|  ̈ |   | 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                                               | 1      |
|                                                                          |   |
| INTRODUCTORY      NOTE                                                        | 1      |
|                                                                          |   |
| GLOSSARY      OF AIRLINE INDUSTRY TERMS                                       | 2      |
|                                                                          |   |
| PART      I                                                                   | 3      |
|                                                                          |   |
| ITEM      1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.           | 3      |
|                                                                          |   |
| ITEM      2. OFFER STATISTICS AND EXPECTED TIMETABLE.                         | 3      |
|                                                                          |   |
| ITEM      3. KEY INFORMATION.                                                 | 3      |
|                                                                          |   |
| Selected      Financial Data                                                  | 3      |
|                                                                          |   |
| Capitalization      and Indebtedness                                          | 6      |
|                                                                          |   |
| Reasons      for the Offer and Use of Proceeds                                | 6      |
|                                                                          |   |
| Risk      Factors                                                             | 6      |
|                                                                          |   |
| ITEM      4. INFORMATION ON THE COMPANY.                                      | 12     |
|                                                                          |   |
| History      and Development of the Company                                   | 12     |
|                                                                          |   |
| Business      Overview                                                        | 13     |
|                                                                          |   |
| Organizational      Structure                                                 | 29     |
|                                                                          |   |
| Property,      Plant and Equipment                                            | 31     |
|                                                                          |   |
| ITEM      4A. UNRESOLVED STAFF COMMENTS.                                      | 32     |
|                                                                          |   |
| ITEM      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.                    | 32     |
|                                                                          |   |
| Critical      Accounting Policies                                             | 32     |
|                                                                          |   |
| Recently      Pronounced International Financial Reporting Standards          | 33     |
|                                                                          |   |
| Overview                                                                      | 33     |
|                                                                          |   |
| Certain      Financial Information and Operating Data by Geographic    Region | 34     |
|                                                                          |   |
| Operating      Results                                                        | 35     |
|                                                                          |   |
| Liquidity      and Capital Resources                                          | 41     |
|                                                                          |   |
| Contractual      Obligations and Commitments                                  | 43     |
|                                                                          |   |
| ITEM      6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.                      | 43     |
|                                                                          |   |
| Directors,      Senior Management and Employees                               | 43     |
|                                                                          |   |
| Compensation                                                                  | 48     |
|                                                                          |   |
| Board      Practices                                                          | 49     |

----

| Employees                                                                      | 50     |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |
| Share      Ownership                                                           | 51     |
|                                                                           |   |
| ITEM      7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.                | 51     |
|                                                                           |   |
| Major      Shareholders                                                        | 51     |
|                                                                           |   |
| Related      Party Transactions                                                | 52     |
|                                                                           |   |
| Interests      of Experts and Counsel                                          | 55     |
|                                                                           |   |
| ITEM      8. FINANCIAL INFORMATION.                                            | 55     |
|                                                                           |   |
| Consolidated      Statements and Other Financial Information                   | 55     |
|                                                                           |   |
| Significant      Changes                                                       | 55     |
|                                                                           |   |
| Legal      Proceedings                                                         | 55     |
|                                                                           |   |
| Dividend      Information                                                      | 55     |
|                                                                           |   |
| ITEM      9. THE OFFER AND LISTING.                                            | 55     |
|                                                                           |   |
| Offer      and Listing Details                                                 | 55     |
|                                                                           |   |
| Plan      of Distribution                                                      | 57     |
|                                                                           |   |
| Markets                                                                        | 57     |
|                                                                           |   |
| Selling      Shareholders                                                      | 57     |
|                                                                           |   |
| Dilution                                                                       | 57     |
|                                                                           |   |
| Expenses      of the Issue                                                     | 57     |
|                                                                           |   |
| ITEM      10. ADDITIONAL INFORMATION.                                          | 57     |
|                                                                           |   |
| A.      Share Capital                                                          | 57     |
|                                                                           |   |
| B.      Memorandum and Articles of Association                                 | 57     |
|                                                                           |   |
| C.      Material Contracts                                                     | 61     |
|                                                                           |   |
| D.      Exchange Controls                                                      | 61     |
|                                                                           |   |
| E.      Taxation                                                               | 62     |
|                                                                           |   |
| F.      Dividends and Paying Agents                                            | 66     |
|                                                                           |   |
| G.      Statement by Experts                                                   | 66     |
|                                                                           |   |
| H.      Documents on Display                                                   | 66     |
|                                                                           |   |
| I.      Subsidiary Information                                                 | 66     |
|                                                                           |   |
| ITEM      11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK. | 66     |
|                                                                           |   |
| ITEM      12. DESCRIPTION OF SECURITIES OTHER THAN EQUITYSECURITIES.           | 68     |
|                                                                           |   |
| PART      II                                                                   | 70     |

----

| ITEM      13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.                                              | 70     |
|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                        |   |
| ITEM      14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS      AND USE OF PROCEEDS. | 70     |
|                                                                                                        |   |
| ITEM      15. CONTROLS AND PROCEDURES.                                                                      | 70     |
|                                                                                                        |   |
| ITEM      16. RESERVED                                                                                      | 71     |
|                                                                                                        |   |
| ITEM      16A. AUDIT COMMITTEE FINANCIAL EXPERT.                                                            | 71     |
|                                                                                                        |   |
| ITEM      16B. CODE OF ETHICS.                                                                              | 72     |
|                                                                                                        |   |
| ITEM      16C. PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                      | 72     |
|                                                                                                        |   |
| ITEM      16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT    COMMITTEE                                 | 72     |
|                                                                                                        |   |
| ITEM      16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED      PURCHASERS.                 | 72     |
|                                                                                                        |   |
| ITEM      16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.                                         | 72     |
|                                                                                                        |   |
| ITEM      16G. CORPORATE GOVERNANCE.                                                                        | 72     |
|                                                                                                        |   |
| PART      III                                                                                               | 75     |
|                                                                                                        |   |
| ITEM      17. FINANCIAL STATEMENTS.                                                                         | 75     |
|                                                                                                        |   |
| ITEM      18. FINANCIAL STATEMENTS.                                                                         | 75     |
|                                                                                                        |   |
| ITEM      19. EXHIBITS.                                                                                     | 75     |
|                                                                                                        |   |
| Index      to Exhibits                                                                                      | 75     |

----

FORWARD-LOOKING STATEMENTS

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

| · | 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 regulatorypolicies; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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 ofASKs                                                                                                                                             |

----

| 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 ExchangeCommission                                                                                                                              |

----

Year ended December 31,

|                                             |   | 2009US$                                                      |   |   | 2009RMB |   |    | 2008RMB |   |   | 2007RMB |   |   | 2006RMB |    |   | 2005RMB |   |
|--------------------------------------------------|--------|--------------------------------------------------------------|--------|--------|---------|--------|---------|---------|--------|--------|---------|--------|--------|---------|---------|--------|---------|--------|
|                                             |   | (in million, except per share data) |   |
|                                             |   |                                                         |   |   |    |   |    |    |   |   |    |   |   |    |    |   |    |   |
| Consolidated      Income Statement Data:         |   |                                                         |   |   |    |   |    |    |   |   |    |   |   |    |    |   |    |   |
|                                             |   |                                                         |   |   |    |   |    |    |   |   |    |   |   |    |    |   |    |   |
| Operating      revenue                           |   |                                                         | 8,026  |   |    |   | 54,802  |    |   |   | 55,288  |   |   |    | 54,401  |   |    |   | 46,081 |   |   |   | 38,233 |   |
| Operating      expenses                          |   |                                                         | (8,106 | )      |    |   | (55,351 | )       |   |   | (61,767 | )      |   |    | (52,956 | )      |    |   | (45,899 | ) |   |   | (39,598 | ) |
| Operating      profit/(loss)                     |   |                                                         | 211    |   |    |   | 1,440   |    |   |   | (5,646  | )      |   |    | 1,881   |   |    |   | 663 |   |   |   | (1,323 | ) |
| profit/(loss)      before taxation               |   |                                                         | 63     |   |    |   | 432     |    |   |   | (4,724  | )      |   |    | 2,879   |   |    |   | 227 |   |   |   | (1,913 | ) |
| profit/(loss)      for the year                  |   |                                                         | 77     |   |    |   | 527     |    |   |   | (4,786  | )      |   |    | 2,032   |   |    |   | 104 |   |   |   | (1,891 | ) |
| profit/(loss)      attributable to:              |   |                                                         |   |   |    |   |    |    |   |   |    |   |   |    |    |   |    |   |   |   |   |   |   |   |
| Equity      shareholders of the Company          |   |                                                         | 48     |   |    |   | 330     |    |   |   | (4,823  | )      |   |    | 1,839   |   |    |   | 106 |   |   |   | (1,893 | ) |
| Minority      interests                          |   |                                                         | 29     |   |    |   | 197     |    |   |   | 37      |   |   |    | 193     |   |    |   | (2 | ) |   |   | 2 |   |
| Basic      and diluted earnings/(loss) per share |   |                                                         | 0.01   |   |    |   | 0.05    |    |   |   | (0.74   | )      |   |    | 0.28    |   |    |   | 0.02 |   |   |   | (0.29 | ) |
| Basic      and diluted earnings/(loss) per ADR   |   |                                                         | 0.34   |   |    |   | 2.33    |    |   |   | (36.75  | )      |   |    | 14.01   |   |    |   | 0.81 |   |   |   | (14.43 | ) |

Year endedDecember 31,

|                                                                                         |   | 2009US$           |   |   | 2009RMB |   |   | 2008RMB |   |   | 2007RMB |   |   | 2006RMB |   |   | 2005RMB |   |
|----------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
|                                                                                         |   | (in million) |   |
|                                                                                         |   |              |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
| Consolidated      Balance Sheet Data:                                                        |   |              |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
|                                                                                         |   |              |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
| Cash      and cash equivalents                                                               |   |              | 636    |   |    |   | 4,343  |    |   |   | 4,649   |   |   |    | 3,824  |   |    |   | 2,264 |   |   |   | 2,901 |   |
| Other      current assets                                                                    |   |              | 701    |   |    |   | 4,785  |    |   |   | 4,599   |   |   |    | 4,966  |   |    |   | 4,419 |   |   |   | 4,320 |   |
| Asset      classified as held for sale                                                       |   |              | 77     |   |    |   | 529    |    |   |   | -       |   |   |    | -      |   |    |   | - |   |   |   | - |   |
| Property,      plant and equipment, net                                                      |   |              | 9,325  |   |    |   | 63,673 |    |   |   | 53,237  |   |   |    | 58,441 |   |    |   | 56,335 |   |   |   | 54,254 |   |
| Total      assets                                                                            |   |              | 13,876 |   |    |   | 94,750 |    |   |   | 83,042  |   |   |    | 82,006 |   |    |   | 75,689 |   |   |   | 71,491 |   |
| Bank      and other loans, including long-term bank and other loans due within one      year |   |              | 2,556  |   |    |   | 17,452 |    |   |   | 22,178  |   |   |    | 24,948 |   |    |   | 23,822 |   |   |   | 16,223 |   |
| Short-term      financing bills                                                              |   |              | -      |   |    |   | -      |    |   |   | 2,000   |   |   |    | -      |   |    |   | - |   |   |   | - |   |
| Obligations      under capital leases due within one      year                               |   |              | 210    |   |    |   | 1,431  |    |   |   | 1,781   |   |   |    | 2,877  |   |    |   | 3,091 |   |   |   | 3,373 |   |
| Bank      and other loans, excluding balance due within one year                             |   |              | 4,082  |   |    |   | 27,875 |    |   |   | 17,429  |   |   |    | 9,074  |   |    |   | 10,018 |   |   |   | 12,740 |   |
| Obligations      under capital leases, excluding balance      due within one year            |   |              | 1,741  |   |    |   | 11,887 |    |   |   | 11,157  |   |   |    | 12,858 |   |    |   | 12,307 |   |   |   | 12,459 |   |
| Total      equity                                                                            |   |              | 1,942  |   |    |   | 13,262 |    |   |   | 9,479   |   |   |    | 14,310 |   |    |   | 11,752 |   |   |   | 11,667 |   |
| Number      of shares (in million)                                                           |   |              | 8,003  |   |    |   | 8,003  |    |   |   | 6,561   |   |   |    | 4,374  |   |    |   | 4,374 |   |   |   | 4,374 |   |

----

|                                                   |   | 2009   |    |   | 2008   |   |    | 2007   |   |   | 2006    |   |   | 2005   |    |
|--------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| Capacity                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| ASK      (million)                                     |   |   | 123,441 |   |   |   | 112,767 |   |   |   | 109,733 |   |   |   | 97,059  |   |   |   | 88,361 |   |
| ATK      (million)                                     |   |   | 15,446  |   |   |   | 14,276  |   |   |   | 14,208  |   |   |   | 12,656  |   |   |   | 11,509 |   |
| Kilometers      flown (thousand)                       |   |   | 746,133 |   |   |   | 686,236 |   |   |   | 675,127 |   |   |   | 594,957 |   |   |   | 539,844 |   |
| Hours      flown (thousand)                            |   |   | 1,195   |   |   |   | 1,106   |   |   |   | 1,075   |   |   |   | 931     |   |   |   | 846 |   |
| Number      of landing and take-offs                   |   |   | 616,296 |   |   |   | 556,914 |   |   |   | 543,789 |   |   |   | 481,810 |   |   |   | 438,674 |   |
| Traffic                                                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| RPK      (million)                                     |   |   | 93,002  |   |   |   | 83,184  |   |   |   | 81,727  |   |   |   | 69,582  |   |   |   | 61,923 |   |
| RTK      (million)                                     |   |   | 10,067  |   |   |   | 9,200   |   |   |   | 9,250   |   |   |   | 8,071   |   |   |   | 7,284 |   |
| Passengers      carried (thousand)                     |   |   | 66,281  |   |   |   | 58,237  |   |   |   | 56,903  |   |   |   | 49,206  |   |   |   | 44,119 |   |
| Cargo      and mail carried (tons)                     |   |   | 862,000 |   |   |   | 835,000 |   |   |   | 872,000 |   |   |   | 819,000 |   |   |   | 775,000 |   |
| Load      Factors                                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Passenger      load factor (RPK/ASK) (%)               |   |   | 75.3    |   |   |   | 73.8    |   |   |   | 74.5    |   |   |   | 71.7    |   |   |   | 70.1 |   |
| Overall      load factor (RTK/ATK) (%)                 |   |   | 65.2    |   |   |   | 64.4    |   |   |   | 65.1    |   |   |   | 63.8    |   |   |   | 63.3 |   |
| Breakeven      load factor (%)                         |   |   | 68.1    |   |   |   | 73.8    |   |   |   | 64.8    |   |   |   | 65.1    |   |   |   | 67.1 |   |
| Yield                                                  |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Yield      per RPK (RMB)                               |   |   | 0.54    |   |   |   | 0.61    |   |   |   | 0.61    |   |   |   | 0.60    |   |   |   | 0.55 |   |
| Yield      per cargo and mail tonkilometers      (RMB) |   |   | 1.63    |   |   |   | 1.96    |   |   |   | 1.87    |   |   |   | 1.89    |   |   |   | 1.75 |   |
| Yield      per RTK (RMB)                               |   |   | 5.26    |   |   |   | 5.86    |   |   |   | 5.75    |   |   |   | 5.57    |   |   |   | 5.13 |   |
| Fleet                                                  |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| —      Boeing                                    |   |   | 194     |   |   |   | 179     |   |   |   | 177     |   |   |   | 159     |   |   |   | 140 |   |
| —      Airbus                                    |   |   | 157     |   |   |   | 133     |   |   |   | 119     |   |   |   | 103     |   |   |   | 71 |   |
| —      McDonnell Douglas                         |   |   | 16      |   |   |   | 25      |   |   |   | 25      |   |   |   | 36      |   |   |   | 36 |   |
| —      Others                                    |   |   | 11      |   |   |   | 11      |   |   |   | 11      |   |   |   | 11      |   |   |   | 14 |   |
| Total      aircraft in service at period end           |   |   | 378     |   |   |   | 348     |   |   |   | 332     |   |   |   | 309     |   |   |   | 261 |   |
| Overall      utilization rate (hours per day)          |   |   | 9.4     |   |   |   | 9.1     |   |   |   | 9.4     |   |   |   | 9.5     |   |   |   | 9.6 |   |
| Cost                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Operating      cost per ATK (RMB)                      |   |   | 3.58    |   |   |   | 4.33    |   |   |   | 3.73    |   |   |   | 3.63    |   |   |   | 3.44 |   |

Exchange Rate Information

| Period                    |   | Period End |   |   | Average      (1)(RMB per US$) |   |   | High   |   |   | Low    |   |
|---------------------------|--------|-----------------|--------|--------|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                      |   |            |   |   |                                    |   |   |   |   |   |   |   |
| Annual      Exchange Rate |   |            |   |   |                                    |   |   |   |   |   |   |   |
|                      |   |            |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| 2005                      |   |            | 8.0694 |   |                                    |   | 8.1825 |   |   |   | 8.2767 |   |   |   | 8.0702 |   |
| 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 |   |

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

 

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| Period                                                             |   | High   |   |   | Low    |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Monthly      Exchange Rate                                         |   |   |   |   |   |   |
| November      2009                                                 |   |   | 6.8300 |   |   |   | 6.8255 |   |
| December      2009                                                 |   |   | 6.8299 |   |   |   | 6.8299 |   |
| January      2010                                                  |   |   | 6.8295 |   |   |   | 6.8258 |   |
| February      2010                                                 |   |   | 6.8330 |   |   |   | 6.8258 |   |
| March      2010                                                    |   |   | 6.8270 |   |   |   | 6.8254 |   |
| April      2010                                                    |   |   | 6.8275 |   |   |   | 6.8229 |   |
| May      2010 (up to May 7, 2010 the latest practicable date) |   |   | 6.8265 |   |   |   | 6.8245 |   |

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Certain transactions between the Company and CSAHC or itsassociates (as defined in the Rules Governing the Listing of Securities on theStock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”)) willconstitute connected transactions of the Company under the Hong Kong ListingRules and, unless exemptions are applicable or waivers are granted, will besubject to disclosure requirements and/or independent shareholders’ approval ina general meeting.

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The Group’s results may be negatively impacted by the fluctuationin domestic prices for jet fuel, and we would be adversely affected bydisruptions in the supply of fuel.

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The Group’s operations primarily focus on the domestic market. Inaddition, the Group also operates regional routes and international flights. Asof the year end of 2009, the Group had 38 regional routes and 99 internationalroutes. The Group’s regional operations include flights between destinations inChina and Hong Kong, Macau and Taiwan. The Group’s international operationsinclude scheduled services to the cities in Australia, Bangladesh, France,India, Japan, Kazakhstan, Korea, Kyrgyzstan, Maldives, Nepal, Netherlands,Nigeria, Pakistan, Russia, Saudi Arabia, Tajikistan, UAE, USA and SoutheastAsian destinations.

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Share Reform Scheme

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|   |   | Passenger carried |   |   | Cargo and Mail Carried (tons) |   |   | Total traffic (tons kilometers) |   |
|--------|--------|------------------------|--------|--------|---------------------------------------------------|--------|--------|------------------------------------------------|--------|
| Year   |   | Total(in million) |   |   | Increase(decrease)overprevious year (%) |   |   | Total(inthousand)                              |   |   | Increase(decrease)overprevious year (%) |   |   | Total(in million) |   |   | Increase(decrease)overpreviousyear (%) |   |
| 2007   |   |                   | 56.90  |   |                                              |   | 15.6   |                                           |   |   | 872.0 |   |   |   | 6.5 |   |   |   | 9,250.0 |   |   |   | 14.6 |   |
| 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 |   |

 

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| Model                     |   | Number ofAircraft |   |   | Average age(years) |   |   | AveragePassengerCapacity |   |
|---------------------------|--------|------------------------|--------|--------|-------------------------|--------|--------|--------------------------|--------|
| Boeing      777-200A      |   | 4                      |   |   | 13.71                   |   |   | 380                      |   |
| Boeing      777-200B      |   | 6                      |   |   | 11.36                   |   |   | 292                      |   |
| Boeing      757-200       |   | 27                     |   |   | 10.76                   |   |   | 200                      |   |
| Boeing      747F          |   | 2                      |   |   | 7.53                    |   |   | n/a                      |   |
| Boeing      737-800       |   | 80                     |   |   | 3.09                    |   |   | 167/170                  |   |
| Boeing      737-700       |   | 46                     |   |   | 5.32                    |   |   | 126                      |   |
| Boeing      737-500       |   | 2                      |   |   | 13.53                   |   |   | 130                      |   |
| Boeing      737-300       |   | 25                     |   |   | 15.35                   |   |   | 145                      |   |
| Boeing      777F          |   | 2                      |   |   | 0.08                    |   |   | n/a                      |   |
| Airbus      319-100       |   | 44                     |   |   | 3.36                    |   |   | 128                      |   |
| Airbus      300-600       |   | 5                      |   |   | 15.19                   |   |   | 272                      |   |
| Airbus      320-200       |   | 54                     |   |   | 6.26                    |   |   | 158                      |   |
| Airbus      321-200       |   | 40                     |   |   | 3.10                    |   |   | 185                      |   |
| Airbus      330-200       |   | 6                      |   |   | 4.10                    |   |   | 264                      |   |
| Airbus      330-300       |   | 8                      |   |   | 1.57                    |   |   | 292                      |   |
| McDonnell      Douglas 82 |   | 3                      |   |   | 17.89                   |   |   | 144                      |   |
| McDonnell      Douglas 90 |   | 13                     |   |   | 12.02                   |   |   | 157                      |   |
| Embraer      145 Jet      |   | 6                      |   |   | 5.31                    |   |   | 50                       |   |
| ATR-72                    |   | 5                      |   |   | 12.58                   |   |   | 72/79                    |   |
|                      |   |                   |   |   |                    |   |   |                     |   |
| Total                     |   | 378                    |   |   |                    |   |   |                     |   |

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| Model                             |   | CapitalLease |   |   | OperatingLease |   |   | AverageRemainingLease Term |   |
|-----------------------------------|--------|--------------|--------|--------|----------------|--------|--------|---------------------------------|--------|
| Boeing      777-200A and 777-200B |   |         | 0      |   |           |   | 4      |                            |   |   | 2.95 |   |
| Boeing      757-200               |   |         | 0      |   |           |   | 8      |                            |   |   | 1.21 |   |
| Boeing      737-700               |   |         | 9      |   |           |   | 15     |                            |   |   | 4.60 |   |
| Boeing      737-800               |   |         | 12     |   |           |   | 40     |                            |   |   | 6.25 |   |
| Boeing      737-500               |   |         | 0      |   |           |   | 2      |                            |   |   | 0.11 |   |
| Boeing      737-300               |   |         | 0      |   |           |   | 4      |                            |   |   | 2.36 |   |
| Boeing      777F                  |   |         | 2      |   |           |   | 0      |                            |   |   | 9.92 |   |
| Airbus      319-100               |   |         | 6      |   |           |   | 30     |                            |   |   | 6.20 |   |
| Airbus      320-200               |   |         | 15     |   |           |   | 15     |                            |   |   | 6.23 |   |
| Airbus      321-100               |   |         | 7      |   |           |   | 20     |                            |   |   | 8.20 |   |
| Airbus      330-200               |   |         | 4      |   |           |   | 2      |                            |   |   | 7.90 |   |
| Airbus      330-300               |   |         | 0      |   |           |   | 8      |                            |   |   | 10.68 |   |
| Total                             |   |         | 55     |   |           |   | 148    |                            |   |   |   |   |

In August 2008, Xiamen Airlines, a non wholly-owned subsidiary ofthe Company entered into an operating lease agreement with GE CommercialAviation Services, and such agreement has been approved by the Board of theCompany on August 18, 2008.  Pursuant to the agreement, Xiamen Airlinesplans to lease seven Boeing B737-800 aircraft by way of operating lease. Theterm of the lease is eight years from 2011 to 2019, with the price for theoperating lease to be determined by the two parities with reference to theprevailing market price. The Board believes that the introduction of newaircraft under the operating lease is beneficial to the implementation of theGroup’s development strategy, will improve the Group’s operating capacity toaccommodate the continuous growth in demand for aviation services in the PRC,serve passengers with better services, and enhance the competitiveness of theGroup.

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Safety

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Promotional and Marketing Activities

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|   |   | 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 billion) |   |   | Group’sShare(% of total) |   |
| 2005   |   |                            | 138.3  |   |                                        |   | 31.8   |                                    |   |   | 3,067 |   |   |   | 25.3 |   |   |   | 26.1 |   |   |   | 27.9 |   |
| 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 |   |

|                   |   |                                         |   |   | Cargo and Mail      |   |   |                                        |   |
|------------------------|--------|----------------------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------------------|--------|
| Airport                |   | Passenger carried(% of total) |   |   | Carried(% of total) |   |   | Departing flight(% of total) |   |
| Beijing                |   |                                         | 18.05  | %      |                          |   | 11.33  | %                                           |   |   | 17.22 | % |
| Shanghai      Pudong   |   |                                         | 8.68   | %      |                          |   | 2.83   | %                                           |   |   | 9.18 | % |
| Guangzhou              |   |                                         | 49.26  | %      |                          |   | 26.84  | %                                           |   |   | 48.73 | % |
| Shanghai      Hongqiao |   |                                         | 15.78  | %      |                          |   | 18.69  | %                                           |   |   | 15.53 | % |
| Shenzhen               |   |                                         | 29.06  | %      |                          |   | 21.96  | %                                           |   |   | 27.69 | % |
| Chengdu                |   |                                         | 15.01  | %      |                          |   | 15.71  | %                                           |   |   | 13.67 | % |
| Kunming                |   |                                         | 16.91  | %      |                          |   | 19.24  | %                                           |   |   | 15.75 | % |
| Hangzhou               |   |                                         | 37.47  | %      |                          |   | 31.99  | %                                           |   |   | 36.06 | % |
| Xi’an            |   |                                         | 19.27  | %      |                          |   | 23.03  | %                                           |   |   | 17.97 | % |
| Chongqing              |   |                                         | 23.12  | %      |                          |   | 26.43  | %                                           |   |   | 21.85 | % |

The following table sets forth the Group’s market share of thepassengers carried, cargo and mail carried on departing flights and totaldeparting flights at eight busiest airports in southern and central China(excluding Guangzhou and Shenzhen, which are included in the table above), basedon passenger volume data from CAAC statistics, in 2009.

|               |   |                                               |   |   | Cargo and Mail      |   |   |                                        |   |
|--------------------|--------|----------------------------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------------------|--------|
| Airport            |   | Passenger carried(% of total ) |   |   | Carried(% of total) |   |   | Departing flight(% of total) |   |
| Wuhan              |   |                                               | 44.41  | %      |                          |   | 54.06  | %                                           |   |   | 39.91 | % |
| Changsha           |   |                                               | 45.25  | %      |                          |   | 63.73  | %                                           |   |   | 44.35 | % |
| Haikou             |   |                                               | 26.16  | %      |                          |   | 26.05  | %                                           |   |   | 25.21 | % |
| Sanya              |   |                                               | 27.47  | %      |                          |   | 27.50  | %                                           |   |   | 28.28 | % |
| Zhengzhou          |   |                                               | 51.48  | %      |                          |   | 63.05  | %                                           |   |   | 47.41 | % |
| Guilin             |   |                                               | 37.03  | %      |                          |   | 47.16  | %                                           |   |   | 36.13 | % |
| Nanning            |   |                                               | 37.05  | %      |                          |   | 36.68  | %                                           |   |   | 32.22 | % |
| Zhang      Jia Jie |   |                                               | 36.28  | %      |                          |   | 30.54  | %                                           |   |   | 38.02 | % |

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The names “China Southern” and “China Southern Airlines” containChinese words of common usage and are therefore not eligible for registration astradenames under current Chinese law. The kapok logo is a trademark registeredin China and recorded with the International Air Transport Association (“IATA”),the rights to which are owned by CSAHC. The Company and CSAHC have entered intoa trademark license agreement (the “Trademark License Agreement”), pursuant towhich CSAHC has licensed to the Group the right to use the names “ChinaSouthern” and “China Southern Airlines” in both English and Chinese and grantedthe Company a 10-year renewable license from 1997 to use the kapok logo on aworld-wide basis. CSAHC has retained the right to use the kapok logo inconnection with its non-airline related businesses conducted as of the date ofthe Trademark License Agreement and to permit its associates that do notcompete, directly or indirectly, with the Group to use the kapok logo. UnlessCSAHC gives a written notice of termination three months before the expirationof the agreement, the agreement will be automatically renewed for anotherten-year term. In May of 2007, the Trademark License Agreement has been renewedby the two parties for another ten-year term ending 2017. Xiamen Airlines ownsall rights to its egret logo, which is a trademark registered in China, andrecorded with the IATA. Chongqing Airlines also owns all rights to its logo,which is a trademark registered in China, and recorded with theIATA.

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| Name of company                                       |   | Place and date ofestablishment/operation |   | Proportion ofownershipinterest held by the Company |   |
|-----------------------------------------------------------------|--------|---------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
| Southern      Airlines 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     | % |
| China      Southern West Australian Flying College Pty Limited  |   | Australia January 26, 1971               |   |                                                                        | 91     | % |
| 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    | % |

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|                                                                |   |                                                    |   | 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 | % |   |   | — |   |
| 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 | % |   |   | — |   |
| MTU      Maintenance Zhuhai Co., Limited                            |   | PRC      April 6, 2001                                  |   |                                                        | 50     | % |   |   | 50 | % |   |   | — |   |
| Zhuhai      Xiang Yi Aviation Technology Company Limited            |   | PRC      July 10, 2002                                  |   |                                                        | 51     | % |   |   | 51 | % |   |   | — |   |
| 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 |   |                             | 330,163 |   |                                      |   | 99,670 |   |   |   | 624,667 |   |   |   | 28,376 |   |
| Shenzhen  |   |                             | 208,740 |   |                                      |   | — |   |   |   | 105,040 |   |   |   | — |   |
| Zhuhai    |   |                             | 170,062 |   |                                      |   | — |   |   |   | 18,791 |   |   |   | — |   |
| Changsha  |   |                             | 138,949 |   |                                      |   | — |   |   |   | 52,552 |   |   |   | — |   |
| Zhengzhou |   |                             | 290,841 |   |                                      |   | — |   |   |   | 66,542 |   |   |   | — |   |
| Haikou    |   |                             | 5,265   |   |                                      |   | 1,711 |   |   |   | 83,923 |   |   |   | 20,917 |   |
| Wuhan     |   |                             | — |   |                                      |   | 31,061 |   |   |   | 17,335 |   |   |   | 22,831 |   |
| Nanyang   |   |                             | — |   |                                      |   | — |   |   |   | 18,156 |   |   |   | 60,035 |   |
| Sanya     |   |                             | 106,680 |   |                                      |   | — |   |   |   | 16,968 |   |   |   | — |   |
| Shenyang  |   |                             | — |   |                                      |   | 167,502 |   |   |   | 79,626 |   |   |   | 93,445 |   |
| Dalian    |   |                             | — |   |                                      |   | 14,403 |   |   |   | 20,290 |   |   |   | 33,597 |   |
| Jilin     |   |                             | 134,488 |   |                                      |   | 65,076 |   |   |   | 38,210 |   |   |   | 7,767 |   |
| Harbin    |   |                             | — |   |                                      |   | 286,871 |   |   |   | 36,925 |   |   |   | 3,188 |   |
| Xinjiang  |   |                             | 17,460  |   |                                      |   | 631,094 |   |   |   | 177,710 |   |   |   | 4,135 |   |
| Guilin    |   |                             | 72,563  |   |                                      |   | — |   |   |   | 73,379 |   |   |   | 139 |   |

|      |   | Land(in square meters) |    |   | Buildings(in square meters) |   |
|-----------|--------|----------------------------------|---------|--------|---------------------------------------|--------|
|      |   | Owned                            |    |   | Leased                                |   |   | Owned |   |   | Leased |   |
| Xiamen    |   |                             | 581,401 |   |                                  |   | — |   |   |   | 511,847 |   |   |   | 26,044 |   |
| Shantou   |   |                             | 36,931  |   |                                  |   | 53,000 |   |   |   | 61,468 |   |   |   | 2,773 |   |
| Zhuhai    |   |                             | 99,306  |   |                                  |   | — |   |   |   | 57,730 |   |   |   | 1,800 |   |
| Guizhou   |   |                             | 259,879 |   |                                  |   | — |   |   |   | 106,245 |   |   |   | 2,032 |   |
| Chongqing |   |                             | — |   |                                  |   | — |   |   |   | 6,785 |   |   |   | 3,482 |   |

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Recently Pronounced International Financial ReportingStandards

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Certain Financial Informationand Operating Data by Geographic Region

|                                        |   | Year ended December 31, |   |   | 2009 vs. 2008% increase |   |   | 2008 vs. 2007% increase |   |
|---------------------------------------------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|
| Traffic                                     |   | 2009                                   |   |   | 2008                                   |   |   | 2007                                   |   |   | (decrease) |   |   | (decrease) |   |
| RPK      (million)                          |   |                                   |   |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                    |   |                                   | 80,697 |   |                                   |   | 70,619 |                                   |   |   | 68,369 |   |   |   | 14.3 |   |   |   | 3.3 |   |
| Regional                                    |   |                                   | 1,337  |   |                                   |   | 1,139  |                                   |   |   | 1,180 |   |   |   | 17.4 |   |   |   | (3.5 | ) |
| International                               |   |                                   | 10,968 |   |                                   |   | 11,426 |                                   |   |   | 12,178 |   |   |   | (4.0 | ) |   |   | (6.2 | ) |
| Total                                       |   |                                   | 93,002 |   |                                   |   | 83,184 |                                   |   |   | 81,727 |   |   |   | 11.8 |   |   |   | 1.8 |   |
| RTK      (million)                          |   |                                   |   |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                    |   |                                   | 8,342  |   |                                   |   | 7,392  |                                   |   |   | 7,219 |   |   |   | 12.9 |   |   |   | 2.4 |   |
| Regional                                    |   |                                   | 126    |   |                                   |   | 110    |                                   |   |   | 115 |   |   |   | 14.5 |   |   |   | (4.3 | ) |
| International                               |   |                                   | 1,599  |   |                                   |   | 1,698  |                                   |   |   | 1,916 |   |   |   | (5.8 | ) |   |   | (11.4 | ) |
| Total                                       |   |                                   | 10,067 |   |                                   |   | 9,200  |                                   |   |   | 9,250 |   |   |   | 9.4 |   |   |   | (0.5 | ) |
| Passengers      carried (thousand)          |   |                                   |   |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                    |   |                                   | 61,130 |   |                                   |   | 53,063 |                                   |   |   | 51,326 |   |   |   | 15.2 |   |   |   | 3.4 |   |
| Regional                                    |   |                                   | 1,276  |   |                                   |   | 1,220  |                                   |   |   | 1,339 |   |   |   | 4.6 |   |   |   | (8.9 | ) |
| International                               |   |                                   | 3,875  |   |                                   |   | 3,954  |                                   |   |   | 4,238 |   |   |   | (2.0 | ) |   |   | (6.7 | ) |
| Total                                       |   |                                   | 66,281 |   |                                   |   | 58,237 |                                   |   |   | 56,903 |   |   |   | 13.8 |   |   |   | 2.3 |   |
| Cargo      and mail carried (thousand tons) |   |                                   |   |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                    |   |                                   | 750    |   |                                   |   | 713    |                                   |   |   | 733 |   |   |   | 5.2 |   |   |   | (2.7 | ) |
| Regional                                    |   |                                   | 9      |   |                                   |   | 11     |                                   |   |   | 12 |   |   |   | (18.2 | ) |   |   | (8.3 | ) |
| International                               |   |                                   | 103    |   |                                   |   | 111    |                                   |   |   | 127 |   |   |   | (7.2 | ) |   |   | (12.6 | ) |
| Total                                       |   |                                   | 862    |   |                                   |   | 835    |                                   |   |   | 872 |   |   |   | 3.2 |   |   |   | (4.2 | ) |

----

|                                      |   | Year ended December 31, |    |   | 2009 vs. 2008%increase |   |    | 2008 vs. 2007%increase |   |
|-------------------------------------------|--------|----------------------------------------|---------|--------|----------------------------------|--------|---------|----------------------------------|--------|
| Capacity                                  |   | 2009                                   |    |   | 2008                             |   |    | 2007                             |   |   | (decrease) |   |   | (decrease) |   |
| ASK      (million)                        |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 105,379 |   |                             |   | 93,384  |                             |   |   | 89,452 |   |   |   | 12.8 |   |   |   | 4.4 |   |
| Regional                                  |   |                                   | 1,916   |   |                             |   | 1,790   |                             |   |   | 1,881 |   |   |   | 7.0 |   |   |   | (4.8 | ) |
| International                             |   |                                   | 16,146  |   |                             |   | 17,593  |                             |   |   | 18,400 |   |   |   | (8.2 | ) |   |   | (4.4 | ) |
| Total                                     |   |                                   | 123,441 |   |                             |   | 112,767 |                             |   |   | 109,733 |   |   |   | 9.5 |   |   |   | 2.8 |   |
| ATK      (million)                        |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 12,425  |   |                             |   | 10,985  |                             |   |   | 10,440 |   |   |   | 13.1 |   |   |   | 5.2 |   |
| Regional                                  |   |                                   | 219     |   |                             |   | 200     |                             |   |   | 210 |   |   |   | 9.5 |   |   |   | (4.8 | ) |
| International                             |   |                                   | 2,802   |   |                             |   | 3,091   |                             |   |   | 3,558 |   |   |   | (9.3 | ) |   |   | (13.1 | ) |
| Total                                     |   |                                   | 15,446  |   |                             |   | 14,276  |                             |   |   | 14,208 |   |   |   | 8.2 |   |   |   | 0.5 |   |
| Load      Factors                         |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger      load factor (RPK/ASK) (%)  |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 76.6    |   |                             |   | 75.6    |                             |   |   | 76.4 |   |   |   | 1.3 |   |   |   | (1.0 | ) |
| Regional                                  |   |                                   | 69.8    |   |                             |   | 63.6    |                             |   |   | 62.7 |   |   |   | 9.7 |   |   |   | 1.4 |   |
| International                             |   |                                   | 67.9    |   |                             |   | 64.9    |                             |   |   | 66.2 |   |   |   | 4.6 |   |   |   | (2.0 | ) |
| Overall                                   |   |                                   | 75.3    |   |                             |   | 73.8    |                             |   |   | 74.5 |   |   |   | 2.0 |   |   |   | (0.9 | ) |
| Overall      load factor (RTK/ATK) (%)    |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 67.1    |   |                             |   | 67.3    |                             |   |   | 69.1 |   |   |   | (0.3 | ) |   |   | (2.6 | ) |
| Regional                                  |   |                                   | 57.7    |   |                             |   | 55.0    |                             |   |   | 55.1 |   |   |   | 4.9 |   |   |   | (0.2 | ) |
| International                             |   |                                   | 57.1    |   |                             |   | 54.9    |                             |   |   | 53.8 |   |   |   | 4.0 |   |   |   | 2.0 |   |
| Overall                                   |   |                                   | 65.2    |   |                             |   | 64.4    |                             |   |   | 65.1 |   |   |   | 1.2 |   |   |   | (1.1 | ) |
| Yield                                     |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Yield      per RPK (RMB)                  |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 0.53    |   |                             |   | 0.59    |                             |   |   | 0.60 |   |   |   | (10.2 | ) |   |   | (1.7 | ) |
| Regional                                  |   |                                   | 0.75    |   |                             |   | 0.84    |                             |   |   | 0.91 |   |   |   | (10.7 | ) |   |   | (7.7 | ) |
| International                             |   |                                   | 0.55    |   |                             |   | 0.67    |                             |   |   | 0.63 |   |   |   | (17.9 | )  |   |   | 6.3 |   |
| Overall                                   |   |                                   | 0.54    |   |                             |   | 0.61    |                             |   |   | 0.61 |   |   |   | (11.5 | )  |   |   | 0.0 |   |
| Yield      per RTK (RMB)                  |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 5.36    |   |                             |   | 5.90    |                             |   |   | 5.89 |   |   |   | (9.2 | )  |   |   | 0.2 |   |
| Regional                                  |   |                                   | 8.30    |   |                             |   | 9.23    |                             |   |   | 9.91 |   |   |   | (10.1 | ) |   |   | (6.9 | ) |
| International                             |   |                                   | 4.52    |   |                             |   | 5.47    |                             |   |   | 5.03 |   |   |   | (17.4 | )  |   |   | 8.7 |   |
| Overall                                   |   |                                   | 5.26    |   |                             |   | 5.86    |                             |   |   | 5.75 |   |   |   | (10.2 | )  |   |   | 1.9 |   |
| Financial                                 |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger      revenue (RMB million)      |   |                                   |    |   |                             |   |    |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                  |   |                                   | 43,033  |   |                             |   | 41,854  |                             |   |   | 40,717 |   |   |   | 2.8 |   |   |   | 2.8 |   |
| Regional                                  |   |                                   | 1,000   |   |                             |   | 952     |                             |   |   | 1,074 |   |   |   | 5.0 |   |   |   | (11.4 | ) |
| International                             |   |                                   | 6,026   |   |                             |   | 7,606   |                             |   |   | 7,708 |   |   |   | (20.8 | ) |   |   | (1.3 | ) |
| Total                                     |   |                                   | 50,059  |   |                             |   | 50,412  |                             |   |   | 49,499 |   |   |   | (0.7 | )  |   |   | 1.8 |   |
| Cargo      and mail revenue (RMB million) |   |                                   | 2,908   |   |                             |   | 3,051   |                             |   |   | 3,697 |   |   |   | (4.7 | ) |   |   | (17.5 | ) |

Operating Results

----

|                                                       |   | 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      service 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 |   |   | Change      in trafficrevenue |   |
|                        |   | RMB million    |   |   | %          |   |   | RMB million    |   |   | % |   |   | % |   |
| 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      in passengerrevenue  |   |
|                             |   | RMB million      |   |   | %          |   |   | RMB million      |   |   | % |   |   | % |   |
| Domestic                         |   |             | 43,033 |   |       |   | 86.0   | %                |   |   | 41,854 |   |   |   | 83.0 | % |   |   | 2.8 |   |
| Hong      Kong, Macao 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      inoperating      expenses |   |
|------------------------------------------------------|--------|-------------|--------|--------|------------|--------|--------|---------------------------------------|--------|
|                                                 |   | RMB million |   |   | Percentage |   |   | RMB million                           |   |   | 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 | ) |

----

----

|                                                       |   | 2008             |   |   | 2007       |   |   |             |   |
|------------------------------------------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                                                       |   | Operatingrevenue |   |   | Percentage |   |   | Operatingrevenue |   |   | Percentage |   |   | Change      inrevenue |   |
|                                                       |   | RMB million      |   |   | %          |   |   | RMB million      |   |   | % |   |   | % |   |
| Traffic      revenue                                       |   |             | 53,913 |   |       |   | 97.5   | %                |   |   | 53,196 |   |   |   | 97.8 | % |   |   | 1.3 |   |
| Including:      Passenger revenue                          |   |             | 50,412 |   |       |   |   |             |   |   | 49,499 |   |   |   |   |   |   |   | 1.8 |   |
| –      Domestic                                      |   |             | 41,854 |   |       |   |   |             |   |   | 40,717 |   |   |   |   |   |   |   | 2.8 |   |
| –      Hong Kong, Macau and Taiwan              |   |             | 952    |   |       |   |   |             |   |   | 1,074 |   |   |   |   |   |   |   | (11.4 | ) |
| –      International                                 |   |             | 7,606  |   |       |   |   |             |   |   | 7,708 |   |   |   |   |   |   |   | (1.3 | ) |
| Cargo      and mail revenue                                |   |             | 3,501  |   |       |   |   |             |   |   | 3,697 |   |   |   |   |   |   |   | (5.3 | ) |
| Other      operating revenue                               |   |             | 1,375  |   |       |   | 2.5    | %                |   |   | 1,205 |   |   |   | 2.2 | % |   |   | 14.1 |   |
| Mainly      including: Commission income                   |   |             | 317    |   |       |   |   |             |   |   | 281 |   |   |   |   |   |   |   | 12.8 |   |
|  Ground      service income                           |   |             | 250    |   |       |   |   |             |   |   | 241 |   |   |   |   |   |   |   | 3.7 |   |
|  Expired      sales in advance of carriage       |   |             | 276    |   |       |   |   |             |   |   | 273 |   |   |   |   |   |   |   | 1.1 |   |
|                                                       |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      operating revenue                               |   |             | 55,288 |   |       |   | 100.0  | %                |   |   | 54,401 |   |   |   | 100.0 | % |   |   | 1.6 |   |
| Less:      fuel surcharge income                           |   |             | (8,197 | )      |       |   |   |             |   |   | (5,359 | ) |   |   |   |   |   |   | 53.0 |   |
|                                                       |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      operating revenue excluding fuel surcharge |   |             | 47,091 |   |       |   |   |             |   |   | 49,042 |   |   |   |   |   |   |   | (4.0 | ) |

|                        |   | 2008           |   |   | 2007       |   |   |           |   |
|-----------------------------|--------|----------------|--------|--------|------------|--------|--------|----------------|--------|
|                        |   | Trafficrevenue |   |   | Percentage |   |   | Trafficrevenue |   |   | Percentage |   |   | Change      in trafficrevenue |   |
|                        |   | RMB million    |   |   | %          |   |   | RMB million    |   |   | % |   |   | % |   |
| Passenger      Revenue      |   |           | 50,412 |   |       |   | 93.5   | %              |   |   | 49,499 |   |   |   | 93.1 | % |   |   | 1.8 |   |
| Cargo      and Mail Revenue |   |           | 3,501  |   |       |   | 6.5    | %              |   |   | 3,697 |   |   |   | 6.9 | % |   |   | (5.3 | ) |
|                        |   |           |   |   |       |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Traffic      revenue        |   |           | 53,913 |   |       |   | 100.0  | %              |   |   | 53,196 |   |   |   | 100.0 | % |   |   | 1.3 |   |

|                             |   | 2008             |   |   | 2007       |   |   |             |   |
|----------------------------------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
|                             |   | Passengerrevenue |   |   | Percentage |   |   | Passengerrevenue |   |   | Percentage |   |   | Change      in passengerrevenue |   |
|                             |   | RMB million      |   |   | %          |   |   | RMB million      |   |   | % |   |   | % |   |
| Domestic                         |   |             | 41,854 |   |       |   | 83.0   | %                |   |   | 40,717 |   |   |   | 82.3 | % |   |   | 2.8 |   |
| Hong      Kong, Macao and Taiwan |   |             | 952    |   |       |   | 1.9    | %                |   |   | 1,074 |   |   |   | 2.1 | % |   |   | (11.4 | ) |
| International                    |   |             | 7,606  |   |       |   | 15.1   | %                |   |   | 7,708 |   |   |   | 15.6 | % |   |   | (1.3 | ) |
|                             |   |             |   |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Passenger      revenue           |   |             | 50,412 |   |       |   | 100.0  | %                |   |   | 49,499 |   |   |   | 100.0 | % |   |   | 1.8 |   |

The Group recorded an amount of fuel surcharge income in respectof passenger operation of RMB7,497 million (2007: RMB4,910 million). Excludingfuel surcharges, the passenger revenue of the Group decreased by 3.8%, fromRMB44,589 million in 2007 to RMB42,915 million in 2008, and the passenger yieldper RPK (excluding fuel surcharges) decreased from RMB0.55 in 2007 to RMB0.52 in2008.

----

|                                                 |   | 2008        |   |   | 2007       |   |   | Change      inoperating      expenses |   |
|------------------------------------------------------|--------|-------------|--------|--------|------------|--------|--------|---------------------------------------|--------|
|                                                 |   | RMB million |   |   | Percentage |   |   | RMB million                           |   |   | Percentage |   |   | % |   |
| Flight      operations                               |   |        | 34,982 |   |       |   | 56.6   | %                                     |   |   | 29,082 |   |   |   | 54.9 | % |   |   | 20.3 |   |
| Mainly      including: Jet fuel costs                |   |        | 23,086 |   |       |   |   |                                  |   |   | 18,316 |   |   |   |   |   |   |   | 26.0 |   |
|  Operating      lease charges                   |   |        | 4,527  |   |       |   |   |                                  |   |   | 4,055 |   |   |   |   |   |   |   | 11.6 |   |
|  Flight      personnel payroll and welfare |   |        | 2,490  |   |       |   |   |                                  |   |   | 2,226 |   |   |   |   |   |   |   | 11.9 |   |
| Maintenance                                          |   |        | 4,890  |   |       |   | 7.9    | %                                     |   |   | 4,643 |   |   |   | 8.8 | % |   |   | 5.3 |   |
| Aircraft      and traffic servicing                  |   |        | 8,476  |   |       |   | 13.7   | %                                     |   |   | 8,160 |   |   |   | 15.4 | % |   |   | 3.9 |   |
| Promotion      and sales                             |   |        | 3,491  |   |       |   | 5.7    | %                                     |   |   | 3,421 |   |   |   | 6.5 | % |   |   | 2.0 |   |
| General      and administrative                      |   |        | 2,041  |   |       |   | 3.3    | %                                     |   |   | 1,874 |   |   |   | 3.5 | % |   |   | 8.9 |   |
| Impairment      on property, plant and equipment     |   |        | 1,884  |   |       |   | 3.1    | %                                     |   |   | 109 |   |   |   | 0.2 | % |   | >100 |   |
| Depreciation      and amortisation                   |   |        | 5,746  |   |       |   | 9.3    | %                                     |   |   | 5,554 |   |   |   | 10.5 | % |   |   | 3.5 |   |
| Others                                               |   |        | 257    |   |       |   | 0.4    | %                                     |   |   | 113 |   |   |   | 0.2 | % |   | >100 |   |
|                                                 |   |        |   |   |       |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      operating expenses                        |   |        | 61,767 |   |       |   | 100.0  | %                                     |   |   | 52,956 |   |   |   | 100.0 | % |   |   | 16.6 |   |

----

| - | During      the year, in view of the age and operating efficiency of the Group’s fleet      of Boeing 777-200A aircraft, Airbus 300 aircraft and McDonnell Douglas 90      aircraft, the Group determined to dispose of these aircraft. The Group has      commenced its process of seeking buyers for these aircraft. As a result,      the Group assessed the recoverable amounts of these aircraft. Based on      this assessment, the carrying amount of the aircraft and the related fleet      assets was written down by RMB1,590 million. The estimates of recoverable      amounts were based on the aircraft’s fair value less costs to sell,      determined by reference to the recent observable market prices for the      respective model of aircraft. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | There      has been a decrease in demand of cargo transportation services as a result      of the current economic conditions. In addition, the operating efficiency      of the Group’s cargo freighters Boeing 747 is not satisfactory due to lack      of economy of scale for the existing small fleet of cargo freighters. As      such, the Group assessed the recoverable amounts of its cargo freighters      and the related fleet assets. Based on this assessment, the carrying      amount of the cargo freighters was written down by RMB291 million. The      estimates of recoverable amounts were based on the aircraft’s fair value      less costs to sell, determined by reference to the recent observable      market prices for the cargofreighters. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                               |   | 2010               |   |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2014andafterwards |   |   | Total  |   |
|----------------------------------------------------|--------|--------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|--------|--------|--------|
|                                               |   | (RMB million) |   |
| Acquisition      of aircraft and related equipment |   |               | 16,404 |   |   |   | 17,482 |   |   |   | 17,421 |   |   |              | 9,845  |   |   |   | 4,691 |   |   |   | 65,843 |   |
| Others                                             |   |               | 1,068  |   |   |   | 601    |   |   |   | 192    |   |   |              | -      |   |   |   | - |   |   |   | 1,861 |   |
| Total      capital commitments                     |   |               | 17,472 |   |   |   | 18,083 |   |   |   | 17,613 |   |   |              | 9,845  |   |   |   | 4,691 |   |   |   | 67,704 |   |

|                                         |   |   |    |   | As of December 31, 2009Payment due by period |   |   |     |   |   | As ofDecember31, 2008 |   |
|----------------------------------------------|--------|--------|---------|--------|---------------------------------------------------------------------------------|--------|--------|----------|--------|--------|---------------------------------|--------|
|                                         |   | Total  |    |   | Lessthan1 year                                                             |   |   | 1-3years |   |   | 3-5years                        |   |   | After 5years |   |   | Total |   |
|                                         |   |   |    |   |                                                                            |   |   |     |   |   |                            |   |   |   |   |   |   |   |
| Short-term      bank loans (note 1)          |   |   | 11,094  |   |                                                                            |   | 11,094 |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | 18,757 |   |
| Long-term      bank and other loans (note 1) |   |   | 36,014  |   |                                                                            |   | 7,047  |     |   |   | 18,248                          |   |   |   | 2,853 |   |   |   | 7,866 |   |   |   | 23,300 |   |
| Short-term      financing bills              |   |   | -       |   |                                                                            |   | -      |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | 2,094 |   |
| Bills      payable                           |   |   | 3,207   |   |                                                                            |   | 3,207  |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | 148 |   |
| Obligations      under capital leases        |   |   | 15,812  |   |                                                                            |   | 1,972  |     |   |   | 3,812                           |   |   |   | 3,432 |   |   |   | 6,596 |   |   |   | 16,036 |   |
| Operating      lease commitments             |   |   | 30,366  |   |                                                                            |   | 4,028  |     |   |   | 8,225                           |   |   |   | 6,882 |   |   |   | 11,231 |   |   |   | 34,330 |   |
| Aircraft      purchase commitments (Note 2)  |   |   | 65,843  |   |                                                                            |   | 16,404 |     |   |   | 34,903                          |   |   |   | 12,491 |   |   |   | 2,045 |   |   |   | 75,639 |   |
| Other      capital commitments               |   |   | 1,861   |   |                                                                            |   | 1,068  |     |   |   | 793                             |   |   |   | - |   |   |   | - |   |   |   | 884 |   |
| Investing      commitments                   |   |   | -       |   |                                                                            |   | -      |     |   |   | -                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                                        |   |   | 164,197 |   |                                                                            |   | 44,820 |     |   |   | 65,981                          |   |   |   | 25,658 |   |   |   | 27,738 |   |   |   | 171,188 |   |

Directors,Senior Management and Employees

----

| Name                    |   | Position                                                            |   | Gender |   | Age |
|-------------------------|--------|---------------------------------------------------------------------|--------|--------|--------|-----|
| Si      Xian Min (1)    |   | Chairman      of the Board                                          |   | Male   |   | 53  |
| Li      Wen Xin         |   | Director                                                            |   | Male   |   | 60  |
| Wang      Quan Hua      |   | Director                                                            |   | Male   |   | 56  |
| Liu      Bao Heng       |   | Director                                                            |   | Male   |   | 60  |
| Tan      Wan Geng (2)   |   | Director,      President                                            |   | Male   |   | 46  |
| Zhang      Zi Fang (3)  |   | Director      and Executive Vice President                          |   | Male   |   | 52  |
| Xu      Jie Bo          |   | Director,      Executive Vice President and Chief Financial Officer |   | Male   |   | 45  |
| Chen      Zhen You      |   | Director                                                            |   | Male   |   | 58  |
| Wang      Zhi           |   | Independent      Non-executive Director                             |   | Male   |   | 68  |
| Sui      Guang Jun      |   | Independent      Non-executive Director                             |   | Male   |   | 49  |
| Gong      Hua Zhang     |   | Independent      Non-executive Director                             |   | Male   |   | 64  |
| Lam      Kwong Yu       |   | Independent      Non-executive Director                             |   | Male   |   | 66  |
| Sun      Xiao Yi        |   | Chairman      of the Supervisory Committee                          |   | Male   |   | 56  |
| Yang      Guang Hua (4) |   | Former      Supervisor                                              |   | Male   |   | 57  |
| Li      Jia Shi (5)     |   | Supervisor                                                          |   | Male   |   | 49  |
| Zhang      Wei          |   | Supervisor                                                          |   | Female |   | 44  |
| Yang      Yi Hua        |   | Supervisor                                                          |   | Female |   | 50  |
| Liang      Zhong Gao    |   | Supervisor                                                          |   | Male   |   | 54  |
| Ren      Ji Dong (6)    |   | Executive      Vice President                                       |   | Male   |   | 45  |
| He      Zong Kai        |   | Executive      Vice President                                       |   | Male   |   | 59  |
| Liu      Qian           |   | Executive      Vice President                                       |   | Male   |   | 46  |
| Dong      Su Guang      |   | Executive      Vice President                                       |   | Male   |   | 56  |
| Chen      Gang (7)      |   | Executive      Vice President                                       |   | Male   |   | 44  |
| Zhang      Zheng Rong   |   | Chief      pilot                                                    |   | Male   |   | 48  |
| Hu      Chen Jie        |   | Chief      Information Officer                                      |   | Male   |   | 41  |
| Tang      Bing (8)      |   | Former      Chief Engineer                                          |   | Male   |   | 43  |
| Su      Liang           |   | Chief      Economist                                                |   | Male   |   | 48  |
| Zhang      He Ping (8)  |   | Current      Chief Engineer                                         |   | Male   |   | 57  |
| Chen      Wei Hua       |   | Chief      Legal Adviser                                            |   | Male   |   | 44  |
| Xie      Bing           |   | Company      Secretary                                              |   | Male   |   | 37  |

----

----

----

----

|                                     |   | Directors’feesRMB’000 |   |   | Salaries,allowancesand benefitsin kindRMB’000 |   |   | DiscretionarybonusRMB’000 |   |   | RetirementschemecontributionsRMB’000 |   |   | TotalRMB’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                       |   |                              | -      |   |                                                          |   | 590    |                            |   |   | -                                          |   |   |               | 38     |   |   |   | 628 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Supervisors                              |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Sun      Xiao Yi                         |   |                              | -      |   |                                                          |   | 550    |                            |   |   | -                                          |   |   |               | 40     |   |   |   | 590 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Yang      Guang Hua                      |   |                              | -      |   |                                                          |   | 407    |                            |   |   |                                       |   |   |               | 17     |   |   |   | 424 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Zhang      Wei                           |   |                              | -      |   |                                                          |   | 345    |                            |   |   | -                                          |   |   |               | 40     |   |   |   | 385 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Yang      Yi Hua                         |   |                              | -      |   |                                                          |   | 266    |                            |   |   | -                                          |   |   |               | 38     |   |   |   | 304 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Liang      Zhong Gao                     |   |                              | -      |   |                                                          |   | 269    |                            |   |   | -                                          |   |   |               | 38     |   |   |   | 307 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Li      Jia Shi                          |   |                              | -      |   |                                                          |   | 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 |   |
|                                     |   |                              |   |   |                                                          |   |   |                            |   |   |                                       |   |   |               |   |   |   |   |   |   |
| Total                                    |   |                              | 338    |   |                                                          |   | 6,767  |                            |   |   | -                                          |   |   |               | 504    |   |   |   | 7,609 |   |

----

----

| – | 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                       |   | 4,021,150,000      A Shares | (1)    |                                                            | 50.24  | % |
|                        |   |                        |   |                                                            |   |   |
| HKSCC      Nominees Limited |   | 1,744,633,398      H Shares | (2)    |                                                            | 21.80  | % |
|                        |   |                        |   |                                                            |   |   |
| Nan      Lung               |   | 721,150,000      H Shares   |   |                                                            | 9.01   | % |

| Name                        |   | Number of HShares |          |   | ApproximatePercentage ofthe TotalNumber of HShares |   |
|-----------------------------|--------|-----------------------------|---------------|--------|------------------------------------------------------------------------|--------|
|                        |   |                        |          |   |                                                                   |   |   |   |
| HKSCC      Nominees Limited |   |                        | 1,744,633,398 | (2)    |                                                                   |   | 70.27% |   |
|                        |   |                        |          |   |                                                                   |   |   |   |
| Nan      Lung               |   |                        | 721,150,000   | (2)    |                                                                   |   | 29.05% |   |

| (1) | CSAHC      has right to acquire not more than 132,510,000 A Shares and through Nan      Lung Holding Limited (a wholly-owned subsidiary of CSAHC), to acquire not      more than 312,500,000 H Shares, pursuant to the A Shares subscription      agreement dated March 8, 2010 entered into between the Company and CSAHC      and the H Shares subscription agreement dated March 8, 2010 entered into      between the Company and Nan Lung, respectively.  Both of the      subscription agreements were approved by the shareholders of the Company.       The      above placement and subscription agreements were approved in the      Extraordinary General Meeting and the respective Class Meetings of      shareholders of A and H shares on April 30, 2010 and are pending approval      from the relevant security regulatory  authorities. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2)  | Among      the 1,744,633,398 H Shares held by HKSCC Nominees Limited, CSAHC had an      interest in an aggregate of 5,350,000 H Shares through Asia Travel      Investment Company Limited, a wholly-owned subsidiary of CSAHC in Hong      Kong (representing approximately 0.2% of the then 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. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      the year ended December 31, 2009, the rent incurred by the Group amounted      to RMB37,148,660 pursuant to such Lease  Agreement. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (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 land and    buildings. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Due      to the expiration on December 31, 2007 of the Land Use Rights Lease      Agreement between the Company and CSAHC, the Property Lease Agreement      between the Company and CSAHC, and China Northern Airlines, as well as the      Property Lease Agreement between the Company and CSAHC and Xinjiang      Airlines on November 12, 2004, and in order to ensure normal operation of      the Company, the Company, based on the actual leasing conditions of both      parties, consolidate the three agreements into two agreements by the type      of the leased properties, namely the Land Lease Agreement and the Property      Lease Agreement. Those two agreements were entered into between the      Company and CSAHC on January 10, 2008 and effective for a period from      January 1, 2008 to December 31, 2010. As provided for in the Land Lease      Agreement and the Property Lease Agreement, the lease areas of the related      lands and properties were changed to 1,104,209.69 square meters and      197,010.37 square meters respectively, and their annual rentals were      adjusted to RMB21,817,145.00 and RMB48,474,632.77, or an aggregate of      RMB70,291,777.77 for each of the years from 2008 to 2010. The rentals were      determined by reference to the market rents of the same district and on      the basis that unit rental and payment terms remained      unchanged. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                     |   | 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, 2005 |   |                                                                            | 3.10   |   |                                                                  |   | 1.83   |                                                                      |   |   | 19.93 |   |   |   | 11.68 |   |   |   | 5.30 |   |   |   | 2.23 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Quarterly      Market Prices             |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal      Year ended December 31, 2008 |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First      Quarter                       |   |                                                                            | 10.44  |   |                                                                  |   | 5.13   |                                                                      |   |   | 65.31 |   |   |   | 33.96 |   |   |   | 28.68 |   |   |   | 12.98 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Second      Quarter                      |   |                                                                            | 6.16   |   |                                                                  |   | 3.10   |                                                                      |   |   | 41.48 |   |   |   | 19.79 |   |   |   | 16.61 |   |   |   | 6.79 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Third      Quarter                       |   |                                                                            | 3.70   |   |                                                                  |   | 1.40   |                                                                      |   |   | 23.22 |   |   |   | 9.03 |   |   |   | 8.46 |   |   |   | 3.18 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fourth      Quarter                      |   |                                                                            | 1.64   |   |                                                                  |   | 0.83   |                                                                      |   |   | 10.06 |   |   |   | 5.56 |   |   |   | 4.03 |   |   |   | 2.72 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Monthly      Market Prices               |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November      2009                       |   |                                                                            | 2.88   |   |                                                                  |   | 2.24   |                                                                      |   |   | 18.86 |   |   |   | 14.42 |   |   |   | 6.49 |   |   |   | 5.29 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      2009                       |   |                                                                            | 2.78   |   |                                                                  |   | 2.36   |                                                                      |   |   | 18.05 |   |   |   | 15.36 |   |   |   | 6.21 |   |   |   | 5.62 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January      2010                        |   |                                                                            | 2.84   |   |                                                                  |   | 2.47   |                                                                      |   |   | 18.42 |   |   |   | 15.98 |   |   |   | 6.44 |   |   |   | 5.84 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February      2010                       |   |                                                                            | 2.98   |   |                                                                  |   | 2.58   |                                                                      |   |   | 18.14 |   |   |   | 16.36 |   |   |   | 6.62 |   |   |   | 6.10 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March      2010                          |   |                                                                            | 3.57   |   |                                                                  |   | 2.98   |                                                                      |   |   | 22.57 |   |   |   | 20.28 |   |   |   | 7.55 |   |   |   | 6.59 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| April      2010                          |   |                                                                            | 4.09   |   |                                                                  |   | 3.48   |                                                                      |   |   | 26.38 |   |   |   | 22.58 |   |   |   | 9.20 |   |   |   | 7.53 |   |
|                                     |   |                                                                            |   |   |                                                                  |   |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May      2010 (up to May 7, 2010)   |   |                                                                            | 4.09   |   |                                                                  |   | 3.70   |                                                                      |   |   | 25.95 |   |   |   | 23.26 |   |   |   | 8.84 |   |   |   | 7.77 |   |

----

| A.  | Share      Capital |
|----------|--------------------|

| B.  | Memorandum      and Articles of Association |
|----------|---------------------------------------------|

----

| (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 orenquiries; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (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 ofshareholders; |
|--------|-----|------------------------------------------------|

----

|   | (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 oralias; |
|--------|------|----------------------------------------------------------|

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

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

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

|   | (ee)  | identification      documents and their relevantnumbers; |
|--------|------------|----------------------------------------------------------|

|   | (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 ofAssociation; |
|-----|------------------------------------------------|

| (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 generalmeeting; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----|-------------------------------------------------------------------------------------------|

----

| C.  | Material      Contracts |
|----------|-------------------------|

| (a) | Pursuant      to the Aircraft General Terms Agreement dated January 20, 2010 between the      Company and Airbus S.A.S.  and A320 Family Aircraft Purchase      Agreement dated January 20, 2010 between the Company and Airbus SNC, the      Company agreed to purchase 20 Airbus A 320 series aircraft from Airbus SNC      in accordance with the terms and conditions thereof. According to the      information provided by Airbus SNC, the catalogue price of an Airbus A320      aircraft is US$ 76.9 million. Such catalogue price includes 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 Airbus Aircraft will be delivered in stages to      the Company during the period commencing from 2011 to  2013. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | 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 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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Pursuant      to the Agreement entered into by and among the Company, CSAHC, MTU and MTU      Aero Engines 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 ofMTU. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| D.  | Exchange      Controls |
|----------|------------------------|

----

| E.  | Taxation |
|----------|----------|

----

| · | 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 integratedinvestment; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

| · | 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| F.  | Dividends      and Paying Agents |
|----------|----------------------------------|

| G.  | Statement      by Experts |
|----------|---------------------------|

| H.  | Documents      on Display |
|----------|---------------------------|

| I.  | Subsidiary      Information |
|----------|-----------------------------|

----

|                                                  |   | As of December 31, 2009 |   |   | As of December 31,2008 |   |
|-------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                  |   | Expected maturity date            |   |   |                                  |   |
|                                                  |   | 2010                                        |   |   | 2011                                  |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | Thereafter |   |   | Totalrecordedamount |   |   | Fairvalue(2) |   |   | Totalrecordedamount |   |   | Fairvalue(2) |   |
| Fixed-rate      bank and other loansin      US$       |   |                                        | 182    |   |                                  |   | 79 |   |   |   | 59 |   |   |   | 62 |   |   |   | 65 |   |   |   | 325 |   |   |   | 772 |   |   |   | 795 |   |   |   | 994 |   |   |   | 1,036 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | 4.81   | %      |                                  |   | 3.70 | % |   |   | 3.70 | % |   |   | 3.70 | % |   |   | 3.70 | % |   |   | 3.70 | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      bank and other loansin      US$    |   |                                        | 15,355 |   |                                  |   | 4,450 |   |   |   | 8,842 |   |   |   | 1,591 |   |   |   | 875 |   |   |   | 7,286 |   |   |   | 38,399 |   |   |   | 38,399 |   |   |   | 25,352 |   |   |   | 25,352 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | 1.08   | %      |                                  |   | 1.18 | % |   |   | 1.19 | % |   |   | 1.14 | % |   |   | 1.07 | % |   |   | 1.16 | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      bank and other loans in HKD        |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 17 |   |   |   | 17 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      bank and other loansin      RMB       |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,224 |   |   |   | 2,224 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | -  |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      bank and other loansin      RMB    |   |                                        | 1,915  |   |                                  |   | 3,694 |   |   |   | 524 |   |   |   | 20 |   |   |   | - |   |   |   | - |   |   |   | 6,153 |   |   |   | 6,153 |   |   |   | 11,020 |   |   |   | 11,020 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | 4.77   | %      |                                  |   | 4.88 | % |   |   | 4.95 | % |   |   | 5.00 | % |   |   | - | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      short-term financing billsin      RMB |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,000 |   |   |   | 2,000 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      bills payablein      RMB              |   |                                        | 3,202  |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,202 |   |   |   | 3,202 |   |   |   | 148 |   |   |   | 148 |   |
|                                                  |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest rate                            |   |                                        | 2.26   | %      |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |

----

|  | (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, 2009 and      2008. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | As of December 31, 2009 |   |   | As of December 31,2008 |   |
|-----------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                      |   | Expected maturity date            |   |   |                                  |   |
|                                                      |   | 2010                                        |   |   | 2011                                  |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | Thereafter |   |   | Totalrecordedamount |   |   | Fairvalue(1) |   |   | Totalrecordedamount |   |   | Fairvalue(1) |   |
|                                                      |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate      bank and other loans In US$               |   |                                        | 182    |   |                                  |   | 79 |   |   |   | 59 |   |   |   | 62 |   |   |   | 65 |   |   |   | 325 |   |   |   | 772 |   |   |   | 795 |   |   |   | 994 |   |   |   | 1,036 |   |
|                                                      |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      bank and other loans  In US$ |   |                                        | 15,355 |   |                                  |   | 4,450 |   |   |   | 8,842 |   |   |   | 1,591 |   |   |   | 875 |   |   |   | 7,286 |   |   |   | 38,399 |   |   |   | 38,399 |   |   |   | 25,352 |   |   |   | 25,352 |   |
|                                                      |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      bank and other loans in HKD            |   |                                        | -      |   |                                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 17 |   |   |   | 17 |   |
|                                                      |   |                                        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      commitment in US$                            |   |                                        | 16,404 |   |                                  |   | 17,482 |   |   |   | 17,421 |   |   |   | 9,845 |   |   |   | 2,646 |   |   |   | 2,045 |   |   |   | 65,843 |   |   |   | 65,843 |   |   |   | 75,639 |   |   |   | 75,639 |   |

| (1)  | Fair      value of debt instruments was estimated based on the floating interest      rates applicable to similar debt instruments as of December 31, 2009 and      2008. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 orits agents for servicing the      deposited securities                                                                                                      |   | •      Asnecessary                                                                                                                                                                                                                       |

----

| 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 OFSECURITIES |
|----|------------------------------------------------------------------------------------------------------------------------------|

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

----

| (d) | Changes      in internal control over financialreporting |
|-----|----------------------------------------------------------|

----

|   |   | Audit Fees |              |   | Audit-RelatedFees |   |             | Tax Fees |   |   | Other Fees   |   |
|--------|--------|-----------------|-------------------|--------|-------------------|--------|------------------|---------------|--------|--------|-------------------|--------|
|   |   |            |              |   |              |   |             |          |   |   |              |   |
| 2008   |   | RMB             | 10.8 million |   |              | RMB    | 5.0 million |          |   | RMB    | 0.55 million |   |   |   | - |   |
|   |   |            |              |   |              |   |             |          |   |   |              |   |   |   |   |   |
| 2009   |   | RMB             | 11.2 million |   |              | RMB    | 5.0 million |          |   | RMB    | 0.25 million |   |   | RMB | 0.3 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 at December      31, 2009, the Nomination Committee consists of three members, Messrs Si      Xian Min, Wang Zhi (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 March 11,      2009.   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. The remuneration committee is chaired by independent      non-executive Director Sui Guang Jun with independent non-executive      Director Gong Hua Zhang and 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

| 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              |   | A320      Family Aircraft Purchase Agreement entered into by and between the Company      and Airbus SNC on January 20, 2010 *                         |
|             |   |                                                                                                                                                   |
| 4.5              |   | A      Shares Subscription Agreement entered into by and between the Company and      CSAHC on December 10, 2008(4)                                    |
|             |   |                                                                                                                                                   |
| 4.6              |   | H      Shares Subscription Agreement entered into by and between the Company and      Nan Lung Holding Limited on December 10, 2008(5)                 |
|             |   |                                                                                                                                                   |
| 4.7              |   | A      Shares Subscription Agreement entered into by and between the Company and      CSAHC on March 8, 2010                                           |
|             |   |                                                                                                                                                   |
| 4.8              |   | H      Shares Subscription Agreement entered into by and between the Company and      Nan Lung Holding Limited on March 8, 2010                        |
|             |   |                                                                                                                                                   |
| 4.9              |   | Transfer      Agreement entered into by and among the Company, CSAHC, MTU and MTU Aero      Engines GmbH on September 28, 2009                         |
|             |   |                                                                                                                                                   |
| 4.10             |   | Transfer      Agreement for the 50% Equity Interest in MTU between CSAHC and the Company      on September 28, 2009                                    |
|             |   |                                                                                                                                                   |
| 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 FinancialOfficer                                                                                               |

----

----

|                                                                                                          |   | Page   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                          |   |   |
| Report      of Independent Registered Public Accounting Firm                                                  |   | F-1    |
| Consolidated      Income Statements                                                                           |   |   |
| for      the years ended December 31, 2009, 2008 and 2007                                                     |   | F-2    |
| Consolidated      Statements of Comprehensive Incomefor      the years ended December 31, 2009, 2008 and 2007 |   | F-4    |
| Consolidated      Balance Sheets at December 31, 2009 and 2008                                                |   | F-5    |
| Consolidated      Statements of Changes in Equity                                                             |   |   |
| for      the years ended December 31, 2009, 2008 and 2007                                                     |   | F-7    |
| Consolidated      Cash Flow Statements                                                                        |   |   |
| for      the years ended December 31, 2009, 2008 and 2007                                                     |   | F-9    |
| Notes      to Consolidated Financial Statements                                                               |   | F-11   |

----

----

|                                                        |   | Note   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-------------------------------------------------------------|--------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                        |   |   |   | RMB      million |   |   | RMB      million |   |   | RMB      million |   |
| Operating      revenue                                      |   |   |   |             |   |   |             |   |   |             |   |
| Traffic      revenue                                        |   | 4      |   |             | 52,967 |   |             |   | 53,913 |             |   |   | 53,196 |   |
| Other      operating revenue                                |   | 5      |   |             | 1,835  |   |             |   | 1,375  |             |   |   | 1,205 |   |
| Total      operating revenue                                |   |   |   |             | 54,802 |   |             |   | 55,288 |             |   |   | 54,401 |   |
|                                                        |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Operating      expenses                                     |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Flight      operations                                      |   | 6      |   |             | 29,296 |   |             |   | 34,982 |             |   |   | 29,082 |   |
| Maintenance                                                 |   | 7      |   |             | 4,446  |   |             |   | 4,890  |             |   |   | 4,643 |   |
| Aircraft      and traffic servicing                         |   | 8      |   |             | 9,169  |   |             |   | 8,476  |             |   |   | 8,160 |   |
| Promotion      and sales                                    |   | 9      |   |             | 4,170  |   |             |   | 3,491  |             |   |   | 3,421 |   |
| General      and administrative                             |   | 10     |   |             | 1,844  |   |             |   | 2,041  |             |   |   | 1,874 |   |
| Impairment      on property, plant and equipment            |   | 20(g)  |   |             | 26     |   |             |   | 1,884  |             |   |   | 109 |   |
| Depreciation      and amortisation                          |   | 11     |   |             | 5,971  |   |             |   | 5,746  |             |   |   | 5,554 |   |
| Others                                                      |   |   |   |             | 429    |   |             |   | 257    |             |   |   | 113 |   |
| Total      operating expenses                               |   |   |   |             | 55,351 |   |             |   | 61,767 |             |   |   | 52,956 |   |
| Other      net income                                       |   | 15     |   |             | 1,989  |   |             |   | 833    |             |   |   | 436 |   |
|                                                        |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Operating      profit/(loss)                                |   |   |   |             | 1,440  |   |             |   | (5,646 | )                |   |   | 1,881 |   |
| Interest      income                                        |   |   |   |             | 68     |   |             |   | 103    |             |   |   | 73 |   |
| Interest      expense                                       |   | 13     |   |             | (1,497 | )      |             |   | (1,987 | )                |   |   | (2,291 | ) |
| Share      of associates’ results                     |   | 22     |   |             | 69     |   |             |   | (12    | )                |   |   | 57 |   |
| Share      of jointly controlled                            |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| entities’      results                                |   | 23     |   |             | 214    |   |             |   | 170    |             |   |   | 123 |   |
| Gain/(loss)      on derivative                              |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| financial      instruments, net                             |   |   |   |             | 45     |   |             |   | (124   | )                |   |   | 90 |   |
| Exchange      gain, net                                     |   |   |   |             | 93     |   |             |   | 2,592  |             |   |   | 2,832 |   |
| Gain      on sale of other investments in equity securities |   |   |   |             | -      |   |             |   | -      |             |   |   | 107 |   |
| Gain      on sale of a jointly controlled entity            |   |   |   |             | -      |   |             |   | 143    |             |   |   | - |   |
| Gain      on sale of equity interest in subsidiaries        |   |   |   |             | -      |   |             |   | 37     |             |   |   | 7 |   |
|                                                        |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Profit/(loss)      before taxation                          |   |   |   |             | 432    |   |             |   | (4,724 | )                |   |   | 2,879 |   |
| Income      tax credit/(expense)                            |   | 16     |   |             | 95     |   |             |   | (62    | )                |   |   | (847 | ) |
| Profit/(loss)      for the year                             |   |   |   |             | 527    |   |             |   | (4,786 | )                |   |   | 2,032 |   |

----

|                            |   | Note   |   | 2009             |   |   | 2008             |      |   | 2007             |   |
|---------------------------------|--------|--------|--------|------------------|--------|--------|------------------|-----------|--------|------------------|--------|
|                            |   |   |   | RMB      million |   |   | RMB      million |      |   | RMB      million |   |
| Attributable      to:           |   |   |   |             |   |   |             |      |   |             |   |
| Equity      shareholders of the |   |   |   |             |   |   |             |      |   |             |   |
| Company                         |   |   |   |             | 330    |   |             |      | (4,823 | )                |   |   | 1,839 |   |
| Minority      interests         |   |   |   |             | 197    |   |             |      | 37     |             |   |   | 193 |   |
|                            |   |   |   |             |   |   |             |      |   |             |   |   |   |   |
| Profit/(loss)      for the year |   |   |   |             | 527    |   |             |      | (4,786 | )                |   |   | 2,032 |   |
|                            |   |   |   |             |   |   |             |      |   |             |   |   |   |   |
| Earnings/(loss)      per share  |   | 19     |   |             |   |   |             |      |   |             |   |   |   |   |
| Basic      and diluted          |   |   |   | RMB              | 0.05   |   |             | RMB  | (0.74  | )           |   | RMB | 0.28 |   |

----

|                                |   | Note   |   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-------------------------------------|--------|--------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                |   |   |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |
| Profit/(loss)      for the year     |   |   |   |   |             | 527    |   |             |   | (4,786 | )                |   |   | 2,032 |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Other      comprehensive income     |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| for      the year (after tax and    |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| reclassification      adjustments): |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Available-for-sale      securities: |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| net      movement in the fair value |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |
| reserve                             |   | 17     |   |   |             | 30     |   |             |   | (192   | )                |   |   | 218 |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| Total      comprehensive income     |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| for      the year                   |   |   |   |   |             |   | 557    |             |   |   | (4,978           | )      |   |   | 2,250 |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| Attributable      to:               |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| Equity      shareholders of the     |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| Company                             |   |   |   |   |             |   | 349    |             |   |   | (4,988           | )      |   |   | 2,022 |   |
| Minority      interests             |   |   |   |   |             |   | 208    |             |   |   | 10               |   |   |   | 228 |   |
|                                |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| Total      comprehensive income     |   |   |   |   |             |   |   |             |   |   |             |   |   |   |   |   |
| for      the year                   |   |   |   |   |             |   | 557    |             |   |   | (4,978           | )      |   |   | 2,250 |   |

----

|                                           |   | Note   |   | 2009             |    |   | 2008             |   |
|------------------------------------------------|--------|--------|--------|------------------|---------|--------|------------------|--------|
|                                           |   |   |   | RMB      million |    |   | RMB      million |   |
| Non-current      assets                        |   |   |   |             |    |   |             |   |
| Property,      plant and equipment, net        |   | 20     |   |             | 63,673  |   |             |   | 53,237 |   |
| Construction      in progress                  |   | 21     |   |             | 18,059  |   |             |   | 17,321 |   |
| Lease      prepayments                         |   |   |   |             | 516     |   |             |   | 531 |   |
| Interest      in associates                    |   | 22     |   |             | 257     |   |             |   | 235 |   |
| Interest      in jointly controlled entities   |   | 23     |   |             | 728     |   |             |   | 1,048 |   |
| Other      investments in equity securities    |   | 24     |   |             | 166     |   |             |   | 166 |   |
| Lease      deposits                            |   |   |   |             | 564     |   |             |   | 563 |   |
| Available-for-sale      equity securities      |   | 25     |   |             | 93      |   |             |   | 114 |   |
| Deferred      tax assets                       |   | 26     |   |             | 479     |   |             |   | 167 |   |
| Other      assets                              |   | 27     |   |             | 558     |   |             |   | 412 |   |
|                                           |   |   |   |             | 85,093  |   |             |   | 73,794 |   |
|                                           |   |   |   |             |    |   |             |   |   |   |
| Current      assets                            |   |   |   |             |    |   |             |   |   |   |
| Inventories                                    |   | 29     |   |             | 1,256   |   |             |   | 1,229 |   |
| Trade      receivables                         |   | 30     |   |             | 1,359   |   |             |   | 1,317 |   |
| Other      receivables                         |   |   |   |             | 1,408   |   |             |   | 1,371 |   |
| Prepaid      expenses and other current assets |   |   |   |             | 711     |   |             |   | 620 |   |
| Amounts      due from related companies        |   | 38     |   |             | 51      |   |             |   | 11 |   |
| Pledged      bank deposits                     |   | 33(j)  |   |             | -       |   |             |   | 51 |   |
| Cash      and cash equivalents                 |   | 31     |   |             | 4,343   |   |             |   | 4,649 |   |
|                                           |   |   |   |             | 9,128   |   |             |   | 9,248 |   |
| Asset      classified as held for sale         |   | 32     |   |             | 529     |   |             |   | - |   |
|                                           |   |   |   |             | 9,657   |   |             |   | 9,248 |   |
|                                           |   |   |   |             |    |   |             |   |   |   |
| Current      liabilities                       |   |   |   |             |    |   |             |   |   |   |
| Financial      liabilities                     |   | 28     |   |             | 44      |   |             |   | 116 |   |
| Bank      and other loans                      |   | 33     |   |             | 17,452  |   |             |   | 22,178 |   |
| Short-term      financing bills                |   | 34     |   |             | -       |   |             |   | 2,000 |   |
| Obligations      under finance leases          |   | 35     |   |             | 1,431   |   |             |   | 1,781 |   |
| Trade      and bills payables                  |   | 36     |   |             | 4,992   |   |             |   | 1,353 |   |
| Sales      in advance of carriage              |   |   |   |             | 2,196   |   |             |   | 2,244 |   |
| Deferred      revenue                          |   | 37     |   |             | 316     |   |             |   | 261 |   |
| Income      tax payable                        |   |   |   |             | 44      |   |             |   | 120 |   |
| Amounts      due to related companies          |   | 38     |   |             | 94      |   |             |   | 102 |   |
| Accrued      expenses                          |   | 39     |   |             | 8,153   |   |             |   | 8,420 |   |
| Other      liabilities                         |   | 40     |   |             | 3,376   |   |             |   | 2,963 |   |
|                                           |   |   |   |             | 38,098  |   |             |   | 41,538 |   |
|                                           |   |   |   |             |    |   |             |   |   |   |
| Net      current liabilities                   |   | 49     |   |             | (28,441 | )      |             |   | (32,290 | ) |
|                                           |   |   |   |             |    |   |             |   |   |   |
| Total      assets less current liabilities     |   |   |   |             | 56,652  |   |             |   | 41,504 |   |

----

|                                            |   | Note               |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------|--------|--------------------|--------|------------------|--------|--------|------------------|--------|
|                                            |   |               |   | RMB      million |   |   | RMB      million |   |
| Non-current      liabilities and deferred items |   |               |   |             |   |   |             |   |
| Bank      and other loans                       |   | 33                 |   |             | 27,875 |   |             |   | 17,429 |   |
| Obligations      under finance leases           |   | 35                 |   |             | 11,887 |   |             |   | 11,157 |   |
| Deferred      revenue                           |   | 37                 |   |             | 594    |   |             |   | 445 |   |
| Provision      for major overhauls              |   | 41                 |   |             | 953    |   |             |   | 945 |   |
| Provision      for early retirement benefits    |   | 42                 |   |             | 148    |   |             |   | 179 |   |
| Deferred      benefits and gains                |   |     |   |             | 1,080  |   |             |   | 1,109 |   |
| Deferred      tax liabilities                   |   | 26                 |   |             | 853    |   |             |   | 761 |   |
|                                            |   |               |   |             | 43,390 |   |             |   | 32,025 |   |
|                                            |   |               |   |             |   |   |             |   |   |   |
| Net      assets                                 |   |               |   |             | 13,262 |   |             |   | 9,479 |   |
|                                            |   |               |   |             |   |   |             |   |   |   |
| Capital      and reserves                       |   |               |   |             |   |   |             |   |   |   |
| Share      capital                              |   | 43                 |   |             | 8,003  |   |             |   | 6,561 |   |
| Reserves                                        |   | 44                 |   |             | 2,348  |   |             |   | 460 |   |
| Total      equity attributable to equity        |   |               |   |             |   |   |             |   |   |   |
| shareholders      of the Company                |   |               |   |             | 10,351 |   |             |   | 7,021 |   |
| Minority      interests                         |   |               |   |             | 2,911  |   |             |   | 2,458 |   |
| Total      equity                               |   |               |   |             | 13,262 |   |             |   | 9,479 |   |

----

|                                        |   | Attributable      to equity shareholders of the      Company |   |   |    |   |   |            |   |
|---------------------------------------------|--------|--------------------------------------------------------------|--------|--------|---------|--------|--------|-----------------|--------|
|                                        |   |                                                         |   |   |    |   |   |            |   |   |   |   |   | (Accumulated |   |   |   |   |   |   |   |   |   |   |
|                                        |   |                                                         |   |   |    |   |   |            |   |   | Other |   |   | losses)      / |   |   |   |   |   |   |   |   |   |   |
|                                        |   | Share                                                        |   |   | Share   |   |   | Fair value |   |   | reserves |   |   | retained |   |   |   |   |   | Minority |   |   | Total |   |
|                                        |   | capital                                                      |   |   | premium |   |   | reserves        |   |   | RMB |   |   | earnings |   |   | Total |   |   | interests |   |   | equity |   |
|                                        |   | RMB                                                          |   |   | RMB     |   |   | RMB             |   |   | million |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                        |   | million                                                      |   |   | million |   |   | million         |   |   | (Note      (a)) |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                        |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2007             |   |                                                         | 4,374  |   |    |   | 5,325  |            |   |   | - |   |   |   | 603 |   |   |   | (465 | ) |   |   | 9,837 |   |   |   | 1,915 |   |   |   | 11,752 |   |
| Changes      in equity for 2007:            |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Paid      in capital from minority          |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity      holders of a subsidiary         |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 240 |   |   |   | 240 |   |
| Acquisition      of Nan Lung                |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Freight      and Air Catering               |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note      48(b))                           |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 80 |   |   |   | 80 |   |
| Disposal      of equity interest in         |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| a      subsidiary to minority               |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note      48(c))                           |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8 | ) |   |   | (8 | ) |
| Distributions      to minority              |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8 | ) |   |   | (8 | ) |
| Share      of an associate’s          |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| reserves      movement                      |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 4 |   |
| Total      comprehensive income             |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for      the year                           |   |                                                         | -      |   |    |   | -      |            |   |   | 183 |   |   |   | - |   |   |   | 1,839 |   |   |   | 2,022 |   |   |   | 228 |   |   |   | 2,250 |   |
|                                        |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31,                |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007      and January 1, 2008               |   |                                                         | 4,374  |   |    |   | 5,325  |            |   |   | 183 |   |   |   | 607 |   |   |   | 1,374 |   |   |   | 11,863 |   |   |   | 2,447 |   |   |   | 14,310 |   |
|                                        |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes      in equity for 2008:            |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bonus      share issue (Note 43(a))         |   |                                                         | 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 minority               |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24 |   |   |   | 24 |   |
| Distributions      to minority              |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (28 | ) |   |   | (28 | ) |
| Government      contributions               |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note      44(d))                           |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | 151 |   |   |   | - |   |   |   | 151 |   |   |   | 5 |   |   |   | 156 |   |
| Total      comprehensive income             |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for      the year                           |   |                                                         | -      |   |    |   | -      |            |   |   | (165 | ) |   |   | - |   |   |   | (4,823 | ) |   |   | (4,988 | ) |   |   | 10 |   |   |   | (4,978 | ) |
|                                        |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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:            |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of shares (Note 43(a))        |   |                                                         | 1,442  |   |    |   | 1,538  |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,980 |   |   |   | - |   |   |   | 2,980 |   |
| Paid      in capital from minority          |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity      holders of subsidiaries         |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note      (b))                             |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 261 |   |   |   | 261 |   |
| Liquidation      of subsidiaries            |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6 | ) |   |   | (6 | ) |
| Distributions      to minority              |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10 | ) |   |   | (10 | ) |
| Government      contributions               |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note      44(d))                           |   |                                                         | -      |   |    |   | -      |            |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Total      comprehensive income             |   |                                                         |   |   |    |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for      the year                           |   |                                                         | -      |   |    |   | -      |            |   |   | 19 |   |   |   | - |   |   |   | 330 |   |   |   | 349 |   |   |   | 208 |   |   |   | 557 |   |
| Balance      at December 31, 2009           |   |                                                         | 8,003  |   |    |   | 4,676  |            |   |   | 37 |   |   |   | 754 |   |   |   | (3,119 | ) |   |   | 10,351 |   |   |   | 2,911 |   |   |   | 13,262 |   |

----

| Note      (a): |   | Other      reserves represent statutory surplus reserve, discretionary surplus      reserve and others.  Details are set out in Note    44.                                                                                 |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                                                                                  |
| Note      (b): |   | In      2009, the minority equity holders of certain subsidiaries of the Company      injected cash of RMB242 million and assets of RMB19 million in respect of      their shares of the registered capital in these    subsidiaries. |

----

|                                   |   | Note   |   | 2009             |    |   | 2008             |   |   | 2007             |   |
|----------------------------------------|--------|--------|--------|------------------|---------|--------|------------------|--------|--------|------------------|--------|
|                                   |   |   |   | RMB      million |    |   | RMB      million |   |   | RMB      million |   |
| Operating      activities              |   |   |   |             |    |   |             |   |   |             |   |
| Cash      generated from operations    |   | 31(b)  |   |             | 11,232  |   |             |   | 4,256  |             |   |   | 9,698 |   |
| Interest      received                 |   |   |   |             | 68      |   |             |   | 103    |             |   |   | 73 |   |
| Interest      paid                     |   |   |   |             | (2,131  | )      |             |   | (2,805 | )                |   |   | (2,814 | ) |
| Income      tax paid                   |   |   |   |             | (210    | )      |             |   | (399   | )                |   |   | (88 | ) |
| Net      cash generated from           |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| operating      activities              |   |   |   |             | 8,959   |   |             |   | 1,155  |             |   |   | 6,869 |   |
|                                   |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| Investing      activities              |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| Proceeds      from disposal of         |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| property,      plant and               |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| equipment                              |   |   |   |             | 320     |   |             |   | 312    |             |   |   | 288 |   |
| Proceeds      from sale of available-  |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| for-sale      equity securities        |   |   |   |             | 138     |   |             |   | -      |             |   |   | - |   |
| Proceeds      from sale of a jointly   |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| controlled      entity                 |   |   |   |             | -       |   |             |   | 210    |             |   |   | - |   |
| Proceeds      from sale of equity      |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| interest      in subsidiaries          |   |   |   |             | -       |   |             |   | 61     |             |   |   | - |   |
| Proceeds      from sale of other       |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| investments      in equity             |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| securities                             |   |   |   |             | -       |   |             |   | -      |             |   |   | 127 |   |
| Net      cash settlement of derivative |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| financial      instruments             |   |   |   |             | (27     | )      |             |   | (11    | )                |   |   | 67 |   |
| Dividends      received from           |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| associates                             |   |   |   |             | 47      |   |             |   | -      |             |   |   | - |   |
| Dividends      received from jointly   |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| controlled      entities               |   |   |   |             | -       |   |             |   | 14     |             |   |   | 79 |   |
| Dividends      received from other     |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| investments                            |   |   |   |             | 14      |   |             |   | 14     |             |   |   | 12 |   |
| Payment      of lease deposits         |   |   |   |             | (10     | )      |             |   | -      |             |   |   | (86 | ) |
| Refund      of lease deposits          |   |   |   |             | 8       |   |             |   | 54     |             |   |   | 165 |   |
| Capital      expenditures              |   |   |   |             | (15,007 | )      |             |   | (8,364 | )                |   |   | (5,502 | ) |
| 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    | )                |   |   | (10 | ) |
| Payment      for acquisition of        |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| Nan      Lung Freight and Air          |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
| Caterting                              |   | 48(b)  |   |             | -       |   |             |   | -      |             |   |   | (58 | ) |
| Liquidation      of subsidiaries       |   |   |   |             | (6      | )      |             |   | -      |             |   |   | 74 |   |
| Net      cash used in investing        |   |   |   |             |    |   |             |   |   |             |   |   |   |   |
|   activities                 |   |   |   |             | (14,478 | )      |             |   | (7,790 | )                |   |   | (4,844 | ) |

----

|                                   |   | Note   |   | 2009             |    |   | 2008             |   |    | 2007             |   |
|----------------------------------------|--------|--------|--------|------------------|---------|--------|------------------|--------|---------|------------------|--------|
|                                   |   |   |   | RMB      million |    |   | RMB      million |   |    | RMB      million |   |
| Financing      activities              |   |   |   |             |    |   |             |   |    |             |   |
| Proceeds      from issue of shares     |   | 43(a)  |   |             | 2,980   |   |             |   | -       |             |   |   | - |   |
| Proceeds      from bank and other      |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| loans                                  |   |   |   |             | 37,146  |   |             |   | 41,450  |             |   |   | 30,984 |   |
| Repayment      of bank and other       |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| loans                                  |   |   |   |             | (31,396 | )      |             |   | (33,783 | )                |   |   | (28,660 | ) |
| 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         |   |   |   |             | (1,750  | )      |             |   | (2,335  | )                |   |   | (3,021 | ) |
| Capital      contributions received    |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| from      government                   |   | 44(d)  |   |             | 1       |   |             |   | 156     |             |   |   | - |   |
| Paid      in capital from minority     |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| equity      holders of subsidiaries    |   |   |   |             | 242     |   |             |   | -       |             |   |   | 240 |   |
| Dividends      paid to minority        |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| shareholders                           |   |   |   |             | (10     | )      |             |   | (28     | )                |   |   | (8 | ) |
| Net      cash generated from/(used in) |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| financing      activities              |   |   |   |             | 5,213   |   |             |   | 7,460   |             |   |   | (465 | ) |
|                                   |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| Net      (decrease)/increase in cash   |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| and      cash equivalents              |   |   |   |             | (306    | )      |             |   | 825     |             |   |   | 1,560 |   |
| Cash      and cash equivalents at      |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| January      1                         |   |   |   |             | 4,649   |   |             |   | 3,824   |             |   |   | 2,264 |   |
| Cash      and cash equivalents at      |   |   |   |             |    |   |             |   |    |             |   |   |   |   |
| December      31                       |   |   |   |             | 4,343   |   |             |   | 4,649   |             |   |   | 3,824 |   |

----

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

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

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

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

| -  | Derivative      financial instruments (Note 2(g));and |
|---------|-------------------------------------------------------|

| -  | Available-for-sale      equity securities (Note 2(f)). |
|---------|--------------------------------------------------------|

----

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

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

| (c)  | Subsidiaries      and minority interests |
|-----------|------------------------------------------|

----

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

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

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

----

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

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

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

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

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

----

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

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

| (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 |
|-----------|-------------------------------|

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

----

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

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

| (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      reorganisation; |
|---|---------------------------------------------------------------------------------------------------------|

| - | 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 recognised 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 favourable 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 notreversed. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 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      amortised 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 amortised 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. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | If      in a subsequent period the amount of an impairment loss decreases and the      decrease can be linked objectively to an event occurring after the      impairment loss was recognised, the impairment loss is reversed through      profit or loss.  A reversal of an impairment loss shall not      result in the asset’s carrying amount exceeding that which would have been      determined had no impairment loss been recognised in prior      years. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | For      available-for-sale equity securities, the cumulative loss that has been      recognised in the fair value reserve is reclassified to profit or      loss.  The amount of the cumulative loss that is recognised in      profit or loss is the difference between the acquisition cost (net of any      principal repayment and amortisation) and current fair value, less any      impairment loss on that asset previously recognised 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)  | Provisions      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 Group intends either      to settle on a net basis, or to realise 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 realise the current tax assets and settle the      current tax liabilities on a net basis or realise and settle      simultaneously. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | Passenger,      cargo and mail revenues are recognised 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 recognised      when services are rendered.  Revenue is stated net of sales      tax. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | The      Group maintains two frequent flyer award programmes, 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 programmes. The value attributed to the      awarded mileages is deferred as a liability, within deferred revenue,      until the mileages are ultimatelyutilised. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenue      received from third parties for the issue of mileages under the frequent      flyer award programmes 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 programmes redeem mileages for an      award, revenue is recorded in profit or loss. Revenue in relation to      flight awards is recognised when the transportation is provided. Revenue      is recognised at the point of redemption where non-flight rewards are      selected. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (iii) | Rental      income receivable under operating leases is recognised in profit or loss      in equal instalments 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 recognised in profit or loss as an integral part of      the aggregate net lease paymentsreceivables. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (v) | Government      grants are recognised 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 recognised 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 recognised in profit or loss over the useful      life of the asset by way of reduced depreciation  expense. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

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

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

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

----

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

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

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

| (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. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

----

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

| (a) | Standards,      amendment and interpretations effective in2009 |
|-----|----------------------------------------------------------------|

| • | IFRS      8, Operating segments |
|---------|---------------------------------|

| • | IAS      1 (revised 2007), Presentation of financial  statements |
|---------|------------------------------------------------------------------|

| • | Amendments      to IFRS 7, Financial instruments: Disclosures – improving disclosures      about financial instruments |
|---------|------------------------------------------------------------------------------------------------------------------------------|

| • | Improvements      to IFRSs (2008) |
|---------|-----------------------------------|

| • | IAS      23, Borrowing costs |
|---------|------------------------------|

| • | IAS      27, Consolidated and separate financial statements – cost of an investment      in a subsidiary, jointly controlled entity or  associate |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | IFRIC      13, Customer loyalty programmes |
|---------|--------------------------------------------|

| • | IFRS      8 requires segment disclosure to be based on the way that the Group’s      chief operating decision maker regards and manages the Group, with the      amounts reported for each reportable segment being the measures reported      to the Group’s chief operating decision maker for the purposes of      assessing segment performance and making decisions about operating      matters. This contrasts with the presentation of segment information in      prior years which was based on a disaggregation of the Group’s financial      statements into segments based on related services and on geographical      areas. The adoption of IFRS 8 has resulted in the presentation of segment      information in a manner that is more consistent with internal reporting      provided to the Group’s chief operating decision maker. Corresponding      amounts have been provided on a basis consistent with the revised segment      information. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | As      a result of the adoption of IAS 1 (revised 2007), details of changes in      equity during the year arising from transactions with equity shareholders      in their capacity as such have been presented separately from all other      income and expenses in a revised consolidated statement of changes in      equity.  All other items of income and expense are presented in      the consolidated income statement, if they are recognised as part of      profit or loss for the year, or otherwise in a new primary statement, the      consolidated statement of comprehensive income.  Corresponding      amounts have been restated to conform to the new      presentation.  This change in presentation has no effect on      reported profit or loss, total income and expense or net assets for any      period presented. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | As      a result of the adoption of the amendments to IFRS 7, the consolidated      financial statements include expanded disclosures in Note 49(f) about the      fair value measurement of the Group’s financial instruments, categorising      these fair value measurements into a three-level fair value hierarchy      according to the extent to which they are based on observable market      data.  The Group has taken advantage of the transitional      provisions set out in the amendments to IFRS 7, under which comparative      information for the newly required disclosures about the fair value      measurements of financial instruments has not been    provided. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (a) | Standards,      amendment and interpretations effective in 2009  (continued) |
|-----|------------------------------------------------------------------------------|

| • | The      amendments to IAS 27 have removed the requirement that dividends out of      pre-acquisition profits should be recognised as a reduction in the      carrying amount of the investment in the investee, rather than as income.      As a result, as from January 1, 2009 all dividends receivable from      subsidiaries, associates and jointly controlled entities, whether out of      pre- or post-acquisition profits, will be recognised in the Company’s      profit or loss and the carrying amount of the investment in the investee      will not be reduced unless that carrying amount is assessed to be impaired      as a result of the investee declaring the dividend. In such cases, in      addition to recognising dividend income in profit or loss, the Company      would recognise an impairment loss. In accordance with the transitional      provisions in the amendment, this new policy will be applied prospectively      to any dividends receivable in the current or future periods and previous      periods have not been restated. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | During      the year ended December 31, 2008, the Group early adopted IFRIC 13,      Customer loyalty programmes, which is effective for accounting periods      beginning on or after July 1, 2008. The impact of the adoption of IFRIC 13      on the 2008 consolidated financial statements was disclosed in Note 3 to      the Group’s financial statements for the year ended December 31,      2008.  Further details of the accounting policy are set out in      Note 2(v)(ii). |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)  | Change      in accounting policy for property, plant and  equipment |
|-----------|---------------------------------------------------------------------|

| • | The      alignment of the Group’s accounting policy with industry peers -      management considers that the historical cost model will improve      comparability of certain financial performance data and results of      operations of the Group with other airlines.  The valuation      model is not commonly used by leading global airlines and the valuation      data is generally not relevant to the operation of airlines except upon      disposal of aircraft or assessment of impairment of    aircraft. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Increased      comparability between finance and operating leased aircraft – under the      old policy the depreciation cost of a finance leased aircraft was based on      the revalued amount whereas operating lease payments are based on cost as      aircraft held under operating leases are not recognised as assets subject      to valuation.  Management therefore considers that the change to      the cost model increases the level of consistency in accounting for      aircraft which are not distinguished from an operational      perspective. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | The      high degree of subjectivity and risk of cyclical volatility associated      with external valuation and second hand aircraft fair values – the market      value of second hand aircraft can be volatile and is influenced by      transactions in global markets that may have little relevance to the      operating environment in China. Management does not believe that financial      statements that reflect, often subjective, movements in second hand values      provide meaningful information toinvestors. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (b) | Change      in accounting policy for property, plant and equipment      (continued) |
|-----|-------------------------------------------------------------------------------------|

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

|                       |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|----------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                       |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                       |   |             |   |   |             |   |   |             |   |
| Passenger                  |   |             | 48,488 |   |             |   | 42,808 |             |   |   | 44,589 |   |
| Cargo      and mail        |   |             | 2,493  |   |             |   | 2,908  |             |   |   | 3,248 |   |
| Fuel      surcharge income |   |             | 1,986  |   |             |   | 8,197  |             |   |   | 5,359 |   |
|                       |   |             | 52,967 |   |             |   | 53,913 |             |   |   | 53,196 |   |

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

|                                      |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                      |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                      |   |             |   |   |             |   |   |             |   |
| Commission      income                    |   |             | 342    |   |             |   | 317    |             |   |   | 281 |   |
| General      aviation income              |   |             | 197    |   |             |   | 133    |             |   |   | 108 |   |
| Ground      services income               |   |             | 320    |   |             |   | 250    |             |   |   | 241 |   |
| Air      catering income                  |   |             | 112    |   |             |   | 107    |             |   |   | 81 |   |
| Rental      income                        |   |             | 116    |   |             |   | 120    |             |   |   | 119 |   |
| Expired      sales in advance of carriage |   |             | 350    |   |             |   | 276    |             |   |   | 273 |   |
| Aircraft      lease income                |   |             | 83     |   |             |   | -      |             |   |   | - |   |
| Others                                    |   |             | 315    |   |             |   | 172    |             |   |   | 102 |   |
|                                      |   |             | 1,835  |   |             |   | 1,375  |             |   |   | 1,205 |   |

----

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

|                                                 |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                 |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                 |   |             |   |   |             |   |   |             |   |
| Jet      fuel costs                                  |   |             | 16,390 |   |             |   | 23,086 |             |   |   | 18,316 |   |
| Operating      lease charges                         |   |             |   |   |             |   |   |             |   |   |   |   |
|  -      Aircraft and flight equipment           |   |             | 4,740  |   |             |   | 4,166  |             |   |   | 3,735 |   |
|  -      Land and buildings                      |   |             | 383    |   |             |   | 361    |             |   |   | 320 |   |
| Air      catering expenses                           |   |             | 1,392  |   |             |   | 1,363  |             |   |   | 1,350 |   |
| Aircraft      insurance                              |   |             | 188    |   |             |   | 174    |             |   |   | 207 |   |
| Flight      personnel payroll and welfare            |   |             | 2,622  |   |             |   | 2,490  |             |   |   | 2,226 |   |
| Training      expenses                               |   |             | 556    |   |             |   | 577    |             |   |   | 517 |   |
| Civil      Aviation Administration of China          |   |             |   |   |             |   |   |             |   |   |   |   |
| (”CAAC”)      Infrastructure Development |   |             |   |   |             |   |   |             |   |   |   |   |
| Fund      contributions                              |   |             | 1,418  |   |             |   | 1,289  |             |   |   | 1,250 |   |
| Others                                               |   |             | 1,607  |   |             |   | 1,476  |             |   |   | 1,161 |   |
|                                                 |   |             | 29,296 |   |             |   | 34,982 |             |   |   | 29,082 |   |

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

|                                |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                |   |             |   |   |             |   |   |             |   |
| Repair      and maintenance charges |   |             | 3,903  |   |             |   | 4,406  |             |   |   | 4,111 |   |
| Maintenance      materials          |   |             | 543    |   |             |   | 484    |             |   |   | 532 |   |
|                                |   |             | 4,446  |   |             |   | 4,890  |             |   |   | 4,643 |   |

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

|                                  |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                  |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                  |   |             |   |   |             |   |   |             |   |
| Landing      and navigation fees      |   |             | 6,772  |   |             |   | 6,135  |             |   |   | 6,030 |   |
| Ground      service and other charges |   |             | 2,397  |   |             |   | 2,341  |             |   |   | 2,130 |   |
|                                  |   |             | 9,169  |   |             |   | 8,476  |             |   |   | 8,160 |   |

----

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

|                               |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                               |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                               |   |             |   |   |             |   |   |             |   |
| Sales      commissions             |   |             | 2,539  |   |             |   | 1,853  |             |   |   | 1,789 |   |
| Ticket      office expenses        |   |             | 1,055  |   |             |   | 1,055  |             |   |   | 1,016 |   |
| Computer      reservation services |   |             | 327    |   |             |   | 331    |             |   |   | 385 |   |
| Advertising      and promotion     |   |             | 52     |   |             |   | 52     |             |   |   | 51 |   |
| Others                             |   |             | 197    |   |             |   | 200    |             |   |   | 180 |   |
|                               |   |             | 4,170  |   |             |   | 3,491  |             |   |   | 3,421 |   |

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

|                              |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-----------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                              |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                              |   |             |   |   |             |   |   |             |   |
| General      corporate expenses   |   |             | 1,760  |   |             |   | 1,973  |             |   |   | 1,811 |   |
| Auditors’      remuneration |   |             | 16     |   |             |   | 16     |             |   |   | 16 |   |
| Other      taxes and levies       |   |             | 68     |   |             |   | 52     |             |   |   | 47 |   |
|                              |   |             | 1,844  |   |             |   | 2,041  |             |   |   | 1,874 |   |

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

|                                              |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                              |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Depreciation                                      |   |             |   |   |             |   |   |             |   |
|  -      Owned assets                         |   |             | 4,702  |   |             |   | 4,199  |             |   |   | 4,232 |   |
|  -      Assets acquired under finance leases |   |             | 1,260  |   |             |   | 1,560  |             |   |   | 1,365 |   |
| Amortisation      of deferred benefits and gains  |   |             | (71    | )      |             |   | (71    | )                |   |   | (71 | ) |
| Other      amortisation                           |   |             | 80     |   |             |   | 58     |             |   |   | 28 |   |
|                                              |   |             | 5,971  |   |             |   | 5,746  |             |   |   | 5,554 |   |

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

|                                     |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                     |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                     |   |             |   |   |             |   |   |             |   |
| Salaries,      wages and welfare         |   |             | 5,887  |   |             |   | 5,591  |             |   |   | 5,130 |   |
| Retirement      scheme contributions     |   |             | 567    |   |             |   | 686    |             |   |   | 614 |   |
| Early      retirement benefits (Note 42) |   |             | 6      |   |             |   | 10     |             |   |   | 12 |   |
|                                     |   |             | 6,460  |   |             |   | 6,287  |             |   |   | 5,756 |   |

----

| 13 | Interest      expense |
|----|-----------------------|

|                                              |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                              |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                              |   |             |   |   |             |   |   |             |   |
| Interest      on bank and other loans wholly      |   |             |   |   |             |   |   |             |   |
| repayable      within five years                  |   |             | 1,333  |   |             |   | 1,934  |             |   |   | 1,986 |   |
| Interest      on other loans                      |   |             | 120    |   |             |   | 30     |             |   |   | 105 |   |
| Finance      charges on obligations               |   |             |   |   |             |   |   |             |   |   |   |   |
| under      finance leases                         |   |             | 471    |   |             |   | 678    |             |   |   | 743 |   |
| Other      interest expense (Note 42)             |   |             | 14     |   |             |   | 19     |             |   |   | 15 |   |
| Less:  borrowing      costs capitalised |   |             | (441   | )      |             |   | (674   | )                |   |   | (558 | ) |
|                                              |   |             | 1,497  |   |             |   | 1,987  |             |   |   | 2,291 |   |

| 14 | Emoluments      of directors, supervisors and seniormanagement |
|----|----------------------------------------------------------------|

|                             |   |             |   |   | 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 (ii))   |   |             | -      |   |          |   | 590    |          |   |   | -             |   |   |          | 38     |   |   |   | 628 |   |
|                             |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Supervisors                      |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Sun      Xiao Yi                 |   |             | -      |   |          |   | 550    |          |   |   | -             |   |   |          | 40     |   |   |   | 590 |   |
| Yang      Guang Hua (Note (iii)) |   |             | -      |   |          |   | 407    |          |   |   | -             |   |   |          | 17     |   |   |   | 424 |   |
| Zhang      Wei                   |   |             | -      |   |          |   | 345    |          |   |   | -             |   |   |          | 40     |   |   |   | 385 |   |
| Yang      Yi Hua                 |   |             | -      |   |          |   | 266    |          |   |   | -             |   |   |          | 38     |   |   |   | 304 |   |
| Liang      Zhong Gao             |   |             | -      |   |          |   | 269    |          |   |   | -             |   |   |          | 38     |   |   |   | 307 |   |
| Li      Jia Shi (Note (iv))      |   |             | -      |   |          |   | 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 |   |

----

| 14 | 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 (v))            |   |             | -      |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | - |   |
| Tan      Wan Geng                       |   |             | -      |   |          |   | 854    |          |   |   | -             |   |   |          | 59     |   |   |   | 913 |   |
| Xu      Jie Bo                          |   |             | -      |   |          |   | 711    |          |   |   | -             |   |   |          | 57     |   |   |   | 768 |   |
| Chen      Zhen You                      |   |             | -      |   |          |   | 711    |          |   |   | -             |   |   |          | 55     |   |   |   | 766 |   |
| Liu      Shao Yong (Notes (i) and (vi)) |   |             | -      |   |          |   | 597    |          |   |   | -             |   |   |          | 79     |   |   |   | 676 |   |
| Zhao      Liu An (Notes (i) and (vii))  |   |             | -      |   |          |   | 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 (viii))            |   |             | -      |   |          |   | 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 |   |

----

| 14 | 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                        |   |             | -      |   |          |   | 670    |          |   |   | -             |   |   |          | 13     |   |   |   | 683 |   |
| Li      Wen Xin                         |   |             | -      |   |          |   | 329    |          |   |   | -             |   |   |          | 14     |   |   |   | 343 |   |
| Wang      Quan Hua                      |   |             | -      |   |          |   | 597    |          |   |   | -             |   |   |          | 14     |   |   |   | 611 |   |
| Tan      Wan Geng                       |   |             | -      |   |          |   | 542    |          |   |   | -             |   |   |          | 13     |   |   |   | 555 |   |
| Xu      Jie Bo                          |   |             | -      |   |          |   | 529    |          |   |   | -             |   |   |          | 13     |   |   |   | 542 |   |
| Chen      Zhen You                      |   |             | -      |   |          |   | 513    |          |   |   | -             |   |   |          | 16     |   |   |   | 529 |   |
| Liu      Shao Yong (Notes (i) and (vi)) |   |             | -      |   |          |   | 737    |          |   |   | -             |   |   |          | 14     |   |   |   | 751 |   |
| Zhao      Liu An (Notes (i) and (vii))  |   |             | -      |   |          |   | 576    |          |   |   | -             |   |   |          | 14     |   |   |   | 590 |   |
|                                    |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Supervisors                             |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Sun      Xiao Yi                        |   |             | -      |   |          |   | 597    |          |   |   | -             |   |   |          | 14     |   |   |   | 611 |   |
| Yang      Guang Hua                     |   |             | -      |   |          |   | 565    |          |   |   | -             |   |   |          | 8      |   |   |   | 573 |   |
| Yang      Yi Hua                        |   |             | -      |   |          |   | 209    |          |   |   | -             |   |   |          | 16     |   |   |   | 225 |   |
| Liang      Zhong Gao (Note (xi))        |   |             | -      |   |          |   | 232    |          |   |   | -             |   |   |          | 12     |   |   |   | 244 |   |
| Liu      Biao (Note (ix) and (xi))      |   |             | -      |   |          |   | 134    |          |   |   | -             |   |   |          | 2      |   |   |   | 136 |   |
|                                    |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Independent                             |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| non-executive      directors            |   |             |   |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Peter      Lok (Note (x))               |   |             | 49     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 49 |   |
| Wei      Ming Hai (Note (x))            |   |             | 50     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 50 |   |
| Gong      Hua Zhang (Note (xi))         |   |             | 50     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 50 |   |
| Wang      Zhi                           |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Sui      Guang Jun                      |   |             | 100    |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 100 |   |
| Lam      Kwong Yu (Note (xi))           |   |             | 48     |   |          |   | -      |          |   |   | -             |   |   |          | -      |   |   |   | 48 |   |
|                                    |   |             | 397    |   |          |   | 6,230  |          |   |   | -             |   |   |          | 163    |   |   |   | 6,790 |   |

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

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

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

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

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

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

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

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

| (ix) | Resigned      on January 18, 2008 |
|------|-----------------------------------|

| (x) | Retired      on June 28, 2007. |
|-----|--------------------------------|

| (xi) | Appointed      on June 28, 2007 |
|------|---------------------------------|

----

| 15 | Other      net income |
|----|-----------------------|

|                                           |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                           |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                           |   |             |   |   |             |   |   |             |   |
| Refund      of CAAC infrastructure             |   |             |   |   |             |   |   |             |   |
| development      fund                          |   |             | 1,328  |   |             |   | -      |             |   |   | - |   |
| Government      subsidies                      |   |             | 541    |   |             |   | 901    |             |   |   | 329 |   |
| Gain      on sale of available-for-sale equity |   |             |   |   |             |   |   |             |   |   |   |   |
| securities      (Note 17(b))                   |   |             | 78     |   |             |   | -      |             |   |   | - |   |
| Gain/(loss)      on sale of property, plant    |   |             |   |   |             |   |   |             |   |   |   |   |
| and      equipment, net                        |   |             |   |   |             |   |   |             |   |   |   |   |
| -      Aircraft and spare engines              |   |             | 14     |   |             |   | (20    | )                |   |   | 106 |   |
| -      Other property, plant and equipment     |   |             | 17     |   |             |   | (39    | )                |   |   | 24 |   |
| Others                                         |   |             | 11     |   |             |   | (9     | )                |   |   | (23 | ) |
|                                           |   |             | 1,989  |   |             |   | 833    |             |   |   | 436 |   |

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

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

|                                      |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                      |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| PRC      income tax                       |   |             |   |   |             |   |   |             |   |
| Provision      for the year               |   |             | 90     |   |             |   | 25     |             |   |   | 408 |   |
| Over-provision      in prior year         |   |             | -      |   |             |   | (6     | )                |   |   | (58 | ) |
|                                      |   |             | 90     |   |             |   | 19     |             |   |   | 350 |   |
| Deferred      tax (Note 26)               |   |             |   |   |             |   |   |             |   |   |   |   |
| Origination      and reversal of          |   |             |   |   |             |   |   |             |   |   |   |   |
| temporary      differences                |   |             | 327    |   |             |   | 232    |             |   |   | 301 |   |
| Utilisation      of unused tax losses and |   |             |   |   |             |   |   |             |   |   |   |   |
| deductible      temporary differences     |   |             |   |   |             |   |   |             |   |   |   |   |
| not      recognised in prior year         |   |             |   |   |             |   |   |             |   |   |   |   |
| (Note      16(b))                         |   |             | (512   | )      |             |   | -      |             |   |   | - |   |
| Effect      on deferred tax balances      |   |             |   |   |             |   |   |             |   |   |   |   |
| resulting      from a change in tax rate  |   |             | -      |   |             |   | (189   | )                |   |   | 196 |   |
|                                      |   |             | (185   | )      |             |   | 43     |             |   |   | 497 |   |
| Income      tax (credit)/expense          |   |             | (95    | )      |             |   | 62     |             |   |   | 847 |   |

----

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

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

|                                                    |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                    |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                    |   |             |   |   |             |   |   |             |   |
| Profit/(loss)      before taxation                      |   |             | 432    |   |             |   | (4,724 | )                |   |   | 2,879 |   |
|                                                    |   |             |   |   |             |   |   |             |   |   |   |   |
| Notional      tax on profit/(loss) before taxation,     |   |             |   |   |             |   |   |             |   |   |   |   |
| calculated      at the rates applicable to              |   |             |   |   |             |   |   |             |   |   |   |   |
| profit/(loss)      in the tax jurisdictions             |   |             |   |   |             |   |   |             |   |   |   |   |
| concerned      (Note (i))                               |   |             | 87     |   |             |   | (913   | )                |   |   | 474 |   |
| Adjustments      for tax effect of:                     |   |             |   |   |             |   |   |             |   |   |   |   |
| Non-deductible      expenses                            |   |             | 63     |   |             |   | 64     |             |   |   | 250 |   |
| Non-taxable      income                                 |   |             |   |   |             |   |   |             |   |   |   |   |
|   -      Share of results of associates       |   |             |   |   |             |   |   |             |   |   |   |   |
|          and jointly controlled entities |   |             | (76    | )      |             |   | (38    | )                |   |   | (36 | ) |
|   -      Others                               |   |             | (20    | )      |             |   | -      |             |   |   | - |   |
| Recognition      of taxable temporary                   |   |             |   |   |             |   |   |             |   |   |   |   |
| difference      on asset classified as held             |   |             |   |   |             |   |   |             |   |   |   |   |
| for      sale                                           |   |             | 67     |   |             |   | -      |             |   |   | - |   |
| Unused      tax losses not recognised                   |   |             | 216    |   |             |   | 566    |             |   |   | 28 |   |
| Deductible      temporary differences                   |   |             |   |   |             |   |   |             |   |   |   |   |
| not      recognised                                     |   |             | -      |   |             |   | 577    |             |   |   | - |   |
| Utilisation      of unused tax losses and               |   |             |   |   |             |   |   |             |   |   |   |   |
| deductible      temporary differences not               |   |             |   |   |             |   |   |             |   |   |   |   |
| recognised      in prior year (Note 16(a)/Note (ii))    |   |             | (512   | )      |             |   | -      |             |   |   | - |   |
| Difference      in tax rates (Note (ii))                |   |             | 81     |   |             |   | -      |             |   |   | - |   |
| Effect      of change in tax rate (Note (iii))          |   |             | -      |   |             |   | (189   | )                |   |   | 196 |   |
| Over      provision in prior years                      |   |             | -      |   |             |   | (6     | )                |   |   | (58 | ) |
| Others                                                  |   |             | (1     | )      |             |   | 1      |             |   |   | (7 | ) |
| Actual      tax (credit)/expense                        |   |             | (95    | )      |             |   | 62     |             |   |   | 847 |   |

| (i) | The      headquarters of the Company and its branches are taxed at rates ranging      from 20% to 25% (2008: 18% to 25%; 2007: 15% to 33%).  The      subsidiaries of the Group are taxed at rates ranging from 15% to 25%      (2008: 15% to 25%; 2007: 7.5% to33%). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|  (ii) | The      Company increased its retained earnings under PRC Accounting Standards for      Business Enterprises (“PRC GAAP”) as a result of changes in accounting      policies in 2003 and 2007.  As at December 31, 2008, the Company      recognised deferred tax liabilities of RMB498 million and an income tax      payable of RMB112 million in respect of the increase in retained earnings      of RMB3,320 million in 2003 and RMB627 million in 2007, respectively in      the 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 and 2007 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, and the new tax law and certain      detailed implementation rules in 2007,  respectively. |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|                                    |   | 2009       |   |   | 2008    |   |   | 2007       |   |
|-----------------------------------------|--------|------------|--------|--------|---------|--------|--------|------------|--------|
|                                    |   | Before-tax |   |   | Tax     |   |   | Net-of-tax |   |   | Before-tax |   |   | Tax |   |   | Net-of-tax |   |   | Before-tax |   |   | Tax |   |   | Net-of-tax |   |
|                                    |   | amount     |   |   | expense |   |   | amount     |   |   | amount |   |   | benefit |   |   | amount |   |   | amount |   |   | expense |   |   | 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 |   |       | 39     |   |    |   | (9     | )          |   |   | 30 |   |   |   | (248 | ) |   |   | 56 |   |   |   | (192 | ) |   |   | 282 |   |   |   | (64 | ) |   |   | 218 |   |

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

|                                        |   | 2009             |    |   | 2008             |   |   | 2007             |   |
|---------------------------------------------|--------|------------------|---------|--------|------------------|--------|--------|------------------|--------|
|                                        |   | RMB million |    |   | RMB million |   |   | RMB million |   |
|                                        |   |             |    |   |             |   |   |             |   |
| Available-for-sale      securities:         |   |             |    |   |             |   |   |             |   |
| Changes      in fair value recognised       |   |             |    |   |             |   |   |             |   |
| during      the year                        |   |             | 117     |   |             |   | (248   | )                |   |   | 282 |   |
| Reclassification      adjustment for amount |   |             |    |   |             |   |   |             |   |   |   |   |
| transferred      to profit or loss:         |   |             |    |   |             |   |   |             |   |   |   |   |
| -      gain on disposal (Note 15)           |   |             | (78     | )      |             |   | -      |             |   |   |   |   |
| Net      deferred tax (debited)/credited to |   |             |    |   |             |   |   |             |   |   |   |   |
| other      comprehensive income             |   |             |    |   |             |   |   |             |   |   |   |   |
| (Note      26(a))                           |   | (9               | )  |   |             | 56     |   |             |   | (64 | ) |
| Net      movement in the fair value reserve |   |             |    |   |             |   |   |             |   |   |   |   |
| during      the year recognised in other    |   |             |    |   |             |   |   |             |   |   |   |   |
| comprehensive      income                   |   |             | 30      |   |             |   | (192   | )                |   |   | 218 |   |

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

----

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

|                                          |   | 2009                |   |   | 2008                |   |   | 2007                |   |
|-----------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|---------------------|--------|
|                                          |   | Million shares |   |   | Million shares |   |   | Million shares |   |
|                                          |   |                |   |   |                |   |   |                |   |
| Issued      ordinary shares at January 1      |   |                | 6,561  |   |                |   | 4,374  |                |   |   | 4,374 |   |
| Effect      of bonus share issue (Note 43)    |   |                | -      |   |                |   | 2,187  |                |   |   | 2,187 |   |
| Effect      of issuance of A shares (Note 43) |   |                | 263    |   |                |   | -      |                |   |   | - |   |
| Effect      of issuance of H shares (Note 43) |   |                | 261    |   |                |   | -      |                |   |   | - |   |
| Weighted      average number of               |   |                |   |   |                |   |   |                |   |   |   |   |
| ordinary      shares at December 31           |   |                | 7,085  |   |                |   | 6,561  |                |   |   | 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, 2008           |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
| -as      previously reported      |   |       | 266    |   |      |   | 6,792  |     |   |   | 37,389   |   |   |       | 25,783 |   |       |   | 10,689 |   |   |   | 3,448 |   |   |   | 84,367 |   |
| -prior      period adjustment     |   |       | -      |   |      |   | (223   | )        |   |   | 1,243    |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | 1,020 |   |
| -as      restated (Note 3(b))     |   |       | 266    |   |      |   | 6,569  |     |   |   | 38,632   |   |   |       | 25,783 |   |       |   | 10,689 |   |   |   | 3,448 |   |   |   | 85,387 |   |
| Additions                         |   |       | -      |   |      |   | 36     |     |   |   | 683      |   |   |       | 288    |   |       |   | 739 |   |   |   | 307 |   |   |   | 2,053 |   |
| Transfer      from construction   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| in      progress (Note 21)        |   |       | -      |   |      |   | 180    |     |   |   | 56       |   |   |       | 101    |   |       |   | 152 |   |   |   | 22 |   |   |   | 511 |   |
| Reclassification      on exercise |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| of      purchase options          |   |       | -      |   |      |   | -      |     |   |   | 4,784    |   |   |       | (4,784 | )      |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification      in respect  |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| of      sale and lease back       |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (finance      lease)              |   |       | -      |   |      |   | -      |     |   |   | (640     | )      |   |       | 640    |   |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification      from        |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| lease      prepayments            |   |       | 98     |   |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | 98 |   |
| Disposals                         |   |       | -      |   |      |   | (45    | )        |   |   | (828     | )      |   |       | (96    | )      |       |   | (271 | ) |   |   | (193 | ) |   |   | (1,433 | ) |
| Other      reclassifications      |   |       | 412    |   |      |   | (555   | )        |   |   | -        |   |   |       | 190    |   |       |   | (190 | ) |   |   | 143 |   |   |   | - |   |
| At      December 31, 2008         |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (Restated,      Note 3(b))        |   |       | 776    |   |      |   | 6,185  |     |   |   | 42,687   |   |   |       | 22,122 |   |       |   | 11,119 |   |   |   | 3,727 |   |   |   | 86,616 |   |
|                              |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| At      January 1, 2009           |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (Restated,      Note 3(b))        |   |       | 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 |   |

----

| 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      and   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
|   impairment      losses: |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
|                                |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
| At      January 1, 2008             |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |
| -as      previously reported        |   |       | 69     |   |      |   | 1,257  |     |   |   | 11,567   |   |   |       | 4,509  |   |       |   | 6,289 |   |   |   | 2,235 |   |   |   | 25,926 |   |
| -prior      period adjustment       |   |       | -      |   |      |   | (223   | )        |   |   | 1,243    |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | 1,020 |   |
| -as      restated (Note 3(b))       |   |       | 69     |   |      |   | 1,034  |     |   |   | 12,810   |   |   |       | 4,509  |   |       |   | 6,289 |   |   |   | 2,235 |   |   |   | 26,946 |   |
| Charge      for the year            |   |       | 14     |   |      |   | 232    |     |   |   | 2,752    |   |   |       | 1,560  |   |       |   | 835 |   |   |   | 366 |   |   |   | 5,759 |   |
| Reclassification      on exercise   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| of      purchase options            |   |       | -      |   |      |   | -      |     |   |   | 2,050    |   |   |       | (2,050 | )      |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification      in respect    |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| of      sale and lease back         |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (finance      lease)                |   |       | -      |   |      |   | -      |     |   |   | (15      | )      |   |       | 15     |   |       |   | - |   |   |   | - |   |   |   | - |   |
| Reclassification      from          |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| lease      prepayments              |   |       | 6      |   |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | - |   |   |   | - |   |   |   | 6 |   |
| Disposals                           |   |       | -      |   |      |   | (14    | )        |   |   | (732     | )      |   |       | (65    | )      |       |   | (240 | ) |   |   | (165 | ) |   |   | (1,216 | ) |
| Other      reclassifications        |   |       | 47     |   |      |   | (62    | )        |   |   | -        |   |   |       | 50     |   |       |   | (50 | ) |   |   | 15 |   |   |   | - |   |
| Impairment      losses (Note (g))   |   |       | -      |   |      |   | 3      |     |   |   | 1,741    |   |   |       | 50     |   |       |   | 90 |   |   |   | - |   |   |   | 1,884 |   |
| At      December 31, 2008           |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (Restated,      Note 3(b))          |   |       | 136    |   |      |   | 1,193  |     |   |   | 18,606   |   |   |       | 4,069  |   |       |   | 6,924 |   |   |   | 2,451 |   |   |   | 33,379 |   |
|                                |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| At      January 1, 2009             |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| (Restated,      Note 3(b))          |   |       | 136    |   |      |   | 1,193  |     |   |   | 18,606   |   |   |       | 4,069  |   |       |   | 6,924 |   |   |   | 2,451 |   |   |   | 33,379 |   |
| 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 (Note (g))   |   |       | -      |   |      |   | -      |     |   |   | -        |   |   |       | -      |   |       |   | 26 |   |   |   | - |   |   |   | 26 |   |
| Impairment      written off         |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| on      disposal                    |   |       | -      |   |      |   | -      |     |   |   | (97      | )      |   |       | -      |   |       |   | (3 | ) |   |   | - |   |   |   | (100 | ) |
| At      December 31, 2009           |   |       | 122    |   |      |   | 1,447  |     |   |   | 22,087   |   |   |       | 3,938  |   |       |   | 7,429 |   |   |   | 2,704 |   |   |   | 37,727 |   |
|                                |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Net      book value:                |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| At      December 31, 2009           |   |       | 461    |   |      |   | 5,304  |     |   |   | 33,993   |   |   |       | 17,989 |   |       |   | 4,504 |   |   |   | 1,422 |   |   |   | 63,673 |   |
| At      December 31, 2008           |   |       | 640    |   |      |   | 4,992  |     |   |   | 24,081   |   |   |       | 18,053 |   |       |   | 4,195 |   |   |   | 1,276 |   |   |   | 53,237 |   |

----

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

|                                 |   | 2009             |   |   | 2008             |   |
|--------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                 |   | RMB million |   |   | RMB million |   |
|                                 |   |             |   |   |             |   |
| Within      1 year                   |   |             | 56     |   |             |   | 64 |   |
| After      1 year but within 5 years |   |             | 182    |   |             |   | 203 |   |
| After      5 years                   |   |             | 111    |   |             |   | 154 |   |
|                                 |   |             | 349    |   |             |   | 421 |   |

----

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

| In      2007, in view of the age of the Group’s fleet of MD82 aircraft, the Group      disposed of 11 MD82 aircraft and assessed the recoverable amounts of the      remaining 12 MD82 aircraft.  Based on this assessment, the      carrying amount of the aircraft was written down by RMB109 million and      recognised as an impairment loss during the year ended December 31,      2007.  The estimates of recoverable amount were based on the      aircraft’s fair value less costs to sell, determined by reference to      observable market prices for MD82aircraft. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                         |   | 2009             |   |   | 2008             |   |
|----------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                         |   | RMB million |   |   | RMB million |   |
|                                         |   |             |   |   |             |   |
| At      January 1                            |   |             | 17,321 |   |             |   | 11,385 |   |
| Additions                                    |   |             | 9,070  |   |             |   | 10,711 |   |
| Transferred      to property, plant          |   |             |   |   |             |   |   |   |
| and      equipment (Note 20)                 |   |             | (8,315 | )      |             |   | (511 | ) |
| Transferred      to other assets upon        |   |             |   |   |             |   |   |   |
| completion      of development               |   |             | (17    | )      |             |   | (112 | ) |
| Transferred      out in respect of sales and |   |             |   |   |             |   |   |   |
| lease      back of aircraft                  |   |             | -      |   |             |   | (4,135 | ) |
| Other      decrease                          |   |             | -      |   |             |   | (17 | ) |
| At      December 31                          |   |             | 18,059 |   |             |   | 17,321 |   |

----

| 21 | Construction      in progress (continued) |
|----|-------------------------------------------|

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

|                     |   | 2009             |   |   | 2008             |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|
|                     |   | RMB million |   |   | RMB million |   |
|                     |   |             |   |   |             |   |
| Share      of net assets |   |             | 257    |   |             |   | 235 |   |

|                                                      |   | 100 Percent |   |   | Group’s effective interest |   |
|-----------------------------------------------------------|--------|------------------|--------|--------|--------------------------------------------|--------|
|                                                      |   | 2009             |   |   | 2008                                       |   |   | 2007 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                      |   | RMB              |   |   | RMB                                        |   |   | RMB |   |   | RMB |   |   | RMB |   |   | RMB |   |
|                                                      |   | million          |   |   | million                                    |   |   | million |   |   | million |   |   | million |   |   | million |   |
|                                                      |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current      assets                                   |   |             | 11,190 |   |                                       |   | 9,587 |   |   |   |   |   |   | 4,210 |   |   |   | 3,546 |   |   |   |   |
| Current      assets                                       |   |             | 3,597  |   |                                       |   | 5,524 |   |   |   |   |   |   | 986 |   |   |   | 1,158 |   |   |   |   |
| Non-current      liabilities                              |   |             | (7,347 | )      |                                       |   | (6,314 | ) |   |   |   |   |   | (2,861 | ) |   |   | (2,460 | ) |   |   |   |
| Current      liabilities                                  |   |             | (6,837 | )      |                                       |   | (8,213 | ) |   |   |   |   |   | (2,229 | ) |   |   | (2,135 | ) |   |   |   |
| Net      assets                                           |   |             | 603    |   |                                       |   | 584 |   |   |   |   |   |   | 106 |   |   |   | 109 |   |   |   |   |
| Net      liabilities not                                  |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shared      by the Group                                  |   |             |   |   |                                       |   |   |   |   |   |   |   |   | 151 |   |   |   | 126 |   |   |   |   |
|                                                      |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |             |   |   |                                       |   |   |   |   |   |   |   |   | 257 |   |   |   | 235 |   |   |   |   |
|                                                      |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                   |   |             | 7,123  |   |                                       |   | 5,761 |   |   |   | 5,635 |   |   |   | 2,750 |   |   |   | 2,234 |   |   |   | 2,184 |   |
| Expenses                                                  |   |             | (7,009 | )      |                                       |   | (6,071 | ) |   |   | (5,471 | ) |   |   | (2,715 | ) |   |   | (2,312 | ) |   |   | (2,127 | ) |
| Profit/(loss)      for the year                           |   |             | 114    |   |                                       |   | (310 | ) |   |   | 164 |   |   |   | 35 |   |   |   | (78 | ) |   |   | 57 |   |
| Net      loss not                                         |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shared      by the Group                                  |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   | 34 |   |   |   | 66 |   |   |   | - |   |
| The      Group’s share of associates’ results |   |             |   |   |                                       |   |   |   |   |   |   |   |   |   | 69 |   |   |   | (12 | ) |   |   | 57 |   |

----

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

|                     |   | 2009             |   |   | 2008             |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|
|                     |   | RMB million |   |   | RMB million |   |
|                     |   |             |   |   |             |   |
| Share      of net assets |   |             | 728    |   |             |   | 1,048 |   |

| · | During      the year, the Company acquired 50% equity interest in a jointly controlled      entity of the Company, Beijing Southern Airlines Ground Services Company      Limited (“Beijing Ground Services”) from the other venturer, which has      become a wholly-owned subsidiary of the Company. The carrying amount of      Beijing Ground Services was RMB18 million as at December 31,      2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | During      the year, the Company entered into an agreement with CSAHC to dispose of      its entire equity interest in MTU Maintenance Zhuhai Co., Ltd. (“MTU”)      with carrying amount of RMB529 million to CSAHC.  As at December      31, 2009, the investment in MTU was classified as asset held for      sale.  Please refer to Note 32 for more  details |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                         |   | Group’s effective interest |   |
|------------------------------|--------|--------------------------------------------|--------|
|                         |   | 2009                                       |   |   | 2008 |   |   | 2007 |   |
|                         |   | RMB million                           |   |   | RMB million |   |   | RMB million |   |
|                         |   |                                       |   |   |   |   |   |   |   |
| Non-current      assets      |   |                                       | 812    |   |   |   | 986 |   |   |   |   |
| Current      assets          |   |                                       | 547    |   |   |   | 1,226 |   |   |   |   |
| Non-current      liabilities |   |                                       | (231   | ) |   |   | (291 | ) |   |   |   |
| Current      liabilities     |   |                                       | (400   | ) |   |   | (873 | ) |   |   |   |
| Net      assets              |   |                                       | 728    |   |   |   | 1,048 |   |   |   |   |
|                         |   |                                       |   |   |   |   |   |   |   |   |   |
| Revenue                      |   |                                       | 1,973  |   |   |   | 2,382 |   |   |   | 1,885 |   |
| Expenses                     |   |                                       | (1,759 | ) |   |   | (2,212 | ) |   |   | (1,762 | ) |
| Profit      for the year     |   |                                       | 214    |   |   |   | 170 |   |   |   | 123 |   |

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

|                                     |   | 2009             |   |   | 2008             |   |
|------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                     |   | RMB million |   |   | RMB million |   |
|                                     |   |             |   |   |             |   |
| Unlisted      equity securities, at cost |   |             | 166    |   |             |   | 166 |   |

----

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

|                                   |   | 2009             |   |   | 2008             |   |
|----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                   |   | RMB million |   |   | RMB million |   |
| Available-for-sale      securities     |   |             |   |   |             |   |
| -      Listed in the PRC               |   |             | 93     |   |             |   | 114 |   |
|                                   |   |             |   |   |             |   |   |   |
| Market      value of listed securities |   |             | 93     |   |             |   | 114 |   |

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

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

|                                                    |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                    |   | RMB million |   |   | RMB million |   |
|                                                    |   |             |   |   |             |   |
| At      January 1                                       |   |             | (594   | )      |             |   | (607 | ) |
| Credited/(charged)      to profit or loss (Note (16(a)) |   |             | 185    |   |             |   | (43 | ) |
| (Charged)/credited      to other comprehensive          |   |             |   |   |             |   |   |   |
| income      (Note (17(b))                               |   |             | (9     | )      |             |   | 56 |   |
| Transfer      to income tax payable                     |   |             | 44     |   |             |   | - |   |
| At      December 31                                     |   |             | (374   | )      |             |   | (594 | ) |

----

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

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

|                                            |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                            |   | RMB million |   |   | RMB million |   |
| Deferred      tax assets:                       |   |             |   |   |             |   |
| Accrued      expenses                           |   |             | 599    |   |             |   | 574 |   |
| Deferred      revenue                           |   |             | 118    |   |             |   | 136 |   |
| Others                                          |   |             | 52     |   |             |   | 53 |   |
| Total      deferred tax assets                  |   |             | 769    |   |             |   | 763 |   |
|                                            |   |             |   |   |             |   |   |   |
| Deferred      tax liabilities:                  |   |             |   |   |             |   |   |   |
| Accrued      expenses                           |   |             | (334   | )      |             |   | (278 | ) |
| Depreciation      allowances in excess of the   |   |             |   |   |             |   |   |   |
| related      depreciation                       |   |             | (672   | )      |             |   | (1,071 | ) |
| Change      in fair value of available-for-sale |   |             |   |   |             |   |   |   |
| equity      securities                          |   |             | (17    | )      |             |   | (8 | ) |
| Asset      classified as held for sale          |   |             | (67    | )      |             |   | - |   |
| Others                                          |   |             | (53    | )      |             |   | - |   |
| Total      deferred tax liabilities             |   |             | (1,143 | )      |             |   | (1,357 | ) |
| Net      deferred tax liabilities               |   |             | (374   | )      |             |   | (594 | ) |

|                                       |   | 2009             |   |   | 2008             |   |
|--------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                       |   | RMB million |   |   | RMB million |   |
| Net      deferred tax asset recognised on  |   |             |   |   |             |   |
| the      consolidated balance sheet        |   |             | 479    |   |             |   | 167 |   |
| Net      deferred tax liability recognised |   |             |   |   |             |   |   |   |
| on      the consolidated balance sheet     |   |             | (853   | )      |             |   | (761 | ) |
|                                       |   |             | (374   | )      |             |   | (594 | ) |

----

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

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

|                                         |   | 2009    |   |   | 2008    |   |
|----------------------------------------------|--------|---------|--------|--------|---------|--------|
|                                         |   | RMB     |   |   | RMB     |   |
|                                         |   | million |   |   | million |   |
|                                         |   |    |   |   |    |   |
| Tax      losses                              |   |    | 1,720  |   |    |   | 3,251 |   |
| Other      deductible temporary differences: |   |    |   |   |    |   |   |   |
| -      Accrued expenses                      |   |    | 499    |   |    |   | 637 |   |
| -      Provision for impairment losses       |   |    | 1,916  |   |    |   | 1,990 |   |
|                                         |   |    | 2,415  |   |    |   | 2,627 |   |
|                                         |   |    | 4,135  |   |    |   | 5,878 |   |

|              |   | 2009             |   |   | 2008             |   |
|-------------------|--------|------------------|--------|--------|------------------|--------|
|              |   | RMB million |   |   | RMB million |   |
| Expiring      in: |   |             |   |   |             |   |
|              |   |             |   |   |             |   |
| 2011              |   |             | 309    |   |             |   | 309 |   |
| 2012              |   |             | 92     |   |             |   | 92 |   |
| 2013              |   |             | 373    |   |             |   | 2,850 |   |
| 2014              |   |             | 946    |   |             |   | - |   |
|              |   |             | 1,720  |   |             |   | 3,251 |   |

----

| 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, 2008        |   |             | 119    |   |             |   | 149    |                   |   |   | 150 |   |
| Additions                      |   |             | -      |   |             |   | 1      |                   |   |   | - |   |
| Amortisation      for the year |   |             | (26    | )      |             |   | (41    | )                      |   |   | - |   |
| At      December 31, 2008      |   |             | 93     |   |             |   | 109    |                   |   |   | 150 |   |
|                           |   |             |   |   |             |   |   |                   |   |   |   |   |
| At      January 1, 2009        |   |             | 93     |   |             |   | 109    |                   |   |   | 150 |   |
| Additions                      |   |             | -      |   |             |   | 32     |                   |   |   | 150 |   |
| Amortisation      for the year |   |             | (26    | )      |             |   | (45    | )                      |   |   | - |   |
| At      December 31, 2009      |   |             | 67     |   |             |   | 96     |                   |   |   | 300 |   |

| 28 | Financial      liabilities |
|----|----------------------------|

|                                 |   | 2009             |   |   | 2008             |   |
|--------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                 |   | RMB million |   |   | RMB million |   |
|                                 |   |             |   |   |             |   |
| Foreign      exchange forward option |   |             | 44     |   |             |   | 116 |   |

| 29 | Inventories |
|----|-------------|

|                                                  |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                  |   | RMB million |   |   | RMB million |   |
|                                                  |   |             |   |   |             |   |
| Expendable      spare parts and maintenance materials |   |             | 1,112  |   |             |   | 1,094 |   |
| Other      supplies                                   |   |             | 144    |   |             |   | 135 |   |
|                                                  |   |             | 1,256  |   |             |   | 1,229 |   |

|                           |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|--------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                           |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                           |   |             |   |   |             |   |   |             |   |
| Consumption                    |   |             | 887    |   |             |   | 828    |             |   |   | 836 |   |
| Write-down      of inventories |   |             | 30     |   |             |   | 189    |             |   |   | 101 |   |
|                           |   |             | 917    |   |             |   | 1,017  |             |   |   | 937 |   |

----

| 30 | Trade      receivables |
|----|------------------------|

|                              |   | 2009             |   |   | 2008             |   |
|-----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                              |   | RMB million |   |   | RMB million |   |
|                              |   |             |   |   |             |   |
| Trade      receivables            |   |             | 1,389  |   |             |   | 1,348 |   |
| Allowance      for doubtful debts |   |             | (30    | )      |             |   | (31 | ) |
|                              |   |             | 1,359  |   |             |   | 1,317 |   |

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

|                                            |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                            |   | RMB million |   |   | RMB million |   |
|                                            |   |             |   |   |             |   |
| Within      1 month                             |   |             | 1,191  |   |             |   | 1,123 |   |
| More      than 1 month but less than 3 months   |   |             | 147    |   |             |   | 182 |   |
| More      than 3 months but less than 12 months |   |             | 21     |   |             |   | 11 |   |
| More      than 12 months                        |   |             | -      |   |             |   | 1 |   |
|                                            |   |             | 1,359  |   |             |   | 1,317 |   |

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

|                                   |   | 2009             |   |   | 2008             |   |
|----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                   |   | RMB million |   |   | RMB million |   |
|                                   |   |             |   |   |             |   |
| At      January 1                      |   |             | 31     |   |             |   | 33 |   |
| Impairment      loss recognised        |   |             | 14     |   |             |   | - |   |
| Impairment      loss written back      |   |             | (13    | )      |             |   | - |   |
| Uncollectible      amounts written off |   |             | (2     | )      |             |   | (2 | ) |
| At      December 31                    |   |             | 30     |   |             |   | 31 |   |

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

|                               |   | 2009             |   |   | 2008             |   |
|------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                               |   | RMB million |   |   | RMB million |   |
|                               |   |             |   |   |             |   |
| Neither      past due nor impaired |   |             | 1,338  |   |             |   | 1,305 |   |

----

| 31 | Cash      and cash equivalents |
|----|--------------------------------|

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

|                                                             |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                             |   | RMB million |   |   | RMB million |   |
|                                                             |   |             |   |   |             |   |
| Deposits      with banks                                         |   |             | 1,116  |   |             |   | 1,998 |   |
| Cash      at bank and in hand                                    |   |             | 3,227  |   |             |   | 2,651 |   |
| Cash      and cash equivalents in the consolidated balance sheet |   |             | 4,343  |   |             |   | 4,649 |   |

----

| 31 | Cash      and cash equivalents (continued) |
|----|--------------------------------------------|

|                                                             |   |         |   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                             |   | Note         |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                                                             |   |         |   |   |             |   |   |             |   |   |             |   |
| Profit/(loss)      before taxation                               |   |         |   |   |             | 432    |   |             |   | (4,724 | )                |   |   | 2,879 |   |
| Depreciation      of property, plant and equipment               |   | 20           |   |   |             | 5,962  |   |             |   | 5,759  |             |   |   | 5,597 |   |
| Other      amortisation                                          |   | 11           |   |   |             | 80     |   |             |   | 58     |             |   |   | 28 |   |
| Amortisation      of deferred benefits and gains                 |   | 11           |   |   |             | (71    | )      |             |   | (71    | )                |   |   | (71 | ) |
| Impairment      loss on property, plant and equipment            |   |    |   |   |             | 26     |   |             |   | 1,884  |             |   |   | 109 |   |
| Share      of associates’ results                          |   | 22           |   |   |             | (69    | )      |             |   | 12     |             |   |   | (57 | ) |
| Share      of jointly controlled entities’ results         |   | 23           |   |   |             | (214   | )      |             |   | (170   | )                |   |   | (123 | ) |
| (Gain)/loss      on sale of property, plant and equipment, net   |   | 15           |   |   |             | (31    | )      |             |   | 59     |             |   |   | (130 | ) |
| Gain      on sale of available-for-sale equity securities        |   | 15           |   |   |             | (78    | )      |             |   | -      |             |   |   | - |   |
| Gain      on sale of other investment in equitiy securities      |   |         |   |   |             | -      |   |             |   | -      |             |   |   | (107 | ) |
| Gain      on sale of a jointly controlled entity                 |   |         |   |   |             | -      |   |             |   | (143   | )                |   |   | - |   |
| Gain      on sale of equity interest in subsidiaries             |   |         |   |   |             | -      |   |             |   | (37    | )                |   |   | (7 | ) |
| Interest      income                                             |   |         |   |   |             | (68    | )      |             |   | (103   | )                |   |   | (73 | ) |
| Interest      expense                                            |   | 13           |   |   |             | 1,497  |   |             |   | 1,987  |             |   |   | 2,291 |   |
| (Gain)/Loss      on derivative financial instruments, net        |   |         |   |   |             | (45    | )      |             |   | 124    |             |   |   | (90 | ) |
| Dividend      income from other investments in equity securities |   |         |   |   |             | (14    | )      |             |   | (14    | )                |   |   | (12 | ) |
| Unrealised      exchange gain, net                               |   |         |   |   |             | (70    | )      |             |   | (2,649 | )                |   |   | (2,832 | ) |
| (Increase)/decrease      in inventories                          |   |         |   |   |             | (27    | )      |             |   | (16    | )                |   |   | 108 |   |
| (Increase)/decrease      in trade receivables                    |   |         |   |   |             | (42    | )      |             |   | 649    |             |   |   | (349 | ) |
| (Increase)/decrease      in other receivables                    |   |         |   |   |             | (15    | )      |             |   | 203    |             |   |   | 156 |   |
| Increase      in prepaid expenses and other current assets       |   |         |   |   |             | (91    | )      |             |   | (28    | )                |   |   | (8 | ) |
| (Decrease)/increase      in net amounts due to related companies |   |         |   |   |             | (48    | )      |             |   | 15     |             |   |   | (50 | ) |
| Increase/(decrease)      in trade and bills payables             |   |         |   |   |             | 3,639  |   |             |   | (491   | )                |   |   | (95 | ) |
| (Decrease)      /increase in sales in advance of carriage        |   |         |   |   |             | (48    | )      |             |   | 353    |             |   |   | 451 |   |
| (Decrease)/increase      in accrued expenses                     |   |         |   |   |             | (49    | )      |             |   | 1,274  |             |   |   | 1,790 |   |
| Increase/(decrease)      in other liabilities                    |   |         |   |   |             | 353    |   |             |   | (36    | )                |   |   | 245 |   |
| Increase      in deferred revenue                                |   |         |   |   |             | 204    |   |             |   | 116    |             |   |   | 98 |   |
| Increase/(decrease)      in provision for major overhauls        |   |         |   |   |             | 8      |   |             |   | 262    |             |   |   | (122 | ) |
| Decrease      in provision for early retirement benefits         |   |         |   |   |             | (31    | )      |             |   | (51    | )                |   |   | (76 | ) |
| Increase      in deferred benefits and gains                     |   |         |   |   |             | 42     |   |             |   | 34     |             |   |   | 148 |   |
| Cash      generated from operations                              |   |         |   |   |             | 11,232 |   |             |   | 4,256  |             |   |   | 9,698 |   |

----

| 32 | Asset      classified as held for sale |
|----|----------------------------------------|

|                     |   | 2009             |   |   | 2008             |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|
|                     |   | RMB million |   |   | RMB million |   |
|                     |   |             |   |   |             |   |
| Share      of net assets |   |             | 529    |   |             |   | - |   |

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

| (a) | At      December 31, 2009, bank and other loans were repayable as      follows: |
|-----|---------------------------------------------------------------------------------|

|                                  |   | 2009             |   |   | 2008             |   |
|---------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                  |   | RMB million |   |   | RMB million |   |
|                                  |   |             |   |   |             |   |
| Within      1 year or on demand       |   |             | 17,452 |   |             |   | 22,178 |   |
|                                  |   |             |   |   |             |   |   |   |
| After      1 year but within 2 years  |   |             | 8,223  |   |             |   | 6,104 |   |
| After      2 years but within 5 years |   |             | 12,038 |   |             |   | 10,343 |   |
| After      5 years                    |   |             | 7,614  |   |             |   | 982 |   |
|                                  |   |             | 27,875 |   |             |   | 17,429 |   |
|                                  |   |             | 45,327 |   |             |   | 39,607 |   |

| (b) | At      December 31, 2009, bank and other loans are analysed as      follows: |
|-----|-------------------------------------------------------------------------------|

|                                              |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                              |   | RMB million |   |   | RMB million |   |
|                                              |   |             |   |   |             |   |
| Short-term      bank loans                        |   |             | 11,012 |   |             |   | 18,232 |   |
| Long-term      bank and other loans due within    |   |             |   |   |             |   |   |   |
| one      year (classified as current liabilities) |   |             | 6,440  |   |             |   | 3,946 |   |
|                                              |   |             | 17,452 |   |             |   | 22,178 |   |
| Long-term      bank and other loans due after one |   |             |   |   |             |   |   |   |
| year      (classified as non-current liabilities) |   |             | 27,875 |   |             |   | 17,429 |   |
|                                              |   |             | 45,327 |   |             |   | 39,607 |   |
|                                              |   |             |   |   |             |   |   |   |
| Representing:                                     |   |             |   |   |             |   |   |   |
| Bank      loans                                   |   |             | 45,324 |   |             |   | 39,604 |   |
| Other      loans                                  |   |             | 3      |   |             |   | 3 |   |
|                                              |   |             | 45,327 |   |             |   | 39,607 |   |

----

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

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

|                                                       |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                       |   | RMB million |   |   | RMB million |   |
| Renminbi      denominated loans                            |   |             |   |   |             |   |
| Non-interest      bearing loan from a                      |   |             |   |   |             |   |
| municipal      government authority                        |   |             | 3      |   |             |   | 3 |   |
|                                                       |   |             |   |   |             |   |   |   |
| Floating      interest rates ranging from 90% to 91% of    |   |             |   |   |             |   |   |   |
| benchmark      interest rate (stipulated by PBOC) as       |   |             |   |   |             |   |   |   |
| at      December 31, 2009, with maturities through 2013    |   |             | 5,660  |   |             |   | 7,647 |   |
|                                                       |   |             |   |   |             |   |   |   |
| United      States Dollars denominated loans               |   |             |   |   |             |   |   |   |
| Fixed      interest rates ranging from 3.26% to 7.20%      |   |             |   |   |             |   |   |   |
| per      annum as at December 31, 2009, with               |   |             |   |   |             |   |   |   |
| maturities      through 2015                               |   |             | 772    |   |             |   | 994 |   |
|                                                       |   |             |   |   |             |   |   |   |
| Floating      interest rates ranging from 1-month          |   |             |   |   |             |   |   |   |
| LIBOR      + 0.50% to 1.20% per annum as at                |   |             |   |   |             |   |   |   |
| December      31, 2009, with maturities through 2019       |   |             | 4,681  |   |             |   | - |   |
|                                                       |   |             |   |   |             |   |   |   |
| Floating      interest rates ranging from 3-month          |   |             |   |   |             |   |   |   |
| LIBOR      + 0.45% to 1.20% per annum as at                |   |             |   |   |             |   |   |   |
| December      31, 2009, with maturities through 2019       |   |             | 13,937 |   |             |   | 1,343 |   |
|                                                       |   |             |   |   |             |   |   |   |
| Floating      interest rates ranging from 6-month          |   |             |   |   |             |   |   |   |
| LIBOR      + 0.30% to 2.30% per annum as at                |   |             |   |   |             |   |   |   |
| December      31, 2009, with maturities through 2019       |   |             | 9,262  |   |             |   | 11,388 |   |
|                                                       |   |             | 34,315 |   |             |   | 21,375 |   |
| Less:  loans      due within one year classified |   |             |   |   |             |   |   |   |
| as      current liabilities                                |   |             | (6,440 | )      |             |   | (3,946 | ) |
|                                                       |   |             | 27,875 |   |             |   | 17,429 |   |

----

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

|                                             |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                             |   | RMB million |   |   | RMB million |   |
| Contractual      undiscounted cash flows         |   |             |   |   |             |   |
|                                             |   |             |   |   |             |   |
| Within      1 year                               |   |             | 18,141 |   |             |   | 23,478 |   |
| After      1 year but within 2 years             |   |             | 8,640  |   |             |   | 6,752 |   |
| After      2 years but within 5 years            |   |             | 12,461 |   |             |   | 10,792 |   |
| After      5 years                               |   |             | 7,866  |   |             |   | 1,035 |   |
|                                             |   |             | 47,108 |   |             |   | 42,057 |   |
|                                             |   |             |   |   |             |   |   |   |
| Consolidated      balance sheet carrying amounts |   |             | 45,327 |   |             |   | 39,607 |   |

|                                                          |   | 2009             |   |   | 2008             |   |
|---------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                          |   | RMB million |   |   | RMB million |   |
| Guarantors                                                    |   |             |   |   |             |   |
| Industrial      and Commercial Bank of China Ltd.             |   |             | -      |   |             |   | 15 |   |
| Export-Import      Bank of the United States                  |   |             | 149    |   |             |   | 304 |   |
| CSAHC      (Note 45(e))                                       |   |             | 512    |   |             |   | 783 |   |
| Shenzhen      Yingshun Investment & Development Co., Ltd. |   |             | -      |   |             |   | 22 |   |
| SA      Finance (Note 45(e))                                  |   |             | -      |   |             |   | 1 |   |
| Bank      of Communications Co., Ltd.                         |   |             | -      |   |             |   | 438 |   |
| China      Minsheng Banking Corp., Ltd.                       |   |             | -      |   |             |   | 629 |   |
|                                                          |   |             | 661    |   |             |   | 2,192 |   |

----

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

| 34 | Short-term      financing bills |
|----|---------------------------------|

|                            |   | 2009             |   |   | 2008             |   |
|---------------------------------|--------|------------------|--------|--------|------------------|--------|
|                            |   | RMB million |   |   | RMB million |   |
|                            |   |             |   |   |             |   |
| Short-term      financing bills |   |             | -      |   |             |   | 2,000 |   |

| 35 | Obligations      under finance leases |
|----|---------------------------------------|

|                                                                                |   | 2009                   |   |   | 2008     |   |
|-------------------------------------------------------------------------------------|--------|------------------------|--------|--------|----------|--------|
|                                                                                |   | 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                                                                  |   |                   | 1,431  |   |     |   | 1,972 |   |   |   | 541 |   |   |   | 1,781 |   |   |   | 2,390 |   |   |   | 609 |   |
| After      1 year but                                                               |   |                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| within      2 years                                                                 |   |                   | 1,495  |   |     |   | 1,970 |   |   |   | 475 |   |   |   | 1,215 |   |   |   | 1,752 |   |   |   | 537 |   |
| After      2 years but                                                              |   |                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| within      5 years                                                                 |   |                   | 4,240  |   |     |   | 5,274 |   |   |   | 1,034 |   |   |   | 3,654 |   |   |   | 4,845 |   |   |   | 1,191 |   |
| After      5 years                                                                  |   |                   | 6,152  |   |     |   | 6,596 |   |   |   | 444 |   |   |   | 6,288 |   |   |   | 7,049 |   |   |   | 761 |   |
|                                                                                |   |                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                   | 13,318 |   |     |   | 15,812 |   |   |   | 2,494 |   |   |   | 12,938 |   |   |   | 16,036 |   |   |   | 3,098 |   |
|                                                                                |   |                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  balance      due within one year classified as current liabilities |   |                   | (1,431 | )      |     |   |   |   |   |   |   |   |   |   | (1,781 | ) |   |   |   |   |   |   |   |   |
|                                                                                |   |                   | 11,887 |   |     |   |   |   |   |   |   |   |   |   | 11,157 |   |   |   |   |   |   |   |   |   |

----

| 35 | Obligations      under finance leases (continued) |
|----|---------------------------------------------------|

|                                   |   | 2009             |   |   | 2008             |   |
|----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                   |   | 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, 2009              |   |             | 7,035  |   |             |   | 7,949 |   |
|                                   |   |             |   |   |             |   |   |   |
| Floating      interest rates           |   |             |   |   |             |   |   |   |
| 3      month LIBOR + 1% per annum      |   |             |   |   |             |   |   |   |
| as      at December 31, 2009           |   |             | 2,172  |   |             |   | - |   |
|                                   |   |             |   |   |             |   |   |   |
| Floating      interest rates ranging   |   |             |   |   |             |   |   |   |
| 6      month LIBOR + 0.03%             |   |             |   |   |             |   |   |   |
| to      1.05% per annum                |   |             |   |   |             |   |   |   |
| as      at December 31, 2009           |   |             | 4,111  |   |             |   | 4,515 |   |
|                                   |   |             |   |   |             |   |   |   |
| Japanese      Yen                      |   |             |   |   |             |   |   |   |
| denominated      obligations           |   |             |   |   |             |   |   |   |
| Fixed      interest rates ranging from |   |             |   |   |             |   |   |   |
| 2.20%      to 3.51% per annum as       |   |             |   |   |             |   |   |   |
| at      December 31, 2008              |   |             | -      |   |             |   | 474 |   |
|                                   |   |             | 13,318 |   |             |   | 12,938 |   |

| 36 | Trade      and bills payables |
|----|-------------------------------|

|                |   | 2009             |   |   | 2008             |   |
|---------------------|--------|------------------|--------|--------|------------------|--------|
|                |   | RMB million |   |   | RMB million |   |
|                |   |             |   |   |             |   |
| Bills      payable  |   |             | 3,207  |   |             |   | 148 |   |
| Trade      payables |   |             | 1,785  |   |             |   | 1,205 |   |
|                |   |             | 4,992  |   |             |   | 1,353 |   |

----

| 36 | Trade      and bills payables (continued) |
|----|-------------------------------------------|

|                                           |   | 2009             |   |   | 2008             |   |
|------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                           |   | RMB million |   |   | RMB million |   |
|                                           |   |             |   |   |             |   |
| Within      1 month                            |   |             | 1,873  |   |             |   | 809 |   |
| More      than 1 month but less than 3 months  |   |             | 1,545  |   |             |   | 302 |   |
| More      than 3 months but less than 6 months |   |             | 1,566  |   |             |   | 239 |   |
| More      than 6 months but less than 1 year   |   |             | 8      |   |             |   | 3 |   |
|                                           |   |             | 4,992  |   |             |   | 1,353 |   |

| 37 | Deferred      revenue |
|----|-----------------------|

|                     |   | 2009             |   |   | 2008             |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|
|                     |   | RMB million |   |   | RMB million |   |
|                     |   |             |   |   |             |   |
| Current      portion     |   |             | 316    |   |             |   | 261 |   |
| Non-current      portion |   |             | 594    |   |             |   | 445 |   |
|                     |   |             | 910    |   |             |   | 706 |   |

| 38 | Amounts      due from/to related companies |
|----|--------------------------------------------|

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

|                             |   | 2009             |   |   | 2008             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB million |   |   | RMB million |   |
|                             |   |             |   |   |             |   |
| CSAHC      and its affiliates    |   |             | 6      |   |             |   | 1 |   |
| An      associate                |   |             | 14     |   |             |   | 1 |   |
| Jointly      controlled entities |   |             | 31     |   |             |   | 9 |   |
|                             |   |             | 51     |   |             |   | 11 |   |

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

|                             |   | 2009             |   |   | 2008             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB million |   |   | RMB million |   |
|                             |   |             |   |   |             |   |
| CSAHC      and its affiliates    |   |             | 43     |   |             |   | 64 |   |
| Jointly      controlled entities |   |             | 51     |   |             |   | 38 |   |
|                             |   |             | 94     |   |             |   | 102 |   |

----

| 39 | Accrued      expenses |
|----|-----------------------|

|                                                   |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                   |   | RMB million |   |   | RMB million |   |
|                                                   |   |             |   |   |             |   |
| Jet      fuel costs                                    |   |             | 1,368  |   |             |   | 1,320 |   |
| Air      catering expenses                             |   |             | 115    |   |             |   | 161 |   |
| Salaries      and welfare                              |   |             | 1,545  |   |             |   | 1,452 |   |
| Repairs      and maintenance                           |   |             | 1,827  |   |             |   | 1,853 |   |
| Provision      for major overhauls (Note 41)           |   |             | 503    |   |             |   | 409 |   |
| Provision      for early retirement benefits (Note 42) |   |             | 57     |   |             |   | 68 |   |
| Landing      and navigation fees                       |   |             | 1,899  |   |             |   | 2,097 |   |
| Computer      reservation services                     |   |             | 518    |   |             |   | 539 |   |
| Interest      expenses                                 |   |             | 146    |   |             |   | 339 |   |
| Others                                                 |   |             | 175    |   |             |   | 182 |   |
|                                                   |   |             | 8,153  |   |             |   | 8,420 |   |

| 40 | Other      liabilities |
|----|------------------------|

|                                                        |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                        |   | RMB million |   |   | RMB million |   |
|                                                        |   |             |   |   |             |   |
| CAAC      Infrastructure Development Fund,                  |   |             |   |   |             |   |
| airport      construction surcharge and airport tax payable |   |             | 1,052  |   |             |   | 899 |   |
| Construction      cost payable                              |   |             | 154    |   |             |   | 106 |   |
| Advance      payments on chartered flights                  |   |             | 71     |   |             |   | 58 |   |
| Sales      agent deposits                                   |   |             | 224    |   |             |   | 222 |   |
| Other      taxes payable                                    |   |             | 611    |   |             |   | 591 |   |
| Others                                                      |   |             | 1,264  |   |             |   | 1,087 |   |
|                                                        |   |             | 3,376  |   |             |   | 2,963 |   |

| 41 | Provision      for major overhauls |
|----|------------------------------------|

|                                                                         |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                         |   | RMB million |   |   | RMB million |   |
|                                                                         |   |             |   |   |             |   |
| At      January 1                                                            |   |             | 1,354  |   |             |   | 1,133 |   |
| Provision      for the year                                                  |   |             | 398    |   |             |   | 462 |   |
| Provision      utilised during the year                                      |   |             | (296   | )      |             |   | (241 | ) |
| At      December 31                                                          |   |             | 1,456  |   |             |   | 1,354 |   |
| Less:  current      portion included in accrued expenses (Note 39) |   |             | (503   | )      |             |   | (409 | ) |
|                                                                         |   |             | 953    |   |             |   | 945 |   |

----

| 42 | Provision      for early retirement benefits |
|----|----------------------------------------------|

|                                                                         |   | 2009             |   |   | 2008             |   |
|------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                         |   | RMB million |   |   | RMB million |   |
|                                                                         |   |             |   |   |             |   |
| At      January 1                                                            |   |             | 247    |   |             |   | 307 |   |
| Provision      for the year (Note 12)                                        |   |             | 6      |   |             |   | 10 |   |
| Financial      costs (Note 13)                                               |   |             | 14     |   |             |   | 19 |   |
| Payments      made during the year                                           |   |             | (80    | )      |             |   | (108 | ) |
| Effect      of changes in discount rate                                      |   |             | 18     |   |             |   | 19 |   |
| At      December 31                                                          |   |             | 205    |   |             |   | 247 |   |
| Less:  current      portion included in accrued expenses (Note 39) |   |             | (57    | )      |             |   | (68 | ) |
|                                                                         |   |             | 148    |   |             |   | 179 |   |

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

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

|                                                  |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                  |   | RMB million |   |   | RMB million |   |
| Registered,      issued and paid up capital:          |   |             |   |   |             |   |
| 4,021,150,000      domestic state-owned               |   |             |   |   |             |   |
| shares      with selling restrictions of RMB1.00 each |   |             |   |   |             |   |
| (2008:      3,300,000,000 shares of RMB1.00 each)     |   |             | 4,021  |   |             |   | 3,300 |   |
| 2,482,417,000      H shares of RMB1.00 each           |   |             |   |   |             |   |   |   |
| (2008:      1,761,267,000shares of RMB1.00 each)      |   |             | 2,482  |   |             |   | 1,761 |   |
| 1,500,000,000      A shares of RMB1.00 each           |   |             |   |   |             |   |   |   |
| (2008:      1,500,000,000 shares of RMB1.00 each)     |   |             | 1,500  |   |             |   | 1,500 |   |
|                                                  |   |             | 8,003  |   |             |   | 6,561 |   |

----

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

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

----

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

|                                                              |   | 2009             |   |   | 2008             |   |
|-------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                              |   | RMB million |   |   | RMB million |   |
| Share      premium                                                |   |             |   |   |             |   |
|                                                              |   |             |   |   |             |   |
| At      January 1                                                 |   |             | 3,138  |   |             |   | 5,325 |   |
| Bonus      Share Issue (Note 43)                                  |   |             | -      |   |             |   | (2,187 | ) |
| Issue      of shares (Note 43)                                    |   |             | 1,538  |   |             |   | - |   |
| At      December 31                                               |   |             | 4,676  |   |             |   | 3,138 |   |
|                                                              |   |             |   |   |             |   |   |   |
| Fair      value reserve                                           |   |             |   |   |             |   |   |   |
| At      January 1                                                 |   |             | 18     |   |             |   | 183 |   |
| Change      in fair value of available-for-sale equity securities |   |             | 19     |   |             |   | (165 | ) |
| At      December 31                                               |   |             | 37     |   |             |   | 18 |   |
|                                                              |   |             |   |   |             |   |   |   |
| 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                                                 |   |             | 150    |   |             |   | 4 |   |
| Acquisition      of equity interest in a subsidiary (Note (c))    |   |             | -      |   |             |   | (5 | ) |
| Government      contributions (Note (d))                          |   |             | 1      |   |             |   | 151 |   |
| At      December 31                                               |   |             | 151    |   |             |   | 150 |   |
|                                                              |   |             |   |   |             |   |   |   |
| Retained      earnings/(accumulated losses)                       |   |             |   |   |             |   |   |   |
|                                                              |   |             |   |   |             |   |   |   |
| At      January 1                                                 |   |             | (3,449 | )      |             |   | 1,374 |   |
| Profit/(loss)      for the year                                   |   |             | 330    |   |             |   | (4,823 | ) |
| At      December 31                                               |   |             | (3,119 | )      |             |   | (3,449 | ) |
| Total                                                             |   |             | 2,348  |   |             |   | 460 |   |

----

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

----

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

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

|                               |   | 2009          |   |   | 2008          |   |   | 2007          |   |
|------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                               |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
|                               |   |          |   |   |          |   |   |          |   |
| Short-term      employees benefits |   |          | 13,991 |   |          |   | 14,117 |          |   |   | 12,226 |   |
| Post-employment      benefits      |   |          | 922    |   |          |   | 1,268  |          |   |   | 275 |   |
|                               |   |          | 14,913 |   |          |   | 15,385 |          |   |   | 12,501 |   |

|                                     |   | 2009          |   |   | 2008          |   |   | 2007          |   |
|------------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                     |   | RMB’000 |   |   | RMB’000 |   |   | RMB’000 |   |
|                                     |   |          |   |   |          |   |   |          |   |
| Directors      and supervisors (Note 14) |   |          | 7,609  |   |          |   | 8,578  |          |   |   | 6,790 |   |
| Senior      management                   |   |          | 7,304  |   |          |   | 6,807  |          |   |   | 5,711 |   |
|                                     |   |          | 14,913 |   |          |   | 15,385 |          |   |   | 12,501 |   |

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

----

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

|                                                                                                                                  |   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                                                                  | Note   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Expenses      paid to the CSAHC Group                                                                                                 |   |   |             |   |   |             |   |   |             |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |
| Handling      charges                                                                                                                 | (i)    |   |             | 68     |   |             |   | 50     |             |   |   | 46 |   |
| Air      catering supplies                                                                                                            | (ii)   |   |             | -      |   |             |   | 60     |             |   |   | 157 |   |
| Commission      expense                                                                                                               | (iii)  |   |             | 6      |   |             |   | 4      |             |   |   | 7 |   |
| Sundry      aviation supplies                                                                                                         | (iv)   |   |             | -      |   |             |   | -      |             |   |   | 72 |   |
| Lease      charges for land and buildings                                                                                             | (v)    |   |             | 107    |   |             |   | 100    |             |   |   | 101 |   |
| Property      management fee                                                                                                          | (vi)   |   |             | 19     |   |             |   | 31     |             |   |   | 31 |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Expenses      paid to jointly controlled entities and an associate                                                                    |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Ground      service expenses                                                                                                          | (vii)  |   |             | 36     |   |             |   | 64     |             |   |   | 37 |   |
| Repairing      charges                                                                                                                | (viii) |   |             | 1,344  |   |             |   | 1,129  |             |   |   | 1,047 |   |
| Flight      simulation service charges                                                                                                | (ix)   |   |             | 172    |   |             |   | 150    |             |   |   | 120 |   |
| Advertising      expenses                                                                                                             | (x)    |   |             | 21     |   |             |   | 20     |             |   |   | 9 |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Income      received from a jointly controlled entity                                                                                 |   |   |             |   |   |             |   |   |             |   |   |   |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Rental      income                                                                                                                    | (ix)   |   |             | 47     |   |             |   | 33     |             |   |   | 31 |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Issuance      of A shares to CSAHC                                                                                                    | (xi)   |   |             | 2,279  |   |             |   | -      |             |   |   | - |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Issuance      of H shares to Nan Lung                                                                                                 | (xi)   |   |             | 721    |   |             |   | -      |             |   |   | - |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Acquisition      of assets from CSAHC Group                                                                                           | (xii)  |   |             | -      |   |             |   | -      |             |   |   | 270 |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Disposal      of GZ Aviation Hotel to CSAHC Group                                                                                | (xiii) |   |             | -      |   |             |   | -      |             |   |   | 75 |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Transfer      of exclusive right to use certain advertising resources      to Southern Airlines Culture and Media Co., Ltd. | (xiv)  |   |             | -      |   |             |   | 35     |             |   |   | - |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Acquisition      of 26% equity interest in West Australian Flying College from      CSAHC Group                             | (xv)   |   |             | -      |   |             |   | 5      |             |   |   | - |   |
|                                                                                                                                  |   |   |             |   |   |             |   |   |             |   |   |   |   |
| Disposal      of certain buildings to Southern Airlines Culture and Media Co.,      Ltd.                                    | (xvi)  |   |             | -      |   |             |   | 2      |             |   |   | - |   |

----

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

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

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

| (iii) | 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. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv) | Certain      sundry aviation supplies were purchased from Southern Airlines (Group)      Economic Development Company (“SAGEDC”), a subsidiary of CSAHC in      2007.  No sundry aviation supplies were purchased from SAGEDC      during the year and 2008. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| (vii) | 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. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (viii) | Guangzhou      Aircraft Maintenance Engineering Company Limited (“GAMECO”) and MTU, both      are jointly controlled entities of the Group, provide comprehensive      maintenance services to the Group. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ix) | 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. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (xi) | On      August 20, 2009 and August 21, 2009, the      Company issued 721,150,000 A shares to CSAHC and 721,150,000 H shares to      Nan Lung, a wholly-owned subsidiary of CSAHC, for cash considerations of      RMB2,279 million and RMB721 million,  respectively. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (xii) | On      August 14, 2007, the Company signed an agreement to acquire (1) the entire      equity interest in Air Catering; (2) certain assets of Guangzhou Bi Hua      Yuan Training Centre including certain properties and office facilities;      and (3) certain assets of Nan Lung Travel & Express (Hong Kong)      Limited, including certain properties and office facilities and the 51%      equity interest in Nan Lung International Freight Limited (“Nan Lung      Freight”), from CSAHC for a total consideration of RMB270 million (Note      48(b)). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (xiii) | On      August 14, 2007, the Company signed an agreement to dispose of its equity      interest in GZ Aviation Hotel Co., Ltd. to CSAHC at a consideration of      RMB75 million. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (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 West Australian 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 RMB2million. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | 2009             |   |   | 2008             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB      million |   |   | RMB      million |   |
| Receivables:                     |   |             |   |   |             |   |
| The      CSAHC Group             |   |             | 6      |   |             |   | 1 |   |
| Associates                       |   |             | 14     |   |             |   | 1 |   |
| Jointly      controlled entities |   |             | 31     |   |             |   | 9 |   |
|                             |   |             | 51     |   |             |   | 11 |   |
|                             |   |             |   |   |             |   |   |   |
| Payables:                        |   |             |   |   |             |   |   |   |
| The      CSAHC Group             |   |             | 43     |   |             |   | 64 |   |
| Jointly      controlled entities |   |             | 51     |   |             |   | 38 |   |
|                             |   |             | 94     |   |             |   | 102 |   |

----

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

| (d)  | Loans      from and deposits placed with SAFinance |
|-----------|----------------------------------------------------|

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

|                                  |   | 2009             |   |   | 2008             |   |
|---------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                  |   | RMB million |   |   | RMB million |   |
|                                  |   |             |   |   |             |   |
| Within      1 year                    |   |             | 400    |   |             |   | 2,100 |   |
| After      2 years but within 5 years |   |             | 419    |   |             |   | 439 |   |
|                                  |   |             | 819    |   |             |   | 2,539 |   |
|                                  |   |             |   |   |             |   |   |   |
| Unsecured                             |   |             | 819    |   |             |   | 2,539 |   |

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

| (e)  | Guarantees      from CSAHC and SA Finance |
|-----------|-------------------------------------------|

|            |   | 2009             |   |   | 2008             |   |
|-----------------|--------|------------------|--------|--------|------------------|--------|
|            |   | RMB million |   |   | RMB million |   |
|            |   |             |   |   |             |   |
| CSAHC           |   |             | 512    |   |             |   | 783 |   |
| SA      Finance |   |             | -      |   |             |   | 1 |   |
|            |   |             | 512    |   |             |   | 784 |   |

----

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

| (f)  | Transactions      with other state-controlledentities |
|-----------|-------------------------------------------------------|

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

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

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

| -  | Purchase      of ancillary materials and spareparts; |
|---------|------------------------------------------------------|

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

|                  |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|-----------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                  |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                  |   |             |   |   |             |   |   |             |   |
| Jet      fuel cost    |   |             | 15,260 |   |             |   | 21,042 |             |   |   | 14,814 |   |
| Interest      income  |   |             | 56     |   |             |   | 77     |             |   |   | 47 |   |
| Interest      expense |   |             | 1,249  |   |             |   | 1,719  |             |   |   | 1,751 |   |

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

|                                                                       |   | 2009             |   |   | 2008             |   |
|----------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                                       |   | RMB million |   |   | RMB million |   |
|                                                                       |   |             |   |   |             |   |
| Cash      and deposits at bank                                             |   |             | 3,174  |   |             |   | 3,354 |   |
| Short-term      bank loans and current portion of long-term bankloans |   |             | 16,068 |   |             |   | 18,675 |   |
| Long-term      bank loans, less current portion                            |   |             | 26,646 |   |             |   | 14,773 |   |

----

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

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

| (iii) | Guarantees      from other state-controlled entities, including state-controlled banks in      the PRC |
|-------|--------------------------------------------------------------------------------------------------------|

|                                               |   | 2009             |   |   | 2008             |   |
|----------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                               |   | RMB million |   |   | RMB million |   |
|                                               |   |             |   |   |             |   |
| Guarantees      on certain bank loans of the Group |   |             | -      |   |             |   | 1,082 |   |

| (iv) | In      2008, the issuance of the short-term financing bills of RMB2,000 million      was underwritten by certain state-controlled banks in the      PRC.  No issuance of short-term financing bills was made during      the year. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 subsidising 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 |
|----------|--------------------------|

----

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

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

|                                                                                                                        |   | Airline business |   |   | All other segments |   |   | Elimination |   |   | Unallocated* |   |   | Total   |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|------------------------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------|--------|
|                                                                                                                        |   | 2009                  |   |   | 2008                         |   |   | 2007        |   |   | 2009         |   |   | 2008    |   |   | 2007 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                                        |   | 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                                                                                   |   |                  | 55,708 |   |                         |   | 56,150 |        |   |   | 55,522       |   |   |    | 335    |   |   |   | 277 |   |   |   | 250 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 56,043 |   |   |   | 56,427 |   |   |   | 55,772 |   |
| Inter-segment      sales                                                                                                    |   |                  | -      |   |                         |   | 4      |        |   |   | -            |   |   |    | 674    |   |   |   | 506 |   |   |   | 484 |   |   |   | (674 | ) |   |   | (510 | ) |   |   | (484 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable      segment revenue                                                                                        |   |                  | 55,708 |   |                         |   | 56,154 |        |   |   | 55,522       |   |   |    | 1,009  |   |   |   | 783 |   |   |   | 734 |   |   |   | (674 | ) |   |   | (510 | ) |   |   | (484 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 56,043 |   |   |   | 56,427 |   |   |   | 55,772 |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable      segment profit/(loss) before taxation                                                                       |   |                  | 27     |   |                         |   | (5,031 | )           |   |   | 2,532        |   |   |    | 56     |   |   |   | (68 | ) |   |   | 11 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 374 |   |   |   | 351 |   |   |   | 306 |   |   |   | 457 |   |   |   | (4,748 | ) |   |   | 2,849 |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable      segment assets                                                                                              |   |                  | 91,322 |   |                         |   | 79,841 |        |   |   |         |   |   |    | 1,776  |   |   |   | 1,705 |   |   |   |   |   |   |   | (159 | ) |   |   | (131 | ) |   |   |   |   |   |   | 1,797 |   |   |   | 1,588 |   |   |   |   |   |   |   | 94,736 |   |   |   | 83,003 |   |   |   |   |   |
| Addition      to non- current segment assets during the year                                                      |   |                  | 17,558 |   |                         |   | 12,801 |        |   |   |         |   |   |    | 66     |   |   |   | 47 |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 13 |   |   |   | 29 |   |   |   |   |   |   |   | 17,637 |   |   |   | 12,877 |   |   |   |   |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reportable      segment liabilities                                                                                         |   |                  | 80,435 |   |                         |   | 72,519 |        |   |   |         |   |   |    | 1,202  |   |   |   | 1,167 |   |   |   |   |   |   |   | (159 | ) |   |   | (131 | ) |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 81,478 |   |   |   | 73,555 |   |   |   |   |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      segment information                                                                                              |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                        |   |                  |   |   |                         |   |   |        |   |   |         |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                                                        |   |                  | 65     |   |                         |   | 99     |        |   |   | 68           |   |   |    | 3      |   |   |   | 4 |   |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 68 |   |   |   | 103 |   |   |   | 73 |   |
| Interest      expenses                                                                                                      |   |                  | 1,446  |   |                         |   | 1,923  |        |   |   | 2,286        |   |   |    | 51     |   |   |   | 64 |   |   |   | 46 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,497 |   |   |   | 1,987 |   |   |   | 2,332 |   |
| Depreciation      and  amortisation for  the year                                                       |   |                  | 5,954  |   |                         |   | 5,724  |        |   |   | 5,501        |   |   |    | 85     |   |   |   | 94 |   |   |   | 94 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,039 |   |   |   | 5,818 |   |   |   | 5,595 |   |
| Impairment      losses (including impact on PP&E, allowance for doubtful debts      and provision for inventories) |   |                  | 57     |   |                         |   | 2,073  |        |   |   | 212          |   |   |    | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 57 |   |   |   | 2,073 |   |   |   | 212 |   |

----

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

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

|                             |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|----------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                             |   | RMB million |   |   | RMB million |   |   | RMB million |   |
|                             |   |             |   |   |             |   |   |             |   |
| Domestic                         |   |             | 47,645 |   |             |   | 45,972 |             |   |   | 44,785 |   |
| Hong      Kong, Macau and Taiwan |   |             | 1,067  |   |             |   | 1,051  |             |   |   | 1,188 |   |
| International      *             |   |             | 7,331  |   |             |   | 9,404  |             |   |   | 9,799 |   |
|                             |   |             | 56,043 |   |             |   | 56,427 |             |   |   | 55,772 |   |

|   | *  | Asian      market accounted for approximately 74% (2008: 72%; 2007: 68%) of the      Group’s total international traffic revenue for the year ended December      31, 2009.  The remaining portion was mainly derived from the      Group’s flights to/from European, North American and Australian      regions. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                          | Note   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|---------------------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                          |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Revenue                                                       |   |   |             |   |   |             |   |   |             |   |
|                                                          |   |   |             |   |   |             |   |   |             |   |
| Reportable      segment revenue                               |   |   |             | 56,717 |   |             |   | 56,937 |             |   |   | 56,256 |   |
| Elimination      of intersegment revenues                     |   |   |             | (674   | )      |             |   | (510   | )                |   |   | (484 | ) |
| Reclassification      of expired sales in advance of carriage | (i)    |   |             | 350    |   |             |   | 276    |             |   |   | 273 |   |
| Reclassification      of business tax                         | (ii)   |   |             | (1,591 | )      |             |   | (1,415 | )                |   |   | (1,644 | ) |
| Consolidated      revenue                                     |   |   |             | 54,802 |   |             |   | 55,288 |             |   |   | 54,401 |   |

----

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

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

|                                                                                     | Note   |   | 2009             |   |   | 2008             |   |   | 2007             |   |
|------------------------------------------------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                                                     |   |   | RMB million |   |   | RMB million |   |   | RMB million |   |
| Profit                                                                                   |   |   |             |   |   |             |   |   |             |   |
|                                                                                     |   |   |             |   |   |             |   |   |             |   |
| Reportable      segment profit/ (loss) before taxation                                   |   |   |             | 83     |   |             |   | (5,099 | )                |   |   | 2,543 |   |
| Unallocated      amounts                                                                 |   |   |             | 374    |   |             |   | 351    |             |   |   | 306 |   |
| 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)    |   |             | (7     | )      |             |   | (7     | )                |   |   | (6 | ) |
| Capitalisation      of exchange difference of specific loans                             | (vi)   |   |             | 3      |   |             |   | 51     |             |   |   | 57 |   |
| Government      grants                                                                   | (vii)  |   |             | 1      |   |             |   | 2      |             |   |   | 1 |   |
| Consolidated      profit/(loss) before taxation                                          |   |   |             | 432    |   |             |   | (4,724 | )           |   |   | 2,879 |   |

|                                             |   |   | 2009             |   |   | 2008             |   |
|--------------------------------------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                             | Note   |   | RMB million |   |   | RMB million |   |
|                                             |   |   |             |   |   |             |   |
| Assets                                           |   |   |             |   |   |             |   |
|                                             |   |   |             |   |   |             |   |
| Reportable      segment assets                   |   |   |             | 93,098 |   |             |   | 81,546 |   |
| Elimination      of intersegment balances        |   |   |             | (159   | )      |             |   | (131 | ) |
| Other      unallocated amounts                   |   |   |             | 1,797  |   |             |   | 1,588 |   |
| Losses      on lump sum housing benefits         | (iii)  |   |             | 66     |   |             |   | 92 |   |
| Revaluation      of land use rights              | (iv)   |   |             | (142   | )      |             |   | (146 | ) |
| Adjustments      arising from business           |   |   |             |   |   |             |   |   |   |
| combinations      under common control           | (v)    |   |             | 1      |   |             |   | 8 |   |
| Capitalisation      of exchange difference of    |   |   |             |   |   |             |   |   |   |
| specific      loans                              | (vi)   |   |             | 111    |   |             |   | 108 |   |
| Government      grants                           | (vii)  |   |             | (39    | )      |             |   | (40 | ) |
| Effect      of the above adjustments on taxation |   |   |             | 17     |   |             |   | 17 |   |
| Consolidated      total assets                   |   |   |             | 94,750 |   |             |   | 83,042 |   |
|                                             |   |   |             |   |   |             |   |   |   |
|                                             |   |   | 2009             |   |   | 2008             |   |
|                                             |   |   | RMB million |   |   | RMB million |   |
| Liabilities                                      |   |   |             |   |   |             |   |   |   |
|                                             |   |   |             |   |   |             |   |   |   |
| Reportable      segment liabilities              |   |   |             | 81,637 |   |             |   | 73,686 |   |
| Elimination      of intersegment balances        |   |   |             | (159   | )      |             |   | (131 | ) |
| Effect      of the above adjustments on taxation |   |   |             | 10     |   |             |   | 8 |   |
| Consolidated      total liabilities              |   |   |             | 81,488 |   |             |   | 73,563 |   |

----

| 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 is      recorded under non-operating income. Under IFRSs, such income is      recognised as other net 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 GAAP , 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 statements of opeartions,      which are spread over the vesting benefit periods stipulated by the      relevant contracts. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | In      accordance with the PRC GAAP, 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 recognised 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 fixedassets. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (a)  | Non      cash transactions - acquisition ofaircraft |
|-----------|-----------------------------------------------------|

----

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

| (b)  | Effect      of the acquisition of Nan Lung Freight and Air  Catering |
|-----------|----------------------------------------------------------------------|

|                                                                                              |   | RMB million |   |
|---------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Assets      acquired:                                                                             |   |             |   |
| Property,      plant and equipment, net                                                           |   |             | 77     |   |
| Inventories                                                                                       |   |             | 6      |   |
| Trade      receivables                                                                            |   |             | 106    |   |
| Other      receivables                                                                            |   |             | 7      |   |
| Cash      and cash equivalents                                                                    |   |             | 54     |   |
|                                                                                              |   |             | 250    |   |
| Liabilities      assumed:                                                                         |   |             |   |   |
| Trade      payables                                                                               |   |             | 30     |   |
| Accrued      expenses                                                                             |   |             | 10     |   |
| Other      liabilities                                                                            |   |             | 18     |   |
|                                                                                              |   |             | 58     |   |
| Net      identifiable assets before minority interests                                            |   |             | 192    |   |
| Less:      Minority interest                                                                      |   |             | (80    | ) |
|                                                                                              |   |             |   |   |
| Net      identifiable assets after minority interest                                              |   |             | 112    |   |
|                                                                                              |   |             |   |   |
| Satisfied      by:                                                                                |   |             |   |   |
| Cash                                                                                              |   |             | 112    |   |
|                                                                                              |   |             |   |   |
| Analysis      of the net outflow of cash and cash equivalents in respect of the      acquisition: |   |             |   |   |
|                                                                                              |   |             |   |   |
| Cash      consideration paid                                                                      |   |             | (112   | ) |
| Cash      and cash equivalents acquired                                                           |   |             | 54     |   |
| Net      outflow of cash and cash equivalents in respect of the      acquisition                  |   |             | (58    | ) |

----

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

| (c)  | Effect      of the disposal of GZ AviationHotel |
|-----------|-------------------------------------------------|

|                                                                                                   |   | RMB million |   |
|--------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Assets      disposed of:                                                                               |   |             |   |
| Property,      plant and equipment, net                                                                |   |             | 72     |   |
| Trade      receivables                                                                                 |   |             | 1      |   |
| Other      receivables                                                                                 |   |             | 6      |   |
| Cash      and cash equivalents                                                                         |   |             | 1      |   |
|                                                                                                   |   |             | 80     |   |
| Liabilities      disposed of:                                                                          |   |             |   |   |
| Other      liabilities                                                                                 |   |             | 4      |   |
| Minority      interest                                                                                 |   |             | 8      |   |
|                                                                                                   |   |             |   |   |
| Net      identifiable assets and liabilities                                                           |   |             | 68     |   |
| Gain      on disposal                                                                                  |   |             | 7      |   |
|                   |   |             | 75     |   |
|                                                                                                   |   |             |   |   |
| Satisfied      by:                                                                                     |   |             |   |   |
| Cash                                                                                                   |   |             | 75     |   |
|                                                                                                   |   |             |   |   |
| Analysis      of the net inflow of cash and cash equivalents in respect of the      disposal:          |   |             |   |   |
|                                                                                                   |   |             |   |   |
| Cash      consideration received                                                                       |   |             | 75     |   |
| Cash      and cash equivalents disposed of                                                             |   |             | (1     | ) |
| Net      inflow of cash and cash equivalents in respect of the    disposal                             |   |             | 74     |   |

----

| 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) |
|-----------|----------------------------------------|

|                            |   | 2009                   |   |   | 2008                                        |   |
|---------------------------------|--------|------------------------|--------|--------|---------------------------------------------|--------|
|                            |   | Appreciation      /    |   |   | Decrease/(increase)                         |   |   | Appreciation/ |   |   | Increase/(decrease) |   |
|                            |   | (depreciation) of |   |   | on profit after tax and |   |   | (depreciation)      of |   |   | on      loss after tax |   |
|                            |   | Renminbi      against  |   |   | increase/(decrease)                         |   |   | Renminbi against |   |   | and accumulated |   |
|                            |   | foreign                |   |   | on      accumulated losses                  |   |   | foreign |   |   | losses |   |
|                            |   | currency               |   |   | RMB      million                            |   |   | currency |   |   | RMB      million |   |
|                            |   |                   |   |   |                                        |   |   |   |   |   |   |   |
| United States Dollars |   |                   | 2      | %      |                                        |   | (764 | ) |   |   | 2 | % |   |   | (606 | ) |
|                            |   |                   | (2     | )%     |                                        |   | 764 |   |   |   | (2 | )% |   |   | 606 |   |

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

----

| 49 | Financial      risk management and fair values(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                                    |   |         | 93     |   |         |   | -      |         |   |   | -       |   |   |   | 93 |   |
|                                             |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Liabilities                                      |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |   |
| Derivative      financial instruments:           |   |         |   |   |         |   |   |         |   |   |    |   |   |   |   |
|  -      Forward option  contracts |   | -            |   |   |         | 44     |   |         |   | -      |    |   |   | 44 |   |

| (ii) | The      economic characteristics of the Group’s finance leases vary from lease to      lease.  It is impractical to compare such leases with those      prevailing in the market within the constraints of timeliness and cost for      the purpose of estimating the fair value of such  leases. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

| (iii) | 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 measuredreliably. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv) | 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. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v) | Loans,      trade and other payables, bills payable and short-term financing bills are      carried at amounts not materially different from their fair values as at      December 31, 2009 and December 31,2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|                                     |   | 2009             |   |   | 2008             |   |
|------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                     |   | RMB million |   |   | RMB million |   |
| Commitments      in respect of aircraft  |   |             |   |   |             |   |
| and      flight equipment                |   |             |   |   |             |   |
| -      authorised and contracted for     |   |             | 57,890 |   |             |   | 75,639 |   |
| -      authorised but not contracted for |   |             | 7,953  |   |             |   | - |   |
|                                     |   |             | 65,843 |   |             |   | 75,639 |   |
| Other      commitments                   |   |             |   |   |             |   |   |   |
| -      authorised and contracted for     |   |             | 462    |   |             |   | 884 |   |
| -      authorised but not contracted for |   |             | 1,399  |   |             |   | 1,958 |   |
|                                     |   |             | 1,861  |   |             |   | 2,842 |   |
|                                     |   |             | 67,704 |   |             |   | 78,481 |   |

|                     |   | 2009             |   |   | 2008             |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|
|                     |   | RMB million |   |   | RMB million |   |
|                     |   |             |   |   |             |   |
| 2009                     |   |             | -      |   |             |   | 15,777 |   |
| 2010                     |   |             | 16,404 |   |             |   | 19,167 |   |
| 2011                     |   |             | 17,482 |   |             |   | 15,142 |   |
| 2012                     |   |             | 17,421 |   |             |   | 13,893 |   |
| 2013                     |   |             | 9,845  |   |             |   | 7,170 |   |
| 2014      and afterwards |   |             | 4,691  |   |             |   | 4,490 |   |
|                     |   |             | 65,843 |   |             |   | 75,639 |   |

----

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

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

|                                   |   | 2009             |   |   | 2008             |   |
|----------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                   |   | RMB million |   |   | RMB million |   |
|                                   |   |             |   |   |             |   |
| Authorised      and contracted for     |   |             | 2      |   |             |   | 1 |   |
| Authorised      but not contracted for |   |             | 40     |   |             |   | 26 |   |
|                                   |   |             | 42     |   |             |   | 27 |   |

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

|                                 |   | 2009             |   |   | 2008             |   |
|--------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                 |   | RMB million |   |   | RMB million |   |
| Payments      due                    |   |             |   |   |             |   |
| Within      1 year                   |   |             | 4,028  |   |             |   | 4,186 |   |
| After      1 year but within 5 years |   |             | 15,107 |   |             |   | 15,689 |   |
| After      5 years                   |   |             | 11,231 |   |             |   | 14,455 |   |
|                                 |   |             | 30,366 |   |             |   | 34,330 |   |

| 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 entered into agreements with its pilot trainees and certain banks      to provide guarantees on personal bank loans amounting to RMB292,586,000      (2008: RMB90,858,000) to be granted to its pilot trainees to finance their      respective flight training expenses.  As at December 31, 2009,      an aggregate of personal bank loans of RMB60 million (2008: RMB13million),      under these guarantees, were drawn down from the banks. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| (a) | On      March 8, 2010, the board of the Company approved (i) the placement of not      more than 1,766,780,000 new A shares to not more than 10 specific      investors (subject to the maximum number as permitted by PRC laws and      regulations at the time of the issuance) including CSAHC, at the same      subscription price of not less than RMB5.66 per A share; and (ii) the      placement of not more than 312,500,000 new H shares to Nan Lung, at the      subscription price of not less than HKD2.73 per H  share. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On      January 20, 2010, the Company entered into an agreement with Airbus SNC to      purchase 20 Airbus 320 series aircraft, which were scheduled for delivery      from 2011 to 2013.  According to the information provided by      Airbus SNC, the catalogue price of an Airbus 320 aircraft is around USD77      million. Such catalogue price includes price for airframe and      engines. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | In      accordance with 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 MTU, a jointly controlled entity of      the Company.  As at December 31, 2009, the sale was approved by      the State Owned Assets Supervision and Administration Commission of the      PRC and shareholders of Company and was pending approval by the Ministry      of Commerce of the PRC.  The sales was subsequently approved by      the Ministry of Commerce of the PRC in January 2010, and the Company      received the acquisition consideration from CSAHC in full in February      2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

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

| 55  | Comparative      figures |
|----------|--------------------------|

----

| 56 | Possible      impact of amendments, new standards and interpretations issued but not yet      effective for the year ended December 31,2009 |
|----|---------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| 57  | Subsidiaries |
|----------|--------------|

| Name of company                                                       |   | Place ofestablishment/operation |   | Registered capital |          | Proportion ofownershipinterest heldby theCompany |   | Principalactivities |
|---------------------------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------|---------------|-----------------------------------------------------------------|--------|---------------------|
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |
| Southern      Airlines Shantou Airlines Company Limited (a)                     |   | PRC                                  |   | RMB                | 280,000,000   |                                                            |   | 60                  | %  | Airline |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Chongqing      Airlines Company Limited (a)                                     |   | PRC                                  |   | RMB                | 1,200,000,000 |                                                            |   | 60                  | % | Airline |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Zhuhai      Airlines Company Limited (a)                                        |   | PRC                                  |   | RMB                | 250,000,000   |                                                            |   | 60                  | % | Airline |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Xiamen      Airlines Company Limited (a)                                        |   | PRC                                  |   | RMB                | 1,200,000,000 |                                                            |   | 60                  | % | Airline |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Guizhou      Airlines Company Limited (a)                                       |   | PRC                                  |   | RMB                | 80,000,000    |                                                            |   | 60                  | % | Airline |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Nan      Lung International Freight Limited                                     |   | HK                                   |   | HKD                | 3,270,000     |                                                            |   | 51                  | % | Freight      services |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Guangzhou      Baiyun International Logistic Company Limited (a)                |   | PRC                                  |   | RMB                | 50,000,000    |                                                            |   | 61                  | % | Logistics      operations |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| China      Southern Airlines Group Air Catering Company Limited (a)             |   | PRC                                  |   | RMB                | 10,200,000    |                                                            |   | 100                 | % | Air      catering |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Guangzhou      Nanland Air Catering Company Limited (“Nanland”) (b) |   | PRC                                  |   | RMB                | 120,000,000   |                                                            |   | 55                  | % | Air      catering |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| China      Southern West Australian Flying College Pty Limited                  |   | Australia                            |   | AUD                | 100,000       |                                                            |   | 91                  | % | Pilot      training services |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Xinjiang      Civil Aviation Property Management Limited (a)                    |   | PRC                                  |   | RMB                | 251,332,832   |                                                            |   | 51.8                | % | Property      management |
|                                                                            |   |                                 |   |                    |          |                                                            |   |                |   |   |
| Beijing      Southern Airlines Ground Services Company Limited (a)              |   | PRC                                  |   | RMB                | 18,000,000    |                                                            |   | 100                 | % | Provision      of airport groundservices |

|  | (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. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------|

----

| 58  | Associates      and jointly controlled entities |
|----------|-------------------------------------------------|

|                                                                    |   |                                 |   | Proportion of ownership interestheld by |   |   |
|-------------------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------------------------------|--------|--------|
| 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 |
|                                                                    |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Southern      Airlines Group Finance Company Limited                    |   | PRC                                  |   |                                                        | 34     | %      |   |   | 21.1 | % |   |   | 12.9 | %  | Provision      of financial services |
|                                                                    |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Sichuan      Airlines Corporation Limited                               |   | PRC                                  |   |                                                        | 39     | %      |   |   | 39 | % |   |   | - |   | Airline |
|                                                                    |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| MTU      Maintenance Zhuhai Co., Limited (a)                            |   | PRC                                  |   |                                                        | 50     | %      |   |   | 50 | % |   |   | - |   | Provision      of engine repair and maintenance 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 inflight |

|  | (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 PRClaw. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

----

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

----

| 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              |   | A320      Family Aircraft Purchase Agreement entered into by and between the Company      and Airbus SNC on January 20, 2010 *                         |
|             |   |                                                                                                                                                   |
| 4.5              |   | A      Shares Subscription Agreement entered into by and between the Company and      CSAHC on December 10, 2008(4)                                    |
|             |   |                                                                                                                                                   |
| 4.6              |   | H      Shares Subscription Agreement entered into by and between the Company and      Nan Lung Holding Limited on December 10, 2008(5)                 |
|             |   |                                                                                                                                                   |
| 4.7              |   | A      Shares Subscription Agreement entered into by and between the Company and      CSAHC on March 8, 2010                                           |
|             |   |                                                                                                                                                   |
| 4.8              |   | H      Shares Subscription Agreement entered into by and between the Company and      Nan Lung Holding Limited on March 8, 2010                        |
|             |   |                                                                                                                                                   |
| 4.9              |   | Transfer      Agreement entered into by and among the Company, CSAHC, MTU and MTU Aero      Engines GmbH on September 28, 2009                         |
|             |   |                                                                                                                                                   |
| 4.10             |   | Transfer      Agreement for the 50% Equity Interest in MTU between CSAHC and the Company      on September 28, 2009                                    |
|             |   |                                                                                                                                                   |
| 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 FinancialOfficer                                                                                               |

----