |   |   | (192 | ) |
| Total comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | (165 | ) |   |   | - |   |   |   | (4,823 | ) |   |   | (4,988 | ) |   |   | 10 |   |   |   | (4,978 | ) |
| Bonus share issue                                                                             |   |                                               | 2,187  |   |    |   | (2,187 | )          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Acquisition of China Southern West Australian Flying College Pty Limited (Note 45(c)(xv))     |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | (5 | ) |   |   | - |   |   |   | (5 | ) |   |   | - |   |   |   | (5 | ) |
| Disposal of partial equity interest in a subsidiary to non-controlling shareholders           |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24 |   |   |   | 24 |   |
| Distributions to non-controlling shareholders                                                 |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (28 | ) |   |   | (28 | ) |
| Government contributions                                                                      |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | 151 |   |   |   | - |   |   |   | 151 |   |   |   | 5 |   |   |   | 156 |   |
| Balance at December 31, 2008 and January 1, 2009                                              |   |                                               | 6,561  |   |    |   | 3,138  |       |   |   | 18 |   |   |   | 753 |   |   |   | (3,449 | ) |   |   | 7,021 |   |   |   | 2,458 |   |   |   | 9,479 |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in equity for 2009:                                                                   |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit for the year                                                                           |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | 330 |   |   |   | 330 |   |   |   | 197 |   |   |   | 527 |   |
| Other comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | 19 |   |   |   | - |   |   |   | - |   |   |   | 19 |   |   |   | 11 |   |   |   | 30 |   |
| Total comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | 19 |   |   |   | - |   |   |   | 330 |   |   |   | 349 |   |   |   | 208 |   |   |   | 557 |   |
| Issuance of shares (Note 43(a))                                                               |   |                                               | 1,442  |   |    |   | 1,538  |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,980 |   |   |   | - |   |   |   | 2,980 |   |
| Paid in capital from non-controlling equity holders of subsidiaries                           |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 261 |   |   |   | 261 |   |
| Liquidation of subsidiaries                                                                   |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6 | ) |   |   | (6 | ) |
| Distributions to non-controlling shareholders                                                 |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10 | ) |   |   | (10 | ) |
| Government contributions (Note 44(c))                                                         |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Balance at December 31, 2009 and January 1, 2010                                              |   |                                               | 8,003  |   |    |   | 4,676  |       |   |   | 37 |   |   |   | 754 |   |   |   | (3,119 | ) |   |   | 10,351 |   |   |   | 2,911 |   |   |   | 13,262 |   |
|                                                                                          |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in equity for 2010:                                                                   |   |                                               |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit for the year                                                                           |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | 5,795 |   |   |   | 5,795 |   |   |   | 620 |   |   |   | 6,415 |   |
| Other comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | (6 | ) |   |   | - |   |   |   | - |   |   |   | (6 | ) |   |   | (9 | ) |   |   | (15 | ) |
| Total comprehensive income                                                                    |   |                                               | -      |   |    |   | -      |       |   |   | (6 | ) |   |   | - |   |   |   | 5,795 |   |   |   | 5,789 |   |   |   | 611 |   |   |   | 6,400 |   |
| Issuance of shares (Note 43(a))                                                               |   |                                               | 1,815  |   |    |   | 8,757  |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10,572 |   |   |   | - |   |   |   | 10,572 |   |
| Decrease in non-controlling interest as a result of loss of control of a subsidiary (Note 23) |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2 | ) |   |   | (2 | ) |
| Distributions to non-controlling shareholders                                                 |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6 | ) |   |   | (6 | ) |
| Acquisition of equity interest of a subsidiary from a non-controlling shareholder (Note (b))  |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (15 | ) |   |   | (15 | ) |
| Government contributions (Note 44(c))                                                         |   |                                               | -      |   |    |   | -      |       |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Balance at December 31, 2010                                                                  |   |                                               | 9,818  |   |    |   | 13,433 |       |   |   | 31 |   |   |   | 756 |   |   |   | 2,676 |   |   |   | 26,714 |   |   |   | 3,499 |   |   |   | 30,213 |   |

----

| Note (a): | Other reserves represent statutory surplus reserve, discretionary surplus reserve and others. Details are set out in Note 44. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------|

| Note (b): | In June 2010, China Southern Airlines Group Air Catering Company Limited (“CSA Catering”), a subsidiary of the Company, acquired 49% equity interest in its subsidiary, Xinjiang Air Catering Company Limited (“Xinjiang Catering”), from the non-controlling shareholder of Xinjiang Catering at a consideration of RMB15 million. Xinjiang Catering became a wholly-owned subsidiary of CSA Catering since then. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                     |   | Note   |   | 2010             |    |   | 2009             |   |    | 2008             |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------|---------|--------|------------------|--------|---------|------------------|--------|
|                                                                                                     |   |   |   | RMB million |    |   | RMB million |   |    | RMB million |   |
| Operating activities                                                                                     |   |   |   |             |    |   |             |   |    |             |   |
| Cash generated from operations                                                                           |   | 30(b)  |   |             | 13,024  |   |             |   | 11,232  |             |   |   | 4,256 |   |
| Interest received                                                                                        |   |   |   |             | 84      |   |             |   | 68      |             |   |   | 103 |   |
| Interest paid                                                                                            |   |   |   |             | (1,473  | )      |             |   | (2,131  | )                |   |   | (2,805 | ) |
| Income tax paid                                                                                          |   |   |   |             | (193    | )      |             |   | (210    | )                |   |   | (399 | ) |
| Net cash generated from operating activities                                                             |   |   |   |             | 11,442  |   |             |   | 8,959   |             |   |   | 1,155 |   |
|                                                                                                     |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Investing activities                                                                                     |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Proceeds from disposal of property, plant and equipment                                                  |   |   |   |             | 364     |   |             |   | 320     |             |   |   | 312 |   |
| Proceeds from sale of available-for-sale equity securities                                               |   |   |   |             | -       |   |             |   | 138     |             |   |   | - |   |
| Proceeds from sale of jointly controlled entities                                                        |   |   |   |             | 1,607   |   |             |   | -       |             |   |   | 210 |   |
| Proceeds from sale of equity interest in subsidiaries                                                    |   |   |   |             | -       |   |             |   | -       |             |   |   | 61 |   |
| Net cash settlement of derivative financial instruments                                                  |   |   |   |             | (61     | )      |             |   | (27     | )                |   |   | (11 | ) |
| Dividends received from associates                                                                       |   |   |   |             | -       |   |             |   | 47      |             |   |   | - |   |
| Dividends received from jointly controlled entities                                                      |   |   |   |             | 10      |   |             |   | -       |             |   |   | 14 |   |
| Dividends received from other investments                                                                |   |   |   |             | 13      |   |             |   | 14      |             |   |   | 14 |   |
| Refund of the investment in an associate                                                                 |   |   |   |             | 4       |   |             |   | -       |             |   |   | - |   |
| Payment of lease deposits                                                                                |   |   |   |             | (16     | )      |             |   | (10     | )                |   |   | - |   |
| Payment for available-for-sale equity securities                                                         |   |   |   |             | (5      | )      |             |   | -       |             |   |   | - |   |
| Refund of lease deposits                                                                                 |   |   |   |             | 19      |   |             |   | 8       |             |   |   | 54 |   |
| Capital expenditures                                                                                     |   |   |   |             | (13,469 | )      |             |   | (15,007 | )                |   |   | (8,364 | ) |
| Decrease / (increase) in pledged bank deposits                                                           |   |   |   |             | -       |   |             |   | 51      |             |   |   | (51 | ) |
| Payment for the investment in an associate, jointly control entities, a subsidiary and other investments |   |   |   |             | -       |   |             |   | (6      | )                |   |   | (29 | ) |
| Liquidation of subsidiaries                                                                              |   |   |   |             | -       |   |             |   | (6      | )                |   |   | - |   |
| Acquisition of equity interest of a subsidiary from a non-controlling shareholder                        |   |   |   |             | (15     | )      |             |   | -       |             |   |   | - |   |
| Deemed disposal of a subsidiary                                                                          |   | 48(b)  |   |             | (19     | )      |             |   | -       |             |   |   | - |   |
|                                                                                                     |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Net cash used in investing activities                                                                    |   |   |   |             | (11,568 | )      |             |   | (14,478 | )                |   |   | (7,790 | ) |

----

|                                                                |   | Note   |   | 2010             |    |   | 2009             |   |    | 2008             |   |
|---------------------------------------------------------------------|--------|--------|--------|------------------|---------|--------|------------------|--------|---------|------------------|--------|
|                                                                |   |   |   | RMB million |    |   | RMB million |   |    | RMB million |   |
| Financing activities                                                |   |   |   |             |    |   |             |   |    |             |   |
| Proceeds from issue of shares                                       |   | 43(a)  |   |             | 10,572  |   |             |   | 2,980   |             |   |   | - |   |
| Proceeds from bank and other loans                                  |   |   |   |             | 22,100  |   |             |   | 37,146  |             |   |   | 41,450 |   |
| Repayment of bank and other loans                                   |   |   |   |             | (24,976 | )      |             |   | (31,396 | )                |   |   | (33,783 | ) |
| Proceeds from issue of short-term financing bills                   |   |   |   |             | -       |   |             |   | -       |             |   |   | 2,000 |   |
| Repayment of short-term financing bills                             |   |   |   |             | -       |   |             |   | (2,000  | )                |   |   | - |   |
| Repayment of principal under finance lease obligations              |   |   |   |             | (1,505  | )      |             |   | (1,750  | )                |   |   | (2,335 | ) |
| Capital contributions received from government                      |   | 44(c)  |   |             | 2       |   |             |   | 1       |             |   |   | 156 |   |
| Paid in capital from non-controlling equity holders of subsidiaries |   |   |   |             | -       |   |             |   | 242     |             |   |   | - |   |
| Dividends paid to non-controlling shareholders                      |   |   |   |             | (6      | )      |             |   | (10     | )                |   |   | (28 | ) |
|                                                                |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Net cash from financing activities                                  |   |   |   |             | 6,187   |   |             |   | 5,213   |             |   |   | 7,460 |   |
|                                                                |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Net increase / (decrease) in cash and cash equivalents              |   |   |   |             | 6,061   |   |             |   | (306    | )                |   |   | 825 |   |
| Cash and cash equivalents at January 1                              |   |   |   |             | 4,343   |   |             |   | 4,649   |             |   |   | 3,824 |   |
|                                                                |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Cash and cash equivalents at December 31                            |   |   |   |             | 10,404  |   |             |   | 4,343   |             |   |   | 4,649 |   |

----

| 1 | Basis of presentation |
|---|-----------------------|

| 2 | Principal accounting policies |
|---|-------------------------------|

| (a)  | Statement of compliance |
|-----------|-------------------------|

| (b)  | Basis of preparation of the consolidated financial statements |
|-----------|---------------------------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (b)  | Basis of preparation of the consolidated financial statements (continued) |
|-----------|---------------------------------------------------------------------------|

| (c)  | Subsidiaries and non-controlling interests |
|-----------|--------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (c)  | Subsidiaries and non-controlling interests (continued) |
|-----------|--------------------------------------------------------|

| (d)  | Associates and jointly controlled entities |
|-----------|--------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (d)  | Associates and jointly controlled entities (continued) |
|-----------|--------------------------------------------------------|

| (e) | Goodwill |
|-----|----------|

|   | (i) | the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the Group’s interest in the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)  | Other investments in equity securities |
|-----------|----------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (g)  | Derivative financial instruments |
|-----------|----------------------------------|

| (h)  | Property, plant and equipment |
|-----------|-------------------------------|

| (i)  | Investment property |
|-----------|---------------------|

| (ii)  | Other property, plant and equipment |
|------------|-------------------------------------|

| Buildings                          | 30 to 35 years |
|------------------------------------|----------------|
| Owned and leased aircraft          | 15 to 20 years |
| Other flight equipment             |           |
| - Jet engines                      | 15 to 20 years |
| - Others, including rotable spares | 3 to 15 years  |
| Machinery and equipment            | 4 to 10 years  |
| Vehicles                           | 6 to 8 years   |

| (i)  | Construction in progress |
|-----------|--------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (j)  | Leased assets |
|-----------|---------------|

|   | (i)  | Classification of assets leased to the Group |
|--------|-----------|----------------------------------------------|

|   | (ii)  | Assets acquired under finance leases |
|--------|------------|--------------------------------------|

|   | (iii)  | Operating lease charges |
|--------|-------------|-------------------------|

----

| 2  | Principal accounting policies (continued) |
|---------|-------------------------------------------|

| (j)  | Leased assets (continued) |
|-----------|---------------------------|

|   | (iv)  | Sale and leaseback transactions |
|--------|------------|---------------------------------|

| (k)  | Deferred expenditure |
|-----------|----------------------|

| (l)  | Impairment of assets |
|-----------|----------------------|

| (i)  | Impairment of investments in equity securities and other receivables |
|-----------|----------------------------------------------------------------------|

|   | - | significant financial difficulty of the debtor; |
|--------|---|-------------------------------------------------|

|   | - | a breach of contract, such as a default or delinquency in interest or principal payments; |
|--------|---|-------------------------------------------------------------------------------------------|

|   | - | it becoming probable that the debtor will enter bankruptcy or other financial reorganization; |
|--------|---|-----------------------------------------------------------------------------------------------|

|   | - | significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------|

|   | - | a significant or prolonged declined in the fair value of an investment in an equity instrument below its cost. |
|--------|---|----------------------------------------------------------------------------------------------------------------|

|   | - | For investments in associates and jointly controlled entities recognized using the equity method (Note 2(d)), the impairment loss is measured by comparing the recoverable amount of the investment as a whole with its carrying amount in accordance with Note 2(l)(ii). The impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount in accordance with Note 2(l)(ii). |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (l)  | Impairment of assets (continued) |
|-----------|----------------------------------|

| (i)  | Impairment of investments in equity securities and other receivables (continued) |
|-----------|----------------------------------------------------------------------------------|

|   | - | For trade and other current receivables and other financial assets carried at amortized cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where financial assets carried at amortized cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | For available-for-sale securities, the cumulative loss that has been recognized in the fair value reserve is reclassified to profit or loss. The amount of the cumulative loss that is recognized in profit or loss is the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that asset previously recognized in profit or loss. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (l) | Impairment of assets (continued) |
|-----|----------------------------------|

| (ii) | Impairment of other assets |
|------|----------------------------|

|   | - | Property, plant and equipment; |
|--------|---|--------------------------------|

|   | - | Construction in progress; |
|--------|---|---------------------------|

|   | - | Lease deposits; |
|--------|---|-----------------|

|   | - | Lease prepayments; |
|--------|---|--------------------|

|   | - | Deferred expenditure; |
|--------|---|-----------------------|

|   | - | Investments in subsidiaries; and |
|--------|---|----------------------------------|

|   | - | Goodwill. |
|--------|---|-----------|

|   | -  | Calculation of recoverable amount |
|--------|---------|-----------------------------------|

|   | -  | Recognition of impairment losses |
|--------|---------|----------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (l) | Impairment of assets (continued) |
|-----|----------------------------------|

| (ii) | Impairment of other assets (continued) |
|------|----------------------------------------|

|   | -  | Reversals of impairment losses |
|--------|---------|--------------------------------|

| (iii) | Interim financial reporting and impairment |
|-------|--------------------------------------------|

| (m) | Inventories |
|-----|-------------|

| (n) | Trade and other receivables |
|-----|-----------------------------|

| (o) | Interest-bearing borrowings |
|-----|-----------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (p) | Trade and other payables |
|-----|--------------------------|

| (q) | Cash and cash equivalents |
|-----|---------------------------|

| (r) | Financial guarantees issued, provisions and contingent liabilities |
|-----|--------------------------------------------------------------------|

| (i) | Financial guarantees issued |
|-----|-----------------------------|

| (ii) | Provision and contingent liabilities |
|------|--------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (s) | Defeasance of long-term liabilities |
|-----|-------------------------------------|

| (t) | Deferred benefits and gains |
|-----|-----------------------------|

| (u) | Income tax |
|-----|------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (u) | Income tax (continued) |
|-----|------------------------|

|   | - | in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either: |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------|

|   | - | the same taxable entity; or |
|--------|---|-----------------------------|

|   | - | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v) | Revenue recognition |
|-----|---------------------|

|   | (i) | Passenger, cargo and mail revenues |
|--------|-----|------------------------------------|

|   | Passenger, cargo and mail revenues are recognized at the fair value of the consideration received when the transportation is provided. Ticket sales for transportation not yet provided are included in current liabilities as sales in advance of carriage. Revenues from airline-related business are recognized when services are rendered. Revenue is stated net of sales tax. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Frequent flyer revenue |
|--------|------|------------------------|

|   | The Group maintains two frequent flyer award programs, namely, the China Southern Airlines Sky Pearl Club and the Egrets Mileage Plus, which provide travel and other awards to members based on accumulated mileages. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenue received in relation to mileage earning flights is allocated, based on fair value, between the flight and mileages earned by members of the Group’s frequent flyer award programs. The value attributed to the awarded mileages is deferred as a liability, within deferred revenue, until the mileages are ultimately utilized. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenue received from third parties for the issue of mileages under the frequent flyer award programs is also deferred as a liability, within deferred revenue. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (v) | Revenue recognition (continued) |
|-----|---------------------------------|

|   | (ii) | Frequent flyer revenue (continued) |
|--------|------|------------------------------------|

|   | As members of the frequent flyer award programs redeem mileages for an award, revenue is recorded in profit or loss. Revenue in relation to flight awards is recognized when the transportation is provided. Revenue is recognized at the point of redemption where non-flight rewards are selected. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The value attributed to mileages that are expected to expire is recognized as revenue, based on the number of mileages that have been redeemed relative to the total number expected to be redeemed. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Rental income receivable under operating leases is recognized in profit or loss in equal installments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are recognized in profit or loss as an integral part of the aggregate net lease payments receivables. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Dividend income is recognized when the shareholder’s right to receive payment is established. |
|--------|------|-----------------------------------------------------------------------------------------------------|

|   | (v) | Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognized as revenue in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of the asset and consequently are effectively recognized in profit or loss over the useful life of the asset by way of reduced depreciation expense. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | Interest income is recognized as it accrues using the effective interest method. |
|--------|------|----------------------------------------------------------------------------------|

| (w) | Traffic commissions |
|-----|---------------------|

| (x) | Maintenance and overhaul costs |
|-----|--------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (y) | Borrowing costs |
|-----|-----------------|

| (z) | Short term employee benefits and contributions to defined contribution retirement schemes |
|-----|-------------------------------------------------------------------------------------------|

| (aa) | Termination benefits |
|------|----------------------|

| (bb) | Translation of foreign currencies |
|------|-----------------------------------|

| (cc) | Non-current assets held for sale |
|------|----------------------------------|

----

| 2 | Principal accounting policies (continued) |
|---|-------------------------------------------|

| (cc) | Non-current assets held for sale (continued) |
|------|----------------------------------------------|

| (dd) | Related parties |
|------|-----------------|

|   | (i) | the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the Group and the party are subject to common control; |
|--------|------|--------------------------------------------------------|

|   | (iii) | the party is an associate of the Group or a joint venture in which the Group is a venturer; |
|--------|-------|---------------------------------------------------------------------------------------------|

|   | (iv) | the party is a member of key management personnel of the Group or the Group’s parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | the party is a close family member of a party referred in (i) or is an entity under the control, joint control or significant influence of such individuals; or |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ee) | Segmental reporting |
|------|---------------------|

----

| 3 | Changes in accounting policies |
|---|--------------------------------|

|   | •  | IFRS 3 (revised 2008),Business combinations |
|--------|---------------|---------------------------------------------|

|   | • | Amendments to IAS 27, Consolidated and separate financial statements |
|--------|---------|----------------------------------------------------------------------|

|   | • | Improvements to IFRSs (2009) |
|--------|---------|------------------------------|

|   | • | The impact of the majority of the revisions to IFRS 3 and IAS 27 have not yet had a material effect on the Group’s financial statements as these changes will first be effective as and when the Group enters into a relevant transaction (for example, a business combination) and there is no requirement to restate the amounts recorded in respect of previous such transactions. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The impact of IAS 27 (in respect of loss of control of a subsidiary and allocation of losses to non-controlling interests (previously known as minority interests) in excess of their equity interest) have had no material impact as there is no requirement to restate amounts recorded in previous periods. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The amendment introduced by the Improvements to IFRSs (2009) omnibus standard in respect of IAS 17, Leases, have had no material impact as the Group considers current classification of interests in leasehold land as operating leases remains appropriate. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3 | Changes in accounting policies (continued) |
|---|--------------------------------------------|

|   | • | As a result of the adoption of IFRS 3 (revised 2008), any business combination acquired on or after January 1, 2010 will be recognized in accordance with the new requirements and detailed guidance contained in IFRS 3 (revised 2008). These include the following changes in accounting policies: |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees, will be expensed as incurred, whereas previously they were accounted for as part of the cost of the business combination and therefore impacted the amount of goodwill recognized. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the Group holds interests in the acquiree immediately prior to obtaining control, these interests will be treated as if disposed of and re-acquired at fair value on the date of obtaining control. Previously, the step-up approach would have been applied, whereby goodwill was computed as if accumulated at each stage of the acquisition. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Contingent consideration will be measured at fair value at the acquisition date. Subsequent changes in the measurement of that contingent consideration unrelated to facts and circumstances that existed at the acquisition date will be recognized in profit or loss, whereas previously these changes were recognized as an adjustment to the cost of the business combination and therefore impacted the amount of goodwill recognized. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the acquiree has accumulated tax losses or other temporary deductible differences and these fail to meet the recognition criteria for deferred tax assets at the date of acquisition, then any subsequent recognition of these assets will be recognized in profit or loss, rather than as an adjustment to goodwill as was previously the policy. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | In addition to the Group’s existing policy of measuring the non-controlling interests (previously known as the “minority interests”) in the acquiree at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets, in future the Group may elect, on a transaction by transaction basis, to measure the non-controlling interest at fair value. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3 | Changes in accounting policies (continued) |
|---|--------------------------------------------|

|   | • | As a result of the adoption of IAS 27 (amended 2008), the following changes in policies are applied as from January 1, 2010: |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the Group acquires an additional interest in a non-wholly owned subsidiary, the transaction will be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no goodwill will be recognized as a result of such transactions. Similarly, if the Group disposes of part of its interest in a subsidiary but still retains control, this transaction will also be accounted for as a transaction with equity shareholders (the non-controlling interests) in their capacity as owners and therefore no profit or loss will be recognized as a result of such transactions. Previously, the Group treated such transactions as step-up transactions and partial disposals, respectively. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the Group’s non-wholly owned subsidiaries incur losses, these losses incurred will be allocated between the controlling and non-controlling interests in proportion to their interests in that entity, even if this results in a deficit balance within consolidated equity being attributed to the non-controlling interests. Previously, if the allocation of losses to the non-controlling interests would have resulted in a deficit balance, the losses were only allocated to the non-controlling interests if the non-controlling interests were under a binding obligation to make good the losses. In accordance with the transitional provisions in IAS 27, this new accounting policy is being applied prospectively and therefore previous periods have not been restated. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In order to be consistent with the above amendments to IFRS 3 and IAS 27, and as a result of amendments to IAS 28, Investments in associates, and IAS 31, Interests in joint ventures, the following policies are applied as from January 1, 2010: |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the Group holds interests in the acquiree immediately prior to obtaining significant influence or joint control, these interests will be treated as if disposed of and re-acquired at fair value on the date of obtaining significant influence or joint control. Previously, the step-up approach would have been applied, whereby goodwill was computed as if accumulated at each stage of the acquisition. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | If the Group loses significant influence or joint control, the transaction will be accounted for as a disposal of the entire interest in that investee, with any remaining interest being recognized at fair value as if re-acquired. Previously, such transactions were treated as partial disposals. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3 | Changes in accounting policies (continued) |
|---|--------------------------------------------|

|   | • | As a result of the amendment to IAS 17, Leases, arising from the Improvements to IFRSs (2009) omnibus standard, the Group has re-evaluated the classification of its interests in leasehold land as to whether, in the Group’s judgment, the lease transfers substantially all the risks and rewards of ownership of the land such that the Group is in a position economically similar to that of a purchaser. The Group has concluded that the classification of such leases as operating leases remains appropriate as the leases do not transfer substantially all the risks and rewards of ownership of the land to the Group. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Traffic revenue |
|---|-----------------|

|                  |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-----------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                  |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                  |   |             |   |   |             |   |   |             |   |
| Passenger             |   |             | 64,308 |   |             |   | 48,488 |             |   |   | 42,808 |   |
| Cargo and mail        |   |             | 4,249  |   |             |   | 2,493  |             |   |   | 2,908 |   |
| Fuel surcharge income |   |             | 5,583  |   |             |   | 1,986  |             |   |   | 8,197 |   |
|                  |   |             | 74,140 |   |             |   | 52,967 |             |   |   | 53,913 |   |

| 5 | Other operating revenue |
|---|-------------------------|

|                                 |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                 |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                 |   |             |   |   |             |   |   |             |   |
| Commission income                    |   |             | 469    |   |             |   | 342    |             |   |   | 317 |   |
| General aviation income              |   |             | 283    |   |             |   | 197    |             |   |   | 133 |   |
| Ground services income               |   |             | 390    |   |             |   | 320    |             |   |   | 250 |   |
| Air catering income                  |   |             | 132    |   |             |   | 112    |             |   |   | 107 |   |
| Rental income                        |   |             | 122    |   |             |   | 116    |             |   |   | 120 |   |
| Expired sales in advance of carriage |   |             | 664    |   |             |   | 350    |             |   |   | 276 |   |
| Aircraft lease income                |   |             | -      |   |             |   | 83     |             |   |   | - |   |
| Others                               |   |             | 295    |   |             |   | 315    |             |   |   | 172 |   |
|                                 |   |             | 2,355  |   |             |   | 1,835  |             |   |   | 1,375 |   |

----

| 6 | Flight operations expenses |
|---|----------------------------|

|                                                                                                      |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-----------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                      |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                                                      |   |             |   |   |             |   |   |             |   |
| Jet fuel costs                                                                                            |   |             | 23,492 |   |             |   | 16,390 |             |   |   | 23,086 |   |
| Operating lease charges                                                                                   |   |             |   |   |             |   |   |             |   |   |   |   |
| - Aircraft and flight equipment                                                                           |   |             | 4,821  |   |             |   | 4,740  |             |   |   | 4,166 |   |
| - Land and buildings                                                                                      |   |             | 477    |   |             |   | 383    |             |   |   | 361 |   |
| Air catering expenses                                                                                     |   |             | 1,808  |   |             |   | 1,392  |             |   |   | 1,363 |   |
| Aircraft insurance                                                                                        |   |             | 206    |   |             |   | 188    |             |   |   | 174 |   |
| Flight personnel payroll and welfare                                                                      |   |             | 3,420  |   |             |   | 2,622  |             |   |   | 2,490 |   |
| Training expenses                                                                                         |   |             | 628    |   |             |   | 556    |             |   |   | 577 |   |
| Civil Aviation Administration of China (“CAAC”) Infrastructure Development Fund contributions |   |             | 1,622  |   |             |   | 1,418  |             |   |   | 1,289 |   |
| Others                                                                                                    |   |             | 2,119  |   |             |   | 1,607  |             |   |   | 1,476 |   |
|                                                                                                      |   |             | 38,593 |   |             |   | 29,296 |             |   |   | 34,982 |   |

| 7 | Maintenance expenses |
|---|----------------------|

|                           |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                           |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                           |   |             |   |   |             |   |   |             |   |
| Repair and maintenance charges |   |             | 4,985  |   |             |   | 3,903  |             |   |   | 4,406 |   |
| Maintenance materials          |   |             | 601    |   |             |   | 543    |             |   |   | 484 |   |
|                           |   |             | 5,586  |   |             |   | 4,446  |             |   |   | 4,890 |   |

| 8 | Aircraft and traffic servicing expenses |
|---|-----------------------------------------|

|                             |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                             |   |             |   |   |             |   |   |             |   |
| Landing and navigation fees      |   |             | 7,792  |   |             |   | 6,772  |             |   |   | 6,135 |   |
| Ground service and other charges |   |             | 3,176  |   |             |   | 2,397  |             |   |   | 2,341 |   |
|                             |   |             | 10,968 |   |             |   | 9,169  |             |   |   | 8,476 |   |

----

| 9 | Promotion and sales expenses |
|---|------------------------------|

|                          |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                          |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                          |   |             |   |   |             |   |   |             |   |
| Sales commissions             |   |             | 3,232  |   |             |   | 2,539  |             |   |   | 1,853 |   |
| Ticket office expenses        |   |             | 1,373  |   |             |   | 1,055  |             |   |   | 1,055 |   |
| Computer reservation services |   |             | 446    |   |             |   | 327    |             |   |   | 331 |   |
| Advertising and promotion     |   |             | 147    |   |             |   | 46     |             |   |   | 52 |   |
| Others                        |   |             | 357    |   |             |   | 203    |             |   |   | 200 |   |
|                          |   |             | 5,555  |   |             |   | 4,170  |             |   |   | 3,491 |   |

| 10 | General and administrative expenses |
|----|-------------------------------------|

|                         |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                         |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                         |   |             |   |   |             |   |   |             |   |
| General corporate expenses   |   |             | 2,158  |   |             |   | 1,760  |             |   |   | 1,973 |   |
| Auditors’ remuneration |   |             | 14     |   |             |   | 16     |             |   |   | 16 |   |
| Other taxes and levies       |   |             | 94     |   |             |   | 68     |             |   |   | 52 |   |
|                         |   |             | 2,266  |   |             |   | 1,844  |             |   |   | 2,041 |   |

| 11 | Depreciation and amortisation |
|----|-------------------------------|

|                                        |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|---------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                        |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Depreciation                                |   |             |   |   |             |   |   |             |   |
| - Owned assets                              |   |             | 5,724  |   |             |   | 4,702  |             |   |   | 4,199 |   |
| - Assets acquired under finance leases      |   |             | 1,301  |   |             |   | 1,260  |             |   |   | 1,560 |   |
| Amortisation of deferred benefits and gains |   |             | (71    | )      |             |   | (71    | )                |   |   | (71 | ) |
| Other amortisation                          |   |             | 107    |   |             |   | 80     |             |   |   | 58 |   |
|                                        |   |             | 7,061  |   |             |   | 5,971  |             |   |   | 5,746 |   |

| 12 | Staff costs |
|----|-------------|

|                                |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                |   |             |   |   |             |   |   |             |   |
| Salaries, wages and welfare         |   |             | 7,713  |   |             |   | 5,887  |             |   |   | 5,591 |   |
| Retirement scheme contributions     |   |             | 808    |   |             |   | 567    |             |   |   | 686 |   |
| Early retirement benefits (Note 41) |   |             | 29     |   |             |   | 6      |             |   |   | 10 |   |
|                                |   |             | 8,550  |   |             |   | 6,460  |             |   |   | 6,287 |   |

----

| 13 | Other net income |
|----|------------------|

|                                                             |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                             |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                             |   |             |   |   |             |   |   |             |   |
| Refund of CAAC infrastructure development fund                   |   |             | -      |   |             |   | 1,328  |             |   |   | - |   |
| Government subsidies                                             |   |             | 553    |   |             |   | 541    |             |   |   | 901 |   |
| (Loss) / gain on sale of property, plant and equipment, net |   |             |   |   |             |   |   |             |   |   |   |   |
| - Aircraft and spare engines                                     |   |             | (8     | )      |             |   | 14     |             |   |   | (20 | ) |
| - Other property, plant and equipment                            |   |             | (1     | )      |             |   | 17     |             |   |   | (39 | ) |
| Gain on sale of available-for-sale equity                        |   |             |   |   |             |   |   |             |   |   |   |   |
| securities (Note 17(b))                                          |   |             | -      |   |             |   | 78     |             |   |   | - |   |
| Others                                                           |   |             | (68    | )      |             |   | 11     |             |   |   | (9 | ) |
|                                                             |   |             | 476    |   |             |   | 1,989  |             |   |   | 833 |   |

| 14 | Interest expense |
|----|------------------|

|                                                                |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                |   |             |   |   |             |   |   |             |   |
| Interest on bank and other loans wholly repayable within five years |   |             | 777    |   |             |   | 1,333  |             |   |   | 1,934 |   |
| Interest on other loans                                             |   |             | 263    |   |             |   | 120    |             |   |   | 30 |   |
| Finance charges on obligations under finance leases                 |   |             | 403    |   |             |   | 471    |             |   |   | 678 |   |
| Other interest expense (Note 41)                                    |   |             | 8      |   |             |   | 14     |             |   |   | 19 |   |
| Less: borrowing costs capitalised                                   |   |             | (186   | )      |             |   | (441   | )                |   |   | (674 | ) |
|                                                                |   |             | 1,265  |   |             |   | 1,497  |             |   |   | 1,987 |   |

----

| 15 | Emoluments of directors, supervisors and senior management |
|----|------------------------------------------------------------|

|                                |   |             |   |   | Salaries,     |   |   |          |   |   |          |   |   |          |   |
|-------------------------------------|--------|------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                |   |             |   |   | allowances    |   |   |          |   |   |          |   |   |          |   |
|                                |   |             |   |   | and           |   |   |          |   |   | Retirement    |   |   |          |   |
|                                |   | Directors’ |   |   | benefits      |   |   | Discretionary |   |   | scheme        |   |   |          |   |
| Name                                |   | fees             |   |   | in kind  |   |   | bonuses       |   |   | contributions |   |   | Total         |   |
|                                |   | RMB’000    |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
| Non-executive directors             |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |
| Si Xian Min (Note (i) and (vii))    |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Li Wen Xin (Note (i) and (vii))     |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Wang Quan Hua (Note (i) and (vii))  |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
|                                |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Executive directors                 |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Liu Bao Heng (Note (ii) and (vii))  |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Tan Wan Geng                        |   |             | -      |   |          |   | 817    |          |   |   | 150           |   |   |          | 61     |   |   |   | 1,028 |   |
| Zhang Zi Fang                       |   |             | -      |   |          |   | 778    |          |   |   | 150           |   |   |          | 60     |   |   |   | 988 |   |
| Xu Jie Bo                           |   |             | -      |   |          |   | 706    |          |   |   | 100           |   |   |          | 60     |   |   |   | 866 |   |
| Chen Zhen You                       |   |             | -      |   |          |   | 706    |          |   |   | 100           |   |   |          | 59     |   |   |   | 865 |   |
|                                |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Supervisors                         |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Pan Fu (Note (iv) and (vii))        |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Sun Xiao Yi (Note (iii) and (vii))  |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Li Jia Shi                          |   |             | -      |   |          |   | 708    |          |   |   | 100           |   |   |          | 58     |   |   |   | 866 |   |
| Zhang Wei (Note (vii))              |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Yang Yi Hua                         |   |             | -      |   |          |   | 368    |          |   |   | 20            |   |   |          | 56     |   |   |   | 444 |   |
| Liang Zhong Gao                     |   |             | -      |   |          |   | 373    |          |   |   | 20            |   |   |          | 57     |   |   |   | 450 |   |
|                                |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Independent non-executive directors |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Wang Zhi (Note (iii))               |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Sui Guang Jun (Note (iii))          |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Gong Hua Zhang                      |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Lam Kwong Yu                        |   |             | 87     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 87 |   |
| Wei Jin Cai (Note (iv))             |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Ning Xiang Dong (Note (iv))         |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
|                                |   |             | 287    |   |          |   | 4,456  |          |   |   | 640           |   |   |          | 411    |   |   |   | 5,794 |   |

----

| 15 | Emoluments of directors, supervisors and senior management (continued) |
|----|------------------------------------------------------------------------|

|                                |   |             |   |   | Salaries,     |   |   |          |   |   |          |   |   |          |   |
|-------------------------------------|--------|------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                |   |             |   |   | allowances    |   |   |          |   |   |          |   |   |          |   |
|                                |   |             |   |   | and           |   |   |          |   |   | Retirement    |   |   |          |   |
|                                |   | Directors’ |   |   | benefits      |   |   | Discretionary |   |   | scheme        |   |   |          |   |
| Name                                |   | fees             |   |   | in kind  |   |   | bonuses       |   |   | contributions |   |   | Total         |   |
|                                |   | RMB’000    |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
| Executive directors                 |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |
| Si Xian Min                         |   |             | -      |   |          |   | 698    |          |   |   | -             |   |   |          | 40     |   |   |   | 738 |   |
| Li Wen Xin                          |   |             | -      |   |          |   | 608    |          |   |   | -             |   |   |          | 40     |   |   |   | 648 |   |
| Wang Quan Hua                       |   |             | -      |   |          |   | 550    |          |   |   | -             |   |   |          | 40     |   |   |   | 590 |   |
| Liu Bao Heng                        |   |             | -      |   |          |   | 550    |          |   |   | -             |   |   |          | 40     |   |   |   | 590 |   |
| Tan Wan Geng                        |   |             | -      |   |          |   | 672    |          |   |   | -             |   |   |          | 38     |   |   |   | 710 |   |
| Xu Jie Bo                           |   |             | -      |   |          |   | 572    |          |   |   | -             |   |   |          | 38     |   |   |   | 610 |   |
| Chen Zhen You                       |   |             | -      |   |          |   | 572    |          |   |   | -             |   |   |          | 38     |   |   |   | 610 |   |
| Zhang Zi Fang (Note (v))            |   |             | -      |   |          |   | 590    |          |   |   | -             |   |   |          | 38     |   |   |   | 628 |   |
|                                |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Supervisors                         |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Sun Xiao Yi                         |   |             | -      |   |          |   | 550    |          |   |   | -             |   |   |          | 40     |   |   |   | 590 |   |
| Yang Guang Hua (Note (vi))          |   |             | -      |   |          |   | 407    |          |   |   | -             |   |   |          | 17     |   |   |   | 424 |   |
| Zhang Wei                           |   |             | -      |   |          |   | 345    |          |   |   | -             |   |   |          | 40     |   |   |   | 385 |   |
| Yang Yi Hua                         |   |             | -      |   |          |   | 266    |          |   |   | -             |   |   |          | 38     |   |   |   | 304 |   |
| Liang Zhong Gao                     |   |             | -      |   |          |   | 269    |          |   |   | -             |   |   |          | 38     |   |   |   | 307 |   |
| Li Jia Shi (Note (v))               |   |             | -      |   |          |   | 118    |          |   |   | -             |   |   |          | 19     |   |   |   | 137 |   |
|                                |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Independent non-executive directors |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Wang Zhi                            |   |             | 50     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 50 |   |
| Sui Guang Jun                       |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Gong Hua Zhang                      |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Lam Kwong Yu                        |   |             | 88     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 88 |   |
|                                |   |             | 338    |   |          |   | 6,767  |          |   |   | -             |   |   |          | 504    |   |   |   | 7,609 |   |

----

| 15 | Emoluments of directors, supervisors and senior management (continued) |
|----|------------------------------------------------------------------------|

|                                 |   |             |   |   | Salaries,     |   |   |          |   |   |          |   |   |          |   |
|--------------------------------------|--------|------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                 |   |             |   |   | allowances    |   |   |          |   |   |          |   |   |          |   |
|                                 |   |             |   |   | and           |   |   |          |   |   | Retirement    |   |   |          |   |
|                                 |   | Directors’ |   |   | benefits      |   |   | Discretionary |   |   | scheme        |   |   |          |   |
| Name                                 |   | fees             |   |   | in kind  |   |   | bonuses       |   |   | contributions |   |   | Total         |   |
|                                 |   | RMB’000    |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
| Executive directors                  |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |
| Si Xian Min                          |   |             | -      |   |          |   | 857    |          |   |   | -             |   |   |          | 60     |   |   |   | 917 |   |
| Li Wen Xin                           |   |             | -      |   |          |   | 596    |          |   |   | -             |   |   |          | 80     |   |   |   | 676 |   |
| Wang Quan Hua                        |   |             | -      |   |          |   | 535    |          |   |   | -             |   |   |          | 61     |   |   |   | 596 |   |
| Liu Bao Heng (Note (ix))             |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Tan Wan Geng                         |   |             | -      |   |          |   | 854    |          |   |   | -             |   |   |          | 59     |   |   |   | 913 |   |
| Xu Jie Bo                            |   |             | -      |   |          |   | 711    |          |   |   | -             |   |   |          | 57     |   |   |   | 768 |   |
| Chen Zhen You                        |   |             | -      |   |          |   | 711    |          |   |   | -             |   |   |          | 55     |   |   |   | 766 |   |
| Liu Shao Yong (Notes (viii) and (x)) |   |             | -      |   |          |   | 597    |          |   |   | -             |   |   |          | 79     |   |   |   | 676 |   |
| Zhao Liu An (Notes (viii) and (xi))  |   |             | -      |   |          |   | 442    |          |   |   | -             |   |   |          | 61     |   |   |   | 503 |   |
|                                 |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Supervisors                          |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Sun Xiao Yi                          |   |             | -      |   |          |   | 535    |          |   |   | -             |   |   |          | 61     |   |   |   | 596 |   |
| Yang Guang Hua                       |   |             | -      |   |          |   | 712    |          |   |   | -             |   |   |          | 28     |   |   |   | 740 |   |
| Yang Yi Hua                          |   |             | -      |   |          |   | 292    |          |   |   | -             |   |   |          | 53     |   |   |   | 345 |   |
| Liang Zhong Gao                      |   |             | -      |   |          |   | 296    |          |   |   | -             |   |   |          | 54     |   |   |   | 350 |   |
| Zhang Wei (Note (xii))               |   |             | -      |   |          |   | 282    |          |   |   | -             |   |   |          | 61     |   |   |   | 343 |   |
|                                 |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Independent non-executive directors  |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Wang Zhi                             |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Sui Guang Jun                        |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Gong Hua Zhang                       |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Lam Kwong Yu                         |   |             | 89     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 89 |   |
|                                 |   |             | 389    |   |          |   | 7,420  |          |   |   | -             |   |   |          | 769    |   |   |   | 8,578 |   |

----

| 15 | Emoluments of directors, supervisors and senior management (continued) |
|----|------------------------------------------------------------------------|

|   | (i) | These three directors were appointed as non-executive directors on December 29, 2010. |
|--------|-----|---------------------------------------------------------------------------------------|

|   | (ii) | Resigned on November 24, 2010. |
|--------|------|--------------------------------|

|   | (iii) | Resigned on December 29, 2010. |
|--------|-------|--------------------------------|

|   | (iv) | Appointed on December 29, 2010. |
|--------|------|---------------------------------|

|   | (v) | Appointed on June 30, 2009. |
|--------|-----|-----------------------------|

|   | (vi) | Resigned on June 30, 2009. |
|--------|------|----------------------------|

|   | (vii) | These directors or supervisors do not receive any remunerations for their services in the capacity of the directors or supervisors of the Company. They also held management positions in CSAHC and their salaries were borne by CSAHC. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (viii) | The above amounts included salaries paid to these directors as pilots of the Company. |
|--------|--------|---------------------------------------------------------------------------------------|

|   | (ix) | Appointed on December 29, 2008. |
|--------|------|---------------------------------|

|   | (x) | Resigned on December 12, 2008. |
|--------|-----|--------------------------------|

|   | (xi) | Resigned on September 19, 2008. |
|--------|------|---------------------------------|

|   | (xii) | Appointed on June 25, 2008. |
|--------|-------|-----------------------------|

----

| 16 | Income tax expense / (benefit) |
|----|--------------------------------|

| (a) | Income tax expense / (benefit) in the consolidated income statements |
|-----|----------------------------------------------------------------------|

|                                                                                                                                    |   | 2010             |   |    | 2009             |   |   | 2008             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|---------|------------------|--------|--------|------------------|--------|
|                                                                                                                                    |   | RMB million |   |    | RMB million |   |   | RMB million |   |
| PRC income tax                                                                                                                          |   |             |   |    |             |   |   |             |   |
| Provision for the year                                                                                                                  |   |             | 2,134  |    |             |   | 90     |             |   |   | 25 |   |
| Over-provision in prior year                                                                                                            |   |             | -      |    |             |   | -      |             |   |   | (6 | ) |
|                                                                                                                                    |   |             | 2,134  |    |             |   | 90     |             |   |   | 19 |   |
| Deferred tax (Note 26)                                                                                                                  |   |             |   |    |             |   |   |             |   |   |   |   |
| Origination and reversal of temporary differences                                                                                       |   |             | (92    | )       |             |   | 327    |             |   |   | 232 |   |
| Utilisation of unused tax losses and deductible temporary differences not recognized     in prior year (Note 16(b)) |   |             | (364   | )  |             |   | (512   | )           |   |   | - |   |
| Effect on deferred tax balances resulting from a change in tax rate                                                                     |   |             | -      |    |             |   | -      |             |   |   | (189 | ) |
|                                                                                                                                    |   |             | (456   | )       |             |   | (185   | )                |   |   | 43 |   |
| Income tax expense / (benefit)                                                                                                          |   |             | 1,678  |    |             |   | (95    | )                |   |   | 62 |   |

----

| 16 | Income tax expense / (benefit) (continued) |
|----|--------------------------------------------|

| (b) | Reconciliation between actual tax expense / (benefit) and calculated tax based on accounting profit/(loss) at applicable tax rates |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                             |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                                                             |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                                                                                             |   |             |   |   |             |   |   |             |   |
| Profit/(loss) before taxation                                                                                                                    |   |             | 8,093  |   |             |   | 432    |             |   |   | (4,724 | ) |
|                                                                                                                                             |   |             |   |   |             |   |   |             |   |   |   |   |
| Notional tax on profit/(loss) before taxation, calculated at the rates applicable to profit/(loss) in the tax jurisdictions concerned (Note (i)) |   |             | 1,974  |   |             |   | 87     |             |   |   | (913 | ) |
| Adjustments for tax effect of:                                                                                                                   |   |             |   |   |             |   |   |             |   |   |   |   |
| Non-deductible expenses                                                                                                                          |   |             | 112    |   |             |   | 63     |             |   |   | 64 |   |
| Non-taxable income                                                                                                                               |   |             |   |   |             |   |   |             |   |   |   |   |
| - Share of results of associates and jointly controlled entities                                                                                 |   |             | (42    | )      |             |   | (76    | )                |   |   | (38 | ) |
|     - Others                                                                                                                 |   |             | (2     | )      |             |   | (20    | )                |   |   | - |   |
| Recognition of taxable temporary difference on asset classified as held for sale                                                                 |   |             | -      |   |             |   | 67     |             |   |   | - |   |
| Unused tax losses not recognized                                                                                                                 |   |             | -      |   |             |   | 216    |             |   |   | 566 |   |
| Deductible temporary differences not recognized                                                                                                  |   |             | -      |   |             |   | -      |             |   |   | 577 |   |
| Utilisation of unused tax losses and deductible temporary differences not recognized in prior year (Note 16(a)/Note (ii))                        |   |             | (364   | )      |             |   | (512   | )                |   |   | - |   |
| Difference in tax rates (Note (ii))                                                                                                              |   |             | -      |   |             |   | 81     |             |   |   | - |   |
| Effect of change in tax rate (Note (iii))                                                                                                        |   |             | -      |   |             |   | -      |             |   |   | (189 | ) |
| Over provision in prior years                                                                                                                    |   |             | -      |   |             |   | -      |             |   |   | (6 | ) |
| Others                                                                                                                                           |   |             | -      |   |             |   | (1     | )                |   |   | 1 |   |
| Actual tax expense / (benefit)                                                                                                                   |   |             | 1,678  |   |             |   | (95    | )                |   |   | 62 |   |

|   | (i) | The headquarters of the Company and its branches are taxed at rates ranging from 22% to 25% (2009: 20% to 25%; 2008: 18% to 25%).  The subsidiaries of the Group are taxed at rates ranging from 15% to 25% (2009: 15% to 25%; 2008: 15% to 25%). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 16 | Income tax expense / (benefit) (continued) |
|----|--------------------------------------------|

| (b) | Reconciliation between actual tax expense / (benefit) and calculated tax based on accounting profit/(loss) at applicable tax rates (continued) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Company’s retained profits under PRC Accounting Standards for Business Enterprises (“PRC GAAP”) was increased as a result of changes in accounting policies in 2003 and 2007.  As at December 31, 2008, the Company recognized deferred tax liabilities of RMB498 million and an income tax payable of RMB112 million in respect of the increase in retained profits of RMB3,320 million in 2003 and RMB627 million in 2007, respectively in the consolidated financial statements prepared under IFRSs.  In 2009, the Company agreed with the local tax authority that the above deferred tax liabilities and income tax payable would be settled from 2009 to 2011. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | The deferred tax assets and liabilities as at December 31, 2008 have been remeasured for the change in applicable tax rates as a result of enactment of regulations governing administration of income tax among headquarters and branches in 2008. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17 | Other comprehensive income |
|----|----------------------------|

| (a) | Tax effects relating to other comprehensive income |
|-----|----------------------------------------------------|

|                          |   | 2010       |   |   | 2009    |   |   | 2008       |   |
|------------------------------------|--------|------------|--------|--------|---------|--------|--------|------------|--------|
|                               |   | Before-tax |   |   | Tax     |   |   | Net-of-tax |   |   | Before-tax |   |   | Tax |   |   | Net-of-tax |   |   | Before-tax |   |   | Tax |   |   | Net-of-tax |   |
|                               |   | Amount     |   |   | benefit |   |   | amount     |   |   | amount |   |   | expense |   |   | amount |   |   | amount |   |   | benefit |   |   | amount |   |
|                               |   | RMB        |   |   | RMB     |   |   | RMB        |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                               |   | million    |   |   | million |   |   | million    |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |
| Available-for-sales securities:    |   |       |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net movement in fair value reserve |   |       | (18    | )      |    |   | 3      |       |   |   | (15 | ) |   |   | 39 |   |   |   | (9 | ) |   |   | 30 |   |   |   | (248 | ) |   |   | 56 |   |   |   | (192 | ) |

| (b) | Reclassification adjustments relating to components of other comprehensive income |
|-----|-----------------------------------------------------------------------------------|

|                                                                                            |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                            |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                                            |   |             |   |   |             |   |   |             |   |
| Available-for-sale securities:                                                                  |   |             |   |   |             |   |   |             |   |
| Changes in fair value recognized during the year                                                |   |             | (18    | )      |             |   | 117    |             |   |   | (248 | ) |
| Reclassification adjustment for amount transferred to profit or loss:                           |   |             |   |   |             |   |   |             |   |   |   |   |
| - gain on disposal (Note 13)                                                                    |   |             | -      |   |             |   | (78    | )                |   |   | - |   |
| Net deferred tax credited / (debited) to other comprehensive income (Note 26(a))                |   |             | 3      |   |             |   | (9     | )                |   |   | 56 |   |
|                                                                                            |   |             |   |   |             |   |   |             |   |   |   |   |
| Net movement in the fair value reserve during the year recognized in other comprehensive income |   |             | (15    | )      |             |   | 30     |             |   |   | (192 | ) |

| 18 | Dividends |
|----|-----------|

----

| 19 | Earnings/(loss) per share |
|----|---------------------------|

|                                                      |   | 2010                |   |   | 2009                |   |   | 2008                |   |
|-----------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|---------------------|--------|
|                                                      |   | Million shares |   |   | Million shares |   |   | Million shares |   |
|                                                      |   |                |   |   |                |   |   |                |   |
| Issued ordinary shares at January 1                       |   |                | 8,003  |   |                |   | 6,561  |                |   |   | 4,374 |   |
| Effect of bonus share issue                               |   |                | -      |   |                |   | -      |                |   |   | 2,187 |   |
| Effect of issuance of A shares (Note 43)                  |   |                | 259    |   |                |   | 263    |                |   |   | - |   |
| Effect of issuance of H shares (Note 43)                  |   |                | 52     |   |                |   | 261    |                |   |   | - |   |
|                                                      |   |                |   |   |                |   |   |                |   |   |   |   |
| Weighted average number of ordinary shares at December 31 |   |                | 8,314  |   |                |   | 7,085  |                |   |   | 6,561 |   |

| 20 | Property, plant and equipment, net |
|----|------------------------------------|

|                                        |   |       |   |   |      |   |   | Aircraft |   |   | Other    |   |   |       |   |   |       |   |
|--------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|------------|--------|
|                                             |   |       |   |   |      |   |   |     |   |   | Acquired |   |   | flight     |   |   | Machinery, |   |   |   |   |
|                                             |   |       |   |   |      |   |   |     |   |   | under    |   |   | equipment, |   |   | equipment  |   |   |   |   |
|                                             |   | Investment |   |   |      |   |   |     |   |   | finance  |   |   | including  |   |   | and        |   |   |   |   |
|                                             |   | properties |   |   | Buildings |   |   | Owned    |   |   | leases   |   |   | rotables   |   |   | vehicles   |   |   | Total |   |
|                                             |   | RMB        |   |   | RMB       |   |   | RMB      |   |   | RMB      |   |   | RMB        |   |   | RMB        |   |   | RMB |   |
|                                             |   | million    |   |   | million   |   |   | million  |   |   | million  |   |   | million    |   |   | million    |   |   | million |   |
| Cost:                                            |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
| At January 1, 2009                               |   |       | 776    |   |      |   | 6,185  |     |   |   | 42,687   |   |   |       | 22,122 |   |       |   | 11,119 |   |   |   | 3,727 |   |   |   | 86,616 |   |
| Additions                                        |   |       | -      |   |      |   | 67     |     |   |   | 4,490    |   |   |       | 2,326  |   |       |   | 1,067 |   |   |   | 402 |   |   |   | 8,352 |   |
| Transfer from construction in progress (Note 21) |   |       | -      |   |      |   | 356    |     |   |   | 7,603    |   |   |       | 102    |   |       |   | 150 |   |   |   | 104 |   |   |   | 8,315 |   |
| Reclassification on exercise of purchase options |   |       | -      |   |      |   | -      |     |   |   | 2,586    |   |   |       | (2,586 | )      |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification to lease prepayments            |   |       | (12    | )      |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | (12 | ) |
| Disposals                                        |   |       | -      |   |      |   | (36    | )        |   |   | (1,209   | )      |   |       | (37    | )      |       |   | (480 | ) |   |   | (109 | ) |   |   | (1,871 | ) |
| Other reclassifications                          |   |       | (181   | )      |      |   | 179    |     |   |   | (77      | )      |   |       | -      |   |       |   | 77 |   |   |   | 2 |   |   |   | - |   |
| At December 31, 2009                             |   |       | 583    |   |      |   | 6,751  |     |   |   | 56,080   |   |   |       | 21,927 |   |       |   | 11,933 |   |   |   | 4,126 |   |   |   | 101,400 |   |
| At January 1, 2010                               |   |       | 583    |   |      |   | 6,751  |     |   |   | 56,080   |   |   |       | 21,927 |   |       |   | 11,933 |   |   |   | 4,126 |   |   |   | 101,400 |   |
| Additions                                        |   |       | -      |   |      |   | 18     |     |   |   | 4,921    |   |   |       | 3,552  |   |       |   | 1,368 |   |   |   | 405 |   |   |   | 10,264 |   |
| Transfer from construction in progress (Note 21) |   |       | -      |   |      |   | 700    |     |   |   | 12,665   |   |   |       | -      |   |       |   | 359 |   |   |   | 41 |   |   |   | 13,765 |   |
| Disposals                                        |   |       | -      |   |      |   | (81    | )        |   |   | (1,294   | )      |   |       | (11    | )      |       |   | (202 | ) |   |   | (246 | ) |   |   | (1,834 | ) |
| Other reclassifications                          |   |       | 28     |   |      |   | (28    | )        |   |   | (41      | )      |   |       | -      |   |       |   | 41 |   |   |   | - |   |   |   | - |   |
| At December 31, 2010                             |   |       | 611    |   |      |   | 7,360  |     |   |   | 72,331   |   |   |       | 25,468 |   |       |   | 13,499 |   |   |   | 4,326 |   |   |   | 123,595 |   |

----

| 20 | Property, plant and equipment, net (continued) |
|----|------------------------------------------------|

|                                        |   |       |   |   |      |   |   | Aircraft |   |   | Other    |   |   |       |   |   |       |   |
|--------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|------------|--------|
|                                             |   |       |   |   |      |   |   |     |   |   | Acquired |   |   | flight     |   |   | Machinery, |   |   |   |   |
|                                             |   |       |   |   |      |   |   |     |   |   | under    |   |   | equipment, |   |   | equipment  |   |   |   |   |
|                                             |   | Investment |   |   |      |   |   |     |   |   | finance  |   |   | including  |   |   | and        |   |   |   |   |
|                                             |   | properties |   |   | Buildings |   |   | Owned    |   |   | leases   |   |   | rotables   |   |   | vehicles   |   |   | Total |   |
|                                             |   | RMB        |   |   | RMB       |   |   | RMB      |   |   | RMB      |   |   | RMB        |   |   | RMB        |   |   | RMB |   |
|                                             |   | million    |   |   | million   |   |   | million  |   |   | million  |   |   | million    |   |   | million    |   |   | million |   |
| Accumulated depreciation andimpairment losses:   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
| At January 1, 2009                               |   |       | 136    |   |      |   | 1,193  |     |   |   | 18,606   |   |   |       | 4,069  |   |       |   | 6,924 |   |   |   | 2,451 |   |   |   | 33,379 |   |
| Depreciation charge for the year                 |   |       | 19     |   |      |   | 234    |     |   |   | 3,260    |   |   |       | 1,260  |   |       |   | 844 |   |   |   | 345 |   |   |   | 5,962 |   |
| Reclassification on exercise of purchase options |   |       | -      |   |      |   | -      |     |   |   | 1,354    |   |   |       | (1,354 | )      |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification to lease prepayments            |   |       | (1     | )      |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | (1 | ) |
| Disposals                                        |   |       | -      |   |      |   | (11    | )        |   |   | (970     | )      |   |       | (37    | )      |       |   | (428 | ) |   |   | (93 | ) |   |   | (1,539 | ) |
| Other reclassifications                          |   |       | (32    | )      |      |   | 31     |     |   |   | (66      | )      |   |       | -      |   |       |   | 66 |   |   |   | 1 |   |   |   | - |   |
| Impairment losses for the year (Note (g))        |   |       | -      |   |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | 26 |   |   |   | - |   |   |   | 26 |   |
| Impairment losses written off on disposal        |   |       | -      |   |      |   | -      |     |   |   | (97      | )      |   |       | -      |   |       |   | (3 | ) |   |   | - |   |   |   | (100 | ) |
| At December 31, 2009                             |   |       | 122    |   |      |   | 1,447  |     |   |   | 22,087   |   |   |       | 3,938  |   |       |   | 7,429 |   |   |   | 2,704 |   |   |   | 37,727 |   |
|                                             |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| At January 1, 2010                               |   |       | 122    |   |      |   | 1,447  |     |   |   | 22,087   |   |   |       | 3,938  |   |       |   | 7,429 |   |   |   | 2,704 |   |   |   | 37,727 |   |
| Depreciation charge for the year                 |   |       | 18     |   |      |   | 248    |     |   |   | 4,226    |   |   |       | 1,301  |   |       |   | 872 |   |   |   | 360 |   |   |   | 7,025 |   |
| Disposals                                        |   |       | -      |   |      |   | (28    | )        |   |   | (967     | )      |   |       | (11    | )      |       |   | (186 | ) |   |   | (233 | ) |   |   | (1,425 | ) |
| Other reclassifications                          |   |       | (2     | )      |      |   | 2      |     |   |   | (35      | )      |   |       | -      |   |       |   | 35 |   |   |   | - |   |   |   | - |   |
| Impairment losses for the year (Note (g))        |   |       | -      |   |      |   | -      |     |   |   | 189      |   |   |       | -      |   |       |   | 22 |   |   |   | 1 |   |   |   | 212 |   |
| Impairment losses written off on disposal        |   |       | -      |   |      |   | -      |     |   |   | (156     | )      |   |       | -      |   |       |   | (2 | ) |   |   | - |   |   |   | (158 | ) |
| At December 31, 2010                             |   |       | 138    |   |      |   | 1,669  |     |   |   | 25,344   |   |   |       | 5,228  |   |       |   | 8,170 |   |   |   | 2,832 |   |   |   | 43,381 |   |
|                                             |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Net book value:                                  |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010                             |   |       | 473    |   |      |   | 5,691  |     |   |   | 46,987   |   |   |       | 20,240 |   |       |   | 5,329 |   |   |   | 1,494 |   |   |   | 80,214 |   |
| At December 31, 2009                             |   |       | 461    |   |      |   | 5,304  |     |   |   | 33,993   |   |   |       | 17,989 |   |       |   | 4,504 |   |   |   | 1,422 |   |   |   | 63,673 |   |

|  (a) | Most of the Group’s buildings are located in the PRC.  The Group was formally granted the rights to use the thirty-two parcels of land in Guangzhou, Shenzhen, Zhuhai, Beihai, Changsha, Shantou, Haikou, Zhengzhou, Jilin, Guiyang and Wuhan, etc. by the relevant PRC authorities for periods of 30 to 70 years, which expire between 2020 and 2073.  For other land in the PRC on which the Group’s buildings are erected, the Group was formally granted the rights to use such land for periods of one to three years pursuant to various lease agreements between the Company and CSAHC.  In this connection, rental payments in respect of land use rights totaling RMB22 million were paid to CSAHC during 2010 (2009 and 2008: RMB22 million) in respect of these leases. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 20 | Property, plant and equipment, net (continued) |
|----|------------------------------------------------|

| (b) | As at December 31, 2010, certain aircraft of the Group with an aggregate carrying value of approximately RMB46,194 million (2009: RMB34,384 million) were mortgaged under certain loan and lease agreements (Notes 33 and 34). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | The Group leased out investment properties and certain flight training facilities under operating leases.  The leases typically run for an initial period of one to fourteen years, with an option to renew the lease after that date at which time all terms are renegotiated.  None of the leases includes contingent rentals.  In this connection, rental income totalling RMB74 million (2009: RMB62 million; 2008: RMB54 million) was received by the Group during the year in respect of the leases. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | 2010             |   |   | 2009             |   |
|---------------------------------|--------|------------------|--------|--------|------------------|--------|
|                            |   | RMB million |   |   | RMB million |   |
|                            |   |             |   |   |             |   |
| Within 1 year                   |   |             | 76     |   |             |   | 56 |   |
| After 1 year but within 5 years |   |             | 97     |   |             |   | 182 |   |
| After 5 years                   |   |             | 1      |   |             |   | 111 |   |
|                            |   |             | 174    |   |             |   | 349 |   |

| (d) | The investment properties are located in the PRC, where comparable market transactions are infrequent.  In the absence of the current or recent prices in an active market and alternative reliable estimates of fair value (for example, discounted cash flow projection) are not available, the Group could not reliably determine the fair value of the investment properties. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | The Company entered into two separate arrangements (the “Arrangements”) with certain independent third parties during each of 2002 and 2003.  Under each of the Arrangements, the Company sold an aircraft and then immediately leased back the aircraft for an agreed period.  The Company has an option to purchase the aircraft at a pre-determined date.  In the event that the lease agreement is early terminated by the Company, the Company is liable to pay a pre-determined penalty to the lessor.  Provided that the Company complies with the lease agreements, the Company is entitled to the continued possession and operation of the aircraft.  Since the Company retains substantially all risks and rewards incidental to ownership of the aircraft and enjoys substantially the same rights to their use as before the Arrangements, no adjustment has been made to the property, plant and equipment. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | As at December 31, 2010 and up to the date of approval of these consolidated financial statements, the Group is in the process of applying for the land use right certificates and property title certificates in respect of the properties located in Guangzhou (including Guangzhou Baiyun International Airport), Xiamen, Heilongjiang, Hainan, Jilin, Dalian, Hunan, Xinjiang, Henan, Shenzhen, Beijing, Shanghai, Sanya, Zhuhai and Shenyang in which the Group has interests and for which such certificates have not been granted.  As at December 31, 2010, carrying value of such properties of the Group amounted to RMB3,271 million (2009: RMB2,638 million).  The directors of the Company are of the opinion that the use of and the conduct of operating activities at the properties referred to above are not affected by the fact that the Group has not yet obtained the relevant land use right certificates and property title certificates. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 20 | Property, plant and equipment, net (continued) |
|----|------------------------------------------------|

| (g) | In 2009, in view of the age of the Group’s fleet of ATR72 aircraft, the Group determined to dispose of these aircraft and commenced its process of seeking buyers for these aircraft. As a result, the Group assessed the recoverable amounts of these aircraft and related fleet assets. The carrying amount of the related fleet assets was written down by RMB26 million. The estimates of recoverable amounts were based on the assets’ fair value less costs to sell, determined by reference to the recent observable market prices for the aircraft and related fleet assets. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21 | Construction in progress |
|----|--------------------------|

|                                                                            |   | 2010             |    |   | 2009             |   |
|---------------------------------------------------------------------------------|--------|------------------|---------|--------|------------------|--------|
|                                                                            |   | RMB million |    |   | RMB million |   |
| At January 1                                                                    |   |             | 18,059  |   |             |   | 17,321 |   |
| Additions                                                                       |   |             | 6,068   |   |             |   | 9,070 |   |
| Transferred to property, plant and equipment (Note 20)                          |   |             | (13,765 | )      |             |   | (8,315 | ) |
| Transferred to lease prepayment and other assets upon completion of development |   |             | (293    | )      |             |   | (17 | ) |
| At December 31                                                                  |   |             | 10,069  |   |             |   | 18,059 |   |

----

| 22 | Interest in associates |
|----|------------------------|

|                |   | 2010             |   |   | 2009             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| Share of net assets |   |             | 309    |   |             |   | 257 |   |

|                                            |   | 100 Percent |   |   | Group’s effective interest |   |
|------------------------------------------------------|--------|------------------|--------|--------|--------------------------------------------|--------|
|                                                 |   | 2010             |   |   | 2009                                       |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                 |   | RMB              |   |   | RMB                                        |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                                 |   | million          |   |   | million                                    |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current assets                                   |   |             | 13,026 |   |                                       |   | 11,190 |   |   |   |   |   |   | 4,909 |   |   |   | 4,210 |   |   |   |   |
| Current assets                                       |   |             | 4,802  |   |                                       |   | 3,597 |   |   |   |   |   |   | 1,275 |   |   |   | 986 |   |   |   |   |
| Non-current liabilities                              |   |             | (6,975 | )      |                                       |   | (7,347 | ) |   |   |   |   |   | (2,718 | ) |   |   | (2,861 | ) |   |   |   |
| Current liabilities                                  |   |             | (9,993 | )      |                                       |   | (6,837 | ) |   |   |   |   |   | (3,286 | ) |   |   | (2,229 | ) |   |   |   |
| Net assets                                           |   |             | 860    |   |                                       |   | 603 |   |   |   |   |   |   | 180 |   |   |   | 106 |   |   |   |   |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net liabilities not shared by the Group              |   |             |   |   |                                       |   |   |   |   |   |   |   |   | 129 |   |   |   | 151 |   |   |   |   |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   | 309 |   |   |   | 257 |   |   |   |   |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                              |   |             | 9,924  |   |                                       |   | 7,123 |   |   |   | 5,761 |   |   |   | 3,843 |   |   |   | 2,750 |   |   |   | 2,234 |   |
| Expenses                                             |   |             | (9,706 | )      |                                       |   | (7,009 | ) |   |   | (6,071 | ) |   |   | (3,765 | ) |   |   | (2,715 | ) |   |   | (2,312 | ) |
| Profit / (loss) for the year                         |   |             | 218    |   |                                       |   | 114 |   |   |   | (310 | ) |   |   | 78 |   |   |   | 35 |   |   |   | (78 | ) |
|                                                 |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (profit) / loss not shared by the Group          |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   | (22 | ) |   |   | 34 |   |   |   | 66 |   |
| The Group’s share of associates’ results |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   | 56 |   |   |   | 69 |   |   |   | (12 | ) |

----

| 23 | Interest in jointly controlled entities |
|----|-----------------------------------------|

|                |   | 2010             |   |   | 2009             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| Share of net assets |   |             | 863    |   |             |   | 728 |   |

|                    |   | Group’s effective interest |   |
|-------------------------|--------|--------------------------------------------|--------|
|                    |   | 2010                                       |   |   | 2009 |   |   | 2008 |   |
|                    |   | RMB million                           |   |   | RMB million |   |   | RMB million |   |
|                    |   |                                       |   |   |   |   |   |   |   |
| Non-current assets      |   |                                       | 806    |   |   |   | 812 |   |   |   |   |
| Current assets          |   |                                       | 691    |   |   |   | 547 |   |   |   |   |
| Non-current liabilities |   |                                       | (207   | ) |   |   | (231 | ) |   |   |   |
| Current liabilities     |   |                                       | (427   | ) |   |   | (400 | ) |   |   |   |
| Net assets              |   |                                       | 863    |   |   |   | 728 |   |   |   |   |
|                    |   |                                       |   |   |   |   |   |   |   |   |   |
| Revenue                 |   |                                       | 943    |   |   |   | 1,973 |   |   |   | 2,382 |   |
| Expenses                |   |                                       | (831   | ) |   |   | (1,759 | ) |   |   | (2,212 | ) |
| Profit for the year     |   |                                       | 112    |   |   |   | 214 |   |   |   | 170 |   |

| 24 | Other investments in equity securities |
|----|----------------------------------------|

|                                |   | 2010             |   |   | 2009             |   |
|-------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                |   | RMB million |   |   | RMB million |   |
|                                |   |             |   |   |             |   |
| Unlisted equity securities, at cost |   |             | 166    |   |             |   | 166 |   |

----

| 25 | Available-for-sale equity securities |
|----|--------------------------------------|

|                                 |   | 2010             |   |   | 2009             |   |
|--------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                 |   | RMB million |   |   | RMB million |   |
| Available-for-sale equity securities |   |             |   |   |             |   |
| - Listed in the PRC                  |   |             | 80     |   |             |   | 93 |   |
|                                 |   |             |   |   |             |   |   |   |
| Market value of listed securities    |   |             | 80     |   |             |   | 93 |   |

| 26 | Deferred tax assets / (liabilities) |
|----|-------------------------------------|

| (a) | Movements of net deferred tax assets / (liabilities) are as follows: |
|-----|----------------------------------------------------------------------|

|                                                            |   | 2010             |   |   | 2009             |   |
|-----------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                            |   | RMB million |   |   | RMB million |   |
|                                                            |   |             |   |   |             |   |
| At January 1                                                    |   |             | (374   | )      |             |   | (594 | ) |
| Credited to profit or loss (Note 16(a))                         |   |             | 456    |   |             |   | 185 |   |
| Credited / (charged) to other comprehensive income (Note 17(b)) |   |             | 3      |   |             |   | (9 | ) |
| Transferred to income tax payable                               |   |             | -      |   |             |   | 44 |   |
| At December 31                                                  |   |             | 85     |   |             |   | (374 | ) |

----

| 26 | Deferred tax assets / (liabilities) (continued) |
|----|-------------------------------------------------|

| (b) | The components of deferred tax assets / (liabilities) recognized are analysed as follows: |
|-----|-------------------------------------------------------------------------------------------|

|                                                                    |   | 2010             |   |   | 2009             |   |
|-------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                    |   | RMB million |   |   | RMB million |   |
| Deferred tax assets:                                                    |   |             |   |   |             |   |
| Accrued expenses                                                        |   |             | 802    |   |             |   | 490 |   |
| Deferred revenue                                                        |   |             | 334    |   |             |   | 118 |   |
| Provision for impairment losses                                         |   |             | 127    |   |             |   | 109 |   |
| Others                                                                  |   |             | 61     |   |             |   | 52 |   |
| Total deferred tax assets                                               |   |             | 1,324  |   |             |   | 769 |   |
|                                                                    |   |             |   |   |             |   |   |   |
| Deferred tax liabilities:                                               |   |             |   |   |             |   |   |   |
| Accrued expenses                                                        |   |             | (390   | )      |             |   | (334 | ) |
| Depreciation allowances in excess of the related depreciation           |   |             | (781   | )      |             |   | (672 | ) |
| Change in fair value of available-for-sale equity securities            |   |             | (14    | )      |             |   | (17 | ) |
| Asset classified as held for sale                                       |   |             | -      |   |             |   | (67 | ) |
| Others                                                                  |   |             | (54    | )      |             |   | (53 | ) |
| Total deferred tax liabilities                                          |   |             | (1,239 | )      |             |   | (1,143 | ) |
|                                                                    |   |             |   |   |             |   |   |   |
| Net deferred tax assets / (liabilities)                                 |   |             | 85     |   |             |   | (374 | ) |
|                                                                    |   |             |   |   |             |   |   |   |
|                                                                    |   |             | 2010   |   |             |   | 2009 |   |
|                                                                    |   | RMB million      |   |   | RMB million      |   |
| Net deferred tax asset recognized on the consolidated balance sheet     |   |             | 997    |   |             |   | 479 |   |
| Net deferred tax liability recognized on the consolidated balance sheet |   |             | (912   | )      |             |   | (853 | ) |
|                                                                    |   |             | 85     |   |             |   | (374 | ) |

----

| 26 | Deferred tax assets / (liabilities) (continued) |
|----|-------------------------------------------------|

| (c) | Deferred tax assets not recognized |
|-----|------------------------------------|

|                                    |   | 2010    |   |   | 2009    |   |
|-----------------------------------------|--------|---------|--------|--------|---------|--------|
|                                    |   | RMB     |   |   | RMB     |   |
|                                    |   | million |   |   | million |   |
|                                    |   |    |   |   |    |   |
| Tax losses                              |   |    | 574    |   |    |   | 1,720 |   |
| Other deductible temporary differences: |   |    |   |   |    |   |   |   |
| - Accrued expenses                      |   |    | 168    |   |    |   | 499 |   |
| - Provision for impairment losses       |   |    | 1,861  |   |    |   | 1,916 |   |
|                                    |   |    | 2,029  |   |    |   | 2,415 |   |
|                                    |   |    | 2,603  |   |    |   | 4,135 |   |

|         |   | 2010             |   |   | 2009             |   |
|--------------|--------|------------------|--------|--------|------------------|--------|
|         |   | RMB million |   |   | RMB million |   |
| Expiring in: |   |             |   |   |             |   |
|         |   |             |   |   |             |   |
| 2011         |   |             | 23     |   |             |   | 309 |   |
| 2012         |   |             | 13     |   |             |   | 92 |   |
| 2013         |   |             | 370    |   |             |   | 373 |   |
| 2014         |   |             | 168    |   |             |   | 946 |   |
|         |   |             | 574    |   |             |   | 1,720 |   |

----

| 27 | Other assets |
|----|--------------|

|                                      |   |             |   |   |             |   |   | Prepayment             |   |
|-------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------------|--------|
|                                      |   |             |   |   |             |   |   | for exclusive     |   |
|                                      |   | Lump sum    |   |   |             |   |   | use right of |   |
|                                      |   | housing          |   |   | Computer         |   |   | an airport        |   |
|                                      |   | benefits         |   |   | software         |   |   | terminal               |   |
|                                      |   | RMB million |   |   | RMB million |   |   | RMB million       |   |
|                                      |   |             |   |   |             |   |   |                   |   |
| At January 1, 2009                        |   |             | 93     |   |             |   | 109    |                   |   |   | 150 |   |
| Additions                                 |   |             | -      |   |             |   | 32     |                   |   |   | 150 |   |
| Amortisation for the year                 |   |             | (26    | )      |             |   | (45    | )                      |   |   | - |   |
| At December 31, 2009                      |   |             | 67     |   |             |   | 96     |                   |   |   | 300 |   |
|                                      |   |             |   |   |             |   |   |                   |   |   |   |   |
| At January 1, 2010                        |   |             | 67     |   |             |   | 96     |                   |   |   | 300 |   |
| Additions                                 |   |             | -      |   |             |   | 6      |                   |   |   | - |   |
| Transferred from construction in progress |   |             | -      |   |             |   | 39     |                   |   |   | - |   |
| Amortisation for the year                 |   |             | (26    | )      |             |   | (48    | )                      |   |   | (10 | ) |
| At December 31, 2010                      |   |             | 41     |   |             |   | 93     |                   |   |   | 290 |   |

| 28 | Inventories |
|----|-------------|

|                                             |   | 2010             |   |   | 2009             |   |
|--------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                             |   | RMB million |   |   | RMB million |   |
|                                             |   |             |   |   |             |   |
| Expendable spare parts and maintenance materials |   |             | 1,219  |   |             |   | 1,112 |   |
| Other supplies                                   |   |             | 136    |   |             |   | 144 |   |
|                                             |   |             | 1,355  |   |             |   | 1,256 |   |

|                      |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|---------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                      |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                      |   |             |   |   |             |   |   |             |   |
| Consumption               |   |             | 1,040  |   |             |   | 887    |             |   |   | 828 |   |
| Write-down of inventories |   |             | 8      |   |             |   | 30     |             |   |   | 189 |   |
|                      |   |             | 1,048  |   |             |   | 917    |             |   |   | 1,017 |   |

----

| 29 | Trade receivables |
|----|-------------------|

|                         |   | 2010             |   |   | 2009             |   |
|------------------------------|--------|------------------|--------|--------|------------------|--------|
|                         |   | RMB million |   |   | RMB million |   |
|                         |   |             |   |   |             |   |
| Trade receivables            |   |             | 2,022  |   |             |   | 1,389 |   |
| Allowance for doubtful debts |   |             | (30    | )      |             |   | (30 | ) |
|                         |   |             | 1,992  |   |             |   | 1,359 |   |

| (a) | Ageing analysis |
|-----|-----------------|

|                                       |   | 2010             |   |   | 2009             |   |
|--------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                       |   | RMB million |   |   | RMB million |   |
|                                       |   |             |   |   |             |   |
| Within 1 month                             |   |             | 1,829  |   |             |   | 1,191 |   |
| More than 1 month but less than 3 months   |   |             | 134    |   |             |   | 147 |   |
| More than 3 months but less than 12 months |   |             | 29     |   |             |   | 21 |   |
|                                       |   |             | 1,992  |   |             |   | 1,359 |   |

| (b) | Impairment of trade receivables |
|-----|---------------------------------|

|                              |   | 2010             |   |   | 2009             |   |
|-----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                              |   | RMB million |   |   | RMB million |   |
|                              |   |             |   |   |             |   |
| At January 1                      |   |             | 30     |   |             |   | 31 |   |
| Impairment loss recognized        |   |             | -      |   |             |   | 14 |   |
| Impairment loss written back      |   |             | -      |   |             |   | (13 | ) |
| Uncollectible amounts written off |   |             | -      |   |             |   | (2 | ) |
| At December 31                    |   |             | 30     |   |             |   | 30 |   |

| (c) | Trade receivables that are not impaired |
|-----|-----------------------------------------|

|                          |   | 2010             |   |   | 2009             |   |
|-------------------------------|--------|------------------|--------|--------|------------------|--------|
|                          |   | RMB million |   |   | RMB million |   |
|                          |   |             |   |   |             |   |
| Neither past due nor impaired |   |             | 1,963  |   |             |   | 1,338 |   |

----

| 30 | Cash and cash equivalents |
|----|---------------------------|

| (a) | Cash and cash equivalents comprise: |
|-----|-------------------------------------|

|                                                        |   | 2010             |   |   | 2009             |   |
|-------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                        |   | RMB million |   |   | RMB million |   |
|                                                        |   |             |   |   |             |   |
| Deposits with banks                                         |   |             | 7,445  |   |             |   | 1,116 |   |
| Cash at bank and in hand                                    |   |             | 2,959  |   |             |   | 3,227 |   |
| Cash and cash equivalents in the consolidated balance sheet |   |             | 10,404 |   |             |   | 4,343 |   |

----

| 30 | Cash and cash equivalents (continued) |
|----|---------------------------------------|

| (b) | Reconciliation of profit / (loss) before taxation to cash generated from operations: |
|-----|--------------------------------------------------------------------------------------|

|                                                               |   |     |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------------------------|--------|----------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                               |   | Note     |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                               |   |     |   |             |   |   |             |   |   |             |   |
| Profit / (loss) before taxation                                    |   |     |   |             | 8,093  |   |             |   | 432    |             |   |   | (4,724 | ) |
| Depreciation of property, plant and equipment                      |   |  20 |   |             | 7,025  |   |             |   | 5,962  |             |   |   | 5,759 |   |
| Other amortisation                                                 |   |  11 |   |             | 107    |   |             |   | 80     |             |   |   | 58 |   |
| Amortisation of deferred benefits and gains                        |   |  11 |   |             | (71    | )      |             |   | (71    | )                |   |   | (71 | ) |
| Impairment loss on property, plant and equipment                   |   |  20 |   |             | 212    |   |             |   | 26     |             |   |   | 1,884 |   |
| Share of associates’ results                                 |   |  22 |   |             | (56    | )      |             |   | (69    | )                |   |   | 12 |   |
| Share of jointly controlled entities’ results                |   |  23 |   |             | (112   | )      |             |   | (214   | )                |   |   | (170 | ) |
| Loss / (gain) on sale of property, plant and equipment, net        |   |  13 |   |             | 9      |   |             |   | (31    | )                |   |   | 59 |   |
| Gain on sale of available-for-sale equity securities               |   |  13 |   |             | -      |   |             |   | (78    | )                |   |   | - |   |
| Gain on sale of jointly controlled entities                        |   |  31 |   |             | (1,078 | )      |             |   | -      |             |   |   | (143 | ) |
| Gain on deemed disposal of equity interest in a subsidiary         |   |  23 |   |             | (17    | )      |             |   | -      |             |   |   | - |   |
| Gain on sale of equity interest in subsidiaries                    |   |     |   |             | -      |   |             |   | -      |             |   |   | (37 | ) |
| Interest income                                                    |   |     |   |             | (93    | )      |             |   | (68    | )                |   |   | (103 | ) |
| Interest expense                                                   |   |  14 |   |             | 1,265  |   |             |   | 1,497  |             |   |   | 1,987 |   |
| Loss / (gain) on derivative financial instruments, net             |   |     |   |             | 30     |   |             |   | (45    | )                |   |   | 124 |   |
| Dividend income from other investments in equity securities        |   |     |   |             | (13    | )      |             |   | (14    | )                |   |   | (14 | ) |
| Unrealised exchange gain, net                                      |   |     |   |             | (1,673 | )      |             |   | (70    | )                |   |   | (2,649 | ) |
| Increase in inventories                                            |   |     |   |             | (107   | )      |             |   | (27    | )                |   |   | (16 | ) |
| (Increase) / decrease in trade receivables                         |   |     |   |             | (647   | )      |             |   | (42    | )                |   |   | 649 |   |
| Decrease / (increase) in other receivables                         |   |     |   |             | 14     |   |             |   | (15    | )                |   |   | 203 |   |
| Decrease / (increase) in prepaid expenses and other current assets |   |     |   |             | 130    |   |             |   | (91    | )                |   |   | (28 | ) |
| Increase / (decrease) in net amounts due to related companies      |   |     |   |             | 74     |   |             |   | (48    | )                |   |   | 15 |   |
| (Decrease) / increase in trade and bills payable                   |   |     |   |             | (3,109 | )      |             |   | 3,639  |             |   |   | (491 | ) |
| Increase / (decrease) in sales in advance of carriage              |   |     |   |             | 1,408  |   |             |   | (48    | )                |   |   | 353 |   |
| Increase / (decrease) in accrued expenses                          |   |     |   |             | 1,199  |   |             |   | (49    | )                |   |   | 1,274 |   |
| (Decrease) / increase in other liabilities                         |   |     |   |             | (200   | )      |             |   | 353    |             |   |   | (36 | ) |
| Increase in deferred revenue                                       |   |     |   |             | 438    |   |             |   | 204    |             |   |   | 116 |   |
| Increase in provision for major overhauls                          |   |     |   |             | 220    |   |             |   | 8      |             |   |   | 262 |   |
| Decrease in provision for early retirement benefits                |   |     |   |             | (30    | )      |             |   | (31    | )                |   |   | (51 | ) |
| Increase in deferred benefits and gains                            |   |     |   |             | 6      |   |             |   | 42     |             |   |   | 34 |   |
| Cash generated from operations                                     |   |     |   |             | 13,024 |   |             |   | 11,232 |             |   |   | 4,256 |   |

----

| 31 | Asset classified as held for sale |
|----|-----------------------------------|

|                |   | 2010             |   |   | 2009             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| Share of net assets |   |             | -      |   |             |   | 529 |   |

| 32 | Financial liabilities |
|----|-----------------------|

|                                      |   | 2010             |   |   | 2009             |   |
|-------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                      |   | RMB million |   |   | RMB million |   |
|                                      |   |             |   |   |             |   |
| Foreign exchange forward option contracts |   |             | 13     |   |             |   | 44 |   |

| 33 | Bank and other loans |
|----|----------------------|

| (a) | At December 31, 2010, bank and other loans were repayable as follows: |
|-----|-----------------------------------------------------------------------|

|                             |   | 2010             |   |   | 2009             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB million |   |   | RMB million |   |
|                             |   |             |   |   |             |   |
| Within 1 year or on demand       |   |             | 9,324  |   |             |   | 17,452 |   |
|                             |   |             |   |   |             |   |   |   |
| After 1 year but within 2 years  |   |             | 10,533 |   |             |   | 8,223 |   |
| After 2 years but within 5 years |   |             | 11,432 |   |             |   | 12,038 |   |
| After 5 years                    |   |             | 9,911  |   |             |   | 7,614 |   |
|                             |   |             | 31,876 |   |             |   | 27,875 |   |
|                             |   |             | 41,200 |   |             |   | 45,327 |   |

----

| 33 | Bank and other loans (continued) |
|----|----------------------------------|

| (b) | At December 31, 2010, bank and other loans are analysed as follows: |
|-----|---------------------------------------------------------------------|

|                                                                                      |   | 2010             |   |   | 2009             |   |
|-------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                      |   | RMB million |   |   | RMB million |   |
|                                                                                      |   |             |   |   |             |   |
| Short-term bank loans                                                                     |   |             | 3,568  |   |             |   | 11,012 |   |
| Long-term bank and other loans due within one year (classified as current liabilities)    |   |             | 5,756  |   |             |   | 6,440 |   |
|                                                                                      |   |             | 9,324  |   |             |   | 17,452 |   |
| Long-term bank and other loans due after one year (classified as non-current liabilities) |   |             | 31,876 |   |             |   | 27,875 |   |
|                                                                                      |   |             | 41,200 |   |             |   | 45,327 |   |
|                                                                                      |   |             |   |   |             |   |   |   |
| Representing:                                                                             |   |             |   |   |             |   |   |   |
| Bank loans                                                                                |   |             | 41,197 |   |             |   | 45,324 |   |
| Other loans                                                                               |   |             | 3      |   |             |   | 3 |   |
|                                                                                      |   |             | 41,200 |   |             |   | 45,327 |   |

| (c) | As at December 31, 2010, the Group’s weighted average interest rate on short-term borrowings was 1.78% per annum (2009: 1.18% per annum). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 33 | Bank and other loans (continued) |
|----|----------------------------------|

| (d) | Details of bank and other loans with original maturity over one year are as follows: |
|-----|--------------------------------------------------------------------------------------|

|                                                                                                                                           |   | 2010             |   |   | 2009             |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                                                           |   | RMB million |   |   | RMB million |   |
| Renminbi denominated loans                                                                                                                     |   |             |   |   |             |   |
| Non-interest bearing loan from a municipal government authority                                                                                |   |             | 3      |   |             |   | 3 |   |
|                                                                                                                                           |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 90% of benchmark interest rate (stipulated by PBOC) as at December 31, 2010, with maturities through 2013 |   |             | 832    |   |             |   | 5,660 |   |
|                                                                                                                                           |   |             |   |   |             |   |   |   |
| United States Dollars denominated loans                                                                                                        |   |             |   |   |             |   |   |   |
| Fixed interest rates ranging from 3.00% to 7.20% per annum as at December 31, 2010, with maturities through 2017                               |   |             | 1,347  |   |             |   | 772 |   |
|                                                                                                                                           |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 1-month LIBOR + 0.50% to 2.20% per annum as at December 31, 2010, with maturities through 2020            |   |             | 4,677  |   |             |   | 4,681 |   |
|                                                                                                                                           |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 3-month LIBOR + 0.50% to 2.20% per annum as at December 31, 2010, with maturities through 2020            |   |             | 21,376 |   |             |   | 13,937 |   |
|                                                                                                                                           |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 6-month LIBOR + 0.30% to 3.15% per annum as at December 31, 2010, with maturities through 2020            |   |             | 9,397  |   |             |   | 9,262 |   |
|                                                                                                                                           |   |             | 37,632 |   |             |   | 34,315 |   |
| Less: loans due within one year classified as current liabilities                                                                              |   |             | (5,756 | )      |             |   | (6,440 | ) |
|                                                                                                                                           |   |             | 31,876 |   |             |   | 27,875 |   |

----

| 33 | Bank and other loans (continued) |
|----|----------------------------------|

| (e) | The remaining contractual maturities at the end of the reporting period of the Group’s bank and other loans, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates, or if floating, based on rates current at the end of the reporting period) and the earliest date the Group can be required to pay, are as follows: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |   | 2010             |   |   | 2009             |   |
|---------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                        |   | RMB million |   |   | RMB million |   |
| Contractual undiscounted cash flows         |   |             |   |   |             |   |
|                                        |   |             |   |   |             |   |
| Within 1 year                               |   |             | 9,974  |   |             |   | 18,141 |   |
| After 1 year but within 2 years             |   |             | 10,997 |   |             |   | 8,640 |   |
| After 2 years but within 5 years            |   |             | 12,201 |   |             |   | 12,461 |   |
| After 5 years                               |   |             | 10,294 |   |             |   | 7,866 |   |
|                                        |   |             | 43,466 |   |             |   | 47,108 |   |
|                                        |   |             |   |   |             |   |   |   |
| Consolidated balance sheet carrying amounts |   |             | 41,200 |   |             |   | 45,327 |   |

| (f) | As at December 31, 2010, bank and other loans of the Group totaling RMB22,060 million (2009: RMB17,677 million) were secured by mortgages over certain of the Group’s aircraft and advance payments for aircraft with aggregate carrying amount of RMB28,823 million (2009: RMB23,996 million). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | As at December 31, 2010, certain bank and other loans were guaranteed by the following parties: |
|-----|-------------------------------------------------------------------------------------------------|

|                                    |   | 2010             |   |   | 2009             |   |
|-----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                    |   | RMB million |   |   | RMB million |   |
| Guarantors                              |   |             |   |   |             |   |
| Export-Import Bank of the United States |   |             | 21     |   |             |   | 149 |   |
| CSAHC (Note 45(e))                      |   |             | 364    |   |             |   | 512 |   |
|                                    |   |             | 385    |   |             |   | 661 |   |

| (h) | As at December 31, 2010, loans to the Group from SA Finance amounted to RMB520 million (2009: RMB819 million) (Note 45(d)). |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

| (i) | The Group has significant bank and other loans balances as well as obligations under finance leases (Note 34) which are denominated in US dollars as at December 31, 2010. The net exchange gain of RMB1,746 million (2009: RMB93 million; 2008: RMB2,592 million) recorded by the Group was mainly attributable to the exchange gain arising from retranslation and settlement of bank and other loans balances and finance lease obligations denominated in US dollars. The foreign currency risk is further discussed in Note 49(c). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j) | As at December 31, 2010, a long-term loan of RMB10 million (2009: RMB10 million) was granted by SA Finance to a subsidiary of the Company. The loan was secured by the trade receivables of the subsidiary due from the Company during the loan period. As at December 31, 2010, the balance of the trade receivables of the subsidiary due from the Company amounted to RMB28 million (2009: RMB21 million). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 34 | Obligations under finance leases |
|----|----------------------------------|

|                                                                |   | 2010               |   |   | 2009     |   |
|---------------------------------------------------------------------|--------|--------------------|--------|--------|----------|--------|
|                                                                |   | Present            |   |   | Total    |   |   |   |   |   | Present |   |   | Total |   |   |   |   |
|                                                                |   | value of the       |   |   | Minimum  |   |   |   |   |   | value of the |   |   | minimum |   |   |   |   |
|                                                                |   | minimum lease |   |   | lease    |   |   |   |   |   | minimum lease |   |   | lease |   |   |   |   |
|                                                                |   | payments           |   |   | payments |   |   | Interest |   |   | payments |   |   | payments |   |   | Interest |   |
|                                                                |   | RMB                |   |   | RMB      |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                                                |   | million            |   |   | million  |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                                                |   |               |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Within 1 year                                                       |   |               | 1,654  |   |     |   | 2,015 |   |   |   | 361 |   |   |   | 1,431 |   |   |   | 1,972 |   |   |   | 541 |   |
| After 1 year but within 2 years                                     |   |               | 1,601  |   |     |   | 1,916 |   |   |   | 315 |   |   |   | 1,495 |   |   |   | 1,970 |   |   |   | 475 |   |
| After 2 years but within 5 years                                    |   |               | 5,043  |   |     |   | 5,701 |   |   |   | 658 |   |   |   | 4,240 |   |   |   | 5,274 |   |   |   | 1,034 |   |
| After 5 years                                                       |   |               | 6,132  |   |     |   | 6,289 |   |   |   | 157 |   |   |   | 6,152 |   |   |   | 6,596 |   |   |   | 444 |   |
|                                                                |   |               | 14,430 |   |     |   | 15,921 |   |   |   | 1,491 |   |   |   | 13,318 |   |   |   | 15,812 |   |   |   | 2,494 |   |
|                                                                |   |               |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: balance due within one year classified as current liabilities |   |               | (1,654 | )      |     |   |   |   |   |   |   |   |   |   | (1,431 | ) |   |   |   |   |   |   |   |   |
|                                                                |   |               | 12,776 |   |     |   |   |   |   |   |   |   |   |   | 11,887 |   |   |   |   |   |   |   |   |   |

----

| 34 | Obligations under finance leases (continued) |
|----|----------------------------------------------|

|                                                                                                  |   | 2010             |   |   | 2009             |   |
|-------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                  |   | RMB million |   |   | RMB million |   |
| United States Dollars denominated obligations                                                         |   |             |   |   |             |   |
| Fixed interest rates ranging from 4.24% to 6.01% per annum as at December 31, 2010                    |   |             | 6,067  |   |             |   | 7,035 |   |
|                                                                                                  |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 3-month LIBOR + 0.55% to 3% per annum as at December 31, 2010    |   |             | 4,796  |   |             |   | 2,172 |   |
|                                                                                                  |   |             |   |   |             |   |   |   |
| Floating interest rates ranging from 6-month LIBOR + 0.03% to 1.05% per annum as at December 31, 2010 |   |             | 3,567  |   |             |   | 4,111 |   |
|                                                                                                  |   |             |   |   |             |   |   |   |
|                                                                                                  |   |             | 14,430 |   |             |   | 13,318 |   |

| 35 | Trade and bills payable |
|----|-------------------------|

|           |   | 2010             |   |   | 2009             |   |
|----------------|--------|------------------|--------|--------|------------------|--------|
|           |   | RMB million |   |   | RMB million |   |
|           |   |             |   |   |             |   |
| Bills payable  |   |             | 104    |   |             |   | 3,207 |   |
| Trade payables |   |             | 1,773  |   |             |   | 1,785 |   |
|           |   |             | 1,877  |   |             |   | 4,992 |   |

----

| 35 | Trade and bills payable (continued) |
|----|-------------------------------------|

|                                      |   | 2010             |   |   | 2009             |   |
|-------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                      |   | RMB million |   |   | RMB million |   |
|                                      |   |             |   |   |             |   |
| Within 1 month                            |   |             | 1,261  |   |             |   | 1,873 |   |
| More than 1 month but less than 3 months  |   |             | 337    |   |             |   | 1,545 |   |
| More than 3 months but less than 6 months |   |             | 240    |   |             |   | 1,566 |   |
| More than 6 months but less than 1 year   |   |             | 12     |   |             |   | 8 |   |
| More than 1 year                          |   |             | 27     |   |             |   | - |   |
|                                      |   |             | 1,877  |   |             |   | 4,992 |   |

| 36 | Deferred revenue |
|----|------------------|

|                |   | 2010             |   |   | 2009             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| Current portion     |   |             | 524    |   |             |   | 316 |   |
| Non-current portion |   |             | 824    |   |             |   | 594 |   |
|                |   |             | 1,348  |   |             |   | 910 |   |

| 37 | Amounts due from/to related companies |
|----|---------------------------------------|

| (a) | Amounts due from related companies |
|-----|------------------------------------|

|                                     |   | 2010             |   |   | 2009             |   |
|------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                     |   | RMB million |   |   | RMB million |   |
|                                     |   |             |   |   |             |   |
| CSAHC and its affiliates (Note 45(c))    |   |             | 12     |   |             |   | 6 |   |
| An associate (Note 45(c))                |   |             | 16     |   |             |   | 14 |   |
| Jointly controlled entities (Note 45(c)) |   |             | 110    |   |             |   | 31 |   |
|                                     |   |             | 138    |   |             |   | 51 |   |

| (b) | Amounts due to related companies |
|-----|----------------------------------|

|                                     |   | 2010             |   |   | 2009             |   |
|------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                     |   | RMB million |   |   | RMB million |   |
|                                     |   |             |   |   |             |   |
| CSAHC and its affiliates (Note 45(c))    |   |             | 139    |   |             |   | 43 |   |
| An associate (Note 45(c))                |   |             | 27     |   |             |   | - |   |
| Jointly controlled entities (Note 45(c)) |   |             | 80     |   |             |   | 51 |   |
|                                     |   |             | 246    |   |             |   | 94 |   |

----

| 38 | Accrued expenses |
|----|------------------|

|                                              |   | 2010             |   |   | 2009             |   |
|---------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                              |   | RMB million |   |   | RMB million |   |
|                                              |   |             |   |   |             |   |
| Jet fuel costs                                    |   |             | 1,727  |   |             |   | 1,368 |   |
| Air catering expenses                             |   |             | 150    |   |             |   | 115 |   |
| Salaries and welfare                              |   |             | 1,970  |   |             |   | 1,545 |   |
| Repairs and maintenance                           |   |             | 1,959  |   |             |   | 1,827 |   |
| Provision for major overhauls (Note 40)           |   |             | 223    |   |             |   | 503 |   |
| Provision for early retirement benefits (Note 41) |   |             | 52     |   |             |   | 57 |   |
| Landing and navigation fees                       |   |             | 2,295  |   |             |   | 1,899 |   |
| Computer reservation services                     |   |             | 545    |   |             |   | 518 |   |
| Interest expenses                                 |   |             | 123    |   |             |   | 146 |   |
| Others                                            |   |             | 286    |   |             |   | 175 |   |
|                                              |   |             | 9,330  |   |             |   | 8,153 |   |

| 39 | Other liabilities |
|----|-------------------|

|                                                                                         |   | 2010             |   |   | 2009             |   |
|----------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                         |   | RMB million |   |   | RMB million |   |
|                                                                                         |   |             |   |   |             |   |
| CAAC Infrastructure Development Fund, airport construction surcharge and airport tax payable |   |             | 760    |   |             |   | 1,052 |   |
| Construction cost payable                                                                    |   |             | 714    |   |             |   | 154 |   |
| Advance payments on chartered flights                                                        |   |             | 73     |   |             |   | 71 |   |
| Sales agent deposits                                                                         |   |             | 282    |   |             |   | 224 |   |
| Other taxes payable                                                                          |   |             | 493    |   |             |   | 611 |   |
| Others                                                                                       |   |             | 1,446  |   |             |   | 1,264 |   |
|                                                                                         |   |             | 3,768  |   |             |   | 3,376 |   |

| 40 | Provision for major overhauls |
|----|-------------------------------|

|                                                         |   | 2010             |   |   | 2009             |   |
|--------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                         |   | RMB million |   |   | RMB million |   |
|                                                         |   |             |   |   |             |   |
| At January 1                                                 |   |             | 1,456  |   |             |   | 1,354 |   |
| Provision for the year                                       |   |             | 462    |   |             |   | 398 |   |
| Provision utilised during the year                           |   |             | (522   | )      |             |   | (296 | ) |
| At December 31                                               |   |             | 1,396  |   |             |   | 1,456 |   |
| Less: current portion included in accrued expenses (Note 38) |   |             | (223   | )      |             |   | (503 | ) |
|                                                         |   |             | 1,173  |   |             |   | 953 |   |

----

| 41 | Provision for early retirement benefits |
|----|-----------------------------------------|

|                                                         |   | 2010             |   |   | 2009             |   |
|--------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                         |   | RMB million |   |   | RMB million |   |
|                                                         |   |             |   |   |             |   |
| At January 1                                                 |   |             | 205    |   |             |   | 247 |   |
| Provision for the year (Note 12)                             |   |             | 29     |   |             |   | 6 |   |
| Financial costs (Note 14)                                    |   |             | 8      |   |             |   | 14 |   |
| Payments made during the year                                |   |             | (75    | )      |             |   | (80 | ) |
| Effect of changes in discount rate                           |   |             | 3      |   |             |   | 18 |   |
| At December 31                                               |   |             | 170    |   |             |   | 205 |   |
| Less: current portion included in accrued expenses (Note 38) |   |             | (52    | )      |             |   | (57 | ) |
|                                                         |   |             | 118    |   |             |   | 148 |   |

| 42 | Deferred benefits and gains |
|----|-----------------------------|

|                                    |   | 2010             |   |   | 2009             |   |
|-----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                    |   | RMB million |   |   | RMB million |   |
|                                    |   |             |   |   |             |   |
| Leases rebates (Note (i))               |   |             | 723    |   |             |   | 801 |   |
| Gains on sale and leaseback (Note (ii)) |   |             | 197    |   |             |   | 222 |   |
| Others                                  |   |             | 95     |   |             |   | 57 |   |
|                                    |   |             | 1,015  |   |             |   | 1,080 |   |

|   | (i) | The Company was granted certain cash rebates by the lessors under certain lease arrangements when it fulfilled certain requirements. The rebates were deferred and amortised using the straight-line method over the residual lease terms. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Company entered into sale and leaseback transactions which result in operating leases with certain third parties. The gains were deferred and amortised over the lease terms of these aircraft. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 43 | Share capital and capital management |
|----|--------------------------------------|

| (a) | Share capital |
|-----|---------------|

|                                                                                                                           |   | 2010             |   |   | 2009             |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                                           |   | RMB million |   |   | RMB million |   |
| Registered, issued and paid up capital:                                                                                        |   |             |   |   |             |   |
| 845,050,000 domestic state-owned shares with selling restrictions of RMB1.00 each (2009: 4,021,150,000 shares of RMB1.00 each) |   |             | 845    |   |             |   | 4,021 |   |
| 3,300,000,000 domestic state-owned shares of RMB 1.00 each (2009: nil)                                                         |   |             | 3,300  |   |             |   | - |   |
| 1,377,600,000 A shares with selling restrictions of RMB1.00 each (2009: nil)                                                   |   |             | 1,378  |   |             |   | - |   |
| 1,500,000,000 A shares of RMB1.00 each (2009: 1,500,000,000 shares of RMB1.00 each)                                            |   |             | 1,500  |   |             |   | 1,500 |   |
| 2,794,917,000 H shares of RMB1.00 each (2009: 2,482,417,000 shares of RMB1.00 each)                                            |   |             | 2,795  |   |             |   | 2,482 |   |
|                                                                                                                           |   |             | 9,818  |   |             |   | 8,003 |   |

----

| 43 | Share capital and capital management (continued) |
|----|--------------------------------------------------|

| (b) | Capital management |
|-----|--------------------|

----

| 44 | Reserves |
|----|----------|

|                                                         |   | 2010             |   |   | 2009             |   |
|--------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                         |   | RMB million |   |   | RMB million |   |
| Share premium                                                |   |             |   |   |             |   |
|                                                         |   |             |   |   |             |   |
| At January 1                                                 |   |             | 4,676  |   |             |   | 3,138 |   |
| Issue of shares (Note 43)                                    |   |             | 8,757  |   |             |   | 1,538 |   |
| At December 31                                               |   |             | 13,433 |   |             |   | 4,676 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Fair value reserve                                           |   |             |   |   |             |   |   |   |
| At January 1                                                 |   |             | 37     |   |             |   | 18 |   |
| Change in fair value of available-for-sale equity securities |   |             | (6     | )      |             |   | 19 |   |
| At December 31                                               |   |             | 31     |   |             |   | 37 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Statutory surplus reserve (Note (a))                         |   |             |   |   |             |   |   |   |
|                                                         |   |             |   |   |             |   |   |   |
| At January 1 and at December 31                              |   |             | 526    |   |             |   | 526 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Discretionary surplus reserve                                |   |             |   |   |             |   |   |   |
|                                                         |   |             |   |   |             |   |   |   |
| At January 1 and at December 31                              |   |             | 77     |   |             |   | 77 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Other reserve                                                |   |             |   |   |             |   |   |   |
|                                                         |   |             |   |   |             |   |   |   |
| At January 1                                                 |   |             | 151    |   |             |   | 150 |   |
| Government contributions (Note (c))                          |   |             | 2      |   |             |   | 1 |   |
| At December 31                                               |   |             | 153    |   |             |   | 151 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Retained profits / (accumulated losses)                      |   |             |   |   |             |   |   |   |
|                                                         |   |             |   |   |             |   |   |   |
| At January 1                                                 |   |             | (3,119 | )      |             |   | (3,449 | ) |
| Profit for the year                                          |   |             | 5,795  |   |             |   | 330 |   |
| At December 31                                               |   |             | 2,676  |   |             |   | (3,119 | ) |
| Total                                                        |   |             | 16,896 |   |             |   | 2,348 |   |

----

| 44 | Reserves (continued) |
|----|----------------------|

| (a) | According to the PRC Company Law and the Articles of Association of the Company and certain of its subsidiaries, the Company and the relevant subsidiaries are required to transfer 10% of their annual net profits after taxation, as determined under the PRC accounting rules and regulations, to a statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of a dividend to shareholders and when there are retained profits at the financial year end. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Dividend distributions may be proposed at the discretion of the Company’s board of directors, after consideration of the transfers of reserves referred to above and making up cumulative prior years’ losses. Pursuant to the Articles of Association of the Company, the net profit of the Company for the purpose of profit distribution is deemed to be the lesser of (i) the net profit determined in accordance with the PRC accounting rules and regulations, and (ii) the net profit determined in accordance with IFRSs. As of December 31, 2010, the Company did not have any distributable reserves (2009: Nil). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (c) | Pursuant to the “Notice of approval for funds to be used specifically for the reconstruction” issued by the CAAC, national funds amounted to RMB2 million were contributed during the year ended December 31, 2010 by the PRC government to the Company. Such funds are to be used specifically for the reconstruction of Nanyang Airport. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 45 | Material related party transactions |
|----|-------------------------------------|

| (a) | Key management personnel remuneration |
|-----|---------------------------------------|

|                          |   | 2010          |   |   | 2009          |   |   | 2008          |   |
|-------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                          |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
|                          |   |          |   |   |          |   |   |          |   |
| Short-term employees benefits |   |          | 14,277 |   |          |   | 13,991 |          |   |   | 14,117 |   |
| Post-employment benefits      |   |          | 1,009  |   |          |   | 922    |          |   |   | 1,268 |   |
|                          |   |          | 15,286 |   |          |   | 14,913 |          |   |   | 15,385 |   |

|                                |   | 2010          |   |   | 2009          |   |   | 2008          |   |
|-------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
|                                |   |          |   |   |          |   |   |          |   |
| Directors and supervisors (Note 14) |   |          | 5,794  |   |          |   | 7,609  |          |   |   | 8,578 |   |
| Senior management                   |   |          | 9,492  |   |          |   | 7,304  |          |   |   | 6,807 |   |
|                                |   |          | 15,286 |   |          |   | 14,913 |          |   |   | 15,385 |   |

| (b) | Contributions to post-employment benefit plans |
|-----|------------------------------------------------|

----

| 45 | Material related party transactions (continued) |
|----|-------------------------------------------------|

| (c) | Transactions with CSAHC and its affiliates (the “CSAHC Group”), and the associates and jointly controlled entities of the Group |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                     |   |   |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------------------------------|--------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                     |   | Note   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |
| Income received from the CSAHC Group                                     |   |   |   |             |   |   |             |   |   |             |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |
| Charter flight and pallet income                                         |   | (i)    |   |             | 36     |   |             |   | 39     |             |   |   | 63 |   |
| Cargo handling income                                                    |   | (i)    |   |             | 14     |   |             |   | 13     |             |   |   | - |   |
| Commission income                                                        |   | (ii)   |   |             | 4      |   |             |   | 2      |             |   |   | 1 |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Expenses paid to the CSAHC Group                                         |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Handling charges                                                         |   | (iii)  |   |             | 79     |   |             |   | 68     |             |   |   | 50 |   |
| Air catering supplies                                                    |   | (iv)   |   |             | -      |   |             |   | -      |             |   |   | 60 |   |
| Commission expense                                                       |   | (v)    |   |             | 16     |   |             |   | 6      |             |   |   | 4 |   |
| Lease charges for land and buildings                                     |   | (vi)   |   |             | 109    |   |             |   | 107    |             |   |   | 100 |   |
| Property management fee                                                  |   | (vii)  |   |             | 30     |   |             |   | 19     |             |   |   | 31 |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Expenses paid to jointly controlled entities and an associate            |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Ground service expenses                                                  |   | (viii) |   |             | -      |   |             |   | 36     |             |   |   | 64 |   |
| Repairing charges                                                        |   | (ix)   |   |             | 1,341  |   |             |   | 1,344  |             |   |   | 1,129 |   |
| Flight simulation service charges                                        |   | (x)    |   |             | 198    |   |             |   | 172    |             |   |   | 150 |   |
| Advertising expenses                                                     |   | (xi)   |   |             | 34     |   |             |   | 21     |             |   |   | 20 |   |
| Training expenses                                                        |   | (xii)  |   |             | 63     |   |             |   | -      |             |   |   | - |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Income received from a jointly controlled entity                         |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Rental income                                                            |   | (x)    |   |             | 37     |   |             |   | 47     |             |   |   | 33 |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Issuance of A shares to CSAHC                                            |   | (xiii) |   |             | 825    |   |             |   | 2,279  |             |   |   | - |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Issuance of H shares to Nan Lung                                         |   | (xiii) |   |             | 736    |   |             |   | 721    |             |   |   | - |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Disposal to the CSAHC Group                                              |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Consideration for disposal of equity interest in MTU (Note 31)           |   |   |   |             | 1,608  |   |             |   | -      |             |   |   | - |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Transfer of exclusive right to use certain advertising resources to SACM |   | (xiv)  |   |             | -      |   |             |   | -      |             |   |   | 35 |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Acquisition of 26% equity interest in Flying College from CSAHC Group    |   | (xv)   |   |             | -      |   |             |   | -      |             |   |   | 5 |   |
|                                                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Disposal of certain buildings to SACM                                    |   | (xvi)  |   |             | -      |   |             |   | -      |             |   |   | 2 |   |

----

| 45 | Material related party transactions (continued) |
|----|-------------------------------------------------|

| (c) | Transactions with CSAHC and its affiliates (the “CSAHC Group”), and the associates and jointly controlled entities of the Group (continued) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | China Southern Airlines Group Passenger and Cargo Agent Company Limited (“PCACL”), a wholly-owned subsidiary of CSAHC, purchases cargo spaces and charters flight from the Group. In addition, cargo handling income is earned by the Group in connection with provision of cargo handling service to PCACL. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Group provided certain website resources to SA Finance to sell air insurance to passengers. |
|--------|------|-------------------------------------------------------------------------------------------------|

|   | (iii) | The Group acquires aircraft, flight equipment and other airline-related facilities through Southern Airlines (Group) Import and Export Trading Company Limited (“SAIETC”), a wholly-owned subsidiary of CSAHC and pays handling charges to SAIETC. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | The Group purchases certain in flight meals and related services from Shenzhen Air Catering Company Limited (“SZ Catering”), which was an associate of CSAHC. SZ Catering ceased to be a related party of the Company in November 2008. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | Commission is earned by certain subsidiaries of CSAHC in connection with the air tickets sold by them on behalf of the Group. Commission is calculated based on the rates stipulated by the CAAC and International Air Transportation Association. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | The Group leases certain land and buildings in the PRC from CSAHC. Rental payments for land and buildings were paid or payable to CSAHC. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | Guangzhou China Southern Airlines Property Management Co., Ltd., a subsidiary of CSAHC, provides property management services to the Group. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | (viii) | Beijing Southern Airlines Ground Services Company Limited (“Beijing Ground Services”), a former jointly controlled entity of the Group, provides airport ground service to the Group. In June 2009, the Company acquired 50% equity interests in Beijing Ground Services from the other venture of Beijing Ground Services and it became a wholly-owned subsidiary of the Company. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | Guangzhou Aircraft Maintenance Engineering Company Limited (“GAMECO”), a jointly controlled entity of the Group, and MTU, a former jointly controlled entity which was disposed of to CSAHC, provide comprehensive maintenance services to the Group. In February 2010, the Group disposed of all equity interest in MTU and MTU ceased to be a related party of the Group. The repairing charges paid or payable to MTU for the full year is RMB487 million. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (x) | Zhuhai Xiang Yi Aviation Technology Company Limited (“Zhuhai Xiang Yi”), a jointly controlled entity of the Group, provides flight simulation services to the Group. In addition, the Group entered into operating lease agreements to lease certain flight training facilities and buildings to Zhuhai Xiang Yi. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xi) | Southern Airlines Culture and Media Co., Ltd., an associate of the Group, provides advertising services to the Group. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------|

|   | (xii) | Flying College, a former subsidiary of the Company, provides training services to the Group. Flying College became a jointly controlled entity of the Company since June 2010. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 45 | Material related party transactions (continued) |
|----|-------------------------------------------------|

| (c) | Transactions with CSAHC and its affiliates (the “CSAHC Group”), and the associates and jointly controlled entities of the Group (continued) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xiii) | On October 29, 2010 and November 1, 2010, the Company issued 123,900,000 A shares to CSAHC and 312,500,000 H shares to Nan Lung, for cash considerations of RMB825 million and RMB736 million, respectively. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xiv) | On November 11, 2008, the Company signed an agreement to transfer the exclusive right to use certain advertising space on the aircraft fleet for a period of 18 years to Southern Airlines Culture and Media Co., Ltd., an associate of the Group, for a total consideration of RMB35 million. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | (xv) | On December 30, 2008, the Company signed an agreement to acquire 26% equity interest in Flying College from CSAHC at a consideration of RMB5 million. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xvi) | On November 11, 2008, the Company signed an agreement to transfer certain buildings to Southern Airlines Culture and Media Co., Ltd., an associate of the Group, at a consideration of RMB2 million. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   |   |   | 2010             |   |   | 2009             |   |
|-----------------------------|--------|--------|--------|------------------|--------|--------|------------------|--------|
|                        |   | Note   |   | RMB million |   |   | RMB million |   |
| Receivables:                |   |   |   |             |   |   |             |   |
| The CSAHC Group             |   |   |   |             | 12     |   |             |   | 6 |   |
| An Associate                |   |   |   |             | 16     |   |             |   | 14 |   |
| Jointly controlled entities |   |   |   |             | 110    |   |             |   | 31 |   |
|                        |   | 37     |   |             | 138    |   |             |   | 51 |   |
|                        |   |   |   |             |   |   |             |   |   |   |
| Payables:                   |   |   |   |             |   |   |             |   |   |   |
| The CSAHC Group             |   |   |   |             | 139    |   |             |   | 43 |   |
| An associate                |   |   |   |             | 27     |   |             |   |  - |   |
| Jointly controlled entities |   |   |   |             | 80     |   |             |   | 51 |   |
|                        |   | 37     |   |             | 246    |   |             |   | 94 |   |

----

| 45 | Material related party transactions (continued) |
|----|-------------------------------------------------|

| (d) | Loans from and deposits placed with SA Finance |
|-----|------------------------------------------------|

| (i) | Loans from SA Finance |
|-----|-----------------------|

|                             |   |   |   | 2010             |   |   | 2009             |   |
|----------------------------------|--------|--------|--------|------------------|--------|--------|------------------|--------|
|                             |   | Note   |   | RMB million |   |   | RMB million |   |
|                             |   |   |   |             |   |   |             |   |
| Within 1 year                    |   |   |   |             | 320    |   |             |   | 400 |   |
| After 1 year but within 2 years  |   |   |   |             | 60     |   |             |   | - |   |
| After 2 years but within 5 years |   |   |   |             | 140    |   |             |   | 419 |   |
|                             |   | 33     |   |             | 520    |   |             |   | 819 |   |

| (ii) | Deposits placed with SA Finance |
|------|---------------------------------|

| (e) | Guarantees from CSAHC |
|-----|-----------------------|

----

| 45 | Material related party transactions (continued) |
|----|-------------------------------------------------|

| (f) | Transactions with other state-controlled entities |
|-----|---------------------------------------------------|

|   | - | Transportation services; |
|--------|---|--------------------------|

|   | - | Leasing arrangements; |
|--------|---|-----------------------|

|   | - | Purchase of equipment; |
|--------|---|------------------------|

|   | - | Purchase of ancillary materials and spare parts; |
|--------|---|--------------------------------------------------|

|   | - | Ancillary and social services; and |
|--------|---|------------------------------------|

|   | - | Financial services arrangement. |
|--------|---|---------------------------------|

|   |  (i) | The Group’s transactions with other state-controlled entities, including state-controlled banks in the PRC |
|--------|-----------|------------------------------------------------------------------------------------------------------------------|

|             |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|             |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|             |   |             |   |   |             |   |   |             |   |
| Jet fuel cost    |   |             | 21,345 |   |             |   | 15,260 |             |   |   | 21,042 |   |
| Interest income  |   |             | 66     |   |             |   | 56     |             |   |   | 77 |   |
| Interest expense |   |             | 808    |   |             |   | 1,249  |             |   |   | 1,719 |   |

|   | (ii) | The Group’s balances with other state-controlled entities, including state-controlled banks in the PRC |
|--------|------|--------------------------------------------------------------------------------------------------------------|

|                                                              |   | 2010             |   |   | 2009             |   |
|-------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                              |   | RMB million |   |   | RMB million |   |
|                                                              |   |             |   |   |             |   |
| Cash and deposits at bank                                         |   |             | 7,899  |   |             |   | 3,174 |   |
| Short-term bank loans and current portion of long-term bank loans |   |             | 8,956  |   |             |   | 16,068 |   |
| Long-term bank loans, less current portion                        |   |             | 31,152 |   |             |   | 26,646 |   |

----

| 46 | Retirement and housing benefits |
|----|---------------------------------|

| (a) | Retirement benefits |
|-----|---------------------|

| (b) | Housing benefits |
|-----|------------------|

|   | (i) | Pursuant to a staff housing benefit scheme effective on September 2002, the Group agreed to pay lump sum housing allowances to certain employees who have not received quarters from CSAHC or the Group according to the relevant PRC housing reform policy, for subsidizing their purchases of houses.  An employee who quits prior to the end of the vesting benefit period is required to pay back a portion of the lump sum housing benefits determined on a pro-rata basis of the vesting benefit period.  The Group has the right to effect a charge on the employee’s house and to enforce repayment through selling the house in the event of default in repayment.  Any shortfall in repayment would be charged to profit or loss. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Group also pays cash housing subsidies on a monthly basis to eligible employees.  The monthly cash housing subsidies are charged to profit or loss. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 47 | Segmental reporting |
|----|---------------------|

| (a) | Business segments |
|-----|-------------------|

----

| 47 | Segmental reporting (continued) |
|----|---------------------------------|

| (a) | Business segments (continued) |
|-----|-------------------------------|

|                                                                                                    |   | Airline business |    |   | All other segments |   |   | Elimination |   |   | Unallocated* |   |   | Total   |   |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------|---------|--------|------------------------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------|--------|
|                                                                                                         |   | 2010                  |    |   | 2009                         |   |   | 2008        |   |   | 2010         |   |   | 2009    |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                                                                         |   | RMB                   |    |   | RMB                          |   |   | RMB         |   |   | RMB          |   |   | RMB     |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                                                                                         |   | million               |    |   | million                      |   |   | million     |   |   | million      |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue from external customers                                                                              |   |                  | 77,394  |   |                         |   | 55,708 |        |   |   | 56,150       |   |   |    | 394    |   |   |   | 335 |   |   |   | 277 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 77,788 |   |   |   | 56,043 |   |   |   | 56,427 |   |
| Inter-segment sales                                                                                          |   |                  | -       |   |                         |   | -      |        |   |   | 4            |   |   |    | 861    |   |   |   | 674 |   |   |   | 506 |   |   |   | (861 | ) |   |   | (674 | ) |   |   | (510 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable segment revenue                                                                                   |   |                  | 77,394  |   |                         |   | 55,708 |        |   |   | 56,154       |   |   |    | 1,255  |   |   |   | 1,009 |   |   |   | 783 |   |   |   | (861 | ) |   |   | (674 | ) |   |   | (510 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 77,788 |   |   |   | 56,043 |   |   |   | 56,427 |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable segment profit/(loss) before taxation                                                             |   |                  | 6,742   |   |                         |   | 27     |        |   |   | (5,031       | )      |   |    | 81     |   |   |   | 56 |   |   |   | (68 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,275 |   |   |   | 374 |   |   |   | 351 |   |   |   | 8,098 |   |   |   | 457 |   |   |   | (4,748 | ) |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable segment assets                                                                                    |   |                  | 108,222 |   |                         |   | 91,322 |        |   |   |         |   |   |    | 1,757  |   |   |   | 1,776 |   |   |   |   |   |   |   | (191 | ) |   |   | (159 | ) |   |   |   |   |   |   | 1,441  |   |   |   | 1,797 |   |   |   |   |   |   |   | 111,229  |   |   |   | 94,736 |   |   |   |   |   |
| Addition to non- current segment assets during the year                                                      |   |                  | 17,188  |   |                         |   | 17,558 |        |   |   |         |   |   |    | 38     |   |   |   | 66 |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 5 |   |   |   | 13 |   |   |   |   |   |   |   | 17,231 |   |   |   | 17,637 |   |   |   |   |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable segment liabilities                                                                               |   |                  | 80,033  |   |                         |   | 80,435 |        |   |   |         |   |   |    | 1,168  |   |   |   | 1,202 |   |   |   |   |   |   |   | (191 | ) |   |   | (159 | ) |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 81,010 |   |   |   | 81,478 |   |   |   |   |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other segment information                                                                                    |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                         |   |                  |    |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                              |   |                  | 91      |   |                         |   | 65     |        |   |   | 99           |   |   |    | 2      |   |   |   | 3 |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 93 |   |   |   | 68 |   |   |   | 103 |   |
| Interest expenses                                                                                            |   |                  | 1,222   |   |                         |   | 1,446  |        |   |   | 1,923        |   |   |    | 43     |   |   |   | 51 |   |   |   | 64 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,265 |   |   |   | 1,497 |   |   |   | 1,987 |   |
| Depreciation and amortisation for the year                                                                   |   |                  | 7,050   |   |                         |   | 5,954  |        |   |   | 5,724        |   |   |    | 83     |   |   |   | 85 |   |   |   | 94 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,133 |   |   |   | 6,039 |   |   |   | 5,818 |   |
| Impairment losses (including impact on PP&E, allowance for doubtful debts and provision for inventories) |   |                  | 220     |   |                         |   | 57     |        |   |   | 2,073        |   |   |    | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 220 |   |   |   | 57 |   |   |   | 2,073 |   |

----

| 47 | Segmental reporting (continued) |
|----|---------------------------------|

| (b) | Geographic information |
|-----|------------------------|

|                        |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|-----------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                        |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                        |   |             |   |   |             |   |   |             |   |
| Domestic                    |   |             | 63,850 |   |             |   | 47,645 |             |   |   | 45,972 |   |
| Hong Kong, Macau and Taiwan |   |             | 1,589  |   |             |   | 1,067  |             |   |   | 1,051 |   |
| International *             |   |             | 12,349 |   |             |   | 7,331  |             |   |   | 9,404 |   |
|                        |   |             | 77,788 |   |             |   | 56,043 |             |   |   | 56,427 |   |

|   | * | Asian market accounted for approximately 57% (2009: 74%; 2008: 72%) of the Group’s total international traffic revenue for the year ended December 31, 2010.  The remaining portion was mainly derived from the Group’s flights to/from European, North American regions and Australian. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Reconciliations of reportable segment revenue, profit or loss, assets and liabilities arising from different accounting policies |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

|                                                     | Note   |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|----------------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                     |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Revenue                                                  |   |   |             |   |   |             |   |   |             |   |
|                                                     |   |   |             |   |   |             |   |   |             |   |
| Reportable segment revenue                               |   |   |             | 78,649 |   |             |   | 56,717 |             |   |   | 56,937 |   |
| Elimination of inter-segment revenues                    |   |   |             | (861   | )      |             |   | (674   | )                |   |   | (510 | ) |
| Reclassification of expired sales in advance of carriage | (i)    |   |             | 664    |   |             |   | 350    |             |   |   | 276 |   |
| Reclassification of business tax                         | (ii)   |   |             | (1,957 | )      |             |   | (1,591 | )                |   |   | (1,415 | ) |
| Consolidated revenue                                     |   |   |             | 76,495 |   |             |   | 54,802 |             |   |   | 55,288 |   |

----

| 47 | Segmental reporting (continued) |
|----|---------------------------------|

| (c) | Reconciliations of reportable segment revenue, profit or loss, assets and liabilities arising from different accounting policies (continued) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                | Note   |   | 2010             |   |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Profit                                                              |   |   |             |   |   |             |   |   |             |   |
|                                                                |   |   |             |   |   |             |   |   |             |   |
| Reportable segment profit/ (loss) before taxation                   |   |   |             | 6,823  |   |             |   | 83     |             |   |   | (5,099 | ) |
| Unallocated amounts                                                 |   |   |             | 1,275  |   |             |   | 374    |             |   |   | 351 |   |
| Losses on lump sum housing benefits                                 | (iii)  |   |             | (26    | )      |             |   | (26    | )                |   |   | (26 | ) |
| Revaluation of land use rights                                      | (iv)   |   |             | 4      |   |             |   | 4      |             |   |   | 4 |   |
| Adjustments arising from business combinations under common control | (v)    |   |             | (1     | )      |             |   | (7     | )                |   |   | (7 | ) |
| Capitalization of exchange difference of specific loans             | (vi)   |   |             | 17     |   |             |   | 3      |             |   |   | 51 |   |
| Government grants                                                   | (vii)  |   |             | 1      |   |             |   | 1      |             |   |   | 2 |   |
| Consolidated profit/(loss) before taxation                          |   |   |             | 8,093  |   |             |   | 432    |             |   |   | (4,724 | ) |

|                                                                |   |   | 2010             |    |   | 2009             |   |
|---------------------------------------------------------------------|--------|--------|------------------|---------|--------|------------------|--------|
|                                                                | Note   |   | RMB million |    |   | RMB million |   |
|                                                                |   |   |             |    |   |             |   |
| Assets                                                              |   |   |             |    |   |             |   |
|                                                                |   |   |             |    |   |             |   |
| Reportable segment assets                                           |   |   |             | 109,979 |   |             |   | 93,098 |   |
| Elimination of inter-segment balances                               |   |   |             | (191    | )      |             |   | (159 | ) |
| Other unallocated amounts                                           |   |   |             | 1,441   |   |             |   | 1,797 |   |
| Losses on lump sum housing benefits                                 | (iii)  |   |             | 40      |   |             |   | 66 |   |
| Revaluation of land use rights                                      | (iv)   |   |             | (138    | )      |             |   | (142 | ) |
| Adjustments arising from business combinations under common control | (v)    |   |             | -       |   |             |   | 1 |   |
| Capitalization of exchange difference of specific loans             | (vi)   |   |             | 128     |   |             |   | 111 |   |
| Government grants                                                   | (vii)  |   |             | (38     | )      |             |   | (39 | ) |
| Effect of the above adjustments on taxation                         |   |   |             | 11      |   |             |   | 17 |   |
| Consolidated total assets                                           |   |   |             | 111,232 |   |             |   | 94,750 |   |
|                                                                |   |   |             |    |   |             |   |   |   |
|                                                                |   |   |             | 2010    |   |             |   | 2009 |   |
|                                                                |   |   | RMB million      |    |   | RMB million      |   |
| Liabilities                                                         |   |   |             |    |   |             |   |   |   |
|                                                                |   |   |             |    |   |             |   |   |   |
| Reportable segment liabilities                                      |   |   |             | 81,201  |   |             |   | 81,637 |   |
| Elimination of inter-segment balances                               |   |   |             | (191    | )      |             |   | (159 | ) |
| Effect of the above adjustments on taxation                         |   |   |             | 9       |   |             |   | 10 |   |
| Consolidated total liabilities                                      |   |   |             | 81,019  |   |             |   | 81,488 |   |

----

| 47 | Segmental information (continued) |
|----|-----------------------------------|

| (c) | Reconciliations of reportable segment revenue, profit or loss, assets and liabilities arising from different accounting policies (continued) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | In accordance with the PRC GAAP, expired sales in advance of carriage are recorded under non-operating income. Under IFRSs, such income is recognized as other operating income. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | In accordance with the PRC GAAP, business tax and surcharge is separately disclosed rather than deducted from revenue under IFRSs. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | In accordance with the PRC accounting rules and regulations, losses on the lump sum housing benefits executed by CSAHC are charged to retained profits as of January 1, 2001 pursuant to the relevant regulations. Under IFRSs, losses on lump sum housing benefits are charged to the consolidated income statements, which are spread over the vesting benefit periods stipulated by the relevant contracts. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | In accordance with the PRC accounting rules and regulations, land use rights are carried at revalued amounts. Under IFRSs, land use rights are carried at cost with effect from January 1, 2002, and accordingly, the unamortised surplus on revaluation of land use rights was reversed against shareholders’ equity. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | In accordance with the PRC GAAP, business combinations under common control should be accounted for by applying the pooling-of-interest method. The carrying amount of the assets and liabilities in the books of subsidiaries acquired were used for consolidation. Under IFRSs, purchase accounting is adopted. The assets and liabilities of the subsidiaries are recorded at fair value. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | In accordance with the PRC GAAP, exchange difference arising on translation of specific loans and related interest denominated in a foreign currency is capitalised as part of the cost of qualifying assets. Under IFRSs, such exchange difference should be recognized in profit or loss unless the exchange difference represents an adjustment to interest. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | In accordance with the PRC GAAP, special funds such as investment grants allocated by the government, if clearly defined in official documents as part of “capital reserve”, are credited to capital reserve, and amortised over the respective useful lives of corresponding assets. Under IFRSs, government grants relating to purchase of fixed assets are deducted from the cost of the related fixed assets. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 48 | Supplementary information to the consolidated cash flow statements |
|----|--------------------------------------------------------------------|

| (a) | Non cash transactions - acquisition of aircraft |
|-----|-------------------------------------------------|

----

| 48 | Supplementary information to the consolidated cash flow statements (continued) |
|----|--------------------------------------------------------------------------------|

| (b)  | Effect of the deemed disposal of Flying College |
|-----------|-------------------------------------------------|

|                               |   | RMB million |   |
|------------------------------------|--------|------------------|--------|
| Assets deemed disposed of:         |   |             |   |
| Property, plant and equipment, net |   |             | 46     |   |
| Inventories                        |   |             | 8      |   |
| Trade receivables                  |   |             | 14     |   |
| Cash and cash equivalents          |   |             | 19     |   |
| Others                             |   |             | 20     |   |
|                               |   |             | 107    |   |
| Liabilities deemed disposed of:    |   |             |   |   |
| Trade payables                     |   |             | 6      |   |
| Advance from customers             |   |             | 85     |   |
| Other liabilities                  |   |             | 1      |   |
|                               |   |             | 92     |   |
| Net identifiable assets            |   |             | 15     |   |

----

| 49 | Financial risk management and fair values |
|----|-------------------------------------------|

| (a) | Liquidity risk |
|-----|----------------|

| (b) | Interest rate risk |
|-----|--------------------|

----

| 49 | Financial risk management and fair values (continued) |
|----|-------------------------------------------------------|

| (b) | Interest rate risk (continued) |
|-----|--------------------------------|

| (c) | Foreign currency risk |
|-----|-----------------------|

----

| 49 | Financial risk management and fair values (continued) |
|----|-------------------------------------------------------|

| (c) | Foreign currency risk (continued) |
|-----|-----------------------------------|

|                  |   | 2010                   |   |     | 2009                                        |   |
|-----------------------|--------|------------------------|--------|----------|---------------------------------------------|--------|
|                  |   | Appreciation /    |   |     | Decrease/(increase)                         |   |   | Appreciation/ |   |   | Increase/(decrease) |   |
|                  |   | (depreciation) of |   |     | on profit after tax and |   |   | (depreciation) of |   |   | on profit after tax |   |
|                  |   | Renminbi against  |   |     | retained profits                       |   |   | Renminbi against |   |   | and increase / (decrease) |   |
|                  |   | foreign                |   |     | RMB million                            |   |   | foreign |   |   | on accumulated losses |   |
|                  |   | currency               |   |     |                                        |   |   | currency |   |   | RMB million |   |
|                  |   |                   |   |     |                                        |   |   |   |   |   |   |   |
| United States Dollars |   |                   | 2      | %        |                                        |   | (798 | ) |   |   | 2 | % |   |   | (764 | ) |
|                  |   |                   | (2     | )%  |                                        |   | 798 |   |   |   | (2 | )%  |   |   | 764 |   |

| (d) | Credit risk |
|-----|-------------|

----

| 49 | Financial risk management and fair values (continued) |
|----|-------------------------------------------------------|

| (d) | Credit risk (continued) |
|-----|-------------------------|

| (e) | Jet fuel price risk |
|-----|---------------------|

| (f) | Fair value |
|-----|------------|

| (i) | Financial instruments carried at fair value |
|-----|---------------------------------------------|

|   | - | Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Level 3 (Lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total   |   |
|---------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|---------|--------|
|                                        |   | RMB          |   |   | RMB          |   |   | RMB          |   |   | RMB     |   |
|                                        |   | million      |   |   | million      |   |   | million      |   |   | million |   |
| Assets                                      |   |         |   |   |         |   |   |         |   |   |    |   |
| Available-for-sale equity securities:       |   |         |   |   |         |   |   |         |   |   |    |   |
| - Listed                                    |   |         | 80     |   |         |   | -      |         |   |   | -       |   |   |   | 80 |   |
|                                        |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Liabilities                                 |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Derivative financial instruments:           |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| - Foreign exchange forward option contracts |   |         | -      |   |         |   | 13     |         |   |   | -       |   |   |   | 13 |   |

----

| 49 | Financial risk management and fair values (continued) |
|----|-------------------------------------------------------|

| (f) | Fair value (continued) |
|-----|------------------------|

| (i) | Financial instruments carried at fair value (continued) |
|-----|---------------------------------------------------------|

|                                        |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total   |   |
|---------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|---------|--------|
|                                        |   | RMB          |   |   | RMB          |   |   | RMB          |   |   | RMB     |   |
|                                        |   | million      |   |   | million      |   |   | million      |   |   | million |   |
| Assets                                      |   |         |   |   |         |   |   |         |   |   |    |   |
| Available-for-sale equity securities:       |   |         |   |   |         |   |   |         |   |   |    |   |
| - Listed                                    |   |         | 93     |   |         |   | -      |         |   |   | -       |   |   |   | 93 |   |
|                                        |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Liabilities                                 |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Derivative financial instruments:           |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| - Foreign exchange forward option contracts |   |         | -      |   |         |   | 44     |         |   |   | -       |   |   |   | 44 |   |

| (ii) | Other non-current investments represent unlisted equity securities of companies established in the PRC.  There is no quoted market price for such equity securities and accordingly a reasonable estimate of the fair value could not be measured reliably. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | Amounts due from/to related companies are unsecured, interest-free and have no fixed terms of repayment.  Given these terms, it is not meaningful to disclose fair values of these balances. |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv) | Loans, trade and other payables and bills payable are carried at amounts not materially different from their fair values as at December 31, 2010 and December 31, 2009. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 50 | Commitments |
|----|-------------|

| (a) | Capital commitments |
|-----|---------------------|

|                                                    |   | 2010             |   |   | 2009             |   |
|---------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                    |   | RMB million |   |   | RMB million |   |
| Commitments in respect of aircraft and flight equipment |   |             |   |   |             |   |
| - authorised and contracted for                         |   |             | 73,909 |   |             |   | 57,890 |   |
| - authorised but not contracted for                     |   |             | -      |   |             |   | 7,953 |   |
|                                                    |   |             | 73,909 |   |             |   | 65,843 |   |
|                                                    |   |             |   |   |             |   |   |   |
| Other commitments                                       |   |             |   |   |             |   |   |   |
| - authorised and contracted for                         |   |             | 757    |   |             |   | 462 |   |
| - authorised but not contracted for                     |   |             | 1,949  |   |             |   | 1,399 |   |
|                                                    |   |             | 2,706  |   |             |   | 1,861 |   |
|                                                    |   |             |   |   |             |   |   |   |
|                                                    |   |             | 76,615 |   |             |   | 67,704 |   |

|                |   | 2010             |   |   | 2009             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| 2010                |   |             | -      |   |             |   | 16,404 |   |
| 2011                |   |             | 20,445 |   |             |   | 17,482 |   |
| 2012                |   |             | 20,033 |   |             |   | 17,421 |   |
| 2013                |   |             | 15,980 |   |             |   | 9,845 |   |
| 2014                |   |             | 10,720 |   |             |   | 4,691 |   |
| 2015 and afterwards |   |             | 6,731  |   |             |   | - |   |
|                |   |             | 73,909 |   |             |   | 65,843 |   |

----

| 50 | Commitments (continued) |
|----|-------------------------|

| (a) | Capital commitments (continued) |
|-----|---------------------------------|

|                              |   | 2010             |   |   | 2009             |   |
|-----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                              |   | RMB million |   |   | RMB million |   |
|                              |   |             |   |   |             |   |
| Authorised and contracted for     |   |             | 14     |   |             |   | 2 |   |
| Authorised but not contracted for |   |             | -      |   |             |   | 40 |   |
|                              |   |             | 14     |   |             |   | 42 |   |

| (b) | Operating lease commitments |
|-----|-----------------------------|

|                            |   | 2010             |   |   | 2009             |   |
|---------------------------------|--------|------------------|--------|--------|------------------|--------|
|                            |   | RMB million |   |   | RMB million |   |
| Payments due                    |   |             |   |   |             |   |
| Within 1 year                   |   |             | 4,068  |   |             |   | 4,028 |   |
| After 1 year but within 5 years |   |             | 13,713 |   |             |   | 15,107 |   |
| After 5 years                   |   |             | 8,196  |   |             |   | 11,231 |   |
|                            |   |             | 25,977 |   |             |   | 30,366 |   |

| 51 | Contingent liabilities |
|----|------------------------|

| (a) | The Group leased certain properties and buildings from CSAHC which located in Guangzhou, Wuhan and Haikou, etc.  However, such properties and buildings lack adequate documentation evidencing CSAHC’s rights thereto. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | The Company and its subsidiary, Xiamen Airlines, entered into agreements with its pilot trainees and certain banks to provide guarantees on personal bank loans amounting to RMB249,972,000 (2009: RMB292,586,000) to be granted to its pilot trainees to finance their respective flight training expenses.  As at December 31, 2010, an aggregate of personal bank loans of RMB151 million (2009: RMB60 million), under these guarantees, were drawn down from the banks.  During the year, the Group has made repayments of RMB2,000,000 due to the default of payments of certain pilot trainees. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 52 | Non-adjusting post balance sheet events |
|----|-----------------------------------------|

| 53 | Immediate and ultimate controlling party |
|----|------------------------------------------|

| 54 | Accounting judgements and estimates |
|----|-------------------------------------|

| (a) | Impairment of long-lived assets |
|-----|---------------------------------|

----

| 54 | Accounting judgements and estimates (continued) |
|----|-------------------------------------------------|

| (b) | Depreciation |
|-----|--------------|

| 55 | Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended December 31, 2010 |
|----|------------------------------------------------------------------------------------------------------------------------------------|

|                                        | Effective for accountingperiods beginning on or after |
|---------------------------------------------|-------------------------------------------------------------------------------------|
|                                        |                                                                                |
| IAS 24 (Revised), Related party disclosures | January 1, 2011                                                                     |
| IFRS 9, Financial instruments               | January 1, 2013                                                                     |

----

| 56 | Subsidiaries |
|----|--------------|

| Name of company                                                  |   | Place ofestablishment/ operation |   | Registered capital |   | Proportion ofownershipinterest heldby theCompany |   | Principalactivities                  |
|----------------------------------------------------------------------------|--------|--------------------------------------------|--------|-------------------------|--------|-----------------------------------------------------------------|--------|--------------------------------------|
|                                                                       |   |                                       |   |                    |   |                                                            |   |                                 |
| Shantou Airlines Company Limited (a)                                       |   | PRC                                        |   | RMB280,000,000          |   | 60%                                                             |   | Airline                              |
| Chongqing Airlines Company Limited (a)                                     |   | PRC                                        |   | RMB1,200,000,000        |   | 60%                                                             |   | Airline                              |
| Zhuhai Airlines Company Limited (a)                                        |   | PRC                                        |   | RMB250,000,000          |   | 60%                                                             |   | Airline                              |
| Xiamen Airlines Company Limited (a)                                        |   | PRC                                        |   | RMB1,200,000,000        |   | 60%                                                             |   | Airline                              |
| Guizhou Airlines Company Limited (a)                                       |   | PRC                                        |   | RMB80,000,000           |   | 60%                                                             |   | Airline                              |
| Nan Lung International Freight Limited                                     |   | HK                                         |   | HKD3,270,000            |   | 51%                                                             |   | Freight services                     |
| Guangzhou Baiyun International Logistic Company Limited (a)                |   | PRC                                        |   | RMB50,000,000           |   | 61%                                                             |   | Logistics operations                 |
| China Southern Airlines Group Air Catering Company Limited (a)             |   | PRC                                        |   | RMB10,200,000           |   | 100%                                                            |   | Air catering                         |
| Guangzhou Nanland Air Catering Company Limited (“Nanland”) (b) |   | PRC                                        |   | RMB120,000,000          |   | 55%                                                             |   | Air catering                         |
| Xinjiang Civil Aviation Property Management Limited (a)                    |   | PRC                                        |   | RMB251,332,832          |   | 51.8%                                                           |   | Property management                  |
| Beijing Southern Airlines Ground Services Company Limited (a)              |   | PRC                                        |   | RMB18,000,000           |   | 100%                                                            |   | Provision of airport ground services |

|   | (a) | These subsidiaries are PRC limited liability companies. |
|--------|-----|---------------------------------------------------------|

|   | (b) | This subsidiary is Sino-foreign equity joint venture company established in the PRC. |
|--------|-----|--------------------------------------------------------------------------------------|

|   | (c) | Certain of the Group’s subsidiaries are PRC joint ventures which have limited lives pursuant to the PRC law. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

----

| 57 | Associates and jointly controlled entities |
|----|--------------------------------------------|

|                                                               |   |                                 |   | Proportion of ownership interest heldby |   |   |
|--------------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------------------------------|--------|--------|
| Name of company                                          |   | Place ofestablishment/operation |   | Group’seffectiveinterest                              |   |   | TheCompany |   |   | Subsidiaries |   | Principal activities |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |
| Guangzhou Aircraft Maintenance Engineering Company Limited (a)     |   | PRC                                  |   |                                                        | 50     | %      |   |   | 50 | % |   |   | - |   | Provision of aircraft repair and maintenance services |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| China Southern Airlines Group Finance Company Limited              |   | PRC                                  |   |                                                        | 34     | %      |   |   | 21.1 | % |   |   | 12.9 | % | Provision of financial services |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Sichuan Airlines Corporation Limited                               |   | PRC                                  |   |                                                        | 39     | %      |   |   | 39 | % |   |   | - |   | Airline |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Southern Airlines Culture and Media Co., Ltd.                      |   | PRC                                  |   |                                                        | 40     | %      |   |   | 40 | % |   |   | - |   | Provision of advertising services |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Zhuhai Xiang Yi Aviation Technology Company Limited (a)            |   | PRC                                  |   |                                                        | 51     | %      |   |   | 51 | % |   |   | - |   | Provision of flight simulation services |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Guangzhou China Southern Zhongmian Dutyfree Store Co., Limited (a) |   | PRC                                  |   |                                                        | 50     | %      |   |   | 50 | % |   |   | - |   | Sales of duty free goods in flight |
|                                                               |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| China Southern West Australian Flying College Pty Limited (a)      |   | Australia                            |   |                                                        | 48.12  | %      |   |   | 48.12 | % |   |   | - |   | Pilot training services |

|   | (a) | These are jointly controlled entities. |
|--------|-----|----------------------------------------|

|   | (b) | Certain of the Group’s jointly controlled entities are PRC joint ventures which have limited lives pursuant to the PRC law. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----