Disclaimer - TodayIRDisclaimer This presentation ... 17 84 18 9 2008 2009 Domestic International HongKong&Macau Taiwan 11 Routes Distribution and Fleet Structure Routes distribution

1

Disclaimer

This presentation contains forward-looking forecast

and statements that reflect the presenting company’s

current opinions on future events and its future

financial performance. These opinions were based

on certain assumptions, which were determined by

various risk factors and subject to change. This

presentation does not give the assurance that the

events predicted will actually occur, the forecast will

materialize, or the assumptions made were correct.

The actual results may deviate materially from the

forecast.

2

Management

Director of Board

Secretariat

Mr. WANG Jian

Executive Director

Company Secretary

Mr. LUO ZhupingCFO

Mr. WU Yongliang

Director of Finance

& Accounting Dept.

Mr. WU Longxue

Vice GM of

Shanghai Airlines

Ms. SHAO Xiaoyun

2009 Results Summary

2009 Review

Outlook

2010Q1 Results Summary(Under PRC GAAP, unaudited)

4

12,506 7.4%

84,456 11.2%

4,904 2.1%

7,909 9.6%

60,942 13.3%

2,474 2.2%

9.4 0.3

Selected Operating Data

Change2009 2008

11,642

75,964

4,805

7,219

53,785

2,420

9.1

Capacity

Available tonne-kilometers (ATK) (million)

Available seat-kilometers (ASK) (million)

Available freight tonne-kilometers (AFTK) (million)

Traffic

Revenue tonne-kilometers (RTK) (million)

Revenue passenger-kilometers

(RPK) (million)

Revenue freight tonne-kilometers

(RFTK) (million)

Daily average utilization (hours)

5

Change2009

63.2% 1.2PPT

72.2% 1.4PPT

50.5% 0.1PPT

4.67 -13.2%

0.54 -12.9%

1.67 -24.4%

Selected Operating Data (Cont’d)

2008

62.0%

70.8%

50.4%

5.38

0.62

2.21

Yields

Revenue tonne-kilometers yield (RMB)

Passenger-kilometers yield (RMB)

Freight tonne-kilometers yield (RMB)

Load factors

Overall load factor (%)

Passenger load factor (%)

Freight load factor (%)

6

Selected Financials

Change2009 2008

38,990 41,073 -5.1%

38,456 56,828 -32.3%

1,821 (15,083) N.M.

0.026 (3.14) N.M.

9,949 (7,198) N.M.

169 (15,269) N.M.

Note: (1) Attributable to the equity holders of the Company

(2) Total shares in issue experienced a material change due to several capital operations completed in 2009

(3,775) 6,401 N.M.

(RMB million )

Revenues

Operating expenses

Operating profit/(loss)

Earnings/(loss) per share

(RMB)

EBITDAR

Profit/(loss) for the yearNote1

Of which, loss/(gain) on

financial derivatives

7

Social Responsibility and Brand Image

Expo Partner

We are the only partner in

passenger aviation to the 2010

Expo in Shanghai

Coordinate with the Expo organizer

to promote the Expo, serve the

Expo and advertise the Expo

Fully committed to the passenger

safety for the Expo

Map out an extensive service

standard based on the Service

Commitment for the Expo

Increasing Customer Satisfaction

Outstanding Service Quality

Honored with the Excellent

Award for Customers’

Satisfaction by CAAC

“Lin Yan” Team in the

Passenger Cabin Group was

honored with the Demonstrative

Window in Shanghai’s service

industry

Honored with the Most Popular

Domestic Airline Company in

China by Travel and Leisure

Magazine in 2009

Our on-time arrival rate was

83.45% in 2009, top 1 again

in the industry, 1.55% above

the industry average

In 2009, our complaint rate

was 0.6 per million,

significantly lower than 2008

Rating system based on the

whole process service


2009 Review

Outlook


9

Overview

2009 review

Improved operating

environment

New management

initiatives

Successful capital operations

Global economic recovery

Strong rebounds of domestic

economy / consumption

Resumed market demand

Stable fuel price

Clear development strategies

Enhanced risk control

Adjusting the market structure

Cost slashing and efficiency

improvement

Proceeds from the two capital

injections

Successful merger with

Shanghai Airlines

Key Achievements

Key

Achievements

Detect and eliminate all potential threats

Enhance the predictability of safety work to ensure

quick responses

Revise the safety-related policies

Strengthen the accountability system

Strong safety track record Clear development strategies

Craft clear development strategies

Strengthen understanding of the strategies through

personnel training and communication

Effectively implement the strategies

Improved operating results Accelerated restructuring

Initial results from operating strategies adjustment

256 new initiatives to “stop bleeding”

Significantly increased profitability

Successful merger with Shanghai Airlines

Smooth and effecitve restructuring

Better social image Highly motivated personnels

Full-scope & multi-angle marketing / promotions

Set up a better social image via strengthened

branding and higher service quality

Strengthen personnel education to reinforce their

links with the Company

Expand communication channels to strengthen the

employees’ confidence in the Company

11263

71

2

6

3

333393

898417189

2008 2009

Domestic International

HongKong&Macau Taiwan

11

Routes Distribution and Fleet Structure

Routes distribution

(#) 504445

Improve routes network with particular focus on key markets and routes

Strengthen links between different routes to improve transit services

Successfully connect domestic routes with international routes

Make adjustments to the routes distribution to increase marginal

contributions

Make timely adjustments to routes distribution in responses to the

domestic and international market trends

Close out certain loss-making international routes, and open up new

domestic routes

Fleet structure

Passenger Cargo Optimize fleet structure to reduce operating costs

Ensure that newly introduced crafts fit well with the routes

network

Focus on A320, A330 and B737NG crafts

Replace old crafts

Developed a timetable for the retirement of MD90 and

A300 crafts in a planned manner

Continue to reduce the fleet models in the coming years

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12

41,07338,990

2008 2009

Revenue and its Breakdown

2009 revenues

(RMB mn)

2009 revenues breakdown

Others, 5.4%

Cargo, 13.1%Passenger, 81.5%

2008 revenues breakdown

Others, 5.3%

Cargo, 10.6%Passenger, 84.1%

Note: Cargo revenue includes cargo revenue from

passenger flights

13

Passenger Businesses

Total % YoY

Passenger revenue (RMB mn) 32,800 33,486 -2.1%

Available seat-kilometers

(million)

84,456 75,964 11.2%

Revenue passenger-

kilometers (million)

60,942 53,785 13.3%

Passenger load factor (%) 72.16 70.80 1.36PPT

Yield

(RMB/passenger-kilometer)

0.54 0.62 -12.9%

Yield

(RMB/seat-kilometer)

0.39 0.44 -11.4%

2009 2008 Domestic routes % YoY

Passenger revenue (RMB mn) 24,038 21,389 12.4%


(million)

59,235 47,588 24.5%

Revenue passenger-

kilometers (million)

44,376 35,352 25.5%


Yield


0.54 0.61 -11.5%

Yield


0.41 0.45 -8.9%

2009 2008

International routes % YoY



(million)

21,386 23,814 -10.2%


(million)

13,994 15,375 -9.0%


Yield


0.51 0.66 -22.7%

Yield


0.33 0.43 -23.3%

2009 2008 Regional routes % YoY



(million)

3,835 4,562 -15.9%


(million)

2,573 3,058 -15.9%


Yield


0.63 0.64 -1.6%

Yield


0.43 0.43 0.0%

2009 2008

Cargo Businesses

2009 2008

Cargo revenue (RMB mn) 4,124 5,358 -23.0%

AFTK (million) 4,904 4,805 2.1%

RFTK (million) 2,474 2,420 2.2%

Tonnage Carried (Thousands) 944 889 6.1%

Freight load factor (%) 50.45% 50.36% 0.2%

Yield (RMB/ tonne-kilometer) 1.67 2.21 -24.4%

Efficiency enhancement initiatives

Optimize capacity allocation with better market predictions

Control cargo costs through overall budgeting & planning

Focus on development of transit products, and enter into strategic

cooperation framework agreements with multiple corporations

Place bellyhold freight business under the centralized management of

China Cargo Airlines, and enhance marketing activities on cargo business

via various channels

% YoY

15

Operating Expense

Operating expense breakdown Available tonne-kilometers unit cost

4.88

3.08

2008 2009

(RMB)(RMB million) 2009 2008 %YtoY

Total 38,456 56,828 -32.3%

including:

Aircraft fuel 12,255 18,488 -33.7%

Loss/(gain) on financial derivatives

(3,775) 6,401

Depreciation & amortization

5,203 4,782 8.8%

Wages, salaries & benefits

5,149 4,545 13.3%

Aircraft maintenance 3,019 3,273 -7.8%

Impairment Loss 109 2,977 -96.3%

Selling & marketing 1,978 1,563 26.6%

Ground services & other charges

290 269 7.8%

Office, Administrative and other expenses

3,752 4,056 -7.5%

16

Key Cost Reduction Initiatives

Fuel consumption

Air catering Supplies

Capital cost

Cost

reduction

initiativesMaintenance & overhaul

Labor

Capex

A-share

–# of shares issued: 1,350,000,000

–Offering price: RMB4.75 / share

–Offering targets: 10 investors including

CEA Group

H-share

–# of shares issued: 490,000,000

–Offering price: HK$1.56 / share

–Target: CEA International, a 100%

subsidiary of CEA Group

Fully-subscribed, RMB7.085 billion

proceeds used for working capital

purpose

A-share / H-

share private

placements

Proposed merger via share swap

– Acquirer: CEA; target: Shanghai Airlines

– Transaction structure: 1 Shanghai Airlines A-share for 1.3 CEA A-shares

– Provide cash options to the dissenting shareholders of CEA / Shanghai Airlines

The transaction was successfully completed, with Shanghai Airlines delisted and

the stocks of post-merger CEA starting trading on February 2nd

Merger with

Shanghai

Airlines

CEA 2009 Capital Operations

June 2009 December 2009

A-share


–Offering price: RMB3.87 / share

–Offering target: CEA Group

H-share


–Offering price: RMB1 / share

–Target: CEA International, a 100%

subsidiary of CEA Group

Fully-subscribed, RMB7 billion

proceeds used for working capital

purpose

Post-merger Integration and

Potential Synergies

Marketing

Increased transit business

volume with a wider network

coverage

Strengthened market control

through combination of high-

rate and low-rate seats

Improved negotiating power

Expanded frequent traveler

base

Operations

Sharing of domestic /

international flight codes

Centralized allocation of

flight resources / schedules

Centralized control over the

sales network, sales

channels and sales force

team

Cost control

Uniform fleet purchase,

capacity and facilities

allocation; uniform purchase

of raw materials and fuel to

optimize inventory; uniform

purchase of food and

supplies

Integrate maintenance

functions and strengthen

negotiating power with

vendors

Reduce administrative costs

by integrating office

resources

Cargo businesses

Integration of traffic rights,

routes and flights resources

Sharing of truck resources,

customer bases and

warehousing facilities to

provide one-stop cargo /

logistics services

Redefine the strategic

cooperation directions with

existing foreign

shareholders

Back-office resources

Sharing of terminal buildings

Unified cabin cleaning

arrangements

Sharing of passenger ferry

services

Cooperation on loading /

unloading

Integration of ramp

resources

Unified branding / marketing

activities

IT system

Be selective as to existing

systems

Uniform development and

maintenance of new systems

completed underway underway

underway completed completed

Scale advantage of Post-Merger CEA

Fleet size Routes network

Scale

Advantage

Total Assets Market share


2009 Review

Outlook

2010Q1 Results Summary (Under PRC GAAP, unaudited)

Opportunities

Air passenger

market continued

to pick up in China,

while gradually

recovered around

the world

Air cargo market is

expected to

experience an

overall recovery

Post-merger

synergy of CEA and

Shanghai Airlines

has started to

emerge

2010 Shanghai

World expo

created

tremendous

opportunities

World economic

recovery remained

stable, led by

economic rally in

China

Opportunities in 2010

“Open Sky Agreement ”

exerts great

impact on the operation

of international flights

Economy uncertainties exist,

international trade protectionism

Impacts growth of air

transport industry

Competitive landscape of the

domestic airlines has changed

Other uncertainties such as

oil price, interest,

exchange rate, etc.

Challenge

s

Challenges in 2010

On the premise of ensuring safety,

actively and cautiously promote the

consolidation of both parties’ segment,

business and staff; the segments

include marketing, logistics, ground

services, aircraft maintenance,

procurement, IT, etc.

Complete the post-merger

Integration

Major Focuses in

2010

Make remarkable progress in

hub construction

Make every effort to serve World

Expo and enhance our brand

image

Offer the finest and customized

service and build up strong brand

image by fully utilizing the Expo

platform

Build up optimized airline route

network

Ensure the hub operation

Strengthen OD marketing and

increase the proportion of transit

passenger

Strengthen the yield management to

meet the advanced industrial standard

Adjust the costs structure, focus on

the potential to reduce the cost of the

major items, and optimize cost

management system

Increase the profitability of our

core business

Major Focuses in 2010

Enhance the IT capacitySteadily promote the reform on

system

Establish the 4 information centers:

development, operation, project

management and telecommunication

Establish business information

management system

Build up information infrastructure

platform to promote the Top Ten

Business Systems Project

Start the process of reengineering and

smoothen the whole-process of the

production and operation

Accelerate the application of

professional-technology- two-track

system

Improve the performance

management system

Propel the SMS construction

and enhance level of safety

Carry out safety management through

systems, emphasize on safe operation

to achieve closed-loop control and risk

management to achieve the

sustainable safety

New CEA Strategies

To be a leading airline

company in Asia with

strong global

competitiveness

Staff Loyalty, Customer Preference

Investor Satisfaction, Strong Social Reputation

Build up

strong hub

network

Provide the best

service with the

finest

management

Be well-established in

core market to

achieve growth

efficiency

Acquire strong

global

competitiveness

Vision

Mission

Strategic Goals

Hub-spoke

networking

strategy

Cost

control

strategy

Brand

management

strategy

Sophisticated

management

strategy

Informatization

strategy


2009 Review

Outlook


2010Q1 Operating Data

Passenger Businesses

Million 1Q2010 Yoy growth

ASK 27,688 37.5%

-Domestic 19,728 44.0%

-International 6,678 22.9%

-Regional 1,283 29.5%

RPK 20,705 45.2%

-Domestic 15,000 46.1%


-Regional 903 35.0%

Passenger Load Factor 74.8% 3.9PPT

-Domestic 76.0% 1.1PPT

-International 71.9% 10.8PPT

-Regional 70.4% 2.9PPT

Cargo Businesses

Million 1Q2010 Yoy growth

AFTK 1,674 47.0%

-Domestic 517 22.7%


-Regional 74 50.5%

RFTK 982 108.5%

-Domestic 246 60.8%

-International 700 131.9%

-Regional 36 125.2%

Freight Load Factor 58.6% 17.3PPT

-Domestic 47.7% 11.3PPT

-International 64.6% 19.5PPT

-Regional 48.2% 16.0PPT

Note: 2009 Q1 operating data excluded the operating results of Shanghai Airlines

27

2010Q1 Financial Data

(RMB Million)

2010Q1

New CEA

2009Q1

CEA

Operating Income

Operating Cost

Operating Profit

EPS (RMB)

— Net profit attributable to

shareholders of the parent

Net Profit

Note: 2009 Q1 financial data excluded the operating results of Shanghai Airlines

(Under PRC GAAP)

Income From Changes In Fair Value

15,569 8,946

12,962 8,423

753 (850)

0.0716 0.008

770 40

787 11

463 422

74.0%

53.9%

N.M.

795.0%

1825.0%

6806.1%

9.8%

YoY Growth

28

Q&A

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Disclaimer - TodayIRDisclaimer This presentation ... 17 84 18 9 2008 2009 Domestic International HongKong&Macau Taiwan 11 Routes Distribution and Fleet Structure Routes distribution