***
INDICATES CONFIDENTIAL MATERIAL OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SEPARATELY WITH
A REQUEST FOR CONFIDENTIAL TREATMENT.
  PURCHASE
AGREEMENT NUMBER 3263
  between
  THE
BOEING COMPANY
  and
  CHINASOUTHERN
AIRLINES COMPANY LIMITED
  (Contract
Number 07HMB2014US)
  Relating
to Boeing Model 737-71B and 737-81B Aircraft
  with
  CHINA
SOUTHERN AIRLINES (GROUP) IMPORT & EXPORT TRADING
 CORPORATION
  P.A.
      No. 3263BOEING
      PROPRIETARY
  
  TABLE OF
CONTENTS
  SANUMBERARTICLES1.
                                                
                                                Quantity,
      Model and Description
                                                
                                                12.
                                                
                                                Delivery
      Schedule
                                                
                                                13.
                                                
                                                Price
                                                
                                                14.
                                                
                                                Payment
                                                
                                                25.
                                                
                                                Miscellaneous
                                                
                                                2TABLE1.
                                                
                                                Aircraft
      Information Table – Block A Aircraft
                                                
                                                12.
                                                
                                                Aircraft
      Information Table – Block B Aircraft
                                                
                                                1EXHIBITA-l
                                                
                                                Aircraft
      Configuration – Block A Aircraft
                                                
                                                A-1A-2
                                                
                                                Aircraft
      Configuration – Block B Aircraft
                                                
                                                A-2B.
                                                
                                                Aircraft
      Delivery Requirements and Responsibilities
                                                
                                                BSUPPLEMENTAL
      EXHIBITSAE1.
                                                
                                                Escalation
      Adjustment/Airframe and Optional Features
                                                
                                                AE1BFE1.
                                                
                                                BFE
      Variables
                                                
                                                BFE1CS1.
                                                
                                                Customer
      Support Variables
                                                
                                                CS1EE1.
                                                
                                                Engine
      Escalation/Engine Warranty and Patent Indemnity
                                                
                                                EE1SLP1.
                                                
                                                Service
      Life Policy Components
                                                
                                                SLP1
  P.A.
      No. 3263BOEING
      PROPRIETARY
  i
  LETTER
      AGREEMENTS3263-01
                                                              
                                                              Seller
      Purchased Equipment
                                                              
                                                              13263-02
                                                              
                                                              Boeing
      Purchase of Buyer Furnished Equipment
                                                              
                                                              13263-03
                                                              
                                                              Loading
      of Software Owned by or Licensed to Customer
                                                              
                                                              16-1165-CKR-1379
                                                              
                                                              Government
      Approval6-1165-CKR-1380
                                                              
                                                              Aircraft
      Performance Guarantees
                                                              
                                                              16-1165-CKR-1381
                                                              
                                                              Promotional
      Support6-1165-CKR-1382
                                                              
                                                              Special
      Matters6-1165-CKR-1383
                                                              
                                                              Shareholder
      Approval
                                                              
                                                              16-1165-CKR-1384
                                                              
                                                              Special
      Escalation Program6-1165-CKR-1385
                                                              
                                                              Volume
      Agreement6-1165-CKR-1386
                                                              
                                                              Aircraft
      Model Substitution6-1165-CKR-1387
                                                              
                                                              Board
      of Directors Approval
                                                              
                                                              16-1165-CKR-1388
                                                              
                                                              Liquidated
      Damages – Non-Excusable Delay6-1165-CKR-1389
                                                              
                                                              Payment
      Matters6-1165-CKR-1390
                                                              
                                                              Clarifications
      and Understandings
                                                              
                                                              1
 P.A.
      No. 3263BOEING
      PROPRIETARY
  ii
  Purchase
Agreement No. 3263
  between
  The
Boeing Company
  and
  China
Southern Airlines Company Limited
 
 This
Purchase Agreement No. 3263 dated as of 8.20.2007,between The Boeing Company (Boeing)
and China Southern Airlines Company Limited (Customer) relating to the purchase and sale of
Model 737-71B and 737-81B aircraft together with all tables, exhibits,
supplemental exhibits, letter agreements and other attachments thereto, if any,
(Purchase Agreement) incorporates the
terms and conditions of the Aircraft General Terms Agreement dated as of September
19, 2000between Boeing and China Southern Airlines (Group) Import &
Export Trading Corporation, identified as AGTA-GUN (AGTA). Boeing and China
Southern Airlines (Group) Import & Export Trading Corporation consent and
agree that Customer may utilize the AGTA for the Purchase Agreement, and
Customer agrees to be bound by the terms and conditions of the
AGTA.
  Article
      1.
                  Quantity,
      Model and
Description.
  The
aircraft to be delivered to Customer will be designated as Model 737-7IB and
737-81B aircraft (the Aircraft). Boeing
will manufacture and sell to Customer Aircraft conforming to the configuration
described in Exhibit A-l and A-2 in the quantities listed in Table 1 and Table 2
to the Purchase Agreement.
  Article
      2.
              Delivery
      Schedule.
  The
scheduled months of delivery of the Aircraft are listed in the attached Table 1
and Table 2. Exhibit B describes certain responsibilities for both Customer and
Boeing in order to accomplish the delivery of the Aircraft.
  Article
      3.
              Price.
  3.1           Aircraft
Basic Price. The Aircraft Basic Price is listed in Table 1 and Table 2 in
subject to escalation dollars.
 P.A.
      No. 3263BOEING
      PROPRIETARY
  1
  3.2           Advance Payment Base Prices.
The Advance Payment Base Prices listed in Table 1 and Table 2 were calculated
utilizing the latest escalation factors available to Boeing on the date of this
Purchase Agreement projected to the month of scheduled delivery.
  Article
      4.
              Payment.
  4.1           Boeing
acknowledges receipt of a deposit in the amount shown in Table 1 and Table 2 for
each Aircraft (Deposit).
  4.2           The
standard advance payment schedule for the Model 737-71B and 737-81B aircraft
requires Customer to make certain advance payments, expressed in a percentage of
the Advance Payment Base Price of each Aircraft beginning with a payment of 1%,
less the Deposit, on the effective date of the Purchase Agreement for the
Aircraft. Additional advance payments for each Aircraft are due as specified in
and on the first business day of the months listed in the attached Table 1 and
Table 2.
  4.3           For
any Aircraft whose scheduled month of delivery is less than 24 months from the
date of this Purchase Agreement, the total amount of advance payments due for
payment upon signing of this Purchase Agreement will include all advance
payments which are past due in accordance with the standard advance payment
schedule set forth in paragraph 4.2 above.
  4.4           Customer
will pay the balance of the Aircraft Price of each Aircraft at
delivery.
  Article
      5.
              Additional
      Terms.
  5.1           Aircraft
Information Table. Table 1 and Table 2 consolidate information contained
in Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft, (ii)
applicable Detail Specification, (iii) month and year of scheduled deliveries,
(iv) Aircraft Basic Price. (v) applicable escalation factors and (vi) Advance
Payment Base Prices and advance payments and their schedules.
  5.2           Escalation
Adjustment/Airframe and Optional Features. Supplemental Exhibit AE1
contains the applicable airframe and optional features escalation
formula.
  5.3           Buyer
Furnished Equipment Variables. Supplemental Exhibit BFE1 contains vendor
selection dates and other variables applicable to the Aircraft.
 P.A.
      No. 3263BOEING
      PROPRIETARY
  2
  5.4           Customer
Support Variables. Information, training, services and other things
furnished by Boeing in support of introduction of the Aircraft intoCustomer’s
fleet are described in Supplemental Exhibit CS1. The level of support to be
provided under Supplemental Exhibit CS1 (the Entitlements) assumes that at the
time of delivery of Customer’s first Aircraft under the Purchase Agreement,
Customer has taken possession of a 737-71B and 737-81B aircraft whether such
aircraft was purchased, leased or otherwise obtained by Customer from Boeing or
another party. Under no circumstances under the Purchase Agreement or any other
agreement will Boeing provide the Entitlements more than once to support
Customer’s operation of the 737-71B and 737-81B aircraft.
  5.5           Engine
Escalation Variables. Supplemental Exhibit EE1 describes the applicable
engine escalation formula and contains the engine warranty and the engine patent
indemnity for the Aircraft.
  5.6           Service
Life Policy Component Variables. Supplemental Exhibit SLP1 lists the
airframe and landing gear components covered by the Service Life Policy for the
Aircraft (Covered
Components).
  5.7           Public Announcement. Boeing
reserves the right to make a public announcement regarding Customer’s purchase
of the Aircraft upon approval of Boeing’s press release by Customer’s public
relations department or other authorized representative.
  5.8           Negotiated
Agreement; Entire Agreement. This Purchase Agreement, including the
provisions of Article 8.2 of the AGTA relating to insurance, and Article 11 of
Part 2 of Exhibit C of the AGTA relating to DISCLAIMER
AND RELEASE and EXCLUSION
OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion
and negotiation and is understood by the parties; the Aircraft Price and other
agreements of the parties stated in this Purchase Agreement were arrived at in
consideration of such provisions. This Purchase Agreement, including the AGTA,
contains the entire agreement between the parties and supersedes all previous
proposals, understandings, commitments or representations whatsoever, oral or
written, and may be changed only in writing signed by authorized representatives
of the parties.
  5.9           Confidential
Treatment. The information contained herein represents confidential
business information and has value precisely because it is not available
generally or to other parties. By receiving this Purchase Agreement, Customer
agrees to limit the disclosure of its contents to employees of Customer with a
need to know the contents for purposes of helping Customer evaluate or respond
to the Purchase Agreement and who understand they are not to disclose its
contents to any other person or entity without the prior written consent of
Boeing.
 P.A.
      No. 3263BOEING
      PROPRIETARY
  3
  Table 1
to
 Purchase
Agreement No. 3263 - Block A Aircraft
 Aircraft
Delivery, Description, Price and Advance Payments
  Airframe
      Model/MTOW:            737-71B
                                  154,500
      pounds
                                  Detail
      Specification:            D019A001GUN37P-01,
      REV D (7/31/2006)Engine
      Model/Thrust:             CFM56-7B22
                                  22,000
      pounds
                                  Airframe
      Price Base Year/Escalation Formula:Airframe
      Price:
                                  ***
                                  Engine Price Base Year/Escalation
      Formula:                   N/A           N/AOptional
      Features:
                                  ***Sub-Total
      of Airframe and Features:
                                  ***
                                  Airframe
      Escalation Data:Engine
      Price (Per Aircraft):
                                  ***
                                  Base
      Year Index (ECI):         
      ***Aircraft
      Basic Price (Excluding BFE/SPE):
                                  ***
                                  Base
      Year Index
      (ICI):          
      ***Buyer
      Furnished Equipment (BFE) Estimate:
                                  ***Seller
      Purchased Equipment (SPE) Estimate:
                                  ***
  Refundable
Deposit/Aircraft at Proposal Accept:
  DeliveryDate
                  Number ofAircraft
                  Escalation
                    Factor
                    (Airframe)Aug-2011
                  1Dec-2011
                  1Feb-2012
                  1Apr-2012
                  1May-2012
                  1
                  ***
                  
                  
                  ***Jun-2012
                  1Jul-2012
                  2Aug-2012
                  1Sep-2012
                  1Oct-2012
                  1
  P.A.
      No. 326344939-1F.TXT
                          Boeing
      Proprietary
  Page
1
  Table
1 to
 Purchase
Agreement No. 3263 - Block A Aircraft
 Aircraft
Delivery, Description, Price and Advance Payments
  EscalationDelivery
                                                                      Number of
                                                                      FactorDate
                                                                      Aircraft
                                                                      (Airframe)Nov-2012
                                                                      1Dec-2012
                                                                      1Jan-2013
                                                                      1Feb-2013
                                                                      1Mar-2013
                                                                      1
                                                                      ***
                                                                      
                                                                      
                                                                      ***Apr-2013
                                                                      1May-2013
                                                                      1Jun-2013
                                                                      2Jul-2013
                                                                      2Aug-2013
                                                                      1Sep-2013
                                                                      1Oct-2013
                                                                      1Total:
                                                                      25
  P.A.
      No. 326344939-1F.TXT
              Boeing
      Proprietary
  Page
2
  Table
2 to
 Purchase
Agreement No. 3263 - Block B Aircraft
 Aircraft
Delivery, Description, Price and Advance Payments
  Airframe
      Model/MTOW:            737-81B
                                          161,500
      pounds
                                          Detail
      Specification:             D019A001GUN38P-01.
      REV C (2/12/2007)Engine
      Model/Thrust:            CFM56-7B26
                                          26,400
      pounds
                                          Airframe
      Price Base Year/Escalation Formula:Airframe
      Price:
                                          ***
                                          Engine Price Base Year/Escalation
      Formula:                   N/A           N/AOptional
      Features:
                                          ***Sub-Total
      of Airframe and Features:
                                          ***
                                          Airframe
      Escalation Data:Engine
      Price (Per Aircraft):
                                          ***
                                          Base
      Year Index
      (ECI):               
      ***Aircraft
      Basic Price (Excluding BFE/SPE):
                                          ***
                                          Base
      Year Index
      (ICI):                 ***Buyer
      Furnished Equipment (BFE) Estimate:
                                          ***Seller
      Purchased Equipment (SPE) Estimate:
                                          ***Refundable
      Deposit/Aircraft at Proposal Accept:
                                          ***
  DeliveryDate
                                                          Number
      ofAircraft
                                                          Escalation
                                                            Factor(Airframe)May-2011
                                                          1Jul-2011
                                                          1Sep-2011
                                                          1Nov-2011
                                                          2
                                                          ***
                                                          
                                                          
                                                          ***Dec-2011
                                                          1Jan-2012
                                                          1Mar-2012
                                                          1May-2012
                                                          1Jun-2012
                                                          2
  P.A.
      No. 326344938-1F.TXT
              Boeing
      Proprietary
  Page
1
  Table
2 to
 Purchase
Agreement No. 3263 - Block B Aircraft
 Aircraft
Delivery, Description, Price and Advance Payments
  EscalationDelivery
                                                  Number
      of
                                                  FactorDate
                                                  Aircraft
                                                  (Airframe)Jul-2012
                                                  1Aug-2012
                                                  2Sep-2012
                                                  1Jan-2013
                                                  1Feb-2013
                                                  1
                                                  ***
                                                  
                                                  
                                                  ***Mar-2013
                                                  2Apr-2013
                                                  1May-2013
                                                  2Jun-2013
                                                  2Jul-2013
                                                  2Aug-2013
                                                  2Sep-2013
                                                  1Oct-2013
                                                  1Total:
                                                  30
  P.A.
      No. 326344938-1F.TXT
              Boeing
      Proprietary
  Page
2




AIRCRAFT
CONFIGURATION




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Exhibit
A-l to Purchase Agreement Number 3263




Block A
Aircraft





P.A.
      No. 3263BOEING
      PROPRIETARY


A-1


AIRCRAFT
CONFIGURATION




Dated
Aug. 20th, 2007.




relating
to




Block
A




BOEING
MODEL 737-71B AIRCRAFT




The
Detail Specification is Boeing Detail Specification D019A001GUN37P-01 (Revision
TBD) dated as of TBD. Such Detail Specification will be comprised of Boeing
D019A001GUN37P-01 (Revision D) dated as of July 31, 2006 which includes the
Options listed below, including the effects on Manufacturer’s Empty Weight (MEW)
and Operating Empty Weight (OEW). As soon as practicable. Boeing will furnish to
Customer copies of the Detail Specification, which copies will reflect such
Options. The Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the price effects of
any Buyer Furnished Equipment or Seller Purchased Equipment.




*** Following pages
omitted




P.A.
      No. 3263BOEING
      PROPRIETARY




A-1-1




AIRCRAFT
CONFIGURATION




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Exhibit
A-2 to Purchase Agreement Number 3263




Block B
Aircraft




P.A.
      No. 3263BOEING
      PROPRIETARY




A-2




AIRCRAFT
CONFIGURATION




Dated
Aug. 20th, 2007.




relating
to




Block
B




BOEING
MODEL 737-81B AIRCRAFT





The
Detail Specification is Boeing Detail Specification D019A001GUN38P-01 (Revision
TBD) dated as of TBD. Such Detail Specification will be comprised of Boeing
D019A001GUN38P-01 (Revision C) dated as of February 12, 2007 which includes the
Options listed below, including the effects on Manufacturer’s Empty Weight (MEW)
and Operating Empty Weight (OEW). As soon as practicable. Boeing will furnish to
Customer copies of the Detail Specification, which copies will reflect such
Options. The Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the price effects of
any Buyer Furnished Equipment or Seller Purchased Equipment.




*** Following pages
omitted




P.A.
      No. 3263BOEING
      PROPRIETARY


A-2-1




AIRCRAFT
DELIVERY REQUIREMENTS AND RESPONSIBILITIES




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Exhibit B
to Purchase Agreement Number 3263




P.A.
      No. 3263BOEING
      PROPRIETARY


B












AIRCRAFT
DELIVERY REQUIREMENTS AND RESPONSIBILITIES




relating
to




BOEING
MODEL 737-71 Band 737-81B AIRCRAFT




Both
Boeing and Customer have certain documentation and approval responsibilities at
various times during the construction cycle of Customer’s
Aircraft that are critical to making the delivery of each Aircraft a positive
experience for both parties. This Exhibit B documents those responsibilities and
indicates recommended completion deadlines for the actions to be
accomplished.




1.             GOVERNMENT DOCUMENTATION
REQUIREMENTS.




Certain
actions are required to be taken by Customer in advance of the scheduled
delivery month of each Aircraft with respect to obtaining certain government
issued documentation.




1.1              Airworthiness and
Registration Documents.




Not later
than 6 months prior to delivery of each
Aircraft, Customer will notify Boeing of the registration number to be painted
on the side of the Aircraft. In addition, and not later than 3months prior to delivery of each Aircraft.
Customer will, by letter to the regulatory authority having jurisdiction,
authorize the temporary use of such registration numbers by Boeing during the
pre-delivery testing of the Aircraft.




Customer
is responsible for furnishing any Temporary or Permanent Registration
Certificates required by any governmental authority having jurisdiction to be
displayed aboard the Aircraft after delivery.




1.2              Certificate of Sanitary
Construction.




1.2.1              U.S. Registered
Aircraft. Boeing will obtain from the United States Public Health
Service, a United States Certificate of Sanitary Construction to be displayed
aboard each Aircraft after delivery to Customer.




1.2.2              Non-U.S. Registered
Aircraft. If Customer requires a United States Certificate of Sanitary
Construction at the time of delivery of the Aircraft. Customer will give written
notice thereof to Boeing at least 3months prior to delivery. Boeing will then use
its reasonable best efforts to obtain the Certificate from the United States
Public Health Service and present it to Customer at the time of Aircraft
delivery.




P.A.
      No. 3263BOEING
      PROPRIETARY




B-1





1.3             
Customs
Documentation.




1.3.1               Import Documentation.
If the Aircraft is intended to be exported from the United States. Customer must
notify Boeing not later than 3
months prior to deliveryof each Aircraft of any documentation required
by the customs authorities or by any other agency of the country of
import.




1.3.2               General Declaration -
U.S. If the Aircraft is intended to be exported from the United States,
Boeing will prepare Customs Form 7507. General Declaration, for execution by
U.S. Customs immediately prior to the ferry flight of the Aircraft. For this
purpose, Customer will furnish to Boeing not later than 20days prior to deliveryall
information required by U.S. Customs or U.S. Immigration and Naturalization
Service, including without limitation (i) a complete crew and passenger list
identifying the names, birth dates, passport numbers and passport expiration
dates of all crew and passengers and (ii) a complete ferry flight itinerary,
including point of exit from the United States for the Aircraft.




If
Customer intends, during the ferry flight of an Aircraft, to land at a U.S.
airport after clearing Customs at delivery, Customer must notify Boeing not
later than 20 daysprior to deliveryof such intention.
If Boeing receives such notification. Boeing will provide to Customer the
documents constituting a Customs permit to proceed, allowing such Aircraft to
depart after any such landing. Sufficient copies of completed Form 7507, along
with passenger manifest, will be furnished to Customer to cover U.S. stops
scheduled for the ferry flight.




1.3.3              Export
Declaration - U.S. If the
Aircraft is intended
to be exported from the United States, Boeing will prepare Form 7525V and, immediatelyprior to the ferry flight,will
submit such Form to U.S. Customs in Seattle in order
to obtain clearance for the departure of the Aircraft, including any cargo, from the
United States. U.S. Customs will deliver the Export Declaration to the U.S. Department
of Commerce after export.




2.           INSURANCE
CERTIFICATES.




Unless
provided earlier, Customer will provide to Boeing not later than 30 days priorto deliveryof the first
Aircraft, a copy of the requisite annual insurance certificate in accordance
with the requirements of Article 8of the AGTA.




P.A.
      No. 3263BOEING
      PROPRIETARY


B-2





3.     
     NOTICE OF FLYAWAY
CONFIGURATION.




Not later
than 20 days prior to delivery of the
Aircraft, Customer will provide to Boeing a configuration letter stating the
requested “flyaway configuration” of the Aircraft for its ferry flight. This
configuration letter should include:




(i)              
 the name of the company which is to furnish fuel for the ferry
flight and any scheduled post-delivery flight training, the method of payment
for such fuel, and fuel load for the ferry flight;




(ii)               the
cargo to be loaded and where it is to be stowed on board the
Aircraft, the address where cargo is to be shipped after flyaway and notification
of any hazardous materials requiring special handling:




(iii)             
any BFE equipment to be removed prior to flyaway and returned
to Boeing BFE stores for installation on Customer’s subsequent Aircraft;




(iv)             
a complete list of names and citizenship of each crew member
and non-revenue passenger who will be aboard the ferry flight; and




(v)               a
complete ferry flight itinerary.




4.      
     DELIVERY ACTIONS BY
BOEING.




4.1               Schedule of
Inspections. All FAA, Boeing. Customer and, if required, U.S. Customs
Bureau inspections will be scheduled by Boeing for completion prior to delivery
or departure of the Aircraft. Customer will be informed of such
schedules.




4.2               Schedule of Demonstration
Flights. All FAA and Customer demonstration flights will be scheduled by
Boeing for completion prior to delivery of the Aircraft.




4.3               Schedule for Customer’s
Flight Crew. Boeing will inform Customer of the date that a flight crew
is required for acceptance routines associated with delivery of the
Aircraft.




P.A.
      No. 3263BOEING
      PROPRIETARY




B-3





4.4               ***





4.5               Flight Crew and Passenger
Consumables. Boeing will provide reasonable quantities of food, coat
hangers, towels, toilet tissue, drinking cups and soap for the first segment of
the ferry flight for the Aircraft.




4.6               Delivery Papers, Documents
and Data. Boeing will have available at the time of delivery of the
Aircraft certain delivery papers, documents and data for execution and delivery.
If title for the Aircraft will be transferred to Customer through a Boeing sales
subsidiary and if the Aircraft will be registered with the FAA. Boeing will
pre-position in Oklahoma City, Oklahoma, for filing with the FAA at the time of
delivery of the Aircraft an executed original Form 8050-2. Aircraft Bill of
Sale, indicating transfer of title to the Aircraft from Boeing’s sales
subsidiary to Customer.




4.7               Delegation of
Authority. If specifically requested in advance by Customer, Boeing will
present a certified copy of a Resolution of Boeing’s Board of Directors,
designating and authorizing certain persons to act on its behalf in connection
with delivery of the Aircraft.




5.            DELIVERY ACTIONS BY
CUSTOMER.




5.1              
Aircraft Radio Station
License. At delivery Customer will provide its Aircraft Radio Station
License to be placed on board the Aircraft following delivery.




5.2.             
Aircraft Flight
Log. At delivery Customer will provide the Aircraft Flight Log for the
Aircraft.




5.3              
Delegation of
Authority. Customer will present to Boeing at delivery of the Aircraft an
original or certified copy of Customer’s Delegation of Authority designating and
authorizing certain persons to act on its behalf in connection with delivery of
the specified Aircraft.




P.A.
      No. 3263BOEING
      PROPRIETARY




B-4




ESCALATION
ADJUSTMENT




AIRFRAME AND OPTIONAL
FEATURES




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Supplemental
Exhibit AE1 to Purchase Agreement Number 3263




P.A.
      No. 3263BOEING
      PROPRIETARY


AE1




1.
            Formula.             ***





P.A.
      No. 3263BOEING
      PROPRIETARY


AE1 -
1




*
* *




2.
            Values to be Utilized
      in the Event of
Unavailability.




2.1               If
the Bureau of Labor Statistics substantially revises the methodology used for
the determination of the values to be used to determine the ECI-R and ICI values
(in contrast to benchmark adjustments or other corrections of previously
released values), or for any reason has not released values needed to determine
the applicable Airframe Price Adjustment, the parties will, prior to the
delivery of any such Aircraft, select a substitute from other Bureau of Labor
Statistics data or similar data reported by non-governmental organizations. Such
substitute will result in the same adjustment, insofar as possible, as would
have been calculated utilizing the original values adjusted for fluctuation
during the applicable time period. However, if within 24 months after delivery
of the Aircraft, the Bureau of Labor Statistics should resume releasing values
for the months needed to determine the Airframe Price Adjustment, such values
will be used to determine any increase or decrease in the Airframe Price
Adjustment for the Aircraft from that determined at the time of delivery of the
Aircraft.




2.2               Notwithstanding
Article 2.1 above, if prior to the scheduled delivery month of an Aircraft the
Bureau of Labor Statistics changes the base year for determination of the ECI-R
and ICI values as defined above, such re-based values will be incorporated in
the Airframe Price Adjustment calculation.




2.3               In
the event escalation provisions are made non-enforceable or otherwise rendered
void by any agency of the United States Government, the parties agree, to the
extent they may lawfully do so, to equitably adjust the Aircraft Price of any
affected Aircraft to reflect an allowance for increases or decreases consistent
with the applicable provisions of paragraph 1of this Supplemental
Exhibit AE1 in labor compensation and material costs occurring since August of
the year prior to the price base year shown in the Purchase
Agreement.







P.A.
      No. 3263BOEING
      PROPRIETARY


AE1 -
2




BUYER
FURNISHED EQUIPMENT VARIABLES




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Supplemental
Exhibit BFE1 to Purchase Agreement Number 3263




P.A.
      No. 3263BOEING
      PROPRIETARY


BFE1




BUYER
FURNISHED EQUIPMENT VARIABLES




relating
to




BOEING
MODEL AIRCRAFT





This
Supplemental Exhibit BFEI contains vendor selection dates, on-dock dates and
other variables applicable to the Aircraft.




1.
            Supplier
      Selection.




Customer
will:




1.1             
Select and notify Boeing of the suppliers and part numbers of the following BFE
items by the following dates:





Galley
      System
              
              To
      Be DeterminedGalley
      Inserts
              
              To
      Be DeterminedSeats
      (passenger)
              
              To
      Be DeterminedOverhead
      & Audio System
              
              To
      Be DeterminedIn-Seat
      Video System
              
              To Be
      DeterminedMiscellaneous
      Emergency Equipment
              
              To Be
      DeterminedCargo
      Handling Systems GUN
              
              To Be
      Determined




GUN For a
new certification, supplier requires notification 10 months prior to Cargo
Handling System on-dock date.





P.A.
      No. 3263BOEING
      PROPRIETARY


BFE1-1




2.
            On-dock
      Dates




On or
before (To Be Determined), Boeing will provide to Customer a BFE Requirements
On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE
Report which may be periodically revised, setting forth the items, quantities,
on-dock dates and shipping instructions relating to the in-sequence installation
of BFE. For planning purposes, a preliminary BFE on-dock schedule is set forth
below:





Item
                        
                        Preliminary On-Dock
Dates[1Month of
      Delivery:]AircraftSeats
                        
                        To
      Be DeterminedGalleys/Furnishings
                        
                        To
      Be DeterminedMiscellaneous
      Emergency Equipment
                        
                        To
      Be DeterminedElectronics
                        
                        To
      Be DeterminedTextiles/Raw
      Material
                        
                        To
      Be DeterminedCargo
      Systems(Single
      Aisle Programs))
                        
                        To
      Be DeterminedProvision Kits(Single
      Aisle Programs)
                        
                        To
      Be DeterminedRadomes(Single
      Aisle Programs)
                        
                        To
      Be
Determined




3.
            Additional
      Delivery Requirements




Customer
will insure that Customer’s BFE suppliers provide sufficient information to
enable Boeing, when acting as Importer of Record for Customer’s BFE, to comply
with all applicable provisions of the U.S. Customs Service.





P.A.
      No. 3263BOEING
      PROPRIETARY


BFE1-2




CUSTOMER
SUPPORT VARIABLES




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Supplemental
Exhibit CS1 to Purchase Agreement Number 3263




*** Following pages
omitted





P.A.
      No. 3263BOEING
      PROPRIETARY


CS1




ENGINE
ESCALATION,


ENGINE
WARRANTY AND PATENT INDEMNITY




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Supplemental
Exhibit EEI to Purchase Agreement Number 3263





P.A.
      No. 3263BOEING
      PROPRIETARY


EE1




ENGINE
ESCALATION,


ENGINE
WARRANTY AND PATENT INDEMNITY




relating
to




BOEING
MODEL 737-71B and 737-81B AIRCRAFT




1.                    
ENGINE
ESCALATION. No separate engine escalation methodology is defined for the
737-600. -700, -800 or -900 Aircraft. Pursuant to the AGTA, the engine prices
for these Aircraft are included in and will be escalated in the same manner as
the Airframe.




2.                    
ENGINE WARRANTY AND
PRODUCT SUPPORT PLAN. Boeing has obtained from CFM International, Inc.
(or CFM International, S.A., as the case may be) (CFM) the right to extend to
Customer the provisions of CFM’s warranty as set forth below (herein referred to
as the “Warranty”); subject, however, to Customer’s acceptance of the conditions
set forth herein. Accordingly, Boeing hereby extends to Customer and Customer
hereby accepts the provisions of CFM’s Warranty as hereinafter set forth, and
such Warranty shall apply to all CFM56-7 type Engines (including all Modules and
Parts thereof) installed in the Aircraft at the time of delivery or purchased
from Boeing by Customer for support of the Aircraft except that, if Customer and
CFM have executed, or hereafter execute, a General Terms Agreement, then the
terms of that Agreement shall be substituted for and supersede the provisions of
Paragraphs 2.1 through 2.10 below and Paragraphs 2.1 through 2.10 below shall be
of no force or effect and neither Boeing nor CFM shall have any obligation
arising therefrom. In consideration for Boeing’s extension of the CFM Warranty
to Customer, Customer hereby releases and discharges Boeing from any and all
claims, obligations and liabilities whatsoever arising out of the purchase or
use of such CFM56-7 type Engines and Customer hereby waives, releases and
renounces all its rights in all such claims, obligations and liabilities. In
addition, Customer hereby releases and discharges CFM from any and all claims,
obligations and liabilities whatsoever arising out of the purchase or use of
such CFM56-7 type Engines except as otherwise expressly assumed by CFM in such
CFM Warranty or General Terms Agreement between Customer and CFM and Customer
hereby waives, releases and renounces all its rights in all such claims,
obligations and liabilities.




2.1.             Title. CFM warrants
that at the date of delivery, CFM has legal title to and good and lawful right
to sell its CFM56-7 type Engine and Products and furthermore warrants that such
title is free and clear of all claims, liens and encumbrances of any nature
whatsoever.





P.A.
      No. 3263BOEING
      PROPRIETARY


EE1-1




2.2.
            Patents.




2.2.1               CFM
shall handle all claims and defend any suit or proceeding brought against
Customer insofar as based on a claim that any product or part furnished under
this Agreement constitutes an infringement of any patent of the United States,
and shall pay all damages and costs awarded therein against Customer. This
paragraph shall not apply to any product or any part manufactured to Customer’s
design or to the aircraft manufacturer’s design. As to such product or part, CFM
assumes no liability for patent infringement.




2.2.2               CFM’s
liability hereunder is conditioned upon Customer promptly notifying CFM in
writing and giving CFM authority, information and assistance (at CFM’s expense)
for the defense of any suit. In case said equipment or part is held in such suit
to constitute infringement and the use of said equipment or part is enjoined,
CFM shall expeditiously, at its own expense and at its option, either (i)
procure for Customer the rights to continue using said product or part; (ii)
replace the same with a satisfactory and noninfringing product or part; or (iii)
modify the same so it becomes satisfactory and noninfringing. The foregoing
shall constitute the sole remedy of Customer and the sole liability of CFM for
patent infringement.




2.2.3              
The above provisions also apply to products which are the same as those covered
by this Agreement and are delivered to Customer as part of the installed
equipment on CFM56-7 powered Aircraft.




2.3.            Initial Warranty. CFM
warrants that CFM56-7 Engine products will conform to CFM’s applicable
specifications and will be free from defects in material and workmanship prior
to Customer’s initial use of such products.




2.4.
            Warranty
      Pass-On.




2.4.1               If
requested by Customer and agreed to by CFM in writing, CFM will extend warranty
support for Engines sold by Customer to commercial airline operators, or to
other aircraft operators. Such warranty support will be limited to the New
Engine Warranty, New Parts Warranty. Ultimate Life Warranty and Campaign Change
Warranty and will require such operator(s) to agree in writing to be bound by
and comply with all the terms and conditions, including the limitations,
applicable to such warranties.





P.A.
      No. 3263BOEING
      PROPRIETARY


EE1-2


2.4.2                     Any
warranties set forth herein shall not be transferable to a third party, merging
company or an acquiring entity of Customer.




2.4.3                     In
the event Customer is merged with, or acquired by, another aircraft operator
which has a general terms agreement with CFM, the Warranties as set forth herein
shall apply to the Engines, Modules, and Parts.





2.5.
            New Engine
      Warranty.       ***





2.6.
              New Parts
      Warranty.     ***  P.A.
      No. 3263BOEING
      PROPRIETARY
  EE1-3


2.7.
            Ultimate Life
      Warranty.





2.7.1
            CFM
      warrants Ultimate Life limits on the following
  Parts:


(i)
              Fan
      and Compressor Disks/Drums


(ii)
            Fan
      and Compressor Shafts


(iii)
            Compressor
      Discharge Pressure Seal (CDP)


(iv)
            Turbine
      Disks


(v)
            HPT
      Forward and Stub Shaft


(vi)
            LPT
      Driving Cone


(vii)
              LPT
      Shaft and Stub Shaft***





2.8.
            Campaign Change
      Warranty.





2.8.1.           A
campaign change will be declared by CFM when a new Part design introduction.
Part modification, Part Inspection, or premature replacement of an Engine or
Module is required by a mandatory time compliance CFM Service Bulletin or FAA
Airworthiness Directive. Campaign change may also be declared for CFM Service
Bulletins requesting new Part introduction no later than the next Engine or
Module shop visit. CFM will grant following Parts Credit
Allowances:





Engines and
Modules       ***




P.A.
      No. 3263BOEING
      PROPRIETARY




EE1-4


2.8.2.                    Labor
Allowance -      ***





2.8.3.                    Life
Controlled Rotating Parts retired by Ultimate Life limits including FAA and/or
DGAC Airworthiness Directive, are excluded from Campaign Change
Warranty.





2.9.         Limitations.         
THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED. THERE ARE NO IMPLIED WARRANTIES OF
FITNESS OR MERCHANTABILITY. SAID PROVISIONS SET FORTH THE MAXIMUM LIABILITY OF
CFM WITH RESPECT TO CLAIMS OF ANY KIND, INCLUDING NEGLIGENCE, ARISING OUT OF
MANUFACTURE. SALE, POSSESSION. USE OR HANDLING OF THE PRODUCTS OR PARTS THEREOF
OR THEREFOR, AND IN NO EVENT SHALL CFM’S LIABILITY TO CUSTOMER EXCEED THE
PURCHASE PRICE OF THE PRODUCT GIVING RISE TO CUSTOMER’S CLAIM OR INCLUDE
INCIDENTAL OR CONSEQUENTIAL DAMAGES.





2.10.
            Indemnity and
      Contribution.





2.10.1.         
IN THE EVENT CUSTOMER ASSERTS A CLAIM AGAINST A THIRD PARTY FOR DAMAGES OF THE
TYPE LIMITED OR EXCLUDED IN LIMITATIONS. PARAGRAPH 2.9, ABOVE, CUSTOMER SHALL
INDEMNIFY AND HOLD CFM HARMLESS FROM AND AGAINST ANY CLAIM BY OR LIABILITY TO
SUCH THIRD PARTY FOR CONTRIBUTION OR INDEMNITY, INCLUDING COSTS AND EXPENSES
(INCLUDING ATTORNEYS’ FEES) INCIDENT THERETO OR INCIDENT TO ESTABLISHING
SUCCESSFULLY THE RIGHT TO INDEMNIFICATION UNDER THIS PROVISION. THIS INDEMNITY
SHALL APPLY WHETHER OR NOT SUCH DAMAGES WERE OCCASIONED IN WHOLE OR IN PART BY
THE FAULT OR NEGLIGENCE OF CFM. WHETHER ACTIVE, PASSIVE OR IMPUTED.




P.A.
      No. 3263BOEING
      PROPRIETARY




EE1-5


2.10.2.         
CUSTOMER SHALL INDEMNIFY AND HOLD CFM HARMLESS FROM ANY DAMAGE, LOSS, CLAIM, AND
LIABILITY OF ANY KIND (INCLUDING EXPENSES OF LITIGATION AND ATTORNEYS’ FEES) FOR
PHYSICAL INJURY TO OR DEATH OF ANY PERSON, OR FOR PROPERTY DAMAGE OF ANY TYPE.
ARISING OUT OF THE ALLEGED DEFECTIVE NATURE OF ANY PRODUCT OR SERVICE FURNISHED
UNDER THIS AGREEMENT. TO THE EXTENT THAT THE PAYMENTS MADE OR REQUIRED TO BE
MADE BY CFM EXCEED ITS ALLOCATED SHARE OF THE TOTAL FAULT OR LEGAL
RESPONSIBILITY OF ALL PERSONS ALLEGED TO HAVE CAUSED SUCH DAMAGE, LOSS, CLAIM,
OR LIABILITY BECAUSE OF A LIMITATION OF LIABILITY ASSERTED BY CUSTOMER OR
BECAUSE CUSTOMER DID NOT APPEAR IN AN ACTION BROUGHT AGAINST CFM. CUSTOMER’S
OBLIGATION TO INDEMNIFY CFM HEREUNDER SHALL BE APPLICABLE AT SUCH TIME AS CFM IS
REQUIRED TO MAKE PAYMENT PURSUANT TO A FINAL JUDGEMENT IN AN ACTION OR
PROCEEDING IN WHICH CFM WAS A PARTY, PERSONALLY APPEARED, AND HAD THE
OPPORTUNITY TO DEFEND ITSELF. THIS INDEMNITY SHALL APPLY WHETHER OR NOT
CUSTOMER’S LIABILITY IS OTHERWISE LIMITED.






P.A.
      No. 3263BOEING
      PROPRIETARY


EE1-6





SERVICE
LIFE POLICY COMPONENTS




between




THE
BOEING COMPANY




and




CHINA
SOUTHERN AIRLINES COMPANY LIMITED




Supplemental
Exhibit SLP1 to Purchase Agreement Number 3263




P.A.
      No. 3263BOEING
      PROPRIETARY


SLP1


SERVICE
LIFE POLICY COMPONENTS




relating
to




BOEING
MODEL 737 AIRCRAFT





This is
the listing of SLP Components for the Aircraft which relate to Part 3, Boeing Service Life
Policy of Exhibit C. Product Assurance
Document to the AGTA and is a part of Purchase Agreement No.
3263.





1.
            Wing.


(a)
              Upper
      and lower skins and stiffeners between the forward and rear wing
      spars.


(b)
              Wing
      spar webs, chords and stiffeners.


(c)
              Inspar
      wing ribs.


(d)
              Inspar
      splice plates and fittings.


(e)
              Main
      landing gear support structure.


(f)
              Wing
      center section floor beams, lower beams and spanwise beams, but not the
      seat tracks attached to floor beams.


(g)
            Engine
      strut support fittings attached directly to wing primary
      structure.





(h)
            Wing-to-body
      structural attachments.





(i)
            Support
      structure in the wing for spoilers and spoiler actuators; for aileron
      hinges and reaction links; and for leading edge devices and trailing edge
      flaps.





(j)
            Trailing
      edge flap tracks and carriages.





(k)
            Aileron
      leading edge device and trailing edge flap internal, fixed attachment and
      actuator support structure.




P.A.
      No. 3263BOEING
      PROPRIETARY




SLP1-1


2.
              Body.


(a)
              External
      surface skins and doublers, longitudinal stiffeners, longerons and
      circumferential rings and frames between the forward pressure bulkhead and
      the vertical stabilizer rear spar bulkhead and structural support and
      enclosure for the APU but excluding all system components and related
      installation and connecting devices, insulation, lining, and decorative
      panels and related installation and connecting devices.


(b)
              Window
      and windshield structure but excluding the windows and
      windshields.


(c)
              Fixed
      attachment structure of the passenger doors, cargo doors and emergency
      exits, excluding door mechanisms and movable hinge components. Sills and
      frames around the body openings for the passenger doors, cargo doors and
      emergency exits, excluding scuff plates and pressure
  seals.


(d)
              Nose
      wheel well structure, including the wheel well walls, pressure deck,
      bulkheads, and gear support structure.


(e)
              Main
      gear wheel well structure including pressure deck and landing gear beam
      support structure.


(f)
              Floor
      beams and support posts in the control cab and passenger cabin area, but
      excluding seat tracks.


(g)
            Forward
      and aft pressure bulkheads.





(h)
              Keel
      structure between the wing front spar bulkhead and the main gear
      wheel well aft bulkhead including
  splices.








(i)
            Wing
      front and rear spar support bulkheads, and vertical and horizontal
      stabilizer front and rear spar support bulkheads including terminal
      fittings but excluding all system components and related installation and
      connecting devices, insulation, lining, decorative panels and related
      installation and connecting
devices.





(j)
            Support
      structure in the body for the stabilizer pivot and stabilizer
      screw.




P.A.
      No. 3263BOEING
      PROPRIETARY




SLP1-2


3.
            Vertical
      Stabilizer.





(a)
              External
      skins between front and rear spars.


(b)
              Front,
      rear and auxiliary spar chords, webs and stiffeners and attachment
      fittings.


(c)
              Inspar
      ribs.


(d)
              Rudder
      hinges and supporting ribs, excluding bearings.


(e)
              Support
      structure in the vertical stabilizer for rudder hinges, reaction links and
      actuators.


(f)
              Rudder
      internal, fixed attachment and actuator support
  structure.


4.
              Horizontal
      Stabilizer.


(a)
              External
      skins between front and rear spars.


(b)
              Front
      and rear spar chords, webs and stiffeners.


(c)
              Inspar
      ribs.


(d)
              Stabilizer
      center section including hinge and screw support
  structure.


(e)
              Support
      structure in the horizontal stabilizer for the elevator hinges, reaction
      links and actuators.


(f)
              Elevator
      internal, fixed attachment and actuator support
  structure.


5.
              Engine
      Strut.


(a)
              Strut
      external surface skin and doublers and stiffeners.


(b)
              Internal
      strut chords, frames and bulkheads.


(c)
              Strut
      to wing fittings and diagonal brace.


(d)
            Engine
      mount support fittings attached directly to strut structure and including
      the engine-mounted support
fittings.




P.A.
      No. 3263BOEING
      PROPRIETARY


SLP1-3


6.
              Main Landing
      Gear.


(a)
              Outer
      cylinder.


(b)
              Inner
      cylinder, including axles.


(c)
              Upper
      and lower side struts, including spindles, universals and reaction
      links.


(d)
              Drag
      strut.


(e)
              Bell
      crank.


(f)
              Orifice
      support tube.


(g)
              Trunnion
      link.


(h)
              Downlock
      links including spindles and universals.


(i)
              Torsion
      links.


(j)
              Actuator
      beam, support link and beam arm.


7.
              Nose Landing
      Gear.


(a)
              Outer
      cylinder.


(b)
              Inner
      cylinder, including axles.


(c)
              Orifice
      support tube.


(d)
              Upper
      and lower drag strut, including lock links.


(e)
              Steering
      plates and steering collars.


(f)
            Torsion
      links.





NOTE:
            The
      Service Life Policy does not cover any bearings, bolts, bushings, clamps,
      brackets, actuating mechanisms or latching mechanisms used in or on the
      Covered Components.




P.A.
      No. 3263BOEING
      PROPRIETARY




SLP1-4









The
Boeing Company


P.O. Box 3707
 Seattle, WA 98124-2207


China
Southern Airlines Company Limited
 Bai Yun
International Airport
 Guangzhou
510405
 People’s
Republic of China
  Subject:
                  Seller
      Purchased Equipment
 Reference:
                  Purchase
      Agreement No. 3263 (the Purchase Agreement) between
      The Boeing Company (Boeing) and China Southern Airlines Company Limited
      (Customer) relating to Model 737-71B and 737-81B aircraft (the
      Aircraft)
  This
Letter Agreement amends and supplements the Purchase Agreement. All terms used
but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
  Definition of Terms:
  Seller Purchased Equipment (SPE):Buyer Furnished Equipment (BFE) that Boeing purchases for
Customer.
  Developmental Buyer Furnished
Equipment (DBFE):BFE not previously certified for installation on the
same model aircraft.
  Developmental Seller Purchased
Equipment (DSPE):DBFE which is converted to SPE. This Letter Agreement
does not include developmental avionics. Developmental avionics are avionics
that have not been previously certified for installation on the same model
aircraft.
  P.A.
      No. 3263
                      Seller_Purchased_EquipmentBOEING
      PROPRIETARY







China
Southern Airlines Company Limited


3263-01


Page
2





1.
            Price.





Advance Payments. An
estimated SPE price is included in the Advance Payment Base Prices shown in
Table 1 for the purpose of establishing the advance payments for the
Aircraft.





Aircraft Price. The
Aircraft Price will be adjusted to reflect the actual costs charged to Boeing by
the SPE suppliers and transportation charges.





2.
            Responsibilities.





2.1
            Customer
      is responsible for:





(i)
            selecting
      and notifying Boeing of the supplier for all items identified in paragraph
      1.1 of Supplemental Exhibit BFE1 of the Purchase
  Agreement,





(ii)
            selecting
      a FAA certifiable part; and





(iii)
            providing
      to Boeing the SPE part specification/Customer
  requirements.





2.2.
            Boeing
      is responsible for:





(i)
            placing
      and managing the purchase order with the
  supplier;





(ii)
            coordinating
      with the suppliers on technical
issues;





(iii)
            ensuring
      that the delivered SPE complies with the part
    specification:





(iv)
            obtaining
      certification of the Aircraft with the SPE installed;
  and





(v)
            obtaining
      for Customer the supplier’s standard warranty for the SPE. SPE is deemed
      to be BFE for purposes of Part 2 and Part 4 of Exhibit C, the Product
      Assurance Document.





P.A. No.
3263


Seller_Purchased_Equipment


BOEING
      PROPRIETARY










China
Southern Airlines Company Limited


3263-01


Page
3





3.
            Supplier Selection For
      SPE Galleys and Seats.





In
addition to those responsibilities described above, for SPE galleys and seats
the following provisions apply with respect to Customer’s selection of
suppliers:





Galley Requirements.
Customer will provide Boeing the definitive galley configuration requirements,
including identification of refrigeration requirements and fixed and removable
insert equipment by quantity, manufacturer and part number not later than (To Be
Determined).





Seat Requirements.
Customer will provide to Boeing the definitive seat configuration requirements
not later than (To Be Determined).





Bidder’s List. For
information purposes, Boeing will submit to Customer a bidder’s list of existing
suppliers of seats and galleys within 120 days of the supplier selection date
referred to in paragraph 2.1 (i) above.





Request for Quotation
(RFQ). Approximately 90 days prior to the supplier selection date. Boeing
will issue its RFQ inviting potential bidders to submit bids for the galleys and
seats within 30 days of the selection date.





Recommended Bidders.
Not later than 15 days prior to the supplier selection date. Boeing will submit
to Customer a list of recommended bidders from which to choose a supplier for
the galleys and seats. The recommendation is based on an evaluation of the bids
submitted using price, weight, warranty and schedule as the
criteria.





Supplier Selection.
If Customer selects a seat or galley supplier that is not on the Boeing
recommended list, such seat or galley will become BFE and the provisions of
Exhibit A. Buyer Furnished Equipment Provisions Document, of the AGTA will
apply.





4.
            Changes.





After
this Letter Agreement is signed, changes to SPE may only be made by and between
Boeing and the suppliers. Customer’s contacts with SPE suppliers relating to
design (including selection of materials and colors), weights, prices or
schedules are for informational purposes only. If Customer wants any changes
made, requests must be made directly to Boeing for coordination with the
supplier.





P.A. No.
3263


Seller_Purchased_Equipment


BOEING
      PROPRIETARY







China
Southern Airlines Company Limited


3263-01


Page
4





5.
            Proprietary
      Rights.





Boeing’s
obligation to purchase SPE will not impose upon Boeing any obligation to
compensate Customer or any supplier for any proprietary rights Customer may have
in the design of the SPE.





6.
            Remedies.





If
Customer does not comply with the obligations above, Boeing may:





(i)
            delay
      delivery of the Aircraft;





(ii)
            deliver
      the Aircraft without installing the
SPE:





(iii)
            substitute
      a comparable part and invoice Customer for the
  cost;





(iv)
            increase
      the Aircraft Price by the amount of Boeing’s additional costs attributable
      to such noncompliance.





7.
            Customer’s
      Indemnification of Boeing.





Customer
will indemnify and hold harmless Boeing from and against all claims and
liabilities, including costs and expenses (including attorneys’ fees) incident
thereto or incident to successfully establishing the right to indemnification,
for injury to or death of any person or persons, including employees of Customer
but not employees of Boeing, or for loss of or damage to any property, including
Aircraft, arising out of or in any way connected with any nonconformance or
defect in any SPE and whether or not arising in tort or occasioned in whole or
in part by the negligence of Boeing. This indemnity will not apply with respect
to any nonconformance or defect caused solely by Boeing’s installation of the
SPE.





P.A. No.
3263


Seller_Purchased_Equipment


BOEING
      PROPRIETARY












The
Boeing Company


P.O.
Box 3707


Seattle,
WA 98124-2207





3263-02





China
Southern Airlines Company Limited


Bai Yun
International Airport


Guangzhou
510405


People’s
Republic of China





Subject:
            Boeing
      Purchase of Buyer Furnished
Equipment





Reference:
            Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)





This
letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.





Customer
will sell to Boeing the Buyer Furnished Equipment (BFE) listed in the Annex to
Exhibit A to this Letter Agreement under the terms and conditions set forth
below.





1.           Customer
will deliver to Boeing a Bill of Sale for the BFE conveying good title, free of
any encumbrances, in the form of Exhibit A to this Letter Agreement (BFE Bill of
Sale) immediately prior to delivery of the Aircraft.





2.           The
BFE purchase price will be the amount stated on the BFE Bill of Sale applicable
to the Aircraft and will be paid to Customer simultaneously with receipt by
Boeing of the Aircraft Price balance at Aircraft delivery. Boeing will deliver a
Bill of Sale for the BFE to Customer at the time of payment in the form of
Exhibit B to this Letter Agreement.





3.           Customer
will pay to Boeing the amount of any taxes, duties or other charges of whatever
nature imposed by any United States, Federal, State or local taxing authority,
or any taxing authority outside the United States required to be paid by Boeing
as a result of any sale, purchase, use, ownership, delivery, transfer, storage
or other activity associated with any of the BFE purchased as part of this
Letter Agreement.




P.A. No.
3263


Boeing_BFE_Purchase


BOEING
      PROPRIETARY










China
Southern Airlines Company Limited


3263-02


Page
2





4.           The
purchase price of the Aircraft will be increased by the amount paid by Boeing
for the BFE as shown on the applicable BFE Bill of Sale plus any amounts which
are identified at the time of Aircraft delivery to be due to Boeing from
Customer pursuant to the provisions of paragraph 3, above. The remainder of any
charges due Boeing from Customer pursuant to paragraph 3 will be payable to
Boeing upon demand.





5.           Customer
will indemnify and hold harmless Boeing from and against all claims, suits,
actions, liabilities, damages, costs and expenses for any actual or alleged
infringement of any patent issued or equivalent right under the laws of any
country arising out of or in any way connected with any sale, purchase, use,
ownership, delivery, transfer, storage or other activity associated with any of
the BFE purchased as part of this Letter Agreement.





6.           Customer
will indemnify and hold harmless Boeing from and against all claims and
liabilities, including costs and expenses (including attorneys’ fees) incident
thereto or incident to successfully establishing the right to indemnification,
for injury to or death of any person or persons, including employees of Customer
but not employees of Boeing, or for loss of or damage to any property, including
any aircraft, arising out of or in any way connected with the performance by
Boeing of services or other obligations under this Letter Agreement and whether
or not arising in tort or occasioned in whole or in part by the negligence of
Boeing.





7.           Boeing
makes no warranty other than warranty of such title to the BFE as has been
transferred by Customer to Boeing pursuant to this Letter Agreement. The
exclusion of liabilities and other provisions of the AGTA are applicable to this
Letter Agreement.





8.           For
the purposes of this Letter Agreement, the term “Boeing” includes The Boeing
Company, its divisions, subsidiaries, affiliates, the assignees of each, and
their directors, officers, employees and agents.





P.A. No.
3263


Boeing_BFE_Purchase


BOEING
      PROPRIETARY










Annex
to


Exhibit A
to


3263-02





SCHEDULE OF EQUIPMENT
(BFE)





Applicable
to





Model
737- Aircraft bearing





Manufacturer’s
Serial No. +





Document
PED





issued





Revision
of








P.A. No.
3263


Boeing_BFE_Purchase


BOEING
      PROPRIETARY







Annex
to


Exhibit B
to


3263-02





SCHEDULE OF EQUIPMENT
(BFE)





Applicable
to





Model
737- Aircraft bearing





Manufacturer’s
Serial No. +





Document
PED





issued





Revision
of








P.A. No.
3263


Boeing_BFE_Purchase


BOEING
      PROPRIETARY















The
Boeing Company


P.O.
Box 3707


Seattle,
WA 98124-2207





3263-03





China
Southern Airlines Company Limited


Bai Yun
International Airport


Guangzhou
510405


People’s
Republic of China





Subject:
            Loading
      of Software Owned by or Licensed to
Customer





Reference:
            Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)





This
Letter Agreement amends and supplements the Purchase Agreement. All terms used
but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.





1.           Customer
may request Boeing to install software owned by or licensed to Customer
(Software) in the following systems in the Aircraft: i) aircraft communications
addressing and reporting system (ACARS), ii) digital flight data acquisition
unit (DFDAU), iii) flight management system (FMS), iv) cabin management system
(CMS), v) engine indication and crew alerting system (EICAS) vi) airplane
information management system (AIMS), vii) satellite communications system
(SATCOM), and viii) In-Flight Entertainment (IFE).





2.           For
all Software described in items i) thru vi) above, the Software is not part of
the configuration of the Aircraft certified by the FAA and therefore cannot be
installed prior to delivery. If requested by Customer, Boeing will install the
Software, described in items i) thru vi) above, after the transfer to Customer
of title to the Aircraft, but before fly away.





3.           The
SATCOM Software, described in item vii), above, is part of the configuration of
the Aircraft and included in the type design. If requested by Customer, Boeing
will install the SATCOM Software prior to transfer to Customer of title to the
Aircraft.





4.           For
Software described in item viii) above, if requested by Customer. Boeing will
make the Aircraft accessible to Customer and Customer’s IFE Software supplier so
that the supplier can install the Software after delivery of the Aircraft, but
before fly away.





P.A. No.
3263


Customer_Software


BOEING
      PROPRIETARY










China
Southern Airlines Company Limited


3263-03


Page
2





5.           All
Software which is installed by Boeing other than the SATCOM software identified
in paragraph 3, above, will be subject to the following conditions:





i)
            Customer
      and Boeing agree that the Software is BFE for the purposes of Articles
      3.1.3, 3.2,3.4, 3.5, 3.10,9. 10 and 11 of Exhibit A. Buyer Furnished
      Equipment Provisions Document, to the AGTA and such articles apply to the
      installation of the Software.





ii)
            Customer
      and Boeing further agree that the installation of the Software is a
      service under Exhibit B. Customer Support Document, to the
      AGTA.





iii)
            Boeing
      makes no warranty as to the performance of such installation and Article
      11 of Part 2 of Exhibit C of the AGTA. Disclaimer and Release; Exclusion
      of Liabilities and Article 8.2, Insurance, of the AGTA apply to the
      installation of the Software.








P.A. No.
3263


Customer_Software


BOEING
      PROPRIETARY












The
Boeing Company


P.O.
Box 3707


Seattle,
WA 98124-2207





6-1165-CKR-I380





China
Southern Airlines Company Limited


Bai Yun
International Airport


Guangzhou
510405


People’ s
Republic of China





Subject:
            Aircraft
      Performance Guarantees





Reference:
            Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)





This
letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.





Boeing
agrees to provide Customer with the performance guarantees in the Attachments.
These guarantees are exclusive and expire upon delivery of the Aircraft to
Customer.





Customer
understands that certain commercial and financial information contained in this
Letter Agreement is considered by Boeing as confidential. Customer agrees that
it will treat this Letter Agreement and the information contained herein as
confidential and will not, without the prior written consent of Boeing, disclose
this Letter Agreement or any information contained herein to any other person or
entity.





P.A. No.
3263


Performance_Guarantees


BOEING
      PROPRIETARY







Attachment
A to Letter Agreement
 No.
6-1165-CKR-I380
 CFM56-7B22
Engines
 Page
1
  BLOCK A
AIRCRAFT
  MODEL
737-71B PERFORMANCE GUARANTEES
  FOR
CHINA SOUTHERN AIRLINES
  SECTION
                                    
                                    CONTENTS1
                                    
                                    AIRCRAFT
      MODEL APPLICABILITY
                                    
                                    22
                                    
                                    FLIGHT
      PERFORMANCE3
                                    
                                    MANUFACTURER’S
      EMPTY WEIGHT
                                    
                                    34
                                    
                                    AIRCRAFT
      CONFIGURATION
                                    
                                    35
                                    
                                    GUARANTEE
      CONDITIONS
                                    
                                    36
                                    
                                    GUARANTEE
      COMPLIANCE
                                    
                                    57
                                    
                                    EXCLUSIVE
      GUARANTEES
                                    
                                    5
  P.A.
      No. 3263AERO-B-BBA4-M07-0753
                      SS07-0473
  
  Attachment
A to Letter Agreement
 No.
6-l165-CKR-1380
 CFM56-7B22
Engines
 Page
2
  1
              AIRCRAFT
      MODEL
  APPLICABILITY      ***
 P.A.
      No. 3263AERO-B-BBA4-M07-0753
                        SS07-0473
  Attachment
A to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B22
Engines
 Page
3
  3
              MANUFACTURER’S
      EMPTY WEIGHT
  The
Manufacturer’s Empty Weight (MEW) is guaranteed not to exceed the value in
Section 03-60-00 of Detail Specification D019A001GUN37P-1 Revision D, plus 300
lb for airplane improvements and production changes to the baseline MEW of the
737NG Configuration Specification that have taken place since the original
release of the Detail Specification, which have not yet been incorporated into
the Detail Specification MEW, plus one percent.
  4
              AIRCRAFT
      CONFIGURATION
  4.1
              The
      guarantees contained in this Attachment are based on the Aircraft
      configuration as defined in Detail Specification D019A001GUN37P-1 Revision
      D (hereinafter referred to as the Detail Specification). Appropriate
      adjustment shall be made for changes in such Detail Specification approved
      by the Customer and Boeing or otherwise allowed by the Purchase Agreement
      which cause changes to the flight performance and/or weight and balance of
      the Aircraft. Such adjustment shall be accounted for by Boeing in its
      evidence of compliance with the
guarantees.
  4.2
              The
      Manufacturer’s Empty Weight guarantee of Section 3 will be adjusted by
      Boeing for the following in its evidence of compliance with the
      guarantees:
  (1)        Changes
to the Detail Specification or any other changes mutually agreed upon between
the Customer and Boeing or otherwise allowed by the Purchase
Agreement.
  (2)        The
difference between the component weight allowances given in Appendix IV of the
Detail Specification and the actual weights.
  5
              GUARANTEE
      CONDITIONS
  5.1
              All
      guaranteed performance data are based on the International Standard
      Atmosphere (ISA) and specified variations therefrom: altitudes are
      pressure altitudes.
  5.2
              The
      FAA Regulations (FAR) referred to in this Attachment are, unless otherwise
      specified, the 737-700 Certification Basis regulations specified in the
      Type Certificate Data Sheet A16WE, Revision 33, dated March 8,
      2002.
 P.A.
      No. 3263AERO-B-BBA4-M07-0753
                      SS07-0473
 
  Attachment
A to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B22
Engines
 Page
4
  5.3
              In
      the event a change is made to any law, governmental regulation or
      requirement, or in the interpretation of any such law, governmental
      regulation or requirement that affects the certification basis for the
      Aircraft as described in Paragraph 5.2, and as a result thereof, a change
      is made to the configuration and/or the performance of the Aircraft in
      order to obtain certification, the guarantees set forth in this Attachment
      shall be appropriately modified to reflect any such
  change.
  5.4
              The
      takeoff and landing guarantees are based on hard surface, level and dry
      runways with no wind or obstacles, no clearway or stopway, 225 mph tires,
      with Category F brakes and anti-skid operative, and with the Aircraft
      center of gravity at the most forward limit unless otherwise specified.
      The takeoff performance is based on no engine bleed for air conditioning
      or thermal anti-icing and the Auxiliary Power Unit (APU) turned off unless
      otherwise specified. The improved climb performance procedure will be used
      for takeoff as required. The landing performance is based on the use of
      automatic spoilers.
  5.5
              The
      cruise range guarantee includes allowances for normal power extraction and
      engine bleed for normal operation of the air conditioning system. Normal
      electrical power extraction shall be defined as not less than a 50
      kilowatts total electrical load. Normal operation of the air conditioning
      system shall be defined as pack switches in the “Auto” position, the
      temperature control switches in the “Auto” position that results in a
      nominal cabin temperature of 75°F, and all air conditioning systems
      operating normally. This operation allows a maximum cabin pressure
      differential of 8.35 pounds per square inch at higher altitudes, with a
      nominal Aircraft cabin ventilation rate of 2.200 cubic feet per minute
      including passenger cabin recirculation (nominal recirculation is 33
      percent). The APU is turned off unless otherwise
  specified.
  5.6
              The
      cruise range guarantee is based on an Aircraft center of gravity location
      of 22.2 percent of the mean aerodynamic
chord.
  5.7
              Performance,
      where applicable, is based on a fuel Lower Heating Value (LHV) of 18,580
      BTU per pound.
 P.A.
      No. 3263AERO-B-BBA4-M07-0753
                      SS07-0473
  Attachment
A to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B22
Engines
 Page
5
  6
              GUARANTEE
      COMPLIANCE
  6.1
              Compliance
      with the guarantees of Sections 2 and 3 shall be based on the conditions
      specified in those sections, the Aircraft configuration of Section 4 and
      the guarantee conditions of Section
5.
  6.2
              Compliance
      with the takeoff and landing guarantees shall be based on the FAA approved
      Airplane Flight Manual for the Model
737-700.
  6.3
              Compliance
      with the cruise range guarantee shall be established by calculations based
      on flight test data obtained from an aircraft in a configuration similar
      to that defined by the Detail
Specification.
  6.4
              Compliance
      with the Manufacturer’s Empty Weight guarantee shall be based on
      information in the “Weight and Balance Control and Loading Manual -
      Aircraft Report.”
  6.5
              The
      data derived from tests shall be adjusted as required by conventional
      methods of correction, interpolation or extrapolation in accordance with
      established engineering practices to show compliance with these
      guarantees.
  6.6
              Compliance
      shall be based on the performance of the airframe and engines in
      combination, and shall not be contingent on the engine meeting its
      manufacturer’s performance
specification.
  7
              EXCLUSIVE
      GUARANTEES
  The only
performance guarantees applicable to the Aircraft are those set forth in this
Attachment.
 P.A.
      No. 3263AERO-B-BBA4-M07-0753
                      SS07-0473
 Attachment
B to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B26
Engines
 Page
1
  BLOCK B
AIRCRAFT
  MODEL
737-81B PERFORMANCE GUARANTEES
  FOR
CHINA SOUTHERN AIRLINES
  SECTION
                                  
                                  CONTENTS1
                                  
                                  AIRCRAFT
      MODEL APPLICABILITY
                                  22
                                  
                                  FLIGHT
      PERFORMANCE
                                  23
                                  
                                  MANUFACTURER’S
      EMPTY WEIGHT
                                  34
                                  
                                  AIRCRAFT
      CONFIGURATION
                                  35
                                  
                                  GUARANTEE
      CONDITIONS
                                  36
                                  
                                  GUARANTEE
      COMPLIANCE
                                  47
                                  
                                  EXCLUSIVE
      GUARANTEES
                                  5
 P.A.
      No. 3263AERO-B-BBA4-M07-0755
                      SS07-0473
 Attachment
B to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B26
Engines
 Page
2
  1
              AIRCRAFT
      MODEL APPLICABILITY      ***
  2
              FLIGHT
      PERFORMANCE      ***
 P.A.
      No. 3263AERO-B-BBA4-M07-0755
                      SS07-0473
 Attachment
B to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B26
Engines
 Page
3
  3
              MANUFACTURER’S EMPTY
    WEIGHT
  The
Manufacturer’s Empty Weight (MEW) is guaranteed not to exceed the value in
Section 03-60-00 of Detail Specification D019A001GUN38P-1 Revision C, plus 350
lb for airplane improvements and production changes to the baseline MEW of the
737NG Configuration Specification that have taken place since the original
release of the Detail Specification, which have not yet been incorporated into
the Detail Specification MEW, plus one percent.
  4
              AIRCRAFT
      CONFIGURATION
  4.1
              The
      guarantees contained in this Attachment are based on the Aircraft
      configuration as defined in Detail Specification D019A001GUN38P-1 Revision
      C (hereinafter referred to as the Detail Specification). Appropriate
      adjustment shall be made for changes in such Detail Specification approved
      by the Customer and Boeing or otherwise allowed by the Purchase Agreement
      which cause changes to the flight performance and/or weight and balance of
      the Aircraft. Such adjustment shall be accounted for by Boeing in its
      evidence of compliance with the
guarantees.
  4.2
              The
      Manufacturer’s Empty Weight guarantee of Section 3 will be adjusted by
      Boeing for the following in its evidence of compliance with the
      guarantees:
  (1)        Changes
to the Detail Specification or any other changes mutually agreed upon between
the Customer and Boeing or otherwise allowed by the Purchase
Agreement.
  (2)        The
difference between the component weight allowances given in Appendix IV of the
Detail Specification and the actual weights.
  5
              GUARANTEE
      CONDITIONS
  5.1
              All
      guaranteed performance data are based on the International Standard
      Atmosphere (ISA) and specified variations therefrom; altitudes are
      pressure altitudes.
  5.2
              The
      FAA Regulations (FAR) referred to in this Attachment are, unless otherwise
      specified, the 737-800 Certification Basis regulations specified in the
      Type Certificate Data Sheet A16WE, Revision 33, dated March 8,
      2002.
 P.A.
      No. 3263AERO-B-BBA4-M07-0755
                      SS07-0473
 
  Attachment
B to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B26
Engines
 Page
4
  5.3
              In
      the event a change is made to any law, governmental regulation or
      requirement, or in the interpretation of any such law, governmental
      regulation or requirement that affects the certification basis for the
      Aircraft as described in Paragraph 5.2, and as a result thereof, a change
      is made to the configuration and/or the performance of the Aircraft in
      order to obtain certification, the guarantees set forth in this Attachment
      shall be appropriately modified to reflect any such
  change.
  5.4
              The
      takeoff and landing guarantees are based on hard surface, level and dry
      runways with no wind or obstacles, no clearway or stopway, 225 mph tires,
      with Category C brakes and anti-skid operative, and with the Aircraft
      center of gravity at the most forward limit unless otherwise specified.
      The takeoff performance is based on no engine bleed for air conditioning
      or thermal anti-icing and the Auxiliary Power Unit (APU) turned off unless
      otherwise specified. The improved climb performance procedure will be used
      for takeoff as required. The landing performance is based on the use of
      automatic spoilers.
  5.5
              The
      cruise range guarantee includes allowances for normal power extraction and
      engine bleed for normal operation of the air conditioning system. Normal
      electrical power extraction shall be defined as not less than a 50
      kilowatts total electrical load. Normal operation of the air conditioning
      system shall be defined as pack switches in the “Auto” position, the
      temperature control switches in the “Auto” position that results in a
      nominal cabin temperature of 75°F, and all air conditioning systems
      operating normally. This operation allows a maximum cabin pressure
      differential of 8.35 pounds per square inch at higher altitudes, with a
      nominal Aircraft cabin ventilation rate of 3,300 cubic feet per minute
      including passenger cabin recirculation (nominal recirculation is 47
      percent). The APU is turned off unless otherwise
  specified.
  5.6
              The
      cruise range guarantee is based on an Aircraft center of gravity location
      of 26.2 percent of the mean aerodynamic
chord.
  5.7
              Performance,
      where applicable, is based on a fuel Lower Heating Value (LHV) of 18,580
      BTU per pound.
  6
              GUARANTEE
      COMPLIANCE
  6.1
              Compliance
      with the guarantees of Sections 2 and 3 shall be based on the conditions
      specified in those sections, the Aircraft configuration of Section 4 and
      the guarantee conditions of Section
5.
 P.A.
      No. 3263AERO-B-BBA4-M07-0755
                      SS07-0473
 Attachment
B to Letter Agreement
 No.
6-1165-CKR-1380
 CFM56-7B26
Engines
 Page
5
  6.2
              Compliance
      with the takeoff and landing guarantees shall be based on the FAA approved
      Airplane Flight Manual for the Model
737-800.
 
 6.3
              Compliance
      with the cruise range guarantee shall be established by calculations based
      on flight test dataobtained from an aircraft in a configuration similar to that
      defined by the Detail
Specification.
 
 6.4
              Compliance
      with the Manufacturer’s
      Empty Weight guarantee shall be based on information in the “Weight and
      Balance Control and Loading Manual - Aircraft
  Report.”
 
 6.5
              The
      data derived from tests shall be adjusted as required by conventional
      methods of correction, interpolation or
      extrapolation in accordance with established engineering practices to show
      compliance with these guarantees.
 
 6.6
              Compliance
      shall be based on the performance of the airframe and engines in
      combination, and shall not be contingent on
      the engine meeting its manufacturer’s
      performance specification.
 
 7
              EXCLUSIVE
      GUARANTEES
  The only
performance guarantees applicable to the Aircraft are those set forth in this
Attachment.
 P.A.
      No. 3263AERO-B-BBA4-M07-0755
                      SS07-0473
 
  The
      Boeing CompanyP.O.
      Box 3707Seattle,
      WA 98124-2207
   6-1165-CKR-1383
  China
Southern Airlines Company Limited
 Bai Yun
International Airport
 Guangzhou
510405
 People’s
Republic of China
  Subject:
              Shareholder
      Approval
  Reference:
              Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)
  This
letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.
  1.                   Listing
Matters.
  Customer
is a listed issuer of equity securities at the Stock Exchange of Hong Kong
Limited (Stock Exchange). Under the governing rules of the Stock Exchange,
Customer’s
purchase of the Aircraft is a transaction classified as a “very substantial
acquisition”. Such classification by the Stock Exchange requires Customer to
comply with the disclosure and shareholder approval requirements regarding the
purchase of the Aircraft.
  2.                  
Shareholder
Approval.
  As
required by the listing rules of the Stock Exchange, a “very substantial
acquisition transaction” must be approved by shareholders in a general meeting.
Shareholder approval for the purchase by the Customer of the Aircraft will be
obtained, following the process defined under the listing rules, as soon as
practicable after the signing of this Letter Agreement. Customer agrees that it
will advise Boeing of such approval when obtained by providing written or
telegraphic notice on December 10, 2007, or as soon thereafter as
practicable.
 P.A.
      No. 3263
                      Shareholder_ApprovalBOEING
      PROPRIETARY
  
  
 The
      Boeing CompanyP.O.
      Box 3707Seattle,
      WA 98124-2207
  6-1165-CKR-1387
  China
Southern Airlines Company Limited
 Bai Yun
International Airport
 Guangzhou
510405
 People’s
Republic of China
  Subject:
              Board
      of Directors Approval
  Reference:
              Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)
  This
letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same
meaning as in the Purchase Agreement.
  1.                  
Board of Directors
Approval.
  Customer
requires the approval of the Board of Directors of China Southern Airlines
Company Limited prior to entering into the Purchase Agreement. Customer and
China Southern Airlines (Group) Import & Export Trading Corporation
signatures on this Letter Agreement is acknowledgement that Customer has
obtained such approvals.
 P.A.
      No. 3263
                        Board_of_Directors_ApprovalBOEING
      PROPRIETARY
 
 The
      Boeing CompanyP.O.
      Box 3707Seattle,
      WA 98124-2207
  6-1165-CKR-1390
  China
Southern Airlines Company Limited
 Bai Yun
International Airport
 Guangzhou
510405
 People’s
Republic of China
  Subject:
              Clarifications
      and Understandings
  Reference:
              Purchase
      Agreement No. 3263 (the Purchase Agreement) between The Boeing Company
      (Boeing) and China Southern Airlines Company Limited (Customer) relating
      to Model 737-71B and 737-81B aircraft (the
  Aircraft)
  This
Letter Agreement amends and supplements the Purchase Agreement. All terms used
but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
  1. Clarifications and
Understandings.    The following clarifications and
understandings pertain to the indicated provisions of the Purchase
Agreement:
  Article
      1.
              Quantity,
      Model and Description.
  As a
point of clarification, as set forth in the AGTA, the Aircraft are manufactured
to conform to the appropriate Type Certificate issued by the United States
Federal Aviation Administration (FAA) for the specific model of aircraft, and
the aircraft will obtain either a Standard Airworthiness Certificate r an Export
Certificate of Airworthiness issued pursuant to Part 21 of the Federal Aviation
Regulations.
  The Civil
Aviation Authority of China (CAAC) has indicated to the FAA that Boeing’s
manufacturing procedures meet the bi-lateral agreements between the responsible
parties. The FAA uses FAR Part 25 to establish Type Certificate. Similarly, the
CAAC uses its CAR 25 for Type Certificate. CAR 25 is not identical to the FAA,
but the CAAC considers both to be sufficiently equivalent to recognize the FAA
Type Certificate to be valid.
  In the
issuance of an Export Certificate of Airworthiness, the FAA complies with any
additional CAAC requirements through the use of Advisory Circular 21-2 (AD
21-2). Such additional requirements are documented by the FAA in AC
21-2.
 P.A.
      No. 3263
                        Clarifications_and_UnderstandingsBOEING
      PROPRIETARY
 China
Southern Airlines Company Limited
 6-1165-CKR-1390
 Page
2
  Article
      4.
              Payment.
  Paragraph
4.2 refers to payments due on the “effective date” of the Purchase Agreement.
Paragraph 4.3 refers to payments due “upon signing” of the Purchase Agreement.
For the avoidance of doubt, the effective date of the Purchase Agreement is the
day it is signed. Such date appears in the first sentence of the Purchase
Agreement and again just above the signature blocks of the parties to the
Purchase Agreement.
  Boeing
will provide invoices for all payments due under the Purchase Agreement. Boeing
will provide final aircraft delivery invoices not later than 30 days prior to
scheduled delivery date.
  Exhibit B,
                Aircraft
      Delivery Requirements and Responsibilities,Paragraph 1.1,Airworthiness
      and Registration Documents.
  Notwithstanding
the provisions of Exhibit B. Paragraph 1.1, the following provisions shall
instead apply in lieu thereof to all aircraft under the Purchase
Agreement.
  1.1          Airworthiness and
Registration Documents.
  Not later
than 4 months prior to deliveryofeach Aircraft, Customer will
notify Boeing of the registration number to be painted on the side of the
Aircraft. In addition, and not later than 3months prior to delivery of each Aircraft. Customer will,
by letter to the regulatory authority having jurisdiction, authorize the
temporary use of such registration numbers by Boeing during the predelivery
testing of the Aircraft.
  Customer
is responsible for furnishing any Temporary or Permanent Registration
Certificates required by any governmental authority having jurisdiction to be
displayed aboard the Aircraft after delivery.
  Exhibit B,
              Aircraft
      Delivery Requirements and Responsibilities, Paragraph 4., Delivery
      Actions by Boeing.
  Paragraph
4.1 Schedule of Inspections and 4.2 Schedule for Demonstration Flights identify
parties that participate in such actions. The Civil Aviation Authority of China
(CAAC) may also participate in these actions.
  In
addition to the fuel provided by Boeing pursuant to paragraph 4.4, Boeing
assists its customers with unique services or accommodation items at no
additional charge. If requested, Boeing provides oil and hydraulic fluid for the
ferry flight. Also, if the customer doesn’t load their own navigation database
for ferry flight, Boeing will provide a limited-time use database for the ferry
flight.
 P.A.
      No. 3263
                        Clarifications_and_UnderstandingsBOEING
      PROPRIETARY
 China
Southern Airlines Company Limited
 6-1165-CKR-1390
 Page
3
  Notwithstanding
the provisions of Exhibit B. Paragraph 4.6, the following provisions shall
instead apply in lieu thereof to all aircraft under the Purchase
Agreement.
  4.6        Delivery Papers, Documents
and Data. Boeing will have available at the time of delivery of the
Aircraft certain delivery papers, documents and data for execution and delivery.
If title for the Aircraft will be transferred to Customer through a Boeing sales
subsidiary and if the Aircraft will be registered with the FAA, Boeing will
pre-position in Oklahoma City, Oklahoma, for filing with the FAA at the time of
delivery of the Aircraft an executed original Form 8050-2, Aircraft Bill of
Sale, indicating transfer of title to the Aircraft from Boeing’s
sales subsidiary to Customer.
  The
documents Boeing will have available will include, but not be limited to, the
following:
  1.          Aircraft
Bill of Sale
 2.          FAA
Export Certificate of Airworthiness
 3.          Weight
and Balance Supplement
 4.          Engine
Brochure
 5.          Miscellaneous
Delivery Record Brochure
 6.          Aircraft
Readiness Log
 7.          Rigging
Record Brochure
 8.          Auxiliary
Power Unit Log
 9.          FAA
Airworthiness Directive Compliance Record Status
  Supplemental
Exhibit CS1,   Customer Support
Variables
  Notwithstanding
the provision of Supplemental Exhibit CS1, Paragraph 1.2, the following
provision shall instead apply.
  1.2        Training
materials will be provided to each student. In addition, one set of training
materials as used in Boeing’s
training program, including visual aids, text and graphics will be provided for
use in Customer’s
own training program
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 China
Southern Airlines Company Limited
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  Supplemental
Exhibit EE1,   Engine Escalation, Engine
Warranty and Patent Indemnity
  Notwithstanding
the provisions of Supplemental Exhibit EE1, Paragraph 2.4.1, the following
provision shall instead apply.
  2.4.1       If
requested by Customer and agreed to by CFM in writing. CFM will extend warranty
support for Engines sold or title transferred by Customer to commercial airline
operators, or to other aircraft operators. Such warranty support will be limited
to the New Engine Warranty, New Parts Warranty, Ultimate Life Warranty and
Campaign Change Warranty and will require such operator(s) to agree in writing
to be bound by and comply with all the terms and conditions, including the
limitations, applicable to such warranties.
  Letter
Agreement 3263-02,   Boeing Purchase of Buyer
Furnished Equipment.
  The
provisions of paragraph 3, of Letter Agreement 3263-02 identify the types of
costs, such as taxes, duties, and other charges that will be paid by Customer to
Boeing pursuant to Boeing’s purchase of Buyer Furnished Equipment (BFE). For the
avoidance of doubt, and except for the types of items listed in paragraph 3.,
Boeing and Customer agree that no profit or handling fee will be charged by
Boeing for this transaction.
  2.
              Confidential
      Treatment.
  Customer
understands that certain commercial and financial information contained in this
Letter Agreement are considered by Boeing as confidential. Customer agrees that
it will treat this Letter Agreement and the information contained herein as
confidential and will not, without the prior written consent of Boeing, disclose
this Letter Agreement or any information contained herein to any other person or
entity.
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