China Southern Airlines Co Ltd 6-K, filed Apr 1, 2020
China Southern Airlines Co Ltd (CHKIF)
About this 6-K
China Southern Airlines Co Ltd filed this 6-K on April 1, 2020.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 6-K
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Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
March 31, 2020
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CHINA SOUTHERN AIRLINES COMPANY LIMITED
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68 Qi Xin Road
Guangzhou, 510403
People’s Republic of China
(Address of principal executive offices)
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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
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China Southern Airlines Company Limited (the “Company”) published the following announcements on March 30, 2020 on the Hong Kong Stock Exchange’s website at:
http://www1.hkexnews.hk/listedco/listconews/sehk/2020/0330/2020033001589.pdf, in relation to the resolutions of the board of directors and the supervisory committee of the Company;
http://www1.hkexnews.hk/listedco/listconews/sehk/2020/0330/2020033001387.pdf, in relation to the 2019 corporate social responsibility report of the Company; and
http://www1.hkexnews.hk/listedco/listconews/sehk/2020/0330/2020033001647.pdf, in relation to the annual results for the year ended December 31, 2019.
The announcements in English are included as exhibits to this Form 6-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHINA SOUTHERN AIRLINES COMPANY LIMITED | ||
| By: | /s/ Xie Bing | |
| Name: Xie Bing |
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| Title: Company Secretary | ||
Exhibit 99.1
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
OVERSEAS REGULATORY ANNOUNCEMENT
This announcement is published pursuant to rules 13.09 and 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
As China Southern Airlines Company Limited has published the “Announcement on Resolutions Passed at the Twelfth Meeting of the Eighth Session of the Board of Directors of China Southern Airlines Company Limited” and “Announcement on Resolutions Passed at the Eighth Meeting of the Eighth Session of the Supervisory Committee of China Southern Airlines Company Limited” on the Shanghai Stock Exchange, the full text of the announcements is set out below for information purpose.
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By order of the Board |
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China Southern Airlines Company Limited Xie Bing |
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Company Secretary |
Guangzhou, the People’s Republic of China
30 March 2020
As at the date of this announcement, the Directors include Wang Chang Shun, Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.
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| Stock short name: China South Air |
Stock Code: 600029 |
Notice No.: Lin 2020-015 |
Announcement on Resolutions Passed at the Twelfth Meeting of the Eighth Session
of the Board of Directors of China Southern Airlines Company Limited
The board (the “Board”) of directors (the “Directors”) of the Company and all of its members confirm that the contents of this announcement do not contain any misrepresentations, misleading statements or material omission, and jointly and severally accept full responsibilities for the truthfulness, accuracy and completeness of the information contained in this announcement.
The convening of the Board meeting
On 30 March 2020, the twelfth meeting of the eighth session of the Board of China Southern Airlines Company Limited (the “Company”) was held at Meeting Room 3301, 33/F, China Southern Air Building, 68 Qixin Road, Baiyun District, Guangzhou. Seven Directors are eligible to attend the Board meeting and seven Directors attended the Board meeting. Mr. Wang Chang Shun, the chairman of the Board, chaired this meeting, supervisors and certain senior management of the Company also attended. The convening, voting and other procedures of this meeting were in compliance with the relevant requirements of PRC Company Law and the articles of association of the Company.
The consideration and approval on the Board meeting
The Directors who were present at the Board meeting considered and voted, and unanimously passed the following resolutions:
I. The full text and summary of the 2019 annual report and annual results of the Company (including financial statements prepared under the PRC accounting standards and the International Financial Reporting Standards, and the Directors’ Report);
II. The profit distribution plan of the Company for the year 2019;
The Company distributed cash dividends of totally RMB1.622 billion in 2017 and 2018, accounting for more than 40% of the annual average distributable profits attributable to shareholders of the Company realized in 2017 to 2019, which is higher than the requirement stipulated under the relevant regulations for listed companies and the articles of association of the Company, that is “the cumulative profit distributed in cash in the last three years shall not be less than 30% of the annual average distributable profits realized by the Company in those three years”.
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The Company’s non-public issuance of A shares and H shares, which was approved at the extraordinary general meeting and class meetings convened by the Company on 27 December 2019, is under review by the China Securities Regulatory Commission. According to the relevant regulations of the China Securities Regulatory Commission, securities cannot be issued before the completion of the implementation of profit distribution. As the distribution of cash dividends of the Company in the past three years complied with the regulations, in view of the strategic significance of the non-public issuance to the Company and in order to ensure the smooth progress of the project, after comprehensive consideration of the Company’s long term development and the interests of all shareholders of the Company, the Board did not recommend any payment of final cash dividend and conversion of capital reserve to share capital of the Company for the year ended 31 December 2019. The retained undistributed profits will be used to supplement the Company's working capital to meet the development needs of the Company's principal business activity. The abovementioned plan is subject to the approval at the Company’s annual general meeting for the year 2019.
III. The re-appointment of external auditor;
The re-appointment of KPMG Huazhen (Special General Partnership) to provide professional services to the Company for its domestic financial reporting and internal control reporting, U.S. financial reporting and internal control of financial reporting for the year 2020 and the re-appointment of KPMG to provide professional services to the Company for its Hong Kong financial reporting for the year 2020 were agreed, and it was proposed the general meeting to authorise the Board to fix their remuneration according to actual work conditions.
IV. The report of the deposit and actual use of funds raised in A shares for the year 2019;
V. The performance report of the Independent Directors for the year 2019;
VI. The internal control appraisal report of the Company for the year 2019;
VII. The corporate social responsibility report of the Company for the year 2019;
VIII. The resolution regarding the procurement of the liability insurance for the Directors, supervisors and senior management of the Company;
Agreed the Company’s 2020-2021 Liability Insurance Procurement Plan for Directors, supervisors and senior management and authorised the general manager of the finance department of the Company to execute the relevant legal documents and the finance department of the Company to handle the renewal of the 2020-2021 Liability Insurance for Directors, supervisors and senior management.
IX. The proposal to be submitted to the general meeting to authorise the Board to issue shares under the general mandate;
The proposal to be submitted to the general meeting to authorise the Board to allot, issue and dispose additional shares of the Company under the general mandate, increase registered capital according to the condition of authorisation of share issuance and revise the articles of association of the Company accordingly was agreed.
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X. The proposal to be submitted to the general meeting to authorise the Board to issue the debt financing instruments under the general mandate;
The proposal to be submitted to the general meeting to authorise the Board to issue the debt financing instruments in one or multiple tranches within the permitted size for bond issuance in accordance with the applicable laws and regulations under the general mandate was agreed.
XI. The authorisation granted to the Board Office to prepare the relevant matters regarding the annual general meeting for the year 2019.
It is agreed for submitting the aforesaid resolutions I, II, III, IX and X to the annual general meeting for the year 2019 for consideration, and authorized the Board Office to prepare the relevant matters regarding the annual general meeting for the year 2019.
The Board of Directors of
China Southern Airlines Company Limited
30 March 2020
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| Stock short name: China South Air |
Stock Code: 600029 |
Notice No.: Lin 2020-016 |
Announcement on Resolutions Passed at the Eighth Meeting of the Eighth Session
of the Supervisory Committee of China Southern Airlines Company Limited
The board of supervisors (the “Supervisors”) of the Company and all of its members confirm that the contents of this announcement do not contain any misrepresentations, misleading statements or material omission, and jointly and severally accept full responsibilities for the truthfulness, accuracy and completeness of the information contained in this announcement.
On 30 March 2020, the eighth meeting of the eighth session of the supervisory committee (“Supervisory Committee”) of China Southern Airlines Company Limited (the “Company”) was held at Meeting Room 3510, 35/F, China Southern Air Building, 68 Qixin Road, Baiyun District, Guangzhou. Three supervisors (the “Supervisors”) are eligible to attend the meeting and three Supervisors attended the meeting. Mr. Li Jia Shi, the chairman of the Supervisory Committee, chaired this meeting, certain senior management of the Company also attended. The convening, voting and other procedures of this meeting were in compliance with the relevant requirements of PRC Company Law and the articles of association of the Company.
The Supervisors who were present at the meeting considered and voted, and unanimously passed the following resolutions:
I. Considered and approved the full text and summary for the 2019 annual report and the annual results of the Company (including financial statements prepared under the PRC accounting standards and the International Financial Reporting Standards);
All members of the Supervisory Committee expressed the opinion on the Company’s 2019 annual report as follows:
(1) The preparation and review procedures of the Company’s 2019 annual report are in compliance with the laws, regulations, the Company’s articles of association and various regulations of the Company’s internal management system;
(2) The content and format of the Company’s 2019 annual report comply with the relevant regulations of the China Securities Regulatory Commission, Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited. The information disclosed can truly reflect the Company’s operating management and financial conditions, and does not contain any misrepresentations, misleading statements or material omission;
(3) As of the date of this opinion, no personnel involved in the preparation and review of the annual report have been found to have violated confidentiality regulations, insider trading, or other violations of laws and regulations.
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II. Considered and approved the profit distribution plan of the Company for the year 2019;
The Company distributed cash dividends of totally RMB1.622 billion in 2017 and 2018, accounting for more than 40% of the annual average distributable profits attributable to shareholders of the Company realized in 2017 to 2019, which is higher than the requirement stipulated under the relevant regulations for listed companies and the articles of association of the Company, that is “the cumulative profit distributed in cash in the last three years shall not be less than 30% of the annual average distributable profits realized by the Company in those three years”.
The Company’s non-public issuance of A shares and H shares, which was approved at the extraordinary general meeting and class meetings convened by the Company on 27 December 2019, is under review by the China Securities Regulatory Commission. According to the relevant regulations of the China Securities Regulatory Commission, securities cannot be issued before the completion of the implementation of profit distribution. As the distribution of cash dividends of the Company in the past three years complied with the regulations, in view of the strategic significance of the non-public issuance to the Company and in order to ensure the smooth progress of the project, after comprehensive consideration of the Company’s long term development and the interests of all shareholders of the Company, the Board did not recommend any payment of final cash dividend and conversion of capital reserve to share capital of the Company for the year ended 31 December 2019. The retained undistributed profits will be used to supplement the Company's working capital to meet the development needs of the Company's principal business activity. The abovementioned plan is subject to the approval at the Company’s annual general meeting for the year 2019.
III. Considered and approved the report of the deposit and actual use of funds raised in A shares for the year 2019;
IV. Considered and approved the internal control appraisal report of the Company for the year 2019;
V. Considered and approved the corporate social responsibility report of the Company for the year 2019;
VI. Considered and approved the report of the supervisory committee of the Company for the year 2019 and submitted to the annual general meeting for the year 2019 for approval.
The Supervisory Committee of
China Southern Airlines Company Limited
30 March 2020
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Exhibit 99.2
Connecting the World to Create a Better Life
China Southern Airlines Co, Ltd
2019 Corporate Social Responsibility Report
(second draft)
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Table of Contents
| 1 Letter from the Chairman（1P） |
4 |
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| 2 About This Report（1P） |
7 |
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| 3 About Us（8P） |
8 |
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| 3.1 Overview（1P） |
8 |
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| 3.2 Corporate Culture（1P） |
9 |
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| 3.3 Strategy and Governance（3P） |
9 |
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| 3.4 Deepening Reform（1P） |
13 |
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| 3.5 Key Performance（1P） |
15 |
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| 3.6 Awards and Honors（1P） |
16 |
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| 4 Focus on 2019 |
17 |
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| 4.1 Construction of Daxing Airport Facilitates, Rapid Development of China Southern（3P） |
17 |
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| 4.2 Full Service Takeoff in the Bay Area (3P) |
20 |
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| 4.3 Targeted Poverty Alleviation-Jointly Building a Moderately Prosperous Society |
24 |
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| 4.4 Mission of Fighting the Epidemic（3P） |
29 |
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| 5 Responsibility Management（5P） |
32 |
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| 5.1 CSR Governance（1P） |
32 |
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| 5.2 Response to UN Sustainable Development Goals（1P） |
33 |
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| 5.3 Analysis of Material Aspects（1P） |
34 |
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| 5.4 Communication with the Stakeholders（2P） |
36 |
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| 6 Safety：Happy work, safety and happiness（10P） |
38 |
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| 6.1 Opening page（1P） |
38 |
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| 6.2 Safety Management（2P） |
38 |
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| 6.3 Aviation Safety |
40 |
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| 6.3.1 Safety Guarantee in Key Aspects(2P) |
40 |
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| 6.3.2 Technology Guarantee flight safety (2P). |
42 |
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| 6.4 Passenger Health and Safety (1P) |
45 |
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| 6.5 Occupational Health and Safety (1P) |
45 |
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| 7 Environment: Green Connectivity, Guarding our Homeland (9P) |
48 |
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| 7.1 Opening Page (1P) |
48 |
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| 7.2 Management of Environmental Impact（1P） |
48 |
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| 7.3 Response to Climate Change（4P） |
49 |
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| 7.3.1 Green Flight (2P) |
50 |
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| 7.3.2 Participation in Carbon Trading (0.5P) |
53 |
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| 7.4 Pollution Prevention (1P) |
53 |
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| 7.5 Resource Conservation（1P） |
54 |
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| 7.6 Spread of Green Ideas (1P) |
56 |
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| 8 Service: Affinity and Refinement, Great Flight Experience (8P) |
57 |
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| 8.1 Opening Page (1P) |
57 |
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| 8.2 Passenger Services (4P) |
57 |
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| 8.2.1 Improving flight normality |
57 |
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| 8.2.2 Upgrading Smart Travel |
59 |
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| 8.2.3 Creating a Beautiful Journey |
61 |
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| 8.2.4 Special Passenger Services |
61 |
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| 8.3 Freight Services (1P) |
62 |
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| 8.4 Customer Relationship（3P） |
63 |
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| 8.4.1 Customer Rights Protection |
63 |
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| 8.4.2 Customer Privacy Protection |
64 |
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| 8.4.3 Customer Complaint Management |
64 |
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| 9 Employee: Happy Connectivity, Win-win Growth (6P) |
66 |
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| 9.1 Opening page（1P） |
66 |
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| 9.2 Rights and Interests Protection（3P） |
66 |
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| 9.2.1 Fair Employment |
66 |
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| 9.2.2 Compensation and Benefits |
68 |
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| 9.3 Employee Development（1P） |
69 |
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| 9.4 Happy Workplace (1P) |
71 |
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| 10 Society: Warm Connection and Harmonious Development (6P) |
72 |
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| 10.1 Opening Page (1P） |
72 |
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| 10.2 Special Flight（1P） |
72 |
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| 10.3 Volunteer Service (1P) |
73 |
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| 10.4 " Belt and Road Initiative" (2P) |
74 |
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| 10.5 Supply Chain Management（1P）na Southern developed the “Supplier Ad |
77 |
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| 11 Report Indicators Index（3P） |
78 |
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| 11.1 ESG indicators index（2P） |
78 |
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| 11.2 GRI standards indicator index（1P） |
83 |
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| 1 Letter from the Chairman（1P） |
Year 2019 marked the 70th Anniversary of the founding of the People's Republic of China, the 70th Anniversary of the founding of New China Civil Aviation and the 70th Anniversary of the "two airlines uprisings" … all in all a crucial year for securing a decisive victory in building a moderately prosperous society in all respects. Year 2020 is likewise bound to see even greater aviation milestones. Known as the world's "new seven wonders" - Beijing Daxing International Airport (BDIA) - the largest commercial airport in the world, is officially open for full flight operations. General Secretary Xi Jinping delivered a distinct and positive message in the strongest possible terms at the Opening Ceremony of Beijing Daxing International Airport, saying, "Chinese people can definitely make it and China can definitely make it!"
As one of the three major mainstay state-owned aviation enterprises, during Year 2019, China Southern Airlines passionately responded to an appeal by the state and unswervingly stationed itself within Beijing Daxing International Airport. It is expected that by the end of March 2021, China Southern and its holding subsidiaries will manage upwards of 43% of the traffic volume at BDIA and become the airport’s largest main base air carrier which in turn will swiftly propel Beijing Daxing International Airport to become the world's leading First Class international aviation hub. During the past year, we have put forth our utmost efforts in the construction of the Guangdong-Hong Kong-Macau Greater Bay Area. To date, China Southern has become the first large state-owned enterprise group to successfully achieve equity diversification through the central and local cooperation mode of operations. Our airline will continuously expand the "Road to Guangzhou" and promote the coordinated development of the triad of Guangzhou, Shenzhen and Zhuhai international airports and make meaningful contributions to the construction of the world-class Bay Area. During this past year, China Southern has withdrawn from SkyTeam and are moving forward in a new direction with impetus on expanded international cooperation with our vibrant airline partners. Going through the dual political tests of the Central Inspection and Supervision Group of the CPC Central Committee and thematic education, we have steadily improved our main operating performance. The total turnover of transport and passenger transport reached 32.625 billion tons/km and 152 million person-times respectively, both hitting record highs. In Brand Finance Magazine's 2019 list of the world's 50 most valuable airline brands, China Southern Airlines was ranked sixth with a brand value of more than $4.46 billion (USD), the highest among all Chinese airlines.
Flight Safety is Forever Job No.1 - Security is always the lifeline of development, the highest politics, the greatest benefit and the best service. We have fully implemented General Secretary Xi Jinping's important instructions, carried out 26 key measures adopted by the Civil Aviation Administration of China (CAAC) as well as 34 measures adopted by China Southern while innovating the "red paper" + "blue paper" system. Throughout the year, more than 2.951 million hours of safe transportation were completed and the cumulative safety flight time reaches 26.386 million hours. Our flight safety performance continues to lead all airlines in China and throughout the international community.
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Move Customers with Love - Of paramount importance is the travel experience of our customers as we strive to serve each and every traveler with warmth and true affection. We have put forward the service orientation of "affinity and refinement" and carried out special actions to improve customer service quality by focusing on key issues of passenger concern such as our connecting hub services at Baiyun International Airport Guangzhou as well as flight delay and luggage service. Simply said … we are operating our airline more efficiently and with less complaints than ever before! The flight normality rate of China Southern was 83.32%, ranked first among the three major domestic airlines ... as China Southern Airlines was awarded the Best Chinese Airline of the Year 2019 by Business Travel Magazine and recipient of the prestigious Golden Phoenix Award.
Protect the Earth - Climate change is a global challenge. China Southern is tackling climate change as its unshakable responsibility and has taken green development as one of its core principles. Through technological optimization, management improvement and big data analysis, we continue to improve jet fuel use and reduce greenhouse gas emissions. For example … the "aviation fuel e-cloud" real-time big data sharing platform independently developed by China Southern, is expected to help reduce aviation fuel waste by approximately 1,500 tons per annum. China Southern senior managers were invited by the International Air Transport Association (IATA) to participate in the formulation of global aviation fuel data standards and present Chinese solutions for the formulation of global aviation data standards. China Southern is a global leader in the use of bio-jet oil for intercontinental flight and promoted the world's first 10,000 ton carbon quota swap trade between the European Union and Guangdong Province. The annual ton/km fuel consumption of China Southern Airlines decreased a significant 3.95% year on year.
Sharing the Fruits of Development. Our staff and senior managers are one of China Southern's most precious resources. This year, with the goal of "ranks can go up and down, income can increase or decrease, employees can move in and out", we carried out much needed reform of the compensation system to stimulate the vitality of employees and collectively share in the benefits of reform and development. We established a unified training program and top-level design of training to help cadres and employees grow and develop themselves. China Southern cares for the work/life balance of all employees and provide mutual aid assistance to special groups such as sick employees and underprivileged families.
Give Back to the Society. The success of China Southern Airlines comes from our support of all sectors of society and it is our important responsibility to give back with equal passion.
Last year, in accordance with the national requirement of "winning the tough battle against poverty", we carried out poverty alleviation work in Pishan and Moyu counties of Xinjiang by investing RMB 35.93 million in assistance funds and sending 77 patriotic cadres to remote villages to help local people pull themselves out of poverty. At the end of Year 2019, we opened 102 new air routes along those of the "Belt and Road Initiative" to help countries along the BRI achieve greater connectivity which in turn led to exceptional new trade opportunities and cultural connectivity. Concurrently, we have actively carried out special flights and volunteer activities to give back to the society.
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At the beginning of Year 2020, the outbreak of the new coronary pneumonia brought severe trials to our airline. Under the unified command of the CPC Central Committee, people from all walks of life have gathered to form a united and victorious force to fight against this insidious epidemic. China Southern has undertaken as its Corporate Social Responsibility mission to immediately respond and devote itself to winning the war of epidemic prevention and management. From January 24 to February 29, 2020, China Southern completed 94 charter rescue flights, transporting 9,516 medical personnel and more than 495.28 tons of rescue supplies to the hardest hit areas of Hubei Province. China Southern will take all effective measures and mobilize all forces to prevent the spread of this epidemic through continual and immaculate cleaning of all aircraft. Although the epidemic has had a great impact on China Southern’s flight operation, we strongly believe that China's economic development prospects will be even brighter when this epidemic has been eliminated.
In the face of this new campaign, China Southern, as always, will remain true to its original aspiration. With diligence, perseverance and courage, we will continue to promote 100% safe flight operations … day or night … rain or shine. China Southern will unswervingly serve as a world aviation leader and facilitator of social progress as we build our airline into a world-class air transport enterprise with Chinese characteristics – making passionate contributions for the great rejuvenation of the Chinese nation and the Chinese dream.
Wang Changshun, Chairman of China Southern Airlines Company Limited
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| 2 About This Report（1P） |
This is the 13th annual Social Responsibility report of China Southern Company Limited since 2007. Based on the principles of objectivity, transparency and standardization, the report systematically discloses the philosophy, policies and progress of China Southern in fulfilling its social responsibility.
Name Description
For convenience of expression, all references to "China Southern" "the Company" or "we", herein refer to China Southern Company Limited, or "China Southern Group ". The reference to "XIAMEN AIR" refers to "Xiamen Airlines Company Limited". All subsidiaries are in the form of "region + the name of the branch " ."Civil Aviation Administration of China " also uses "CAAC".
Basis
This Report has been prepared in accordance with the following: Guidelines Concerning State-Owned Enterprises’ Fulfilling Social Responsibilities published by the State-Owned Assets Supervision and Administration Commission (SASAC); Environmental, Social and Governance Reporting Guide published by the Hong Kong Stock Exchange (HK-ESG);
Guidelines on Preparation of Corporate Social Responsibility Report and Notice on Further Improving Disclosure of Poverty Alleviation Work of Listed Companies published by the Shanghai Stock Exchange;
GRI Sustainability Reporting Guidelines (GRI Standards) issued by Global Reporting Initiative (GRI) and The national standard GB/T 36001-2015: Guideline on the Compilation of Corporate Social Responsibility Report.
Reporting Period
The reporting period is January 1, 2019 to December 31, 2019. In order to enhance the comparability of the reports, certain elements of this report may be traced back to previous years. This report is released at the same time as the Annual Report. The previous Annual Report was released in March 2019.
Scope
The indicators disclosed in this report is mainly sourced from China Southern, and some indicators are extended to China Southern Group. The data disclosure scope has been specified in detail in the report.
Source of Data
Financial data used in this report were extracted from audited annual reports of China Southern, and other data were sourced from public data of government departments or official corporate documents and statistics. Unless otherwise stated, all financial data in this report are expressed in Renminbi (RMB).
Reliability Assurance
The Board of Directors and all directors of the Company hereby guarantee that this report contains no false records, misleading statements, or major omissions, and accept liabilities for the truthfulness, accuracy and completeness of this report.
Access to the Report
This report is published in both printed and electronic formats, and can be obtained through---
Address of China Southern Airlines’ Headquarters: No.68 Qixin Road, Baiyun District, Guangzhou
China Southern Airlines’ s official Website：www.csair.com
Contacts：Xiao Hang
E-mail：xiaohang@csair.com
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3 About Us（8P）
3.1 Overview（1P）
Company Profile
China Southern was founded in Year 1995 and six years later was listed on both the Hong Kong and the New York Stock Exchanges. This was followed by a public listing on the Shanghai Stock Exchange in Year 2003. China Southern is the largest airline company in the People’s Republic of China based on fleet size, number of routes and annual passenger carried. China Southern owns 8 holding public air transportation subsidiaries including Xiamen Airlines, Guizhou Airlines and Xiongan Airlines, and 16 branches including Xinjiang Beijing and North.; 23 domestic sales offices in nearly every major Chinese city including Hangzhou and Qingdao as well as 55 international sales offices located in major metropolitan destinations such as Sydney, London, Singapore, Dubai and New York City.
Working closely with partners, the network extends to more destinations around the world. China Southern continues to open new and encrypted route network, build Guangzhou headquarters hub, and will gradually build Beijing hub into an international and domestic aviation hub, forming a "north-south echo, wing to wing" dual hub pattern with Guizhou hub. By the end of 2019, China Southern had operated 939 routes, including 113 new domestic routes and 23 new international and regional routes.
Achievements
Fleet size: No.1 in Asia and No.3 in the world
The largest first-class pilot training base (Zhuhai) in Asia
The engine maintenance base with the largest investment and the highest maintenance level in China. (cooperating with German MTU)
Passenger traffic ranked first among Chinese airlines for 41 consecutive years
Received the Two-Star Flight Safety Diamond Award by the Civil Aviation Administration of China (CAAC), as the leading Chinese carrier to maintain the highest safety records in China.
Ranked sixth in the 2019 World’s Most Valuable Airline Brands released by Brand Finance. No.1 among Chinese airlines.
Note :source from IATA
Fleet composition
| Aircraft Type |
2019 |
| Number by the end of the year | |
| Passenger aircraft |
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| A380 series |
5 |
| A350 series |
6 |
| A330 series |
47 |
| A320 series |
317 |
| B787 series |
37 |
| B777 series |
15 |
| B737 series |
401 |
| EMB190 |
20 |
| Total of passenger aircrafts |
848 |
| Cargo aircraft |
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| B777series |
12 |
| B747series |
2 |
| Total of cargo aircrafts |
14 |
| total |
862 |
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3.2 Corporate Culture（1P）
China Southern issued the Convention on Sunshine China Southern, which serves as an action program and ideological guideline commonly created, followed and implemented by all people in China Southern in the new era.
Core Concepts：
SuCultural character: Sunshine China Southern
Mission: Connecting the World to Create a Better Life
Vision: Building a World-class Airline with Global Competitiveness
Spirit: Diligent, Practical, Inclusive, Innovative
Core Values: Customer, Staff, Advantage, Innovation, Return
Application Concepts
Safety concept: happy work to realize safety and happiness
Service concept: sincere services to move customers and ourselves
Marketing concept: value creation for customers and the Company
Development concept: standardization, integration, intellectualization and globalization
Talent concept: people-oriented, all-inclusive and win-win growth
Code of Conduct:
Code of conduct for the management: reasonable, compliant and responsible
Code of conduct for leader and employees: prudent, practical, careful, precise and incorruptible
3.3 Strategy and Governance（3P）
■ Development Strategy
China Southern had formulated a "Three Two Four Five Three " strategic framework to build a world-class airline. In 2019, China Southern formulated the Development Program for High-quality World-class Air Transport Enterprises, completed the rolling planning for 2019-2021, and ensured the orderly progress of the Company along the development strategy.
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Strategic objectives: first-class safety quality, first-class profitability, first-class brand image
Strategic layout: construction of Guangzhou double hub flight operation
Strategic orientation: standardization, integration, intelligence, and globalization
Governance system: perfection of the party's leadership, governance structure, strategic management, market mechanism and corporate culture
Support capacity: condition guarantee, resource guarantee, environment guarantee
Corporate Governance
Since its establishment, China Southern has been strictly abiding by the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Governance Standards of Listed Companies, Code on Corporate governance, Appendix 14 to Listing Rules for Stock Exchange of Hong Kong limited, formulated corporate governance documents such as the Articles of Association, Rules of Procedure of Shareholders' General Meetings, Rules of Procedure of Board of Directors and Rules of Board of Supervisors, and established appropriate internal control systems to standardized Corporate Governance. Please refer to the annual report of China Southern for details of corporate governance structure and corporate governance mechanism.
Figure: Governance Structure of China Southern
■ Information Disclosure and Investor Relation Management
China Southern strictly comply with the regulatory requirements of listed companies to carry out information disclosure, to ensure the transparency of operations. In 2019, China Southern issued more than 350 announcements in Chinese and English, hosted or participated in more than 90 performance conferences, road shows and telephone conferences, communicated deeply with more than 1,000 investors, continuously improved online and offline platforms, actively communicated with shareholders, and ensured investors' right to know. Due to good corporate governance and listing compliance performance, China Southern has been awarded the A-level evaluation of information disclosure by Shanghai Stock Exchange for 6 consecutive years.
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Compliance Management
In accordance with the compliance management requirements of SASAC, China Southern formulated and issued the Compliance Management Work Plan, established compliance management system, and promoted the integration of manual management and compliance management to ensure compliance operations. At the same time, China Southern has compiled targeted compliance guidelines for related party transactions, data security and privacy protection, labor and employment, anti-monopoly and other key areas to ensure the compliance and implementation of the company's operation and globalization strategy. In addition, the Company's legal risk management is involved in the whole process of key reform projects, and the annual review of major operation decisions, rules and regulations and economic contracts covers the whole process of legal review of major projects.
■ Internal Audits
China Southern Airlines gave full play to the role of internal audit in the company's supervision system, continued to deepen the reform of audit functions, focused on key areas and important risks, and carried out special audits on the construction of the China Southern base in Beijing Daxing International Airport, poverty alleviation projects and funds, inventory and accounts receivable, the payment of arrears to private enterprises and the implementation of wages for migrant workers; Focused on important positions and conduct audits on economic responsibilities of leading cadres, continuously improved the internal control system, built an internal control system that places equal emphasis on financial data risk and integrity risk prevention and control, especially in the areas of capital, marketing, procurement and capital construction. The implementation of internal audit promoted the development of the central work, comprehensive reforms, the normal operation of power, anti-corruption and integrity, the implementation of corporate strategies, prevented and resolved major risks, and promoted high-quality development of enterprises. A total of 42 audit projects were carried out throughout the year, and 680 management suggestions were put forward.
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■ Anti-Corruption
China Southern always maintained a high-pressure situation of disciplinary violations, reported and punished employees for violations, and has closed 36 cases of disciplinary violations throughout the year, strengthening the deterrence of "Dare Not to Corrupt"; tightening the cage of the system, formulated and promulgated the "Provisions on Intervention of Records and Reports on Major Events Intervened by Leading Cadres", and improved the long-term mechanism of " Not Afford to Corrupt" ; Promoted the regularization and institutionalization of disciplinary education, increased the intensity of warning education, strengthened the concept of discipline of cadres and employees , and consciously built a "not Want to Corrupt" ideological defense line.
In terms of risk prevention and control of supplier integrity, China Southern has set up a procurement management department to implement unified and centralized procurement of the company, revised the "Management Measures for Procurement Evaluating Personal", and minimized the risk of bid evaluation. The Regulations on Prohibiting Transaction with Enterprises Established by Relatives of Leading Cadres was promulgated to prohibit transaction with enterprises established by relatives of leading cadres. Suppliers shall sign "Letter of Tendering" and "Commitment Letter of Bidding integrity", and be required not to engage in transfer of benefits, bribery, embezzlement and other behaviors involving improper interests.
In addition, China Southern has set up a unified reporting channel and implemented a hierarchical responsibility system for complaint reporting. Discipline inspection and supervision agencies at all levels are responsible for receiving complaint concerning reports and problem clues on employees' violations of discipline, and keep the information on reporters strictly confidential.
■ Intellectual Property Rights
China Southern attaches great importance to the protection of brand equity. According to the Trademark Law of the People's Republic of China, the Patent Law of the People's Republic of China and other laws and regulations, the management of trademarks, patents and software copyrights were standardized through the series of regulations, such as "Intellectual Property Rights Management Manual", "Trademark Management Booklet", "Patent Management Booklet", "Commercial Secret Management Booklet" and other intellectual property rights protection system. At the same time, China Southern has established a complete set of trademark management system to clarify the specific operation methods and procedures of trademark registration, use, management and protection, and has set up full-time and part-time trademark management personnel to ensure that the company's brand rights and interests are not infringed.
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■ Party Building
Guided by Xi Jinping thought on socialism with Chinese characteristics for a new era, China Southern has been working hard to strengthen party building, promote the in-depth integration of party building work with production and operation, and gather the powerful forces of entrepreneurship for the company's high-quality development.
Carrying out thematic education. We carried out the education on the theme of " remain true to our original aspiration and keep our mission firmly in mind " in two batches in a solid and orderly manner, promoting rectification of inspections and theme education, highlighting on the focus issues of passengers and employees.
Carrying out inspection and rectification. We have cooperated with the team of disciplinary inspectors, made all-out efforts to rectify the problems clarified by Central Inspection and Supervision Group, and continued to promote the establishment of rectification programs to address both symptoms and root causes. The overall rectification rate of 130 rectification measures exceeded 98%, and more than 50 policies were established and improved.
| " China Southern's theme education is orderly organized and led effectively. The study and discussion is conducted in-depth. The investigation and research are practical, and the effect of rectification is obvious. ——Proposed by leader of the Twelfth Central Inspection and Supervision Group of the CPC Central Committee during his investigation and guidance tour in China Southern |
3.4 Deepening Reform（1P）
Reform is the source of vitality for development and progress. China Southern has always persisted in the reform, established the office of leading group for deepening reform, intensified the reform, actively carried out the "double hundred action", compensation system, centralized procurement, headquarters functionalization and other reform actions, constantly stimulated the vitality of the enterprise and accelerated the construction of a world-class enterprise.
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Steadily promoting the "double hundred actions". In accordance with SASA relevant requirements of State Council, China Southern Airlines Cargo Logistics (Guangzhou) Co., Ltd, and China Southern General Aviation Co., LTD, the two enterprises included in the "double hundred actions", have continuously improved the mixed-ownership reform plan, steadily promoted the reform of optimizing the modern corporate governance system, market-oriented operation mechanism, incentive and restraint mechanism, etc.
Deepening the market-oriented reform. China Southern launched a special campaign to make the headquarters more functionalized, and identified 26 rectification measures to enhance its internal vitality, market competitiveness and development driving force. It continued to promote the reform of the regional marketing system, establish a European marketing center, and improve the market response capacity.
| Case study:
opening a new path for international cooperation. In order to adapt to international cooperation and market changes, equity investment, joint venture cooperation and inter-alliance cooperation have become a new trend in the development of international aviation market. In order to make a breakthrough in the international market, China Southern decided to withdraw from Star Alliance after careful study, enter the international stage as an independent identity, actively expand the global“circle of friends“, and strive to blaze a new path of international development.
Withdrawing from the alliance, cooperation continues. Work closely with members of the SkyTeam Alliance such as KLM, Delta Air Lines, and Air France after withdrawal.
Accepting and developing new partners. Code sharing and frequent flyer cooperation with American Airlines; code sharing cooperation with Emirates; code sharing cooperation with Finnair for the first time to fill gaps in Nordic network routes; Established joint venture partnership with British Airways; Qatar Airways has become a shareholder of China Southern, carrying out all-round and multi-level cooperation to actively develop new partners. Reserving passengers’ rights. Innovatively launched the "China Southern CZ Priority" elite member service brand, carrying the original "Tianhe Youxiang SkyPriority" service rights, to ensure that after the official withdrawal from membership in 2020, members' mileage accumulation and redemption functions, elite member privileges service rights continue to be retained, in other words, passengers rights and interests are not affected. |
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3.5 Key Performance（1P）
| Indicator |
2019 |
| Passengers transported (million) |
152 |
| Total transportation mileage(billion) |
32.625 |
| Freight and mail volume(million tons) |
1.7636 |
| Operating revenue(billion) |
154.322 |
| Safe flight hours time(million hours) |
295.1 |
| Incident rate per 10 thousand flight hours |
0.0088 |
| Carbon dioxide emissions (kg/tons km ) |
0.869 |
| On-time rate of flights（%） |
83.32 |
| Complaint rate (per million) |
30.71 |
| Employees’ volunteer service hours(hours) |
36,000 |
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3.6 Awards and Honors（1P）
| Award /honor |
Issuing agency |
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| Ranked 14th World's Best Airline |
Skytrax |
| 2019 Best First Class Lounge in China | |
| 2019 Chinese Brand Powerful Model 100 Brands |
"2019 Chinese Brand Powerful Grand Ceremony" event hosted by China Media Group |
| The first airline in Asia to obtain a full process tracking compliance certification |
International Air Transport Association |
| The Best Airline |
Civil Aviation resources Network |
| 2019 Best Airline in China |
Business Travel Magazine
Asia Quality Network |
| Asian Quality Award |
|
| Best Airline Award |
The 5th CAPSE (civil aviation passenger service evaluation) aviation service award presentation ceremony |
| Best Ticketing Service Award | |
| Progress in excellence in in-flight entertainment | |
| Awarded the highest ranking "good" in the 2018 assessment on the effectiveness of targeted poverty alleviation work by the central agencies |
SASAC leading group for poverty alleviation and development |
| Innovation Award of 2018 Xinjiang Poverty Alleviation Award |
Leading Group of Poverty Alleviation and Development of Xinjiang Uygur Autonomous Region |
| Grade A in information disclosure |
Shanghai Stock Exchange |
| No.1 in the list of Central Enterprises' Overseas Image Communication Index |
Research Report on "Central Enterprise Overseas Image Dissemination (2019)" released by Overseas Data Research Center |
| No. 1 Overseas Social Media for Central Enterprises in Aviation | |
| Poverty Alleviation Cases Selected in Blue Paper on Central Corporate Social Responsibility (2019) |
Joint research group of State-owned Assets Supervision and Administration Commission of the State Council and Chinese Academy of Social Sciences |
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4 Focus on 2019
4.1 Construction of Daxing Airport Facilitates, Rapid Development of China Southern（3P）
On September 25, 2019, Beijing Daxing International Airport was officially opened. Daxing International Airport is the century project that General Secretary Xi Jinping personally decides, personally promotes, and personally announces the launch of flight operation. It is a new source of power for national development and a comprehensive transportation hub in the Beijing-Tianjin-Hebei region that supports the construction of Xiong'an New District. China Southern serves the national strategy with the most resolute and positive attitude. As the main base airline , China Southern will fully promote Beijing Daxing International Airport to become an international and domestic composite aviation hub, and create a future-oriented green, intelligent, new experience of technology travel that opens the era of China Southern’s Guangzhou-Beijing "dual hub".
n National strategy, a new driving force for national development
Daxing International Airport has set a number of world records and is hailed as the "New Seven Wonders". In addition to the breathtaking buildings, Daxing Airport's unique location advantage, airspace structure and functional design make it a "new country gate" and "a new source of power for national development."
Location advantage, connecting Beijing, Tianjin and Hebei
It is located in the middle of Beijing-Tianjin-Hebei, 46 kilometers from Tiananmen in a straight line, 54 kilometers from the sub-center of Beijing city, and 65 kilometers from Xiong'an New District. As a comprehensive transportation hub in Beijing-Tianjin-Hebei, it will greatly promote the development of Tianjin and Hebei.
Airspace advantages, shorter uptime
The unique airspace structure makes it unnecessary for China Southern flights at Daxing Airport to pass through the Beijing area and bypass, and the air flight time is shorter; the "three vertical and one horizontal" omnidirectional configuration runway designed according to the characteristics of air operations can reduce more ground taxi time.
[highlight] More than 30 minutes: China Southern flights, to and from Daxing International Airport in the direction of South China, Southwest and East China, save taxi time and air flight time more than 30 minutes on average compared with the flights of Capital Airport.
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Transportation advantage, convenient pit stop transfer
In order to make passenger travel more convenient, Daxing Airport has constructed an integrated transportation backbone network of "five verticals and two horizontals". There are 16 tracks passing directly below the terminal building, which can realize three-dimensional transfers of aircraft, high-speed rail, and expressways. The radial design of the center of the 6 finger corridors of the airport allows passengers to board a plane for up to 8 minutes after walking from Terminal Center to the farthest boarding point after security check.
[highlight] 20 minutes: For Daxing Airport international flight, it only takes 20 from the terminal to boarding, about 40 minutes less than T3 of Beijing Capital Airport.
n A pioneer and the largest main base company
China Southern actively responds to the national strategy to take a lead to station at Daxing International Airport. . It is the main base airline with the largest resource share, the widest flight network coverage, and the largest number of passenger carriers at Daxing Airport. It has also built the largest hangar in Asia, the largest operation control center in Asia, and the largest. aviation food production base in Asia, helping Daxing Airport to become an international first-class and world-leading international aviation hub. The construction of Daxing Airport provides favorable conditions and resources for China Southern to build a Beijing hub, and a strategic opportunity to achieve high-quality development of the company.
【highlight】
As of the end of March 2021, China Southern and its holding subsidiaries have undertaken about 43% of business traffic volume at Daxing Airport;
Completed 13 inaugural flights and the first batch of transit routes;
More than 900 departures and arrivals at Daxing Airport in 2025
[Illustrated]
Asia's largest hangar
With a total area of about 40,000 square meters, it can accommodate two A380, three B777, and three narrow-body aircrafts at the same time. The maintenance is more scientific, efficient and intensive.
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Asia's largest operations control center
Covering an area of more than 3,000 square meters, it is the super-brain of China Southern at Daxing Airport, the collaborative office of operation control, hub ground control and maintenance control, that is the first among domestic airlines.
Asia's largest aviation food production base
It covers an area of 53,000 square meters, with an average daily capacity of 100,000 units and a peak daily capacity of 180,000 units, which can meet the capacity demand in the next five years or even longer term.
Intelligent and exclusive enjoyment bringing new travel experience for passengers
China Southern is committed to creating a smart, convenient, comfortable and exclusive new travel experience for passengers. It is equipped with advanced technology, user-friendly and integrated aesthetic design service facilities to allow passengers to enjoy the quality of "full process, zero intervention, paperless" services, bringing new travel experiences for travelers.
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• | Exclusive and comfortable high-end services |
China Southern has built a highly intelligent VIP check-in area at Daxing Airport, which can provide 100 passengers with full-process services such as check-in and self-check-in. A 1,700-square-meter VIP lounge, which can accommodate more than 300 people at the same time, has been built, which is equipped with hot and cold dining tables, executive lounges, rest areas, and art corridors, etc. to provide passengers with exclusive services.
4.2 Full Service Takeoff in the Bay Area (3P)
The construction of the Guangdong-Hong Kong-Macau Greater Bay Area is a major decision for the country to comprehensively deepen reform and expand opening up under the new situation. China Southern actively responds to the central government's call, grasps the major opportunities in the construction of the Guangdong-Hong Kong-Macau Greater Bay Area, comprehensively deepens reforms, increases investment in transportation capacity, innovates products and services, fully builds the Guangzhou international aviation hub, and continues to expand Shenzhen, Zhuhai, Macau and other urban route networks, provide world-class aviation upstream and downstream solutions for the construction of world-class Bay Area, and contribute to the economic development of the Bay Area.
■ Expanding the air route network and promoting connectivity between the Bay Area and the rest of the world
The route to Guangzhou
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In recent years, China Southern has continued to open and encrypt the Guangzhou route network, and has made every effort to build the " route to Guangzhou " international aviation hub. It has formed two sectors of Europe and Oceania as its core, with Southeast Asia, South Asia, and East Asia as its hinterland. The route network layout in Africa has helped Guangzhou form a "4-hour air traffic circle" with major cities in China and Southeast Asia, and a "12-hour air traffic circle" with major cities in the world. Guangzhou hub has become the most important gateway hub between mainland China and Oceania and Southeast Asia. .
[highlight] 50 Guangzhou- international and regional navigation points; 66 international and regional routes; more than 210 Aircrafts launched in Guangzhou.
（to be updated）
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Shenzhen routes
International long-distance routes in Shenzhen such as Melbourne, Moscow, Sydney, and Dubai have been successively opened and direct flights to Bangkok, Jakarta, Bali, Hanoi, Phuket and other Southeast Asian routes have been improved. The expand of Shenzhen international routes have been speed up to serve the construction of Shenzhen’s demonstration areas.
Zhuhai routes
The Zhuhai route network is optimized to reach major domestic cities including Beijing, Shanghai, and Hangzhou. The route network effectively covers provincial capital hub cities and tourist hotpot cities.
Macau routes
Plan the layout of the Macau market, add Wuhan-Macau, Changsha-Macau and Chongqing-Macau routes to the winter and spring routes, and fully support Macau's development.
Hong Kong routes
The Company Operates 5 routes including Hong Kong-Beijing, Hong Kong-Wuhan, Hong Kong-Shenyang, Hong Kong-Yiwu, Hong Kong-Meizhou to support the development of Hong Kong.
Pioneering central-regional cooperation to accelerate integration of aviation resources in the Bay Area
In order to further accelerate the integration of aviation resources in the Guangdong-Hong Kong-Macau Greater Bay Area, on July 20, 2019, China Southern Group announced the formal implementation of equity diversification reform. Guangdong Province, Guangzhou City, and Shenzhen, through their identified investment entities, paid cash to China Southern Group with Capital increase of 10 billion yuan and total capital increase of 30 billion yuan.
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China Southern Group's equity diversification reform is the first innovation sample in the country that adopts a central-enterprise and local cooperation model to promote equity diversification reform at the central enterprise group level. This reform will significantly reduce the company's asset-liability ratio, provide a strong financial guarantee for the development of China Southern, and further improve the modern enterprise system, and continue to move towards the goal of building a world-class air transport company. China Southern Airlines Group mainly used the capital increase for air transportation to serve the country ’s " Belt and Road Initiative" and Guangdong-Hong Kong-Macau Greater Bay Area strategy. It strongly supported the development of civil aviation in Guangzhou and Shenzhen. It also took into account investment in cities in Zhuhai, Huizhou, Jieyang, Zhanjiang, and Meizhou, comprehensively promoted the construction of a strong province of civil aviation in Guangdong. This reform has strengthened the deep cooperation between China Southern and two core airports of Guangzhou Baiyun and Shenzhen Baoan, as well as the integration efforts of China Southern in South China and the Guangdong-Hong Kong-Macau Greater Bay Area to better serve the construction of the Bay Area.
Innovative products and services making travel easier for Bay Area travelers
China Southern has launched an exclusive product and service system in the Greater Bay Area to provide passengers with greater choice of ticket purchases, better travel experiences, and more flexible membership rights, making travel more convenient for passengers.
Launching "Bay Area Pass" products. It includes the China Southern Express and free transfer products from other places. Passengers of China Southern Express departing from Guangzhou and Shenzhen can enjoy preferential changes to 10 routes including Beijing, Shanghai Hongqiao, Xi'an, Haikou, etc. by submitting an application no less than 4 hours before flight departure. Free transfers at different places provide passengers with more discounts for transfers from other places in Guangzhou, Shenzhen, Zhuhai, Hong Kong, and Macau to or from the same destination.
Launching ground-to-air combined transport services. Provide special door-to-door transfers for passengers from six cities of Shenzhen, Zhuhai, Jiangmen, Zhongshan, Dongguan, Foshan to Baiyun Airport, allowing travelers to travel without worry.
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4.3 Targeted Poverty Alleviation-Jointly Building a Moderately Prosperous Society
Targeted poverty alleviation is an important guarantee for completing the building of a moderately prosperous society in all respects and realizing the "Chinese dream" of the great rejuvenation of the Chinese nation. China Southern has actively implemented the precise poverty alleviation requirements of the party central committee and the State Council, giving full play to the advantages of aviation business. Combined with the actual support, it has explored the development of a poverty alleviation model featuring "aviation guidance, industry-driven development, education, care and assistance, and sunshine poverty alleviation", and has taken concrete actions to help the local poor enter a moderately prosperous society in all respects with the Chinese people by 2020.
■ Set up "air poverty alleviation road of China Southern"
China Southern has made full use of its advantages in the market of civil aviation links to continuously improve the construction of "air poverty alleviation road", opening up air channels for poor areas to get rid of poverty and become rich.
Expand airline network.
Three routes for poverty alleviation have been opened, namely, Hetian - Urumqi - Guangzhou, Hetian - Korla - Chengdu, and Kashgar - Hetian - Zhengzhou. Routes have been expanded among 19 provinces and cities, those providing aid to Xinjiang and those receiving aid, and the route network has been improved as well.
Optimize the development environment.
China Southern has formulated preferential policies for air passenger and freight rates for poverty alleviation enterprises and products in designated poverty alleviation counties, attracted investment enterprises to enter, and optimized the local industry development environment.
Issue the Pearl Aid Xinjiang Card.
China Southern has provided more than 60,000 aiding cadres with restroom services, extra baggage, priority boarding and other full-process services, helping them to aid Xinjiang with peace of mind and focus on poverty alleviation.
Promote the "Poverty Alleviation Products to the Blue Sky Project"
Considering the actual situation of regions receiving aid, China Southern develops industries to promote poverty alleviation in accordance with the poverty alleviation ideas of "markets lead industries, industry leads employment, employment promotes poverty alleviation, and poverty alleviation promotes stabilization".
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Carry out industrial poverty alleviation.
China Southern Assisted in introducing companies to build forest and fruit processing plants, labor insurance glove factories in Pishan County, clothing and footwear cooperatives in County. In Xinjiang, Liaoning, Jilin, Henan, Hubei, Hunan, Hainan, Guangxi, Guizhou, more than 10 industrial projects such as the cultivation of agaric, ginkgo, chrysanthemum, rice, navel orange, the breeding of chicken, goose, and sheep were carried out, to help the local poor out of poverty with long-term mechanisms.
Assist in attracting investment
Involved cadres have been sent to the developed region for investment promotion, introducing 6 enterprises for Pishan County with capital of 125 million yuan and 66 implemented projects for Moyu County with a capital of 220 million yuan.
Carry out poverty alleviation through consumption.
China Southern Purchased 8.2 million yuan of agricultural products in Pishan County and Moyu County in 2019, helped to build and improve systems for online sales of agricultural products, e-commerce training, etc., promote and sell Xinjiang tourism resources and specialty products through platforms such as China Southern Aircraft Magazine, e-commerce platform, and employee mall. Agricultural products worth nearly 30 million yuan in Pishan County and Moyu County were sold.
Build "China Southern First-Class Pearl School"
China Southern attaches great importance to the development of education in poverty-stricken areas. Through the development of basic education, skills training, and support for cultural and sports undertakings. Focusing on intelligence development and ambition cultivation, China Southern continuously brings upward growth to the poor areas.
Improve local basic education level
For 15 consecutive years, China Southern has funded the construction of Pishan County's China Southern Pearl Primary School and Moyu County's China Southern Pearl Kindergarten. It plans to invest 58 million yuan in two years to build a new China Southern Pearl Primary School in Moyu County, of which 25 billion yuan was paid in 2019 to improve local basic education level.
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Actively broaden visions.
China Southern organized 22 outstanding teachers and 30 youths from designated counties to Guangzhou and Urumqi to conduct skills training camps and summer camps to improve teaching quality and enhance students' knowledge. It organized 20 youths from Altay region to carry out patriotic summer camps in Beijing to open up students' vision.
Support the cultural and sports undertakings.
China Southern has supported the football team to go out to participate in the competition for 6 consecutive years, helping it to win the national championship many times. At the same time, in cooperation with the Ministry of Education, the National Youth Campus Football "Starry Sky" training camp was established in Moyu County to promote the development of youth football.
Implement the "health poverty alleviation project of China Southern"
China Southern pays great attention to the groups who become poor due to illness and return to poverty due to illness, and helps improve the medical and health conditions of the poor by providing financial support and assisting in improving medical infrastructure.
Support the "Emergency and Difficulty Relief" mission. In 2019, we invested 2 million yuan to support Moyu County ’s "Emergency and Difficulty Relief" initiative, and donated a total of 6 million yuan to help more than 800 poor families with serious illness.
Promote the implementation of medical insurance policies.
China Southern promoted the implementation of the supplementary medical insurance policy for the deeply impoverished population in Moyu County, ensuring that 100% of the poor people who have registered in the program are insured, and guaranteed the full coverage of " diagnosis and treatment before payment " and "one-stop settlement services" for poor patients.
Improve medical and health conditions:
The construction of 16 standardized township hospitals and 362 standardized administrative village clinics in Moyu County were completed to help improve medical infrastructure conditions.
Poverty Alleviation Footprint
In 2019, China Southern United Corporation actively responded to the country's call for precision poverty alleviation, extended its assistance footprint to a number of state-level poverty-stricken counties, and took practical actions to join hands with the poor to strive for prosperity.
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新疆维吾尔自治区皮山县、墨玉县 |
Pishan County, Moyu County, Xinjiang Uygur Autonomous Region |
| 广东省怀集县 |
Huaiji County, Guangdong Province |
|
辽宁省兴城市、普兰店区 |
Xingcheng city and Pulandian District, Liaoning Province |
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湖北省蕲春县、点军区 |
Hunchun County and Dianjun District, Hubei Province |
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海南省乐东黎族自治县 |
Ledong Li Autonomous County, Hainan Province |
|
广西壮族自治区富川瑶族自治县 |
Fuchuan Yao Autonomous County, Guangxi Zhuang Autonomous Region |
| 贵州省盘州市 |
Panzhou City, Guizhou Province |
|
河南省镇平县、社旗县 |
Zhenping County and Sheqi County, Henan Province |
| 吉林省洮南市 |
Taonan City, Jilin Province |
| 湖南省新宁县 |
Xinning County, Hunan Province |
|
重庆市秀山土家族苗族自治县 |
Xiushan Tujia and Miao Autonomous County ,Chongqing |
Note: [Map of Nansha Islands to be added when designing] Map download address:
http://bzdt.ch.mnr.gov.cn/
■ Poverty relief performance
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|
| Indicator |
Amount and development |
| I Overview | |
| Direct funding (RMB 10,000) |
3,593 |
| Poverty relief number of people from registered poor households(person) |
3,045 |
| Dispatched poverty alleviation officials on secondment |
77 |
| II Breakdown | |
| 1. Poverty relief via industry development | |
| Poverty alleviation projects launched |
13 |
| Poverty alleviation via agriculture and forestry(RMB10,000) |
480 |
| Poverty relief number of people from registered poor households(person) |
3,045 |
| 2. Poverty relief via transfer employment | |
| Funding in vocational skills training (RMB 10,000) |
30 |
| Training of grassroots cadres (person-times) |
408 |
| Vocational skill training(person) |
16,440 |
| Number of people from registered poor households who become employed with company's assistance |
3,278 |
| 3. Poverty relief by education | |
| Funding for subsidizing poor students (RMB 10,000) |
80 |
| Needy students given financial aid(person) |
290 |
| Investment amount of educational resources to improve poor areas (RMB 10,000) |
2,570 |
| 4. Poverty relief via health support | |
| Investment in medical and health service(RMB 10,000) |
200 |
| 5. Other projects | |
| Project number |
8 |
| Funding amount(RMB 10,000) |
233 |
[scan for more] the big world of the country: hand in hand, a poverty alleviation story of a beautiful flight attendant
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4.4 Mission of Fighting the Epidemic（3P）
At the beginning of 2020, a sudden battle to prevent and control new-type corona-virus infection in pneumonia started suddenly in China. The epidemic is ruthless whereas there is love on earth. After the epidemic attack, China Southern, as the central enterprise with high responsibility, responded to it at the fastest speed, making full use of aviation advantages, using all resources and strengths, racing against time, racing against the epidemic, and setting up the fastest channel for air war against epidemic through rescue charters, and devoted all its efforts to winning the battle against epidemic with all sectors of society.
【highlight】
From January 24 to February 29, 2020, China Southern has carried out 94 times of rescue charters, transporting 9,516 team members, 495.28 tons of rescue supplies.
China Southern Airlines donates 10 million yuan in cash to Hubei Province
Donate scarce medical supplies
The shortage of medical supplies in Hubei affects the heart of the world. China Southern took advantage of its overseas regional marketing center and sales department's territorial advantages, searched for sources of goods in various ways, purchased medical supplies in various ways, and opened green channels for procurement, customs clearance, and logistics to ensure the donated materials delivered to Hubei as soon as possible. On February 9, China Southern Airlines Group donated 10,000 sets of protective clothing and 10,000 surgical masks to Hubei Province through the State-owned Assets Supervision and Administration Commission of the State Council, and 20,000 medical masks to the Hubei Bureau of Civil Aviation.
Rescue charter flights to Hubei
Time is life. In order to ensure that medical personnel and medical supplies can go to the front line of the epidemic prevention as soon as possible, China Southern made every effort to provide emergency rescue support and urgently transported medical team members and supplies from Guangdong, Guangxi, Liaoning, Jilin, Chongqing, Heilongjiang, Guizhou, Xinjiang, Henan to Hubei and the front as soon as possible. At the same time, China Southern opened a green transportation channel for the transfer of aid materials for the epidemic, and provided free air transportation and priority to guarantee the domestic and overseas aid materials donated by the public.
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Transport overseas compatriots home
In the case of the suspension of foreign airlines, China Southern took an active role in carrying out charter flights to overseas cities such as Phuket, Thailand, and received passengers who were Hubei original to return to China. By Feb. 29, 2020, China Southern has transported 432 Hubei passengers.
■ Safeguard passenger life
China Southern always puts the safety and health of passengers first. After the epidemic broke out, China Southern issued the policy of refund and changes as soon as possible in accordance with the requirements of the Civil Aviation Administration and other departments. It issued a total of 4 external announcements and 6 internal operating guidelines to quickly process ticket refunds and changes. At the same time, according to the requirements of the Civil Aviation Administration, the on-board meal supply standard was adjusted to effectively reduce the close contact of personnel, and the aircraft cabin was fully disinfected to ensure that the cabin was clean enough to block the spread of the epidemic in the cabin to the greatest extent.
Special rights tribute to medical workers
In order to pay tribute to the front-line medical workers, China Southern launched the exclusive service of "Honorary Medical Card" for medical workers. In addition to providing regular membership benefits for medical workers who are new members of the Pearl club, there are also three major benefits such as bonus miles, exclusive coupons, and benefits for up to 7 immediate relatives. The actions aim at expressing our great gratitude to medical staff for their efforts .
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| Case study: on New Year's Eve, rushing to Wuhan for rescue
On Jan. 24, 2020, when people are immersed in the festival atmosphere, Luo Haizhong, Manager of the Operation Command of the Hubei Branch of China Southern, received an urgent notice: China Southern will fly a rescue charter flight, carrying medical personnel from Guangzhou to Wuhan for assistance. This is the first medical support charter mission performed by China Southern and one of the first medical support flights at Wuhan Tianhe Airport. Luo Haizhong immediately released the notice. In less than 40 minutes, all the staff on duty in various departments, such as ground service, freight transportation, maintenance, transportation, and information, arrived. At the same time, in Guangzhou, China Southern selected the capable personnel at the earliest time to make preparations and protection.
On Jan.25, spanning the Lunar New Year, Flight CZ5241 took off at 10pm from Guangzhou on the special mission, Carrying 128 Guangdong medical staff and 3.4 tons of materials, and successfully arrived at Wuhan Tianhe Airport at 00:14. In Wuhan, Luo Haizhong had already made preparations and, in coordination with the airport, parked the plane at a road crossing near the quarantine zone. "It's better to get the medics off the ferry and onto the bus directly. They're all going to the front at once. We shall try to save every extra minute for them." Luo Haizhong said. |
| China Southern people without hesitation
In front of the raging epidemic, there were no onlookers. In the fight against the "epidemic", the people of China Southern held their position and participated in their own ways to contribute to the prevention and control of the epidemic.
On the fifth day of the Chinese New Year, I received a special flight order: I am supposed to land at 2 o'clock at night and get up at 4:30 am to report. I have to change the plane and crew four times, take two breaks, and wait for the plane once in the terminal. Maybe canceled ... I replied," No problem, I'll fly. " After completing the first day flight mission, although exhausted, but in front of the epidemic, the mission is on my shoulder. If there is another special mission, I will still answer " I will continue to fly ".
—Yang Siyi, Flight Department, Hunan Branch
When I saw the solicitation order in the early morning, I immediately asked for joining in the battle of epidemic. The simplest idea at that time was that I was a party member and a native of Wuhan, Hubei province. I was duty-bound to do something for my hometown. In the face of the epidemic, all people should do their part in their posts and do what they can."
--- Tian Jing chief steward The first batch of Xinjiang aid medical teams took the CZ7997 charter flight to Wuhan. Two crew members were required to follow the plane to complete the maintenance and release of the flight after it landed in Wuhan.I submitted the application without hesitation. My wife was very worried and opposed me. Between the worries of my family and the cries of responsibility, I finally convinced my wife, "the protective measures are complete, and I'm going with the medical staff. Don't worry, I will return safely for you and the plane."
—Zhang Honglin, Aircraft Maintenance Base of Xinjiang |
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5 Responsibility Management（5P）
5.1 CSR Governance（1P）
In accordance with the requirements by SASAC, Hong Kong stock exchange and Shanghai stock exchange for the work of social responsibility, China Southern have formulated the "General Handbook of CSR Management" (and its separate volumes), established the social responsibility management architecture, made clear the responsibilities of relevant departments and further enhanced CSR management ability.
| The CSR Guidance Committee, with the chairman and general manager as the team leader, the social responsibility work leader and the board secretary as the deputy team leader, is the highest decision-making body for ESG management, responsible for establishing an effective ESG risk management and internal monitoring system, and reviewing corporate social responsibility reports.
CSR Working Office, which is set up at the Publicity Department, is responsible for implementing the resolutions of the Guidance Committee on social responsibility, formulating the social responsibility system, clarifying the goals, policies and measures of ESG, monitoring the achievement of ESG indicators, and organizing the preparation of social responsibility reports.
The CSR working group, composed of the functional departments of the headquarters and subordinate units is responsible for the management and information disclosure of the corresponding social responsibility issues, formulating the management objectives and measures of the issues, regularly monitoring the progress of the issues, and participating in the preparation of social responsibility reports. |
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CSR Operation Structure
5.2 Response to UN Sustainable Development Goals（1P）
In response to the United Nations' 2030 Agenda for Sustainable Development, China Southern has identified eight priority actions from the 17 sustainable development goals, given full play to its industry advantages and resource expertise to contribute to the cause of global sustainable development.
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| SDGs |
Our Actions |
Report Location |
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A total of 35.93 million yuan was invested in the project, and 77 cadres were sent to take temporary posts or stay in villages for poverty alleviation We will train 408 cadres at the community level, and help poor areas to become well-off by adopting the model of "leading by aviation, driving by industry, focusing on education, caring for and assisting the need, and warmly helping the poor ". |
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For 15 consecutive years, the Company has funded the construction of China Southern Pearl Primary School primary school in Pishan County and China Southern Pearl kindergarten in Moyu County. The company plans to invest 58 million yuan in two years to build a new China Southern Pearl Primary School in Moyu County to improve the local education level and prevent inter-generational poverty. |
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Promote "equal pay for equal work" - irrespective of gender - and protect the rights and interests of female employees by signing collective contracts; Help 63 illness-stricken female employees apply for mutual aid funds amounting to RMB 0.9 million. |
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Regularly test aircraft drinking water to ensure water safety and hygiene; Promote aircraft dry cleaning technology; Save water in aircraft cleaning. |
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Implement the reform of the employee compensation system; Establish a more equitable and reasonable compensation system; Provide employees with good compensation and benefits. |
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Promote energy conservation and environmental protection during the national energy conservation publicity week; Call for low-carbon travel from all walks of life; Actively control the discharge of waste water and exhaust gas; Make the first use of bio-jet fuel for intercontinental flight to reduce the impact of production and operation on the environment. |
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Promote the world's first 10,000 ton carbon quota swap trade between the EU and Guangdong; Continue to reduce jet fuel consumption. The annual carbon dioxide emissions per ton-km is 0.869 kg. |
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Sign the "Buckingham Palace Declaration"; comply with 11 commitments stated in the Declaration, Participate in the global effort in stopping illegal transportation and trade of wildlife and wildlife products. |
5.3 Analysis of Material Aspects（1P）
In order to further improve the pertinence of information disclosure in the report, China Southern conducts analysis of material aspects , identifies key material aspects, and responds to the appeal and expectations of stakeholders through different communication channels and platforms.
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Identification Flow of China Southern Material Aspects
List of CSR Material Aspects of China Southern
| Serial Number |
Aspects |
Report Location |
| 1 |
Implementing targeted poverty alleviation |
P25-29 |
| 2 |
Anti-corruption |
P13 |
| 3 |
Assurance of passengers’ health and safety |
P49 |
| 4 |
Safeguarding safe flight |
P64 |
| 5 |
Responds to climate change |
P53-55 |
| 6 |
Attention to waste disposal |
P57-59 |
| 7 |
Reduction in flight delays |
P62-63 |
| 8 |
Protection of passenger privacy |
P69 |
| 9 |
Easier travel business |
P63 |
| 10 |
Supporting employee training and education |
P75 |
| 11 |
Assurance of employees’ diversity and equality of opportunity and treatment |
P72 |
| 12 |
Attention to employees’ remunerations and benefits |
P74 |
| 13 |
Performing " Belt and Road Initiative" responsibility |
P81 |
| 14 |
Promoting suppliers to fulfill their social responsibilities |
P84 |
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5.4 Communication with the Stakeholders（2P）
China Southern has always been committed to building a diversified communication mechanism, actively and extensively communicating with stakeholders through multiple channels and ways, and continuously improving it's ability to fulfill its responsibilities based on the opinions of stakeholders.
■ Communicating with stakeholders
| stakeholders |
Expectations and requirements |
Means and channels of communication | ||
| Investors |
• |
Corporate governance |
• |
Regular disclosure of business information |
| • |
Risk Control |
• |
Shareholders' meeting, report and notification | |
| • |
Return on investment |
• |
Continued growth in performance to ensure shareholder returns | |
| government |
• |
Legal operation |
• |
Special reports, visits and investigations |
| • |
Increase in tax contribution |
• |
Project cooperation and business meetings | |
| • |
Increase in employment |
• |
Statistical reports | |
| environment |
• |
Energy saving and emission reduction; |
• |
Green flight and carbon emission reduction |
| • |
climate change |
• |
Ground environmental protection | |
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Ecological preservation and pollution reduction |
• |
Noise reduction measures | |
| • |
Noise reduction |
|||
| customers |
• |
Continuous safety |
• |
Safety management system |
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• |
Customer relation management and | |
| • |
Quick response to customer complaints and suggestions |
• |
online services | |
| employees |
• |
ž Establishing effective communication channels |
• |
Employee Representatives General Meeting |
| • |
Improving training |
• |
Diversified employee training | |
| • |
Improving employee compensation and benefits |
• |
Compensation system reform | |
| • |
Open, fair and health human resource policy |
• |
Integrated staff management | |
| suppliers |
• |
ž Ethical operation |
• |
Transparent procurement |
| • |
Co-development |
• |
Training and technology exchange seminars | |
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| Financial Institutions |
• |
Enhancing debt-repayment ability |
• |
Strengthen compliance management |
| • |
Reducing risk |
• |
Improve business level | |
| Community |
• |
Helping targeted poverty alleviation |
• |
Carry out targeted poverty alleviation |
| • |
Volunteer service |
• |
Charitable activities and volunteers | |
| Media |
• |
Establishing information disclosure channels |
• |
Press conferences |
| • |
Timely expressing the voice of China Southern |
• |
Media forums | |
| Other players in the industry |
• |
Fair competition and friendly cooperation |
• |
Cooperation |
| • |
Healthy and harmonious industry Development |
• |
Communications, forums and conferences |
Public Open Day events
First quarter: Birdview Guangdong, Hong Kong and Macau from Helicopter
On March 25, more than 30 people from media and public representatives were invited to take the China Southern navigation helicopter to birdview the Hong Kong-Zhuhai-Macau Bridge and the Guangdong-Hong Kong-Macau Greater Bay Area from the air to experience the great changes of the motherland.
Second quarter: walk into Daxing Airport construction site
On June 29, more than 50 citizens and reporters walked into Daxing Airport, visited the "Three Asia's Largest" Projects of China Southern, the locomotive maintenance hangar, the Transportation Control Center, and aviation food production base, and experienced China's speed and quality.
Third quarter: Experience the first flight of Daxing
On September 25, a total of 162 people from hundreds of media and citizen representatives experienced Daxing Airport's "five vertical and two horizontal" three-dimensional transportation network, took the first flight of Daxing International Airport, and learned about China Southern's Guangzhou-Beijing "dual hub" planning and construction.
Fourth quarter: Explore China Southern’s Daxing base in new flight season
On October 26th and 27th, 120 media and citizen representatives visited China Southern’s largest aviation food production base of Asia, its largest operations control center of Asia, China Southern’s exclusive check-in area and passenger lounge, etc.
"Social Responsibility Day"
On April 22, on the CZ3121 (Guangzhou-Beijing) flight "China Southern Social Responsibility", China Southern released a social responsibility report at an altitude of 10,000 meters to introduce to the public the spread of China Southern's social responsibility concepts and progress.
"State-owned Enterprise Open Class" activity
On May 22, China Southern and South China University of Technology together held a special public lecture " Leaders on the Podium" in South China University of Technology. Wang Changshun, Board Chairman of China Southern, delivered a lecture and exchanged the history and innovation of China Southern with university students.
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6 Safety：Happy work, safety and happiness（10P）
6.1 Opening page（1P）
Safety is the lifeline of airlines and the cornerstone of stable operations. It is also the primary goal for all China Southern staff to work together. China Southern adheres to the safety concept of "happy work, safety and happiness", establishes a zero mindset, always treats safety with a reassuring attitude, continuously improves the safety management system, strictly implements various safety measures, and makes every effort to ensure every flight and every passenger Security. With unremitting efforts, China Southern continued to maintain the No.1 safety record of China Civil Aviation in 2019.
6.2 Safety Management（2P）
China Southern strictly complies with safety laws and regulations such as the Work Safety Law, the Civil Aviation Law, the Emergency Law, and the Anti-Terrorism Law, and establishes a safety management system( SMS) including rules and regulations, accountability system implementation, risk management, safety inspection and audit, etc., with a sound mechanism and system guarantee, to build the company's foundation for safe operation. In 2019, China Southern thoroughly studied and implemented the spirit of General Secretary Xi Jinping's important instructions on civil aviation safety work, strictly followed the implementation of Article 26 of Civil Aviation Administration and Article 34 of China Southern, and made every effort to ensure the safety of aviation.
Safety governance structure
An aviation safety committee is set up under the board of directors of China Southern. As the company's highest safety management agency, it is responsible for researching, decision-making, managing and supervising the implementation of important safety policies of the company. The company's chairman / general manager, as the company's first security responsible person, has set a deputy general manager for safety and set up a safety management function department to establish a security management organizational structure covering all majors and levels to achieve full coverage of security management responsibilities.
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n Safety system construction
According to the characteristics of the large fleet size and complex structure, China Southern initiated the construction of seven major safety systems centered on safety responsibility, regulations and manuals, training , process control, risk management and control, safety culture, and technological innovation, and promoted the company's safety management to be institutionalized , structured, systematic, and informatized.
Construction of safety system
In 2019, China Southern introduced regulations such as the Management Regulations for Dishonesty, the Management Regulations for Cockpit Sound Monitoring, and the Regulations for Comprehensive Smoking Banning of Aircraft to strengthen institutional supervision. At the same time, the "Aviation Safety Management Manual" was comprehensively revised, precision assessments were implemented, safety assessment terms were significantly streamlined, key links were focused, and safety systems were continuously improved.
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Safety risk management
China Southern has established a monitoring mechanism for "daily reports, weekly reviews, monthly summaries, and quarterly rankings" of safety risks. It regularly organizes operational seminars to analyze risk vulnerabilities using typical error cases, and improves awareness and capabilities of safety risk prevention. In 2019, in response to safety risks such as complex weather, aircraft failures, bird strikes, and air turbulence, timely prompts of safety risks were issued to curb the frequent occurrence of similar unsafe events.
Case study: Innovating the "red paper" and "blue paper" system, making employees awe of safety
| In order to encourage employees to respect the rules and safety in awe, China Southern has established a distinctive "red paper" and "blue paper" system in flight, aircraft maintenance, operation control, cabin, and security systems. "Red paper" is an illegal violation file while "Blue Paper" is a file of ability and quality, forming a personal discipline file of employees, which is closely linked to salary, cadre selection, evaluation of superiors, transfer to new plane models, and personnel mobility, etc. This system can educate staff throughout the full cycle of professional career. |
6.3 Aviation Safety
China Southern has established comprehensive safety control measures in the entire chain of aviation safety, relying on the cooperation of flight, maintainence, cabin, security, ground services, and operation control departments to ensure that each flight is foolproof and allows passengers to reach their destination safely.
6.3.1 Safety Guarantee in Key Aspects(2P)
Pilot capacity building
According to the Civil Aviation Law，Operational Certification Rules for Large Aircraft Public Air Transport Carriers and the Civil Aircraft Pilot Certification Rules, China Southern revised and perfected the two manuals of the Flight System Management Manual and Flight Staff Training Outline. In 2019, China Southern innovated the training model, promoted online training through online learning platform, and by the means of remote CBT teaching, standardized training program (STP), and CRM training camp to further consolidate the theoretical foundation of pilots and strengthen the construction of "three basic skills"; Organized 11 sessions of "Flight Lecture Hall" video training to improve the comprehensive ability of pilots to deal with special situations; Taking co-pilot upgrade simulator training as a pilot, explored ability-based training courses to improve the training's pertinence and practicality; Promoted the training courses of RNP, CAT II, CAT III, HUD, strengthened the cultivation of pilots' ability to operate around the clock.
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Maintenance safety
In order to ensure the quality of maintenance, China Southern continued to promote the comprehensive application of "production arrangements, construction procedures, work standards" safety management procedures, requiring maintenance personnel to strictly follow the standard procedures to ensure that they work according to manuals and work cards to reduce the risk of illegal operation of maintenance. In 2019, China Southern actively carried out "active offensive" safety management in maintenance, and concentrated its efforts on tool management, preventing missed follow-ups and preventing aircraft from scratching to guard against maintenance risks.
Operational Command safety
In 2019, China Southern's operation command system focuses on strengthening the management and control of operational risks such as style qualification, IT system risks, and "three new" routes. In particular, in order to ensure the smooth operation of Daxing Airport, the Civil Aviation Administration of China conducted the largest airspace adjustment in the domestic airspace mainly in North China. China Southern completed the route revision work as required. The revised route accounted for 35% of the company's total routes. The company issued a "three new" route safety alert in a timely manner, and issued a one-month early-warning to flight crews to achieve smooth flight operations without any occurrence of wrong route flight.
Air security
China Southern completed the revision of the "Aviation Security Operation Manual", "Aviation Security Personnel Work Manual", as well as the "Aviation Security Personnel Training Management Manual" and "Aviation Security Personnel Training Outline", and standardized the safety management with the manual rules and regulations. At the same time, China Southern carried out the "Safe Flight" operation, carefully implemented the "Ten Measures for Strictly Controlling the Safety Order on Board Aircraft" of the Public Security Bureau of the Civil Aviation Administration, and severely cracked down on the behaviors disturbing the cabin order on board. A total of 113 incidents were handed over to the public security organs on board, thus maintaining the cabin security order on board.
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Crew Scheduling and fatigue management
China Southern has formulated Operation Manual to standardize the crew scheduling and the pilot fatigue management to ensure that pilots perform each flight mission in the best physical condition.
Scheduling management. Develop an automatic shift scheduling and automatic scheduling system to further standardize the management of crew member qualification data by means of information technology, and continuously strengthened data analysis capabilities to provide data support for scientific scheduling.
Fatigue management. Integrate the crew overnight process, optimize the route structure, reduce the crew's overnight ratios, increase the proportion of flight crews performing the same aircraft flight missions, reduce crew fatigue, thus reduce the safety risk caused by pilot fatigue.
6.3.2 Technology Guarantee flight safety (2P).
Advanced science, technology and equipment are important supports for civil aviation safety and a guarantee for improving operational efficiency. China Southern continued to strengthen its scientific and technological innovation capabilities, continuously promoted innovation in flight technology, and escorted safety with technology.
Operation command
The introduction of the LIDO flight planning system has improved the automation level of the transportation control system, and completed the development of the "alarm function on comparison between planning and pilot report route ", which enables comprehensive monitoring changes of flight plan reroutes.
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· |
The ORCS system was initially established. Data processing functions of crosswinds during the take-off phase, short runways, comparisons between navigation database with planned routes, low temperature routes, and air bump risk nodes were developed, and monitoring information and three new route databases were accessed to achieve eight major flight monitoring alarms and "three new" route risk alerts.. |
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n |
Maintenance |
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China Southern Jointly developed the Engmap engine management system with MTU, which integrates oil monitoring, borehole / magnetic plug inspection, fleet management, and repair management to optimize the function of engine data collection, storage, analysis and etc.
China Southern developed the aircraft maintenance dispatch system AMAS, which further extended the remote diagnosis system function, realized faster aircraft data information acquisition, more efficient troubleshooting decisions, faster deployment of aviation materials and personnel, and greatly improved the efficiency and quality of aircraft maintenance.
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· |
Security |
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Develop a comprehensive security management system and a mobile "Guard Mobile" APP used by security personnel to help perform precise duties. |
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· |
Develop a security flight tracking system to achieve real-time monitoring of key flights. |
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· |
Develop a visual command system to achieve real-time video command between air and ground. |
| Case study: Developer of long-range aircraft " pulse diagnosis " system boarded the National Day parade float
On October 1, 2019, during the celebration of the 70th anniversary of the founding of the People's Republic of China, China Southern engineer Liu Yuhui boarded the "floating spring" square array float. He was also the only civil aviation person invited by the State-owned Assets Supervision and Administration Commission of the State Council. Liu Yuhui once led the research and development of the "Aircraft Remote Diagnosis Real-time Tracking System", breaking foreign technical blockades, achieving remote "diagnosis of the pulse" for aircraft, and receiving the "Second Prize for Scientific and Technological Progress" of the General Administration of Civil Aviation.
Chinese solution for remote "pulse diagnosis" of aircraft
The electronic display screen of the China Southern Aircraft Maintenance Control Center is full of dots of various colors. "Each dot is an aircraft, and different colors represent different health conditions of the aircraft. If any aircraft failure occurs, we can grasp it in real time and propose solutions to maintain it in time after the aircraft has landed." Liu Yuhui introduced. |
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| This was not the case 20 years ago. At that time, engine performance monitoring also relied on pilots to manually copy in flight logbooks, which were subsequently entered into computer systems. At the same time, the aircraft does not know if there is a fault or where it is after it reaches the ground. Only then can it begin to judge, analyze, prepare aviation materials and maintain, which will easily cause the delay of the next shift and cannot meet the needs of rapid development.
At that time, there were existing fault monitoring systems in the world, but the fees were very expensive, which made China Southern determined to develop its own fault monitoring system. So Liu Yuhui set foot on the road of research and development without any hesitation. At that time, the domestic research and development of airborne information technology was still blank. Liu Yuhui led the team to overcome various difficulties and challenges. At the end of 2001, the prototype of China Southern’s "Aircraft Remote Diagnosis Real-Time Tracking System" based on B777 aircraft was completed. The operation provided the "China Solution".
In 2016, the fourth-generation prototype of China Southern's self-developed remote diagnosis system was launched, and its performance reached the international advanced level. China Southern has also become the first and only company in China's civil aviation industry to have an independently developed remote diagnosis system.
Support the development of large passenger aircraft in China
From 2010 to 2012, COMAC sent more than 10 engineers to China Southern' "Airborne Information Room" to study on the research and development of domestic large passenger aircraft. Over the past two years, Liu Yuhui's team imparted systematic knowledge to engineers of COMAC without any reservations. Together, he completed more than 400,000 words of monographs and contributed to the self-developed large passenger planes in 2015.
"Only when China is strong and becomes a true 'aviation power' and seizes the commanding heights of the industry, can we get rid of the dilemma of 'restrained by others'," said Liu Yuhui. Independent innovation is the only way for China Southern and even China's aviation industry to embark on high-quality development. China Southern has been always on the road. |
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6.4 Passenger Health and Safety (1P)
China Southern has formulated the Aviation Health Management Manual, Aircraft Public Health Work Manual, Emergency Control Plan for Public Health Emergencies to comprehensively guarantee passengers' safety on drinking water, food and health during flight.
Safe drinking water. Investigate the health status of aviation drinking water, conduct water quality audits of aviation drinking water at 12 domestic and foreign stations to ensure drinking water safety.
Aviation food safety. The four stages of procurement acceptance, basic hygiene, processing and inspection and taste testing in aviation food production are well carried out. On-site audits of 16 food raw material suppliers are carried out throughout the year, and key inspections such as storage processing temperature, time, and date identification are conducted to ensure aviation food safety.
Medical assistance. Establish a 24-hour on-call health consultation system for passengers, provide them with health medical consultation services before boarding, and ensure the health of passengers from the source. For passengers with sudden injuries and illnesses on board, upholding the principle of "life is above everything, proactive rescue, proactive comfort, respect for passengers", China Southern requires air-ground service departments to cooperate with each other, actively participate in handling, and make every effort to ensure that passengers receive medical assistance in the first time.
[Highlighted] The number of passenger receiving health consultations throughout the year was 1,465, of which 136 were advised to suspend flight.
6.5 Occupational Health and Safety (1P)
Safety and health are the prerequisites for personal growth and happiness. China Southern attaches great importance to the physical and mental health of each employee, strictly abides by laws and regulations such as the Labor Law, the Prevention and Control of Occupational Diseases Law, continuously strengthens the identification and assessment of employees' occupational health and safety risks, and adopts targeted health education and management measures to ensure employees are physically and mentally healthy.
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Flight crew health management
| No. |
Major health risks |
Measures |
| 1 |
Aircrew frequently travel to different places, eat and drink irregularly, and are prone to diseases such as the digestive system. |
Strengthen health education, and carry out thematic education courses on common diseases, frequently-occurring diseases and healthy lifestyles of flight crews. |
| 2 |
Pilots have an increased risk of metabolic and cardiovascular diseases, and their bodies are vulnerable to sub-health. |
Carry out health grading management for pilots, develop personalized correction plans for personnel who combine multiple risk factors or clinical diseases, and reverse sub-health status. |
| 3 |
Aircrew members are highly stressed during their duties and are under great mental stress. |
Incorporate mental health knowledge into daily health education and incorporate mental health construction into the induction training of new crew members to ensure maximum physical and mental health. |
【Highlight】
|
|
2017 |
2018 |
2019 |
| Deaths due to work (persons) |
4 |
1 |
1 |
| Proportion of employees killed by work (%) |
0.0031 |
0.0010 |
0.0010 |
| Working hours lost due to work (working days) |
9,365 |
14,485 |
17,508 |
Note: we deeply regret that one employee of China Southern died suddenly at work in 2019. China Southern will continue to care about the physical condition of employees and urge employees to participate in the company's physical examination in a timely manner to ensure the physical and mental health of employees
Under the guidance of the company's safety concept and relying on the cooperation of employees in various positions, in 2019, China Southern maintained the No.1 safety record of China Civil Aviation.
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| Aspects |
Performance in 2019 |
| Safe flight hours (10,000 hours) |
295.1* |
| Accumulated safe flight hours(10,000 hours) |
2,638.6* |
| Consecutive months for flight safety |
242 |
| Consecutive months for aviation safety |
307 |
| Incident rate per ten thousand flight hours |
0.0088 |
| General incident rate per ten thousand aircrafts |
0 |
| Aircraft ground incident rate per ten thousand aircrafts |
0 |
Note: The safety flight time and the cumulative safety flight time are based on the data provided by China Southern.
| aspect |
year |
China Southern |
Civil aviation in China |
| China Civil Aviation Transportation Aviation Man-made Cause Accidents |
2015 |
0.0337 |
0.0376 |
| 2016 |
0.0054 |
0.0390 | |
| 2017 |
0.0101 |
0.0274 | |
| 2018 |
0.0047 |
0.0329 | |
| 2019 |
0.0088 |
0.0219 |
Notes: The data above only include incidents produced at the Company, excluding those by manufacturers and accidents. Industrial data originate from Report on Statistic Analysis of Safety Data of Civil Aviation Industry issued by CAAC.
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7 Environment: Green Connectivity, Guarding our Homeland (9P)
7.1 Opening Page (1P)
Against the background of green and low-carbon development becoming a global consensus, as a "big player" in carbon emissions, how to reduce the consumption of energy and resources while minimizing the impact on the environment and in the meantime maintaining the rapid growth of air transport is a common challenge facing the industry. China Southern actively explores the application and practice of new environmental protection technologies and methods in the management, operation and flight processes, minimize its own impact on the environment and create more opportunities and possibilities for the sustainable development of the earth's ecology.
7.2 Management of Environmental Impact（1P）
2019 Environment performance（1P）
n Emission of Greenhouse Gases
| indicator |
2017 |
2018 |
2019 |
| Carbon dioxide emission (10,000 tons) |
2,527.94 |
2,690.13 |
2,862.63 |
| Carbon dioxide emission (kg/ton-kilometer) |
0.916 |
0.888 |
0.869 |
| Indicator |
2019 |
| Category1--Carbon dioxide emission (10,000 tons) |
2,845.89 |
| Category2--Carbon dioxide emission (10,000 tons) |
16.74 |
n Energy Consumption
| Indicator |
2017 |
2018 |
2019 |
| Fuel (10,000 tons) |
794.01 |
854.01 |
900.33 |
| Gasoline (tons) |
5,553.65 |
5,012.95 |
4,869.11 |
| Diesel (tons) |
7,407.13 |
10,199.24 |
8,598.59 |
| Coal (tons) |
3,450.00 |
2,100.00 |
550.00 |
| Natural gas (10,000 m3) |
2,990.31 |
3,215.06 |
2,537.49 |
| Liquefied gas (tons) |
242.57 |
258.52 |
195.14 |
| Electricity (10,000 kWh) |
25,444.21 |
27,425.90 |
28,190.80 |
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n Water Consumption
| Indicator |
2017 |
2018 |
2019 |
| Total water consumption ( 10,000 tons) |
768.44 |
764.75 |
696.65 |
| Water intensity m3/10,000 yuan |
0.5325 |
0.5946 |
0.4514 |
n Waste Treatment
| 2019 |
Treatment capacity |
Treatment rate（%） |
| Hazardous waste |
615.205 tons |
100 |
| non-hazardous waste（On-board service） |
7,909.5 m³ |
100 |
n Consumption of packaging Materials
| Indicator |
2019 |
| Total consumption of packaging materials in the process of aviation food production (tons) |
881.03 |
7.3 Response to Climate Change（4P）
Greenhouse gas emissions are an important cause of global climate change, and extreme weather caused by climate change has also affected the sustainable development of the aviation industry to a certain extent. Facing global climate change issues, China Southern actively responds to international and domestic aviation carbon emission reduction regulations, actively manages its own carbon footprint, and takes practical actions to help achieve the Paris Agreement's carbon reduction targets.
In 2019, China Southern and the International Air Transport Association (IATA) launched a strategic cooperation in environmental assessment projects and was elected as a member of IATA's newly established Sustainability and Environmental Advisory Committee. In July of the same year, the Aviation Environmental Protection Committee of the China Air Transport Association was formally established. China Southern actively joined and responded to the relevant requirements of the "Resolution on Aviation Carbon Reduction" to promote the green development of civil aviation.
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Scan and learn more about the requirements of the Resolution on Aviation Carbon Reduction
7.3.1 Green Flight (2P)
China Southern has formulated the "Energy Saving and Emission Reduction Management Manual" and "Energy and Environmental Management Business Processes" and other systems to comprehensively improve the efficiency of aviation fuel use and achieve green flight through technical optimization, management improvement, and big data analysis.
n Technical optimization
Optimization of the Fleet: Through the introduction of new models such as A350, B787, and A320neo, the fleet's fuel efficiency was further improved. In 2019, 54 aircraft were introduced and 32 old aircraft were withdrawn. The average fleet age was 6.7 years.
Single-engine taxi-in: The single-engine taxi-in project was fully implemented, and one engine will be shut down to reduce taxi fuel consumption when the aircraft is taxiing. In 2019, a total of 160,882 one single-slide flights were executed, and the execution time 11,039 hours will save fuel 3,042 tons.
Fuel-saving wheel releasing: Scientifically grasp the timing of flaps and landing gear releasing, which can save fuel consumption. Using big data mining technology, China Southern monitors the height of flight wheel release, and through data guidance, reduces flights with wheel release of more than 2,700 feet, effectively reducing fuel consumption.
Case study: China Southern used bio-jet fuel for intercontinental flight for the first time.
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| On February 23, a new A320neo aircraft numbered B-305E flew from Toulouse, France, to Astana, Kazakhstan, and arrived at Guangzhou Baiyun International Airport to join the China Southern fleet. The first segment of the intercontinental flight used 10% blended aviation bio-fuel, which was the first time that China Southern used bio-fuel to perform flight missions.
The bio-jet fuel refilled on this flight is made from sugarcane, which reduces carbon emissions by about 73% compared to traditional jet fuel, and has greater emission reduction benefits. In addition, the aviation fuel used this time has been certified for airworthiness, and has no negative impact on food security, water resources protection, soil protection, etc., with low carbon emissions and sustainability. China Southern has played a significant role in promoting the use of green aviation fuel in the civil aviation industry.
The contrast is highlighted:
Traditional jet fuel: 1 MJ of heat produces 89 grams of equivalent carbon dioxide.
Bio jet fuel: 1 MJ of heat produces 24 grams of equivalent carbon dioxide.
Bio jet fuel reduces carbon emissions by about 73%. |
Management promotion
Specialized Aviation fuel management: Set up five professional fuel-saving project teams including flight fuel-saving, ground fuel, aircraft weight, flight plan reliability, and aviation fuel informationalization, and formulate 19 fuel-saving measures to promote the company's fuel-saving and oil-control.
Paperless flight operations: Paperless dispatch and release at domestic sites and 61 overseas sites makes flight operations safer, smarter, and more efficient. In 2019, EFB electronic release saved 2,798.82 tons of jet fuel.
Optimization of route selection: by adjusting the route direction, promoting the use of temporary routes, shortening the distance and reducing the flight time, etc., China Southern has achieved the goal of saving aviation fuel. In 2019, the utilization rate of China Southern' temporary routes reached 24.61% monthly, saving flight distance of 2.08 million miles, and optimizing the route to save a total of about 25,000 tons of aviation fuel.
Refinement of weight management: comprehensively sort out historical data of machine supplies and flight water refills, formulate flight water refill standards, and adjust the water refill amount of wide-body aircraft flights with flight schedules of 4 hours or less to 60% of the water tank volume to achieve weight reduction flight .
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n Data Assisted Fuel Saving
Based on the Internet of Things and cloud technology, China Southern independently developed the "Fuel e-Cloud" and MRV system for carbon emissions data of flight activities to achieve fine-grained control of aviation fuel and carbon emission data, and provide reference information for further improvement of fuel efficiency.
| Case study: Development of "Fuel e-Cloud" provides a Chinese solution for the development of jet fuel data international standards
Based on the Internet of Things and cloud technology, China Southern independently developed the "Fuel e-Cloud" real-time big data sharing platform to provide digital tools for refined management of fuels. On this platform, the refueling status of each aircraft of China Southern can be viewed in real time. After refueling, the data will be uploaded to the platform within 10 seconds and displayed on the pilot's electronic flight bag, and the fuel cost of the flight will be automatically generated.
With the "Fuel e-cloud" platform, China Southern reduced refueling guarantee time by about 17% with the complete connection of flight and refueling information, thus improving the flight regularity. At the same time, it also promoted the establishment of fuel-saving culture, combined with evaluation and comparison, which promotes pilots to effectively reduce the amount of overscheduled refueling, estimated to reduce the waste of aviation fuel by about 1,500 tons per year.
In July 2019, IATA invited China Southern to join the "aviation fuel data standards group" to participate in the formulation of global aviation fuel data standards, helping CAAC to have a say in the formulation of international aviation fuel data standards, and providing Chinese solutions to the data standards of global airlines.
Case study: developing a carbon emission data detection and reporting system to help the healthy development of China's carbon emission market
In 2019, China Southern independently developed the first carbon emission data MRV system of civil aviation in China in accordance with "the Interim measures on carbon dioxide monitoring, reporting and verification of civil aviation flight activities".
Through the system, you can get all the monthly data of China Southern, and compare it with the CAA clearing center data. For each flight, flights are performed from the three dimensions of average fuel consumption, average fuel consumption in air time and average fuel consumption in gear time. The fuel consumption verification finally formed a carbon emission report submitted to the Civil Aviation Administration, which improved the accuracy of carbon emission monitoring data and helped the healthy development of China's carbon emission market. |
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7.3.2 Participation in Carbon Trading (0.5P)
As a pioneer of carbon trading pilot in China, China Southern fulfilled its obligations to participate in the EU carbon trading for flights commuting between two destinations within the EU and carbon market in Guangdong province in 2018 in April and June, according to the requirements of carbon trading between CAAC and EU. In participating in the Guangdong province carbon trading agreement, thanks to the improvement of carbon emission efficiency of China Southern, China Southern has a surplus quota of more than 400,000 tons in 2018.
[Highlight] Promote the world's first single 10,000-ton EU carbon quota and Guangdong carbon quota swap trade.
7.4 Pollution Prevention (1P)
Wastewater and exhaust gas generated during air transportation will result in some pollution. Complying with the regulations such as the "Water Pollution Control Law of the People ’s Republic of China" and the "Air Pollution Control Law of the People ’s Republic of China" and other regulations, China Southern treated on-board sewage, industrial wastewater and domestic sewage generated during ground handling operations and had measurable environmental impact reduction.
■ Wastewater
On-board sewage: After being collected by a professional sewage truck, it will be disposed of by a qualified sewage treatment plant.
Industrial wastewater: Industrial wastewater generated during aircraft maintenance and aircraft cleaning is collected and sent to a wastewater treatment station for treatment by GAMECO (Guangzhou Aircraft Maintenance Engineering Co.,Ltd). In the year, 16,477 tons of industrial wastewater were treated.
Domestic sewage: Regarding the domestic sewage produced in the process of aviation food production, standardized waste water discharge outlets are set up and managed by special persons. In the whole year, 224,000 tons of wastewater generated by aviation food production were treated by Guangzhou Nanland Air Catering Co. Ltd., and the treatment rate was 100%.
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n Exhaust gas
Through measures such as strengthening aviation fuel management, increasing investment in technological transformation, and improving energy efficiency, the impact of exhaust emissions on the environment and employees is minimized. In 2019, China Southern handled a total of 225.6 million cubic meters of exhaust gas.
n Hazardous waste
Hazardous waste such as waste kerosene, waste miscellaneous oil, waste medicines, and waste lamps generated during aircraft maintenance, air service, and ground office are classified and collected in accordance with the "National Hazardous Waste Namelist", and finally delivered to qualified Hazardous waste treatment companies to o conduct professional waste management. In 2019, China Southern handled a total of 615.205 tons of hazardous waste, with a treatment rate of 100%.
| Classification of hazardous waste |
Treatment amount (tons) | |
| Maintenance and engineering |
Waste cleaning agent |
83.303 |
| Waste organic solvent |
10.306 | |
| Waste kerosense |
324.213 | |
| Waste oil |
91.656 | |
| Paint coat and slag |
40.668 | |
| Waste activated carbon |
14.515 | |
| Waste acid |
0.14 | |
| Waste encasement and container |
30.096 | |
| Waste lead-acid battery |
6.86 | |
7.5 Resource Conservation（1P）
Water, paper, plastic, wood and other resources are inevitably consumed in the course of aviation flight and ground services. China Southern attaches great importance to resource conservation and utilization efficiency improvement in all aspects of operation to promote resource conservation.
Water conservation. By implementing accurate cabin water refilling and adopting aircraft dry-cleaning technology, water consumption on board and aircraft clean water can be saved.
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Saving paper. In passenger transportation services, electronic boarding passes, electronic invoices, and electronic luggage tags are promoted with the use of electronic platforms such as "China Southern" to reduce paper printing. In freight services, continuous promotion of electronic freight orders can save paper freight orders 171,000 pieces per month, and the amount of domestic electronic freight orders ranks first in the world.
n Non-hazardous waste treatment
China Southern collects non-hazardous wastes such as cabin food packaging materials, recyclable magazines, kitchen waste, office and domestic wastes during the event, and then transfer them to a qualified recycling company to promote the recycling of resources. In 2019, China Southern handled 7,909.5 cubic meters of non-hazardous waste on board, with a treatment rate of 100%.
Case study: Airplane washing and dry cleaning
Traditional aircraft cleaning requires a large amount of water, and professional treatment of sewage is required after cleaning, which consumes a lot of resources. GAMECO (Guangzhou Aircraft Maintenance Engineering Co.,Ltd) actively promotes the application of aircraft dry cleaning technology, directly applying professional cleaning agents to the aircraft fuselage, and then drying it with professional cleaning equipment. Compared with traditional washing, dry cleaning technology can reduce 98% of cleaning water.
|
|
Traditional cleaning |
Dry cleaning |
| Water consumption |
30 tons of water for A320 |
60 liters of water for A320 |
| Cleaning site |
Specified cleaning site |
Ordinary aircraft stand |
| Drainage facilities |
Special drainage is required |
Little sewage is spilled |
| Cleaning duration |
Unable to achieve continuous cleaning |
Able to keep the plane appearance clean for a long time; reducing the frequency of cleaning |
| Cleaning time |
more ground time is required |
Reducing ground time |
| Pollutant treatment |
Sewage treatment is required |
Reducing sewage treatment; detergent bio-degradation rate can be more than 96% |
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7.6 Spread of Green Ideas (1P)
Energy conservation and emission reduction require the concerted efforts of the whole society. Faced with a large population of customers, China Southern uses its own expertise to guide more stakeholders to participate in energy conservation and emission reduction actions and jointly participate in the sustainable development process of mankind.
| Case study: Waste sorting, China Southern in action China Southern has actively responded to Shanghai's garbage classification. Since August 22. It has officially implemented garbage classification on arriving flights. According to the "Guidelines for the Classification and Distribution of Domestic Garbage in Shanghai", dry and wet waste is sorted before landing on the plane. Recycling of dry waste of cans, plastic bottles, and other wastes are performed. After centralized recovery, wet garbage such as food boxes, residual food will be returned to the ground personnel for disposal. China Southern's on-board garbage sorting behavior was praised by passengers. |
| Case study: "Green Development, Energy Saving First" Energy Saving Publicity Week
|
June 17-23 is the National Energy Saving Publicity Week. China Southern carried out healthy riding activities for internal employees, and used award-winning riding power generation to light up China Southern 's aircraft, as well as green development display boards and initiative signature boards, to let employees understand the concepts, achievements and practices of energy conservation and environmental protection. At the same time, an award-winning quiz on the basic knowledge of energy saving and emission reduction was held on the flight, and passengers were urged to participate to convey the environmental protection concept to the public.
| Case study: Launching a green flight project to promote green travel for passengers
|
In response to the waste of onboard meals, China Southern launched a green flight project in 2019, calling on passengers who do not need to dine to give up onboard meals in advance to achieve green flight. For passengers participating in green flight projects, China Southern awards them 300-500 miles to achieve mutual benefits and win-win results. As of December 25, 2019, China Southern has opened green flights on 650 flights, sending precise invitation text messages to more than 30,000 passengers every day, and a total of 215,000 passengers have successfully participated in green flights, reducing 215,000 meals on board.
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8 Service: Affinity and Refinement, Great Flight Experience (8P)
8.1 Opening Page (1P)
Every time a passenger chooses a CSA flight, they have unlimited trust in CSA , which is an inexhaustible driving force for CSA to continuously optimize its services. China Southern is committed to providing "affinity + refinement" intimate, warm and delicate air and ground services, as well as professional, efficient, safe and efficient passenger and cargo services, delivering warmth and joy in each service and creating value for passengers.
8.2 Passenger Services (4P)
China Southern always adheres to the "customer first" sincere service concept, starting from the needs of passengers, constantly optimizing the details of each service to bring a beautiful air journey to passengers all over the world.
8.2.1 Improving flight normality
Flight normality is an indicator of concern for travelling passengers, and an important manifestation of China Southern's operating efficiency and service quality. China Southern has formulated and continuously improved the systems of "normality management", "risk flight monitoring and guarantee management system", "2019 flight normalization improvement project plan" and other systems. By continuing to promote large-scale operation construction, it has increased operational normality assessment and risk flight management and control to ensure that passengers travel on time.
n Continue to promote the construction of overall operations
China Southern has started overall operation construction since 2018. By establishing a centralized operation platform and establishing a unified operation management and control model, China Southern has improved the company's decision-making efficiency and service support capabilities, and improved flight normality.
Centralized operation. AOC, a centralized operation platform for headquarters, and GOC, a subsidiary's centralized operation platform for subsidiary companies, were established to greatly improve joint decision-making efficiency through two platforms and coordinately resolve issues such as flight delays.
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Unified scheduling. Unify flight planning resources and capacity, set up operation schedule and dispatch centers, realize flat operation management, greatly shorten the information chain, and timely handle abnormal air flight conditions.
n Improve the support ability of key links
China Southern has comprehensively sorted out service processes to improve the efficiency of collaboration and reduce flight delays on key links affecting the normality of flights.
Close door early. Sort out the ground service process, and improve the cooperation efficiency of various units such as maintenance, ground service and transportation.
Quick launch: This include---tow the aircraft outward from the jetway and optimize the taxi path to improve operational efficiency by cooperating with apron control.
The ground glides. Optimize the parking position arrangement, increase the nearby takeoff and landing rates, and effectively shorten the average taxi time by taking into account flight connection, exit and slide-in routes, and plane position characteristics,.
Two-way coordination. Coordinate airport ground support resources and air traffic control resources, actively participate in the formulation of the "A-CDM Cooperative Operation Rules", complete the entry of seats in the traffic control rooms of various regions in the country, and establish a stable coordination mechanism.
rapid transit stop. Establish a rapid transit stop comment and notification mechanism, specifically sort out the guarantee process, and improve the success rate of rapid transit stops.
| Case study: From 120 minutes to 57 minutes, the A380 quickly passed the station
The Airbus A380 is the largest passenger aircraft in the world. Every time the A380 lands, the race against time starts. In order to provide better services for the next voyage, the aircraft needs to complete baggage transportation, cargo handling, meal distribution, regular cleaning, maintenance, and aviation security inspections at the airport. The time here is counted in minute.
In order to ensure the rapid transit of the A380, China Southern issued the "implementation plan for A380 aircraft rapid transit stop within 90 minutes ." On June 19, 2019, the CZ3109 flight started a rapid transit stop. From opening door to closing door, the flight transit took only 57 minutes, less than half the 120 minutes standard of the CAAC, and one of the fast guarantee records in recent years. The implementation of rapid transit greatly improved the overall efficiency of flight operation. |
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[Highlighted] China Southern flight normality rate ranks first among the three major domestic airlines.
| Year |
Flight normality rate （%） |
Non-weather severe delay （%） |
| 2017 |
73.25 |
0.44 |
| 2018 |
80.96 |
0.43 |
| 2019 |
83.32 |
0.29 |
8.2.2 Upgrading Smart Travel
From self-service ticket purchase, seat selection, refund and change to self-service consignment service, and self-service check-in, China Southern continuously improves every travel aspect. While changing the travel habits of passengers, it brings "one machine in hand, the whole process worry-free" smart travel experience.
In 2019, China Southern continued to optimize the "China Southern e-platform" platform function, the main ticket purchase flow, upgrades, first-line sales assistance systems, paid seat selection, electronic boarding passes, 100% pre-selected seats, paid lounges, green flight, electronic invoices, automatic refund and change, which make travel truly "just go".
Smart ticket grabbing
The China Southern App supports passengers to start automatic ticket grabbing through the China Southern App after the domestic flight ticket is sold out. When there are available seats on the selected flight, the system will automatically issue tickets for passengers at no additional charge.
n VR seat selection
In order to enhance the sense of reality of passenger seat selection, China Southern is the first company in the world to launch a VR (Virtual Reality) cabin roaming function. 360 ° panoramic technology is used to allow passengers to "select the cabin seat" "immediately" and enjoy new visual effects and a more intuitive seat selection experience.
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Convenient boarding
China Southern cooperates with airport authorities of Guangzhou Baiyun Airport to implement the "One Pass Customs Clearance" service. Passengers who purchase air tickets through second-generation ID cards and take domestic flights of China Southern can directly carry out luggage check-in, security check-in and boarding procedures with their ID cards, without the need to present boarding passes, QR code to enable passengers to quickly board from the "home entrance" to the "cabin door".
| indicator |
Performance in 2019 |
| App Online Features / Items |
547 |
| Total number of App download activation/million |
56.463 |
| Number of active social media followers/million |
39.3835 |
| Number of passengers checking in by mobile |
20,205,331 |
Note: The number of mobile check-in passengers includes applets, apps, touch screens and text messages.
| Case study: Baggage tracking through the whole process, let luggage "talk" "Where did my luggage go?" "How long can I get my luggage?" These questions are information that many travelers want to know when traveling. China Southern uses Full Baggage Tracking System to achieve precise positioning and real-time sharing of luggage, allowing passengers to "trace" their luggage.
Know your luggage information From September 1, 2019, China Southern has fully put into use radio frequency identification (RFID) luggage tags in Guangzhou's T2 terminal. When passengers check in their luggage, information will be written into the chip embedded in the luggage tag. The speed of baggage transportation is near instantaneous as is the information collection for the entire process of baggage transportation.
Real-time push of luggage status China Southern is the first airline in China to realize the function of self-service inquiry and active push of information in the whole process of luggage. Sky Pearl Club member can now log into China Southern’s official smart phone App or the Company’s WeChat public account to receive real-time status of transportation of their checked luggage.
Baggage arrival time reminder Starting from August 14, China Southern added a pre-arrival time reminder service to all baggage transfer displays (No. 31-40) in the arrival area of domestic flights at the Guangzhou hub for the first time. Before the baggage claim turntable of the flight, passengers can look up to know when their checked luggage is expected to arrive at the turntable, reducing the anxiety of waiting for luggage.
highlight: Obtained the IATA Baggage Tracking Resolution 753 Hub Compliance Certification, the first in Asia and the sixth company in the world to obtain IATA Baggage Tracking Hub Compliance Certification. I often depart from Guangzhou. Now I can use the China Southern App to select seats and check-in passes in advance, which is particularly convenient. I can also control the time more freely by air and save 5 to 10 minutes without checking in at the counter. ——Miss Li, Frequent Traveler. |
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8.2.3 Creating a Beautiful Journey
China Southern launched the "Family Service 360" service. Friendly warm professional service, friendly precise communication and exquisite details, as well as putting ourselves right in passengers’ shoes render the passengers with the warmth of a spring breeze and kindred love, an atmosphere of mutual trust and numerous touching moments.
"3" --- Three key phrases : Friendly ice-breaking communication: service process perfection and warm service and guidance at farewell
"6" --- Six details presented: friendly and spontaneous kindness, warm and delighted words, preference prediction, pleasant environment, fine dining and consistent good service
"0"——zero distance emotional connection
More delicious. China Southern cooperated with Michelin chefs to develop high-quality meals and promote them to all routes that deliver Western-style meals. Customers who like Chinese food can also choose fist products such as "China Southern Big Stuffed Bun " and "China Southern Big Bowl Porridge" to taste authentic, exquisite on-board meals with Lingnan characteristics.
More abundant. Promote a new version of the top TV theme planning program, enrich the content of the music channel, plan the exclusive premiere of the excellent documentary "Four Springs", and launch classic themes such as "China Southern and Your Family Fun" to enrich the travel itinerary.
Cleaner. Innovative cabin cleaning kits were launched and used on Beijing-Guangzhou route and 7 international routes. The ground floor cleaning standards were promoted and the "Outside Station Lounge Cleaning Checklist" was implemented, which was well received by passengers.
8.2.4 Special Passenger Services
China Southern has formulated the "China Southern Air Transport Service Plan for Disabled Persons" and "China Southern Full Process Service Specification For Wheelchair Passengers " to regulate the management of special passenger services and provide more personalized, specialized and professional services for special passengers.
Accessible web pages. Introduce functions of flight dynamics inquiry, domestic round-trip ticket purchase, self-service refund and change, and mileage redemption to provide more convenient network services for the visually impaired.
Wheelchair service. Provide wheelchair services for passengers with mobility impairments to cover the places of the apron, passenger elevators, cabins and onboard, as well as check-in electric wheelchair services.
Unaccompanied passenger service. Provide unattended children and unaccompanied elders with special services such as waiting area, reading books, exclusive TV channels for children, and directing boarding by special persons on domestic flights taking off from Guangzhou. In 2019, the China Southern App innovatively launched the ticket purchase function for unaccompanied children.
Special meals. Provide special meal reservation at departure station, and Provide special meal reservation service through "China Southern e-flight " to meet the needs of different tastes.
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8.3 Freight Services (1P)
China Southern relies on its developed route network to provide customers with dense freight coverage across China and Asia, connecting major cities in Europe, America, Australia, and Africa, and providing efficient, fast, and reliable air freight corridors for goods around the world.
China Southern Express. "China Southern Express" products meet the service requirements of domestic aviation high-end freight product transportation by "ten advantages". Those are transportation commitment, VIP window, priority booking, early delivery, extended time limit, SMS tracking, fast delivery, free change, dedicated line inquiry and customer-customized.
China Southern flight delivery. In 2019, China Southern launched the "China Southern flight delivery" door-to-door product, which is aimed at customers with high time-to-door express delivery requirements. The product features timely to-door delivery as the core feature, and provides high-quality and efficient air express experience through unified service standards and operation specifications.
Temperature control services. China Southern's Temperature ”Control Products”service relies on high-efficiency air transportation, and uses cold-chain packaging or airworthy temperature-control containers, together with high-level cabins and ground service. Safe and reliable aviation cold chain service is provided for cargo sensitive to temperature, such as the fresh, the perishable or drugs. In 2019 , China Southern completed the system construction, personnel training, and hardware renovation in accordance with the Temperature-controlled Drug Transport Specifications. In January 2020, China Southern Airlines successfully passed the International Aviation Association CEIV Pharma Certification and ensured that the compliance of temperature-controlled drugs throughout the air transport operation and their stable quality to prevent incidents of drug failure or even endangering the health and safety of patients taking drugs.
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Highlights: Freighter fleet size of 14 aircraft, operation of 12 international all-cargo routes, weekly freighter volume of 50 flights
| Case study: Chinese import air carrier of Sanofi Pasteur vaccine
China Southern has developed a special transportation plan for Sanofi Pasteur's penta vaccine and influenza vaccine. In order to meet the temperature conditions of 2-8°C during the entire transportation, China Southern provides exclusive services in terms of guaranteeing processes, information transmission, facilities and equipment, and emergency disposal. In addition, China Southern has designated certain person to follow up with customers during the entire transportation process to achieve zero-error service, and became the designated Chinese import air carrier of Sanofi Pasteur vaccine. So far, the two sides have cooperated to transport more than 1,000 tons of imported vaccine products. |
8.4 Customer Relationship（3P）
China Southern cherishes the good relationship with customers, and with the increasingly perfected system and actions in place, it protects the rights and privacy of customers, responds to customer needs and feedback, and improves the overall service level.
8.4.1 Customer Rights Protection
China Southern has formulated the "Transportation Service Management Manual", "Transportation Service Management System", "Transportation Service Management System", and "Transportation Service Product Management" to effectively protect the rights and interests of passengers.
Case study: Refunds, Rules & Fares
In 2019, China Southern officially implemented a "staircase fee" for domestic airline ticket refund and modification fees. Tickets were reclassified in more steps, and the rules were clearer. "Earlier refunds, lower fees" and "the higher the class, the lower the fee”. The principle of "no refunds, no changes, no transfers" no longer exists, which better meets the needs of passengers for flexible refunds.
Adjust the time ladder from 2 to 4:
| Before adjustment |
After adjustment |
| 2 hours before departure
Within 2 hours before departure |
7 days before departure (inclusive)
7 days to 2 days before departure (inclusive)
2 days to 4 hours before departure (inclusive)
Within 2 hours before departure |
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8.4.2 Customer Protection
China Southern strictly complies with the requirements of the Cyber Security Law of the People's Republic of China and the General Data Protection Regulation (GDPR) of the European Union, and has formulated the “Administrative Measures for the Protection of Personal Privacy Data”. In 2019, China Southern officially launched the measures of GDPR and responded promptly to its requirements, taking practical actions to protect user privacy. There were no complaints about violations of customer privacy and loss of customer data due to the security problems of information system throughout the year.
Organization guarantee. Set up a data protection officer DPO, and set up a project work team with multiple departments to take full responsibility for data protection and compliance operations. In 2019, China Southern held training on new trends in GDPR law enforcement, organized more than 200 people within the company to study European data protection law enforcement activities and cases, and strengthened employees' data protection awareness and capabilities.
Technical Support. Establish a complete network security protection system to ensure the safe operation of the system after going online, and work closely with the Ministry of Public Security's Cyber Security Reporting Center, Patching Vulnerability Platform, National Information Security Evaluation Center to rectify, repair risks or vulnerabilities to ensure the safe operation of information systems and prevent consumer information leakage.
Management guarantee. Formulate various systems for network security, standards and operating procedures for information security, refine network security assessment and evaluation standards, standardize network security incidents and error handling methods, promote the implementation of network security management responsibilities, and ensure security management.
8.4.3 Customer Complaint Management
China Southern has continuously optimized and improved the Customer Care Management Manual, unified the complaint management system, established a complaint warning and process improvement mechanism, and implemented closed-loop management of complaints. China Southern attaches great importance to passenger opinions, makes full use of internal and external evaluation data such as passenger full-process satisfaction evaluation and special evaluation to find service problems and continuously improves passenger satisfaction. China Southern listened to and responded to passengers' opinions and needs through text messages, apps, surveys and other forms, and actively paid attention to the evaluation of external Skytrax, Australian Review Network and domestic civil aviation resources network, and continuously improved service levels to make passengers more satisfied.
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Optimize management processes. Establish a closed-loop service management mechanism for early warning and process optimization, change passive processing to active prevention, analyze customer complaints and major service incidents every month, and turn service shortcomings into springboards for improving service quality.
Reduce processing time. The mobile version of the customer care management system was launched to implement the pop-up reminder function for overdue complaints and speed up the complaint processing speed. Concurrently, senior managers made quick approval for all passenger compensation.
Comprehensive linkage improvement. Establish an overdue complaint improvement project team, implement segmented area management and responsibilities to certain people. Focus on improving passenger service experience, centralized complaints, service pain points and difficulties. Coordinate efforts of all parties to improve and optimize, and reduce passenger complaint rates from the source.
n Data on customer complaint
|
|
n year |
China Southern Complaint Rate (parts per million) |
|
|
2017 |
31.89 |
|
|
2018 |
24.65 |
|
|
2019 |
30.71 |
Industry average complaint rate: 35.16 parts per million
| 65 |
|
|
9 Employee: Happy Connectivity, Win-win Growth (6P)
9.1 Opening page（1P）
The creativity of employees is an inexhaustible motive force for achieving sustainable development. As a high capital-intensive, high-tech, high-risk service industry, aviation companies have a greater dependence on human resources. In the process of international development, China Southern brings together talents from all corners of the world with an inclusive concept, providing employees with broad development space and opportunities, constantly inspiring the sense of ownership and innovation, and realizing the common efforts and growth of employees and the Company.
9.2 Rights and Interests Protection（3P）
China Southern strictly abides by the "Labor Law of the People's Republic of China" and other regulations, and gradually improves the human resource management system and employment policies. All important employment policies have been reviewed by the legal department for compliance and submitted to the company's decision-making bodies and the staff representative conference for review so as to protect all legal rights and interests of employees. In 2019, there were no major incidents that violated human rights and legal rights of employees.
9.2.1 Fair Employment
China Southern actively adheres to international conventions on labor and human rights, advocates equal and non-discriminatory employment policies, and provides inclusive, fair promotion opportunities for employees of different genders, ages, education, nationalities, nationalities, races, regions, religious beliefs and cultural backgrounds, eliminates all forms of forced labor, and protects employees' right to work and rest.
|
|
· |
In terms of staff recruitment, China Southern conducts its human resource recruitment in accordance with the principles of open, fair and just recruitment, and does not use gender, age, etc. as recruitment criteria. |
|
|
|
|
|
|
· |
In terms of compliance employment, China Southern signed a "collective contract" and "Special Collective Contract for Labor Safety and Health" with employees to protect employees' legal rights and interests in promotion, departure, working hours, compensation and benefits, and signed a "Special Collective |
| 66 |
|
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|
|
· |
for the Protection of Female Employees' Rights and Interests" which clearly states that gender equality must be adhered to in terms of recruitment, assessment, and promotion. |
|
|
|
|
|
|
· |
With regard to employee dismissal, in strict accordance with the provisions of the Labor Law and on the rescission or termination of labor contracts, the Company has formulated the "Regulations on the Management of Labor Contracts of the Company" to make specific restrictions on recession or termination of employees' labor contracts. |
|
|
|
|
|
|
· |
In terms of preventing violations, China Southern has established a human resources evaluation system, which regularly inspects and evaluates human resources work, investigates and deals with human resource issues found. |
[highlight] In 2019, China Southern’s labor contract signing rate and employee social security coverage rate are 100%
Staff Structure
| Number of employees and turnover rate |
Total number of employees |
|
| Total number of employees |
103,876 |
|
| Newly recruited employees |
9,542 |
| Employee distribution |
Rate /% | |
| Mid-level and above female managers |
0.95 | |
| Minority employee ratio |
4.94 | |
| By gender |
Female |
41.39 |
| Male |
58.61 | |
| By Employment Category |
Full time employees |
99.87 |
| Part time employees |
0.13 | |
| By type of duty |
pilot |
10.18 |
| Cabin crew(including part-time security personnel) |
22.28 | |
| Air marshal |
3.39 | |
| Maintenance and engineering |
16.60 | |
| Operational control |
2.38 | |
| Passenger transportation |
8.61 | |
| Freight transportation |
7.32 | |
| Ground services |
10.39 | |
| IT |
1.84 | |
| Finance |
1.86 | |
| Others |
15.15 | |
| 67 |
|
|
| By region |
Guangzhou |
25.01 |
| China (except Guangzhou) |
73.73 | |
| Overseas |
1.26 | |
| By age |
30 years old or below |
48.09 |
| 31-40 years old |
29.83 | |
| 41-50 years old |
17.36 | |
| 51 years old or above |
4.72 | |
| By education level |
Master degree or above |
4.24 |
| Bachelor degree |
48.77 | |
| College degree |
30.03 | |
| Secondary education or below |
16.96 |
9.2.2 Compensation and Benefits
China Southern adheres to the principle of marketization, adapts to labor market conditions and needs of the company's development strategy, provides employees with a competitive salary level in the industry, and fully attracts and motivates outstanding talents. Adhere to value creation as the guidance, linked to post value and performance contribution, formulate salary management methods for air crew and ground staff, establish and improve a dynamic employee salary growth mechanism, provide employees with good benefits, and enhance their sense of belonging, happiness and gain.
| Diversified benefits
Ten insurance and two benefits: basic endowment insurance, basic medical insurance, supplementary medical insurance, work injury insurance, maternity insurance, unemployment insurance, personal accident insurance, pilot disability insurance, employer liability insurance, aircrew special personal insurance, enterprise annuity, housing provident fund .
Holiday benefits: statutory holidays, holidays for some employees (Women's Day, Children's Day, Youth Day, ethnic minority holidays), paid annual leave, family leave, marriage leave, menstrual leave, maternity leave, nursing leave, paternity leave, work injury leave, sick leave, funeral leave, one-child care leave, birthday leave, etc.
Health Checkup: Provide a free health checkup for employees once a year. |
| 68 |
|
|
| Case study: Reform of compensation policy, sharing reform and development bonus with employees
In 2019, in accordance with the overall goals of "ranks can go up and down, income can increase or decrease, employees can move in and out", China Southern comprehensively launched the reform of the employment, labor and distribution systems, and established the new position specification system, performance evaluation, compensation management, and total payroll management mechanisms. At the same time, China Southern took the opportunity to reform the employment compensation system, perfected the construction of incentive mechanisms, and further stimulated the enthusiasm, initiative and creativity of all employees. |
9.3 Employee Development（1P）
China Southern regards employee development as a prerequisite for the long-term development of the company. According to the company's strategic orientation, it formulates the "Master Education & Training Plan (2018-2025)", establishes a unified training plan, strengthens the top-level design, and promotes the integrated development of training. At the same time, China Southern has established a training system including a curriculum system, a teacher system, and an operating system, which constitute a mutually supportive organizational learning system, offer diversified training, comprehensively help employees grow, and provide talent guarantee for the construction of a world-class enterprise.
Training of high-skilled personnel. The "Hundred Talents Plan" was launched. In 2019, the warehousing and project approval of personnel in the maintenance and cabin system was carried out. The personnel in the maintenance and cabin system were supported to carry out industry-university-research projects with special funds, and the training of highly skilled personnel was promoted in an orderly manner.
Training of young cadres. Carry out the "Ten, One Hundred, One Thousand" plan, organize mid-level youth classes and basic training classes for cadres in different stages, and strive to build a highly qualified and professional young cadre team with politically competent, highly skilled, professionally competent and worthy of heavy responsibilities. Throughout the year, two mid-level youth classes and two basic training classes were held to train 104 outstanding young cadres.
| 69 |
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Special training for staffs. Throughout the year, 1,996 in-service training sessions for pilots, flight attendants, and security personnel were conducted. A total of 25 English training courses were organized, and 44 business training courses were conducted. Training for 888 new employee were completed, and 184 new PC courses and 1,278 micro-lecture chapters were added to the online training, which constantly improved employees' professional capabilities.
| Case Study: Training in Tsinghua promotes growth of the trainees
Carrying out excellent team leader training is a major project implemented by China Southern to strengthen the training of basic talents. From March 10th to April 3rd, China Southern’s 29th and 30th Excellent Team Leader Training Classes were held at Tsinghua University. Over 220 outstanding team leaders from various units of China Southern spent 10 unforgettable days in Tsinghua University . During the training, more than 10 well-known experts in the field of management taught courses for China Southern students on aviation business management, innovative thinking, and improvement of work efficiency, and stimulated students' enthusiasm through various teaching activities such as special lectures and case studies, which broadens students' horizons and improves their business capabilities.
"After 10 days of study, I not only updated my ideas and thinking mode, expanded my working ideas and improved my ideological realm , but also forged a deep friendship with my classmates!"
-- Fan Kun, student representative of the 29th session |
highlight：
| Staff training |
Training concerned staff |
Training time per staff/hours | |
| total |
63,665 |
134.36 | |
| By gender |
Female |
28,616 |
103.39 |
| Male |
35,049 |
153.55 | |
| By level |
High-level |
596 |
107.80 |
| Mid-level |
4,745 |
111.77 | |
| Basic-level |
58,324 |
136.47 | |
Note：data on Xiamen Airlines and non-aviation holding subsidiary excluded
| 70 |
|
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9.4 Happy Workplace (1P)
China Southern attaches importance to employees' living standards and quality of life, provides employees with humane care and rich spiritual and cultural life, and creates a relaxed and enjoyable workplace environment, so that everyone in China Southern can fully enjoy the sense of value and gain in professional life.
■ Employee care
China Southern continued to promote employee health care projects, formulated the "Administrative Measures for Employees' Mutual Aid Funds", the "Administrative Measures for labor Workers' Mutual Aid Funds", the "Administrative Measures for Civil Aviation Female Employees' Mutual Aid Funds," and "Administrative Measures for Assistance for Difficult Employees". Caring activities for company employees were implemented.
In 2019, China Southern applied for a total of 900,000 yuan for 63 sick female employees. It set up files for employees with difficulties and allocated 1.224 million yuan of funds for employees with difficulties reaching 380 families; A total of 4.655 million yuan was distributed to special groups, including 9 labor workers from poor families, 63 sick female employees and 479 employees suffering from serious diseases.
Staff activities
China Southern advocates "happy work and healthy life" for employees, actively enriches their spare time life, and helps them achieve the balance between work and life. In 2019, with the platform of the fourth staff culture festival of "Sunshine southern airlines, beautiful home", China Southern successively held a series of staff culture activities including spring reception party, spring garden party, table tennis competition, chess and card competition, host competition, and book and picture competition, providing a personal display platform for employees and enriching their spiritual and cultural life.
| Case study: Establishing a 1 + e staff service system to provide intelligent and considerate services for staffs
In 2019, China Southern's Guangzhou Headquarters staff service center's three-site self-service equipment was fully put into operation, realizing 7 * 24 hours self- printing service of 8 kinds of certificates including identity certificate, work experience certificate, visa certificate, etc., to accelerate the intelligentization of staff services. At the same time, China Southern also put into operation the first intelligent robot to provide staffs with business handling guidelines, shuttle inquiry, and flight dynamic inquiry services to further improve service levels for the staffs. |
| 71 |
|
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10 Society: Warm Connection and Harmonious Development (6P)
10.1 Opening Page (1P）
As a responsible international enterprise, China Southern attaches great importance to both corporate development and social prosperity. It takes advantage of its own advantages to ensure special flights, actively conducts public welfare volunteer activities, promotes win-win cooperation among countries and regions along the " Belt and Road Initiative", and works with suppliers to create responsible supply chain to contribute to the building of a community of Shared future for mankind through commitment and friendship
10.2 Special Flight（1P）
China Southern strives to ensure the smooth flow of major transportation, successfully executes various important charter flights and special flight missions, and launches emergency rescue operations. In 2019, China Southern focused on the transportation guarantee tasks of the "two sessions", the Boao Forum, the " Belt and Road Initiative" summit forum, the Beijing Garden Expo, the Asian Civilization Dialogue Conference, the World Port Conference, the China-Africa Economic and Trade Fair, the Davos Forum, the Military Games. The major special transportation support tasks of civil aviation have highlighted the responsibilities of state-owned enterprises.
[Highlighted] A total of 54 important charter missions were performed throughout the year, and 4,915 person times were transported.
| Case study: Emergency rescue aid to Mozambique thousands miles away
In mid-March 2019, Mozambique was hit by a tropical cyclone "Idai". Storms and heavy rainfall caused severe floods, landslides and river breakwaters, causing major casualties and property damage. Mozambique entered a state of emergency across the country and requested the Chinese government to implement Rescue.
It is the first time China Southern has flown to Mozambique for a rescue. At noon on March 22, on receiving the rescue mission, China Southern immediately began preparations for route calculation and operational risk assessment. However, there are no direct flights between Mozambique and the Beijing Capital Airport, and emergency rescue flights need to fly over 6 countries. China Southern has completed the route performance analysis and assessment, the application of the flight schedule, and the international overflight permission application in the shortest time. At 17:58 on March 24, China Southern's rescue flight took off from Beijing. Fourteen hours and 18 minutes later, a flight carrying 65 medical paramedics and nearly 20 tons of emergency aid arrived in Maputo, the capital of Mozambique.
China Southern once again successfully completed the emergency rescue flight support mission, demonstrating the national strength and the role of China Southern as a central enterprise. |
| 72 |
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10.3 Volunteer Service (1P)
The development of an enterprise are inseparable from society. China Southern always sticks to its original intention, keeps its mission in mind, and takes the responsibility of giving back love to society as its duty. China Southern insists on fulfilling its political, economic, social, environmental protection and public welfare responsibilities, and promotes harmonious social development. In 2019, China Southern formulated the "Implementation Opinions on Further Strengthening China Southern's Voluntary Service Work", set up a Volunteer Service Steering Committee and Volunteer Association to continuously expand community participation and promote community development with better policy and organizational guarantees.
| Case study: "99 Charity Day-Little Red Flower" theme flight
From September 10 to 12, 2019, China Southern and Tencent Public Welfare jointly launched the "99 Public Welfare Day-Little Red Flower" theme flight from Guangzhou-Urumqi-Vienna. The "99 Charity Day-Little Red Flower" theme flight aims to encourage passengers to "do good deeds together" and bring "samples of China" to Europe. Passengers on this public-interest flight were surrounded by "little red flowers", which symbolize love, as they took a rest from the lounge, boarded the plane and entered the cabin. Many tourists took the initiative to learn about the charity project and donated money. They also wrote their best wishes to the recipients on the postcards. |
| Case study: Warm winter trip, let love spread
In order to carry forward the traditional virtue of respecting the old and cherishing the young of the Chinese nation and carry out the practice that the elderly and children can feel the warmth in the cold winter, China Southern Shenzhen Branch and Shenzhen Airlines Food Company organized a warm winter activity in Shenzhen Baoan Welfare Institute in the winter solstice of 2019. During the event, the condolation group performed a wonderful program for the children of the orphanage. The passion and vigorous song and dance performances brought the unique winter warmth to the orphanage, and signified the grand opening of the warm winter activity with cheers. people gathered together to make dumplings, baked pastries, and experienced the lively atmosphere of the festival. China Southern hopes to provide help for the elderly and children within its ability. It calls on people from all walks of life to pay attention to and care for the disadvantaged, and to form a social trend of enthusiasm for public welfare and respect for the elderly and the young. |
| 73 |
|
|
【data on volunteer service】
| indicator |
2019 |
| Number of volunteers/person-times |
3,500 |
| Volunteer hours/hours |
36,000 |
10.4 " Belt and Road Initiative" (2P)
The "Belt and Road Initiative" initiative has established a broader platform for Chinese companies to “go global”. China Southern actively integrates into the country ’s " Belt and Road Initiative" initiative, continues to increase international and regional transportation capacity investment, actively integrates into local communities, and helps countries along the "Belt and Road Initiative" to achieve facility connectivity, smooth trade, and cultural connectivity.
Route connectivity
China Southern has continued to increase its capacity investment and established a comprehensive air route network in South Asia, Southeast Asia, South Pacific, and Central and Western Asia, which are the major areas covered by the " Belt and Road Initiative" Initiative, and has become the main force for aviation connectivity between China and the countries and regions along the route.
China Southern opens Guangzhou-Cebu, Sanya-Bangkok, Guangzhou-Urumqi-Nur-Sultan, Guangzhou-Changsha-Nairobi and other routes, increasing the frequency of Guangzhou-Manila, Shenzhen-Jakarta, Guangzhou-Bali and other routes to strengthen the interconnection with the countries along the route.
| 74 |
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|
【highlight】
By the end of 2019, China Southern has opened 102 routes along the " Belt and Road Initiative", and has 768 round-trip flights every week. The number of routes, flight frequency and market share rank first among domestic airlines. (The data includes Chongqing airline and excludes Xiamen Airlines)
Smooth trade
China Southern has continuously strengthened the air connectivity between China and the cities along the " Belt and Road Initiative", which has directly promoted regional economic development. It also has a continuous stream of development vitality for personnel exchanges and material exchanges.
In Xinjiang, China Southern signed a strategic cooperation agreement with the Xinjiang Uygur Autonomous Region. Xinjiang ’s air route network can reach more than 10 neighboring countries, including Kazakhstan, Turkmenistan, Russia, Pakistan, and Georgia, and it is working hard to propel the construction of Urumqi International Aviation Hub and promote economic development. China Southern Airlines opens first direct flight to Turkey from Central China, allowing passengers from Central to and from Turkey to shorten at least 10 hours, accelerating cultural, tourism, and economic exchanges between Central China and Turkey.
Cultural connectivity
With the continuous development and deepening of business, China Southern has also taken root in the areas along the " Belt and Road Initiative". China Southern has recruited local staff. There are more than 200 foreign flight attendants from France, the Netherlands, Australia, Malaysia and other countries, providing services to passengers on flights to different corners of the world. At the same time, China Southern's sales offices around the world have conducted cultural exchanges with local communities, actively integrated into local communities, and promoted the friendship between Chinese people and the people along the" Belt and Road Initiative".
| 75 |
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| Overseas Cultural Activities (Illustrated)
Netherlands
Signed a contract with the famous football team Ajax and became the exclusive air ticket cooperation supplier
New Zealand
Become a National Partner of "Uncle McDonald's House Charity Foundation" Settled in the 20th Lantern Festival in Auckland as the sole airline sponsor
Australia
Sponsored the "Brisbane Great South Run Half Marathon"
India
Ticket sellers uniformly wear traditional Indian clothing in the main colors of the Indian flag on Independence Day
Italy
Participated in the Italian Chinese Film Festival and awarded honors to local government officials and civil society people who made outstanding contributions
United States
Walk into the Shouxing Building in the San Francisco Bay Area, carried out the activity "service community, warm mountain residence"
Hosted the listing ceremony of San Francisco-Guangzhou Tourism Promotion Center to introduce Guangzhou tourism resources
Participated in "China Tourism Culture Week and Huangshan Walked into New York World Trade Center Public Day" event |
| 76 |
|
|
| Case study: Holding "air temple fair", opening the window of Lingnan culture for the world
During the Spring Festival of 2019, China Southern held an "air temple fair" in the cabin of the aircraft for the second consecutive year. More than 2,000 passengers from Africa, Asia, North America, Latin America, Oceania, and Europe hung lanterns, guessed lantern riddles, ate dumplings and experienced the endless charm of traditional Chinese culture, Lingnan culture, and Guangfu temple fair.
China Southern flight attendants turned into "Guangfu Cultural Courier", introduced the Chinese New Year customs, the Guangfu Temple Fair and the cultural connotation to the passengers, invited the passengers to guess lantern riddles and make lanterns, and sent a Chinese New Year gift package to each passenger. The postcards show the traditional customs and intangible cultural heritage of Guangzhou, so that visitors will know more about Guangfu Temple. The air journey of passengers has become an immersive journey of Chinese culture, and the aircraft cabin has become a space for the dissemination and exchange of Chinese culture.
"This aerial temple fair has a very new form of activity and is a very good cultural dissemination event." ---- Ms. Zhang, a Chinese Canadian tourist |
10.5 Supply Chain Management（1P）
China Southern believes that a sustainable supply chain can promote its own better operation and the growth of its suppliers. In 2019, China Southern has been actively transforming to supply chain procurement. According to the modern supply chain management concept, it has improved rules and regulations, strengthened hierarchical management, comprehensively standardized supplier management, and prevented supply chain risks. It has worked with the supply chain to provide better services for passengers and other relevant parties, and promoted the high-quality development of the company.
Standardized procurement management. China Southern has developed 15 policies including "Procurement Management Volume", "Procurement Risk Control Management Volume" and procurement volumes for flight, engineering and construction projects, and maintenance, also including "Supplier Management Measures" and "Supplier Inspection Post Operation Process". The internal control system of China Southern 's procurement and supplier management were standardized and improved to prevent risks in the supply chain.
| 77 |
|
|
Hierarchical management of suppliers. By Carrying out hierarchical and differentiated management of supply, and divide suppliers into excellent suppliers, qualified suppliers, registered suppliers and blacklisted suppliers, China Southern has built a comprehensive supplier library and brand library, standardized the management of suppliers, and provided preferential policies for excellent suppliers, thus excellent suppliers have the motivation to continue to strengthen the cooperation with China Southern and create a benign supplier ecosystem.
Responsible procurement. China Southern promotes the procurement of green products from the source. In the cabin, China Southern purchased the dining car made of lightweight materials to reduce the weight of the dining car and reduce fuel consumption in flight. At Daxing International Airport, China Southern is 100% committed to using new energy general vehicles, with the purchase of 16 new vehicles during the year.
【Supplier data】
| Indicator |
Number in 2019 | |
| Suppliers by region |
South Central China |
4,473 |
| Northeast China |
1,260 | |
| East China |
1,323 | |
| North China |
1,330 | |
| Northwest China |
861 | |
| Southwest China |
742 | |
| Hong Kong, Macau and Taiwan |
16 | |
|
|
Outside Mainland |
2,298 |
|
|
Regions not specified |
1,176 |
| Total number of suppliers |
13,479 | |
11 Report Indicators Index（3P）
11.1 ESG indicators index（2P）
Environmental
| 78 |
|
|
| Aspect |
Aspect number |
"Comply or Explain" provision |
Report Location |
Reason for non-disclosure |
| A1：Emissions |
General disclosure |
Information on:（a）the policies; and （b）compliance with relevant laws and regulations that have a significant impact on the issuers relating to waste gas and greenhouse gas emissions, discharges into water and land, and generation of hazardous and non-hazardous waste |
P57 |
|
| A1.1 |
The types of emissions and respective emissions data |
P52 |
| |
| A1.2 |
Energy direct (Scope 1) and energy indirect (Scope 2) greenhouse gas emissions (in tons) and (if applicable) intensity (eg, per unit of production volume, per facility)
|
P52 |
| |
| A1.3 |
Total hazardous waste produced (in tons)and, where appropriate, intensity(e.g. per unit of production volume, per facility. |
P58 |
| |
| A1.4 |
Total non-hazardous waste produced (in tons)and, where appropriate, intensity(e.g. per unit of production volume, per facility. |
P59 |
| |
| A1.5 |
Description of the emissions targets and the steps taken
|
P54-57 Emission targets have not been disclosed for the time being, and relevant plans are being formulated. |
| |
| A1.6 |
Description of the methods used to treat hazardous and non-hazardous waste; description of the waste reduction goals and steps taken.
|
P57 Waste reduction targets have not been disclosed for the time being, and relevant plans are being formulated. |
|
| 79 |
|
|
| A2：Use of Resources |
General disclosure |
Policies on the efficient use of resources, including energy, water and other raw materials. |
P58 |
|
| A2.1 |
Direct and/or indirect energy consumption by type (e.g. electricity, gas or oil) in total (KWH in 1000s) and intensity (e.g. per unit of production volume, per facility). |
P52 |
Only ton - kilometer fuel consumption is disclosed, other temporarily not disclosed | |
| A2.2 |
Water consumption in total and intensity (e.g. per unit of production volume, per facility). |
P53 |
| |
| A2.3 |
Description of the energy efficiency goals and the steps taken.
|
P54-57 Targets have not been disclosed for the time being, and relevant plans are being formulated |
Temporary unplanned | |
| A2.4 |
Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency initiatives and results achieved |
P58-59 |
| |
| A2.5 |
Total packaging material used for finished products (in tons) and, if applicable, with reference to per unit produced |
The amount of packaging materials used in air food packaging is 881.03 tons and the density is 0.44 tons / RMB 10,000 |
| |
| A3：The Environment and Natural Resources |
General disclosure |
Policies on minimizing the issuer’s significant impact on the environment and natural resources. |
P58、P60 |
|
| A3.1 |
Description of the significant impacts of activities on the environment and natural resources and the actions taken to manage them. |
P58-60 |
| |
| A4：Climate Change |
General disclosure |
Identification and response to mitigation measures related to significant climate-related issues that have and may affect issuers |
P53 |
|
| A4.1 |
Description of the major climate-related issues that have had and are likely to have an impact on issuers and the actions taken to address them。 |
P54-57 |
| 80 |
|
|
Social
| Aspect |
Aspect number |
"Comply or Explain" provision |
Location in this report |
Reason for non-disclosure |
| B: Employment |
General disclosure |
Information on : (a) policies and (b) compliance with relevant laws and regulations that have a material impact on the issuer relating to remuneration and dismissal, recruitment and promotion, working hours, leave, equal opportunities, diversity, anti-discrimination and other welfare and benefits. |
P72 |
|
| B1.1 |
Total number of employees by gender, type of employment (including full-time and part-time), age group and region. |
P73-74 |
| |
| B1.2 |
Rate of employee turnover by gender, age group and region. |
N/A |
The related information have not been disclosed for the time being and the relevant data statistics is being conducted.
| |
| B2： Health and Safety |
General disclosure |
Information on : (a) policies and (b) compliance with relevant laws and regulations that have a material impact on the issuer relating to providing a safe working environment and protecting employees from occupational hazards |
P50 |
|
| B2.1 |
Number and rate of deaths due to work in each of the past three years (including reporting year)
|
P50 |
| |
| B2.2 |
Number of working days lost due to work-related injury. |
P50 |
| |
| B2.3 |
Description on the occupational health and safety measures adopted and the relevant implementation and monitoring methods. |
P50 |
| |
| B3: Development and Training |
General disclosure |
Policies on improving employees’ knowledge and skills for discharging duties at work. Description of training activities |
P75-76 |
|
| B3.1 |
Percentage of trainees by gender and type of employees (e.g. senior management, middle management, etc.). |
P76 |
| |
| B3.2 |
Average number of hours of training completed per employee by gender and type of employee. |
P76 |
| |
| B4: Labor Standards |
General disclosure |
Information on : (a) policies and (b) compliance with relevant laws and regulations that have a material impact on the issuer relating to preventing child and forced labor. |
P72 |
|
| B4.1 |
Description of measures to review employment practices to avoid child and forced labor. |
P72 |
| |
| B4.2 |
Description of steps taken to eliminate such practices when discovered. |
P72 |
|
| 81 |
|
|
| B5: Supply Chain Management |
General disclosure |
policies on managing supply chain environmental and social risk. |
P84-85 |
|
| B5.1 |
Number of suppliers by region. |
P85 |
| |
| B5.2 |
Description of practices relating to engaging suppliers, number of suppliers where the practices are being implemented, the way they are implemented and monitored. |
P84-85 |
| |
| B5.3 |
Description on the practices for identifying environmental and social risks at each stage of the supply chain, as well as the implementation and monitoring methods. |
N/A |
China Southern gradually improving its supply chain management methods, incorporating environmental and social risks into its management. | |
| B5.4 |
Description on the practices used to promote the use of environmentally friendly products and services in the selection of suppliers and the relevant enforcement and monitoring methods. |
P85 |
| |
| B6： Products Responsibility |
General disclosure |
Information on : (a) policies and (b) compliance with relevant laws and regulations that have a material impact on the issuer relating to health and safety, advertising, labeling and privacy matters relating to products and services provided and methods of redress |
P49 Label related policy is not available |
|
| B6.1 |
Percentage of total products sold or shipped that need to be recalled for safety and health reasons. |
N/A |
| |
| B6.2 |
The number of complaints received about products and services and how to respond. |
P70-71 |
| |
| B6.3 |
Description on practices related to the protection and protection of intellectual property rights. |
P13 |
| |
| B6.4 |
Description on the quality verification process and product recovery procedures. |
N/A |
| |
| B6.5 |
Description on the consumer data protection and privacy policy and the relevant enforcement and monitoring methods. |
P70 |
| |
| B7: Anti-corruption |
General disclosure |
Information on : (a) policies and (b) compliance with relevant laws and regulations that have a material impact on the issuer relating to bribery, extortion, fraud and money laundering. |
P12 |
|
| B7.1 |
The number and results of corruption cases brought against and concluded against the issuer or its employees during the reporting period. |
P12 |
| |
| B7.2 |
Description on preventive measures and reporting procedures, as well as relevant enforcement and monitoring methods. |
P12 |
| |
| B7.3 |
Description on the anti-corruption training activities provided to directors and staff |
P12 |
Through inspection, rectification, mobilization and deployment meeting, warning education conference and other ways, China Southern to cadres and staff to carry out anti-graft warning education | |
| B8： Community Investment |
General disclosure |
policies on community involvement to understand the needs of the community in which the operation operates and to ensure its activities take into consideration the communities’ interests. |
P36、P80 |
|
| B8.1 |
Focus areas of contribution (e.g. education, environmental issues, Labour needs, health, culture, sports). |
P36；P80-81 |
| |
| B8.2 |
Resources (such as money or time) used in the focus area. |
P36、P80-81 |
| 82 |
|
|
11.2 GRI standards indicator index（1P）
| Section in this report |
GRI standards |
| Chairman’s letter |
102-14、102-15 |
| About this report |
102-45、102-46、102-50、102-51、102-52、102-53 |
| About China Southern |
102-1、102-2、102-3、102-4、102-5、102-6、102-7、102-16、102-17、102-18、102-22、103-2、205-2、205-3、417-1、417-2 |
| Focus on 2019 |
103-2、203-1、413-1、415-1 |
| Responsibility Management |
102-20、102-21、102-29、102-31、102-32、102-33、102-34、102-40、102-42、102-44、102-47、103-2、205-2、205-3 |
| Safety | |
| Safety management |
103-2 |
| Aviation safety |
103-2 |
| Passenger health and safety |
103-2、416-1 |
| Occupational health and safety |
403-2 |
| Safety performance |
416-2 |
| Environment | |
| Environment management |
301-1、302-1、302-3、302-4、305-4 |
| Response to climate change |
102-13、103-2、302-5 |
| Pollution prevention |
301-3、305-7、306-1、306-2 |
| Resources saving |
301-2、301-3、303-3、306-2 |
| Avocations for environment protection |
—— |
| 83 |
|
|
|
Service | |
| Service for passengers |
103-2 |
| Freight transportation services |
—— |
| Customer relations |
418-1 |
| Employees | |
| Employee rights and interests |
103-2、401-1、401-2、401-3、405-1、406-1、 |
| Employee development |
103-2、404-1、404-2 |
| Employee care |
—— |
| Society | |
| Special flights |
203-1 |
| Voluntary service |
103-2、203-1、413-1 |
| " Belt and Road Initiative" |
203-1 |
| Supply chain management |
102-9、103-2、414-1、414-2 |
|
Annex | |
| ESG indicators index |
—— |
| GRI standards index |
102-55 |
| Readers’ Feedback |
—— |
China Southern Airlines Company Limited
Compiler: the Publicity Division, China Southern Airlines Company Limited
Address of China Southern Airlines’ Headquarters: No.68 Qixin Road, Baiyun District, Guangzhou
China Southern Airlines’s official Website：www.csair.com
Contacts：Xiao Hang
E-mail：xiaohang@csair.com
This report is printed on recycled paper, 100% soy ink was used to reduce air pollution
| 84 |
Exhibit 99.3
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 1055)
2019 ANNUAL RESULTS
The board of directors (the “Board”) of China Southern Airlines Company Limited (the “Company”) hereby announces the audited results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2019 together with the comparative figures for 2018 which have been derived from the Group’s audited consolidated financial statements for the year ended 31 December 2019.
FINANCIAL RESULTS
| A. | PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”) |
|
|
|
|
|
CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2019 |
|
|
|
Note |
|
|
2019 RMB million |
|
|
2018 RMB million |
| |||
|
|
|
|
|
|
(Note) |
| ||||||
| Operating revenue |
|
|
|
|
|
|
|
|
|
|
| |
| Traffic revenue |
|
|
|
|
|
148,117 |
|
|
|
138,064 |
| |
| Other operating revenue |
|
|
|
|
|
6,205 |
|
|
|
5,559 |
| |
| Total operating revenue |
|
|
4 |
|
|
|
154,322 |
|
|
|
143,623 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Flight operation expenses |
|
|
5 |
|
|
|
70,566 |
|
|
|
76,216 |
|
| Maintenance expenses |
|
|
|
|
|
|
13,057 |
|
|
|
12,704 |
|
| Aircraft and transportation service expenses |
|
|
|
|
|
|
26,591 |
|
|
|
24,379 |
|
| Promotion and selling expenses |
|
|
|
|
|
|
7,755 |
|
|
|
7,036 |
|
| General and administrative expenses |
|
|
|
|
|
|
4,073 |
|
|
|
3,770 |
|
| Depreciation and amortisation |
|
|
6 |
|
|
|
24,620 |
|
|
|
14,308 |
|
| Impairment losses on property, plant and equipment |
|
|
|
|
|
|
18 |
|
|
|
– |
|
| Others |
|
|
|
|
|
|
1,928 |
|
|
|
1,829 |
|
| Total operating expenses |
|
|
|
|
|
|
148,608 |
|
|
|
140,242 |
|
| Other net income |
|
|
7 |
|
|
|
5,124 |
|
|
|
5,438 |
|
| Operating profit |
|
|
|
|
|
|
10,838 |
|
|
|
8,819 |
|
|
|
|
|
|
Note |
|
|
2019 RMB million |
|
|
2018 RMB million |
| |||
|
|
|
|
|
|
|
|
(Note) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Interest income |
|
|
|
|
|
74 |
|
|
|
125 |
| |
| Interest expense |
|
|
8 |
|
|
|
(5,845 | ) |
|
|
(3,202 | ) |
| Share of associates’ results |
|
|
|
|
|
|
(178 | ) |
|
|
263 |
|
| Share of joint ventures’ results |
|
|
|
|
|
|
365 |
|
|
|
200 |
|
| Exchange loss, net |
|
|
9 |
|
|
|
(1,477 | ) |
|
|
(1,853 | ) |
| Changes in fair value of financial assets / liabilities |
|
|
|
|
|
|
265 |
|
|
|
12 |
|
| Remeasurement of the originally held equity interests in a joint venture |
|
|
|
|
|
|
13 |
|
|
|
– |
|
| Profit before income tax |
|
|
|
|
|
|
4,055 |
|
|
|
4,364 |
|
| Income tax |
|
|
10 |
|
|
|
(971 | ) |
|
|
(1,000 | ) |
| Profit for the year |
|
|
|
|
|
|
3,084 |
|
|
|
3,364 |
|
| Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity shareholders of the Company |
|
|
|
|
|
|
2,640 |
|
|
|
2,895 |
|
| Non-controlling interests |
|
|
|
|
|
|
444 |
|
|
|
469 |
|
| Profit for the year |
|
|
|
|
|
|
3,084 |
|
|
|
3,364 |
|
| Earnings per share |
|
|
|
|
|
|
|
|
|
| ||
| Basic and diluted |
|
|
12 |
|
|
RMB0.22 |
|
|
RMB0.27 |
| ||
| Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
Under this approach, comparative information is not restated. See Note 3. |
|
|
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |
|
|
For the year ended 31 December 2019 |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
|
|
|
|
|
(Note) |
| |||
|
|
|
|
|
|
|
| ||
| Profit for the year |
|
|
3,084 |
|
|
|
3,364 |
|
| Other comprehensive income: |
|
|
|
|
|
|
|
|
| Items that will not be reclassified to profit or loss |
|
|
|
|
|
|
|
|
| – Equity investments at fair value through other |
|
|
|
|
|
|
|
|
| comprehensive income – net movement in fair value reserve (non-recycling) |
|
|
(31 | ) |
|
|
319 |
|
| – Share of other comprehensive income of an associate |
|
|
3 |
|
|
|
(4 | ) |
| – Deferred tax relating to above items |
|
|
7 |
|
|
|
(80 | ) |
| Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
| – Cash flow hedge: fair value movement of derivative financial assets |
|
|
(72 | ) |
|
|
29 |
|
| – Differences resulting from the translation off oreign currency financial statements |
|
|
(7 |
) |
|
|
(2 |
) |
| – Deferred tax relating to above items |
|
|
17 |
|
|
|
(7 |
) |
| Other comprehensive income for the year |
|
|
(83 |
) |
|
|
255 |
|
| Total comprehensive income for the year |
|
|
3,001 |
|
|
|
3,619 |
|
| Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
| Equity shareholders of the Company |
|
|
2,552 |
|
|
|
3,048 |
|
| Non-controlling interests |
|
|
449 |
|
|
|
571 |
|
| Total comprehensive income for the year |
|
|
3,001 |
|
|
|
3,619 |
|
| Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
Under this approach, comparative information is not restated. See Note 3. |
|
|
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |
|
|
At 31 December 2019 |
|
|
|
Note |
|
|
31 December 2019 RMB million |
|
|
31 December 2018 RMB million |
| |||
| Non-current assets |
|
|
|
|
|
|
(Note) |
| ||||
| Property, plant and equipment, net |
|
|
|
|
|
84,788 |
|
|
|
170,692 |
| |
| Construction in progress |
|
|
13 |
|
|
|
39,222 |
|
|
|
37,791 |
|
| Right-of-use assets |
|
|
14 |
|
|
|
153,211 |
|
|
|
– |
|
| Lease prepayments |
|
|
|
|
|
|
– |
|
|
|
2,970 |
|
| Goodwill |
|
|
|
|
|
|
237 |
|
|
|
237 |
|
| Interest in associates |
|
|
|
|
|
|
3,322 |
|
|
|
3,181 |
|
| Interest in joint ventures |
|
|
|
|
|
|
3,124 |
|
|
|
2,812 |
|
| Aircraft lease deposits |
|
|
|
|
|
|
457 |
|
|
|
594 |
|
| Other equity instrument investments |
|
|
|
|
|
|
1,049 |
|
|
|
1,080 |
|
| Other non-current financial assets |
|
|
|
|
|
|
106 |
|
|
|
103 |
|
| Derivative financial assets |
|
|
|
|
|
|
3 |
|
|
|
75 |
|
| Deferred tax assets |
|
|
|
|
|
|
2,692 |
|
|
|
1,566 |
|
| Other assets |
|
|
|
|
|
|
1,979 |
|
|
|
1,776 |
|
|
|
|
|
|
|
|
|
290,190 |
|
|
|
222,877 |
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
|
|
|
|
|
1,893 |
|
|
|
1,699 |
|
| Trade receivables |
|
|
15 |
|
|
|
3,152 |
|
|
|
2,901 |
|
| Other receivables |
|
|
16 |
|
|
|
7,860 |
|
|
|
8,015 |
|
| Cash and cash equivalents |
|
|
|
|
|
|
1,849 |
|
|
|
6,928 |
|
| Restricted bank deposits |
|
|
|
|
|
|
102 |
|
|
|
116 |
|
| Prepaid expenses and other current assets |
|
|
|
|
|
|
1,591 |
|
|
|
3,659 |
|
| Other financial assets |
|
|
|
|
|
|
– |
|
|
|
440 |
|
| Derivative financial assets |
|
|
|
|
|
|
218 |
|
|
|
– |
|
| Assets held for sale |
|
|
|
|
|
|
– |
|
|
|
224 |
|
| Amounts due from related companies |
|
|
|
|
|
|
73 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
16,738 |
|
|
|
24,072 |
|
|
|
|
|
|
Note |
|
|
31 December 2019 RMB million |
|
|
31 December 2018 RMB million |
| |||
|
|
|
|
|
|
|
|
(Note) |
| ||||
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
| |
| Derivative financial liabilities |
|
|
|
|
|
– |
|
|
|
44 |
| |
| Borrowings |
|
|
|
|
|
37,543 |
|
|
|
38,741 |
| |
| Lease liabilities |
|
|
17 |
|
|
19,998 |
|
|
|
– |
| |
| Current portion of obligations under finance leases |
|
|
|
|
– |
|
|
|
9,555 |
| ||
| Trade payables |
|
|
18 |
|
|
|
2,317 |
|
|
|
2,309 |
|
| Contract liabilities |
|
|
|
|
|
|
1,610 |
|
|
|
1,693 |
|
| Sales in advance of carriage |
|
|
|
|
|
|
10,303 |
|
|
|
8,594 |
|
| Current income tax |
|
|
|
|
|
|
563 |
|
|
|
369 |
|
| Amounts due to related companies |
|
|
|
|
|
|
170 |
|
|
|
127 |
|
| Accrued expenses |
|
|
|
|
|
|
15,745 |
|
|
|
15,682 |
|
| Other liabilities |
|
|
|
|
|
|
7,241 |
|
|
|
6,573 |
|
|
|
|
|
|
|
|
|
95,490 |
|
|
|
83,687 |
|
| Net current liabilities |
|
|
|
|
|
|
(78,752 | ) |
|
|
(59,615 | ) |
| Total assets less current liabilities |
|
|
|
|
|
|
211,438 |
|
|
|
163,262 |
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Borrowings |
|
|
|
|
|
|
13,637 |
|
|
|
15,676 |
|
| Lease liabilities |
|
|
17 |
|
|
|
114,076 |
|
|
|
– |
|
| Obligations under finance leases |
|
|
|
|
|
|
– |
|
|
|
62,666 |
|
| Other non-current liabilities |
|
|
|
|
|
|
1,782 |
|
|
|
2,036 |
|
| Provision for major overhauls |
|
|
|
|
|
|
3,542 |
|
|
|
2,831 |
|
| Provision for early retirement benefits |
|
|
|
|
|
|
– |
|
|
|
2 |
|
| Deferred benefits and gains |
|
|
|
|
|
|
833 |
|
|
|
906 |
|
| Deferred tax liabilities |
|
|
|
|
|
|
239 |
|
|
|
676 |
|
|
|
|
|
|
|
|
|
134,109 |
|
|
|
84,793 |
|
| Net assets |
|
|
|
|
|
|
77,329 |
|
|
|
78,469 |
|
| Capital and reserves |
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
|
|
|
|
|
12,267 |
|
|
|
12,267 |
|
| Reserves |
|
|
|
|
|
|
51,839 |
|
|
|
52,990 |
|
| Total equity attributable to equity shareholders of the Company |
|
|
|
|
|
|
64,106 |
|
|
|
65,257 |
|
| Non-controlling interests |
|
|
|
|
|
|
13,223 |
|
|
|
13,212 |
|
| Total equity |
|
|
|
|
|
|
77,329 |
|
|
|
78,469 |
|
| Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
Under this approach, comparative information is not restated. See Note 3. |
|
|
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |
|
|
For the year ended 31 December 2019 |
|
|
|
Attributable to equity shareholders of the Company |
|
|
|
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Fair value |
|
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
Share capital
|
|
|
Share premium
|
|
|
reserve(recycling)
|
|
|
reserve(non-recycling) |
|
|
Other reserves
|
|
|
Retained earnings |
|
|
Total |
|
|
Non- controlling interests |
|
|
equity |
| |||||||||
|
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
RMB |
| |||||||||
|
|
|
million |
|
|
million |
|
|
million |
|
|
million |
|
|
million |
|
|
million |
|
|
million |
|
|
million |
|
|
million |
| |||||||||
| Balance at 1 January 2018 |
|
|
10,088 |
|
|
|
15,182 |
|
|
|
35 |
|
|
|
303 |
|
|
|
2,684 |
|
|
|
22,273 |
|
|
|
50,565 |
|
|
|
12,668 |
|
|
|
63,233 |
|
| Changes in equity for 2018: |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,895 |
|
|
|
2,895 |
|
|
|
469 |
|
|
|
3,364 |
|
| Profit for the year |
|
|
– |
|
|
|
– |
|
|
|
22 |
|
|
|
133 |
|
|
|
(2 | ) |
|
|
– |
|
|
|
153 |
|
|
|
102 |
|
|
|
255 |
|
| Other comprehensive income |
|
|
– |
|
|
|
– |
|
|
|
22 |
|
|
|
133 |
|
|
|
(2 | ) |
|
|
2,895 |
|
|
|
3,048 |
|
|
|
571 |
|
|
|
3,619 |
|
| Total comprehensive income |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
221 |
|
|
|
(221 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Appropriations to reserves |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(1,009 | ) |
|
|
(1,009 | ) |
|
|
– |
|
|
|
(1,009 | ) |
| Dividends relating to 2017 |
|
|
2,179 |
|
|
|
10,470 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
12,649 |
|
|
|
– |
|
|
|
12,649 |
|
| Issuance of shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital injection by non- controlling interests in subsidiaries |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
72 |
|
|
|
72 |
|
| Change in other reserves |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
4 |
|
|
|
– |
|
|
|
4 |
|
|
|
– |
|
|
|
4 |
|
| Distributions to non-controlling interests |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(99 | ) |
|
|
(99 | ) |
| Balance at 31 December 2018 |
|
|
12,267 |
|
|
|
25,652 |
|
|
|
57 |
|
|
|
436 |
|
|
|
2,907 |
|
|
|
23,938 |
|
|
|
65,257 |
|
|
|
13,212 |
|
|
|
78,469 |
|
| (Note) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Impact on initial application of IFRS 16 (Note 3) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(272 | ) |
|
|
(2,852 | ) |
|
|
(3,124 | ) |
|
|
(338 | ) |
|
|
(3,462 | ) |
| Adjusted balance at 1 January 2019 |
|
|
12,267 |
|
|
|
25,652 |
|
|
|
57 |
|
|
|
436 |
|
|
|
2,635 |
|
|
|
21,086 |
|
|
|
62,133 |
|
|
|
12,874 |
|
|
|
75,007 |
|
| Changes in equity for 2019: |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,640 |
|
|
|
2,640 |
|
|
|
444 |
|
|
|
3,084 |
|
| Profit for the year |
|
|
– |
|
|
|
– |
|
|
|
(55 | ) |
|
|
(27 | ) |
|
|
(6 | ) |
|
|
– |
|
|
|
(88 | ) |
|
|
5 |
|
|
|
(83 | ) |
| Other comprehensive income |
|
|
– |
|
|
|
– |
|
|
|
(55 | ) |
|
|
(27 | ) |
|
|
(6 | ) |
|
|
2,640 |
|
|
|
2,552 |
|
|
|
449 |
|
|
|
3,001 |
|
| Total comprehensive income |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
181 |
|
|
|
(181 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Appropriations to reserves Dividends relating to 2018 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(613 | ) |
|
|
(613 | ) |
|
|
– |
|
|
|
(613 | ) |
| Acquisition of non-controlling interests in a subsidiary |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(10 | ) |
|
|
– |
|
|
|
(10 | ) |
|
|
(14 | ) |
|
|
(24 | ) |
| Change in other reserves |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
44 |
|
|
|
– |
|
|
|
44 |
|
|
|
– |
|
|
|
44 |
|
| Distributions to non-controlling interests |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(86 | ) |
|
|
(86 | ) |
| Balance at 31 December 2019 |
|
|
12,267 |
|
|
|
25,652 |
|
|
|
2 |
|
|
|
409 |
|
|
|
2,844 |
|
|
|
22,932 |
|
|
|
64,106 |
|
|
|
13,223 |
|
|
|
77,329 |
|
| Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
Under this approach, comparative information is not restated. See Note 3. |
|
|
Notes to the financial information prepared in accordance with IFRSs:
| 1 | CORPORATE INFORMATION |
|
|
|
|
|
China Southern Airlines Company Limited (the “Company”), a joint stock limited company, was incorporated in the People’s Republic of China (the “PRC”) on 25 March 1995. The address of the Company’s registered office is Unit 301, 3/F, Office Tower, Guanhao Science Park Phase I, 12 Yuyan Street, Huangpu District, Guangzhou, Guangdong Province, the PRC. The Company and its subsidiaries (the “Group”) are principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services.
The Company’s majority interest is owned by China Southern Air Holding Limited Company (“CSAH”), a state-owned enterprise incorporated in the PRC.
The Company’s shares are traded on the Shanghai Stock Exchange, The Stock Exchange of Hong Kong Limited and the New York Stock Exchange. |
| 2 | BASIS OF PREPARATION |
|
|
|
|
|
The consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual IFRSs, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (the “IASB”). The consolidated financial statements also comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The IASB has issued certain new and revised IFRSs that are first effective for the current accounting period of the Group. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current accounting period reflected in these consolidated financial statements.
The consolidated financial statements for the year ended 31 December 2019 comprise the Group and the Group’s interest in associates and joint ventures.
The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair value: |
|
|
– | other equity instrument investments; |
|
|
|
|
|
|
– | other non-current financial assets; |
|
|
|
|
|
|
– | other financial assets; and |
|
|
|
|
|
|
– | derivative financial assets/liabilities. |
|
|
|
|
|
|
Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell. | |
|
|
| 3 | CHANGES IN ACCOUNTING POLICIES |
|
|
|
|
|
The IASB has issued a new IFRS, IFRS 16, Leases, and a number of amendments to IFRSs that are first effective for the current accounting period of the Group.
Except for IFRS 16, Leases, none of the developments have had a material effect on how the Group’s results and financial position for the current or prior periods have been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. |
|
|
|
|
|
IFRS 16, Leases
IFRS 16 replaces IAS 17, Leases, and the related interpretations, IFRIC 4, Determining whether an arrangement contains a lease, SIC 15, Operating leases – incentives, and SIC 27, Evaluating the substance of transactions involving the legal form of a lease. IFRS16 introduces a single accounting model for lessees, which requires a lessee to recognise a right-of-use asset and a lease liability for all leases, except for leases that have a lease term of 12 months or less (“short-term leases”) and leases of low-value assets. The lessor accounting requirements are brought forward from IAS 17 substantially unchanged.
IFRS 16 also introduces additional qualitative and quantitative disclosure requirements which aim to enable users of the financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity.
The Group has initially applied IFRS 16 as from 1 January 2019. The Group has elected to use the modified retrospective approach and has therefore recognised the cumulative effect of initial application as an adjustment to the opening balance of equity at 1 January 2019. Comparative information has not been restated and continues to be reported under IAS 17.
Further details of the nature and effect of the changes to previous accounting policies and the transition options applied are set out below: |
|
|
(a) | New definition of a lease |
|
|
|
|
|
|
|
The change in the definition of a lease mainly relates to the concept of control. IFRS 16 defines a lease on the basis of whether a customer controls the use of an identified asset for a period of time, which may be determined by a defined amount of use. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.
The Group applies the new definition of a lease in IFRS 16 only to contracts that were entered into or changed on or after 1 January 2019. For contracts entered into before 1 January 2019, the Group has used the transitional practical expedient to grandfather the previous assessment of which existing arrangements are or contain leases. Accordingly, contracts that were previously assessed as leases under IAS 17 continue to be accounted for as leases under IFRS 16 and contracts previously assessed as non-lease service arrangements continue to be accounted for as executory contracts. |
|
|
|
|
(b) |
Lease accounting and transitional impact |
IFRS
16 eliminates the requirement for a lessee to classify leases as either operating leases or finance leases, as was previously required by IAS 17. Instead, the Group is required to capitalise all leases when it is the lessee, including leases previously classified as operating leases under IAS 17, other than those short-term leases and leases of low-value assets which are exempt. As far as the Group is concerned, these newly capitalised leases are primarily in relation to aircraft, flight equipment, buildings, machinery, equipment and vehicles. The Group also has the right to occupy space, including airport terminals, cargo/catering facilities and lounges space, in and around airports under different types of leasing arrangements.
At the date of transition to IFRS 16 (i.e. 1 January 2019), the Group determined the length of the remaining lease terms and measured the lease liabilities for the leases previously classified as operating leases at the present value of the remaining lease payments, discounted using the relevant incremental borrowing rates at 1 January 2019. The incremental borrowing rates range used for determination of the present value of the remaining lease payments was 4.75%~4.90%.
Right-of-use assets are measured at either:
|
|
– | their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental borrowing rate at the date of initial application – the Group applied this approach to its aircraft and engine leases; or |
|
|
|
|
|
|
– | an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other leases. |
|
|
|
To ease the transition to IFRS 16, the Group applied the following recognition exemption and practical expedients at the date of initial application of IFRS 16: |
|
|
– | the Group elected not to apply the requirements of IFRS 16 in respect of the recognition of lease liabilities and right-of-use assets to leases for which the remaining lease term ends within 12 months from the date of initial application of IFRS 16, i.e. where the lease term ends on or before 31 December 2019; |
|
|
|
|
|
|
– | excluded initial direct costs from the measurement of the right-of-use assets at the date of initial application; |
|
|
|
|
|
|
– | when measuring the lease liabilities at the date of initial application of IFRS 16, the Group applied a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment); and |
|
|
|
|
|
|
– | when measuring the right-of-use assets at the date of initial application of IFRS 16, the Group relied on the previous assessment for onerous contract provisions as at 31 December 2018 as an alternative to performing an impairment review. |
|
|
|
|
The following table reconciles the operating lease commitments as at 31 December 2018 to the opening balance for lease liabilities recognised as at 1 January 2019: |
|
|
|
1 January 2019 |
| |
|
|
|
RMB million |
| |
|
|
|
|
| |
| Operating lease commitments at 31 December 2018 |
|
|
75,729 |
|
| Less: commitments relating to leases exempt from capitalisation: |
|
|
| |
| – short-term leases and other leases with remaining lease term ending on or before 31 December 2019 and leases of low-value assets |
|
|
(924 | ) |
| – leases contracts entered before 31 December 2018 but the lease period start after 1 January 2019 |
|
|
(16,612 | ) |
| Less: total future interest expenses |
|
|
(10,037 | ) |
| Present value of remaining lease payments, discounted using the incremental |
|
|
|
|
| borrowing rates at 1 January 2019 |
|
|
48,156 |
|
| Add: finance lease liabilities recognised as at 31 December 2018 |
|
|
72,221 |
|
| Total lease liabilities recognised at 1 January 2019 |
|
|
120,377 |
|
|
|
|
So far as the impact of the adoption of IFRS 16 on leases previously classified as finance leases is concerned, the Group is not required to make any adjustments at the date of initial application of IFRS 16, other than changing the captions for the balances. Accordingly, instead of “obligations under finance leases”, these amounts are included within “lease liabilities”, and the depreciated carrying amount of the corresponding leased assets is identified as right-of-use assets. There is no impact on the opening balance of equity. |
|
|
|
|
The following table summarises the impacts of the adoption of IFRS 16 on the Group’s consolidated statement of financial position: |
|
|
|
|
|
|
Adoption of IFRS 16 |
|
|
|
| |||||||
|
|
|
Carrying amount at 31 December |
|
|
|
|
|
|
Carrying amount at 1 January |
| ||||||
|
|
|
2018 |
|
|
Remeasurement |
|
|
Reclassification |
|
|
2019 |
| ||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||
| Line items in the consolidated statement of financial position impacted by the adoption of IFRS 16: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Property, plant and equipment, net |
|
|
170,692 |
|
|
|
– |
|
|
|
(88,880 | ) |
|
|
81,812 |
|
| Right-of-use assets |
|
|
– |
|
|
|
45,437 |
|
|
|
91,914 |
|
|
|
137,351 |
|
| Lease prepayments |
|
|
2,970 |
|
|
|
– |
|
|
|
(2,970 | ) |
|
|
– |
|
| Interest in associates |
|
|
3,181 |
|
|
|
(527 | ) |
|
|
– |
|
|
|
2,654 |
|
| Deferred tax assets |
|
|
1,566 |
|
|
|
717 |
|
|
|
– |
|
|
|
2,283 |
|
| Other assets |
|
|
1,776 |
|
|
|
– |
|
|
|
(210 | ) |
|
|
1,566 |
|
| Total non-current assets |
|
|
222,877 |
|
|
|
45,627 |
|
|
|
(146 | ) |
|
|
268,358 |
|
| Prepaid expenses and other current assets |
|
|
3,659 |
|
|
|
(811 | ) |
|
|
– |
|
|
|
2,848 |
|
| Total current assets |
|
|
24,072 |
|
|
|
(811 | ) |
|
|
– |
|
|
|
23,261 |
|
| Lease liabilities |
|
|
– |
|
|
|
6,969 |
|
|
|
9,952 |
|
|
|
16,921 |
|
| Current portion of obligations under finance leases |
|
|
9,555 |
|
|
|
– |
|
|
|
(9,555 | ) |
|
|
– |
|
| Accrued expenses |
|
|
15,682 |
|
|
|
(83 | ) |
|
|
(397 | ) |
|
|
15,202 |
|
| Total current liabilities |
|
|
83,687 |
|
|
|
6,886 |
|
|
|
– |
|
|
|
90,573 |
|
| Net current liabilities |
|
|
59,615 |
|
|
|
7,697 |
|
|
|
– |
|
|
|
67,312 |
|
| Total assets less current liabilities |
|
|
163,262 |
|
|
|
37,930 |
|
|
|
(146 | ) |
|
|
201,046 |
|
|
|
|
|
|
|
|
Adoption of IFRS 16 |
|
|
| |||||||||
|
|
|
Carrying amount at 31 December |
|
|
|
|
|
|
Carrying amount at 1 January |
| ||||||
|
|
|
2018 |
|
|
Remeasurement |
|
|
Reclassification |
|
|
2019 |
| ||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||
| Line items in the consolidated statement of financial position impacted by the adoption of IFRS 16: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Lease liabilities |
|
|
– |
|
|
|
40,790 |
|
|
|
62,666 |
|
|
|
103,456 |
|
| Obligations under finance leases |
|
|
62,666 |
|
|
|
– |
|
|
|
(62,666 | ) |
|
|
– |
|
| Provision for major overhauls |
|
|
2,831 |
|
|
|
780 |
|
|
|
– |
|
|
|
3,611 |
|
| Deferred benefits and gains |
|
|
906 |
|
|
|
– |
|
|
|
(146 | ) |
|
|
760 |
|
| Deferred tax liabilities |
|
|
676 |
|
|
|
(178 | ) |
|
|
– |
|
|
|
498 |
|
| Total non-current liabilities |
|
|
84,793 |
|
|
|
41,392 |
|
|
|
(146 | ) |
|
|
126,039 |
|
| Net assets |
|
|
78,469 |
|
|
|
(3,462 | ) |
|
|
– |
|
|
|
75,007 |
|
| Reserves |
|
|
52,990 |
|
|
|
(3,124 | ) |
|
|
– |
|
|
|
49,866 |
|
| Total equity attributable to equity shareholders of the Company |
|
|
65,257 |
|
|
|
(3,124 | ) |
|
|
– |
|
|
|
62,133 |
|
| Non-controlling interests |
|
|
13,212 |
|
|
|
(338 | ) |
|
|
– |
|
|
|
12,874 |
|
| Total equity |
|
|
78,469 |
|
|
|
(3,462 | ) |
|
|
– |
|
|
|
75,007 |
|
|
|
(c) | Impact on the financial result and cash flows of the Group |
|
|
|
|
|
|
|
After the initial recognition of right-of-use assets and lease liabilities as at 1 January 2019, the Group as a lessee is required to recognise interest expense accrued on the outstanding balance of the lease liabilities, and the depreciation of the right-of-use assets, instead of the previous policy of recognising rental expenses incurred under operating leases on a straight-line basis over the lease term. This results in a positive impact on the reported operating profit and a negative impact on the profit before income tax in the Group’s consolidated income statement, as compared to the results if IAS 17 had been applied during the year.
In the consolidated cash flow statement, the Group as a lessee is required to split rentals paid under capitalised leases into their capital element and interest element. The capital element is classified as financing cash outflows, similar to how leases previously classified as finance leases under IAS 17 were treated, rather than as operating cash outflows, as was the case for operating leases under IAS 17. Although total cash flows are unaffected, the adoption of IFRS 16 therefore results in a significant change in presentation of cash flows within the cash flow statement. |
|
|
|
|
The following tables give an indication of the estimated impact of the adoption of IFRS 16 on the Group’s financial result and cash flows for the year ended 31 December 2019, by adjusting the amounts reported under IFRS 16 in these consolidated financial statements to compute estimates of the hypothetical amounts that would have been recognised under IAS 17 if this superseded standard had continued to apply to 2019 instead of IFRS 16, and by comparing these hypothetical amounts for 2019 with the actual 2018 corresponding amounts which were prepared under IAS 17. |
|
|
|
2019 |
|
|
2018 |
| ||||||||||||||||||
|
|
|
Amounts reported under IFRS 16 |
|
|
Add back: IFRS 16 depreciation, maintenance and interest expenses, net |
|
|
Add back: net effect between IAS 17 and IFRS 16 relating to share of associates’ results |
|
|
Deduct: estimated amounts related to operating leases as if under IAS 17 (Note (i)) |
|
|
Hypothetical amounts for 2019 as if under IAS 17 |
|
|
Compared to amounts reported for 2018 under IAS 17 |
| ||||||
|
|
|
(A) |
|
|
(B) |
|
|
(C) |
|
|
(D) |
|
|
(E=A+B+C-D) |
|
|
|
| ||||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||||
| Financial result for the year ended 31 December 2019 impacted by the adoption of IFRS 16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Operating profit |
|
|
10,838 |
|
|
|
7,580 |
|
|
|
– |
|
|
|
9,491 |
|
|
|
8,927 |
|
|
|
8,819 |
|
| Interest expense |
|
|
(5,845 | ) |
|
|
2,380 |
|
|
|
– |
|
|
|
– |
|
|
|
(3,465 | ) |
|
|
(3,202 | ) |
| Exchange loss, net |
|
|
(1,477 | ) |
|
|
756 |
|
|
|
– |
|
|
|
– |
|
|
|
(721 | ) |
|
|
(1,853 | ) |
| Share of associates’ results |
|
|
(178 | ) |
|
|
– |
|
|
|
216 |
|
|
|
– |
|
|
|
38 |
|
|
|
263 |
|
| Profit before income tax |
|
|
4,055 |
|
|
|
10,716 |
|
|
|
216 |
|
|
|
9,491 |
|
|
|
5,496 |
|
|
|
4,364 |
|
| Profit for the year |
|
|
3,084 |
|
|
|
10,716 |
|
|
|
216 |
|
|
|
9,491 |
|
|
|
4,525 |
|
|
|
3,364 |
|
|
|
|
2019 |
|
|
2018 |
| ||||||||||
|
|
|
Amounts reported under IFRS 16 |
|
|
Estimated amounts related to operating leases as if under IAS 17 (Notes (i) & (ii)) |
|
|
Hypothetical amounts for 2019 as if under IAS 17 |
|
|
Compared to amounts reported for 2018 under IAS 17 |
| ||||
|
|
|
(A) |
|
|
(B) |
|
|
(C=A+B) |
|
|
|
| ||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||
| Line items in the consolidated cash flow statement for the year ended 31 December 2019 impacted by the adoption of IFRS 16: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Cash generated from operating activities |
|
|
39,728 |
|
|
|
(9,491 | ) |
|
|
30,237 |
|
|
|
21,174 |
|
| Interest paid |
|
|
(7,014 | ) |
|
|
2,380 |
|
|
|
(4,634 | ) |
|
|
(4,255 | ) |
| Net cash generated from operating activities |
|
|
31,175 |
|
|
|
(7,111 | ) |
|
|
24,064 |
|
|
|
15,388 |
|
| Capital element of lease rentals paid (Note (iii)) |
|
|
(17,784 | ) |
|
|
7,111 |
|
|
|
(10,673 | ) |
|
|
(10,433 | ) |
| Net cash (used in)/ activities generated from financing |
|
|
(21,833 | ) |
|
|
7,111 |
|
|
|
(14,722 | ) |
|
|
5,220 |
|
|
|
|
|
Notes: | |
|
|
|
|
|
|
(i) | The “estimated amounts related to operating leases” is an estimate of the amounts of the cash flows in 2019 that relate to leases which would have been classified as operating leases, if IAS 17 had still applied in 2019. This estimate assumes that there were no differences between rentals and cash flows and that all of the new leases entered into in 2019 would have been classified as operating leases under IAS 17, if IAS 17 had still applied in 2019. Any potential net tax effect is ignored. |
|
|
|
|
|
|
(ii) | In this impact table these cash outflows are reclassified from financing to operating in order to compute hypothetical amounts of net cash generated from operating activities and net cash used in financing activities as if IAS 17 still applied. |
|
|
|
|
|
|
(iii) | The capital element of finance leases under IAS 17 previously presented as “Repayment of principal under finance lease obligations” in 2018 consolidated cash flow statement. |
|
|
(d) | Investment property |
|
|
|
|
|
|
|
Under IFRS 16, the Group is required to account for all leasehold properties as investment properties when these properties are held to earn rental income and / or for capital appreciation (“leasehold investment properties”). The adoption of IFRS 16 does not have a significant impact on the Group’s consolidated financial statements as the Group previously elected to apply IAS 40, Investment properties, to account for all of its leasehold properties that were held for investment purposes as at 31 December 2018. |
|
|
(e) | Lessor accounting |
|
|
|
|
|
|
|
In addition to leasing out the investment property referred to in paragraph (d) above, the Group leases out a number of items of consumable spare parts and maintenance materials as the lessor of operating leases. The accounting policies applicable to the Group as a lessor remain substantially unchanged from those under IAS 17.
Under IFRS 16, when the Group acts as an intermediate lessor in a sublease arrangement, the Group is required to classify the sublease as a finance lease or an operating lease by reference to the right-of-use assets arising from the head lease, instead of by reference to the underlying asset. The adoption of IFRS 16 does not have a significant impact on the Group’s consolidated financial statements in this regard. |
| 4 | REVENUE AND SEGMENT INFORMATION |
|
|
(a) | Operating revenue |
|
|
|
|
|
|
|
The Group is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery, and other extended transportation services. |
|
|
|
|
(i) | Disaggregation of revenue |
|
|
|
|
|
|
|
Disaggregation of revenue from contracts with customers by major services lines is as follow: |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
RMB million |
|
|
|
RMB million |
|
| Revenue from contracts with customers within the scope of IFRS 15: |
|
|
|
|
|
|
|
|
| Disaggregated by service lines |
|
|
|
|
|
|
|
|
| Traffic revenue |
|
|
|
|
|
|
|
|
| – Passenger |
|
|
138,502 |
|
|
|
128,038 |
|
| – Cargo and mail |
|
|
9,615 |
|
|
|
10,026 |
|
| Commission income |
|
|
2,952 |
|
|
|
2,619 |
|
| Hotel and tour operation income |
|
|
712 |
|
|
|
676 |
|
| General aviation income |
|
|
564 |
|
|
|
476 |
|
| Ground services income |
|
|
409 |
|
|
|
429 |
|
| Air catering income |
|
|
353 |
|
|
|
391 |
|
| Cargo handling income |
|
|
359 |
|
|
|
254 |
|
| Others |
|
|
654 |
|
|
|
536 |
|
| Revenue from other sources: |
|
|
154,120 |
|
|
|
143,445 |
|
| Rental income |
|
|
202 |
|
|
|
178 |
|
|
|
|
|
154,322 |
|
|
|
143,623 |
|
|
|
|
Disaggregation of revenue from contracts with customers by the timing of revenue recognition and by geographic markets is disclosed in Notes 4(b) and 4(c) respectively. |
|
|
|
|
|
|
(ii) | Revenue expected to be recognised in the future arising from contracts with customers in existence at the reporting date |
|
|
|
|
|
|
|
As at 31 December 2019, the aggregated amount of the transaction price allocated to the remaining performance obligation, which is the unredeemed credits under the frequent flyer award programmes, amounted to RMB3,331 million (31 December 2018: RMB3,711 million). This amount represents revenue expected to be recognised in the future when the customers take possession of the goods or services redeemed. |
|
|
(b) | Business segments |
|
|
|
|
|
|
|
The Group has two reportable operating segments “airline transportation operations” and “other segments”, according to internal organisation structure, managerial needs and internal reporting system. “Airline transportation operations” comprises the Group’s passenger and cargo and mail operations. “Other segments” includes hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services. |
|
|
|
|
For the purposes of assessing segment performance and allocating resources between segments, the Group’s chief operating decision maker (“CODM”) monitors the results, assets and liabilities attributable to each reportable segment based on financial results prepared under the People’s Republic of China Accounting Standards for Business Enterprises (“PRC GAAP”). As such, the amount of each material reconciling item from the Group’s reportable segment profit before taxation, assets and liabilities, which arises from different accounting policies are set out in Note 4(d). | |
|
|
|
|
|
|
|
Inter-segment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.
Information regarding the Group’s reportable segments as provided to the Group’s CODM for the purposes of resource allocation and assessment of segment performance is set out below.
The segment results of the Group for the year ended 31 December 2019 are as follows: |
|
|
|
Airline transportation |
|
|
Other |
|
|
| ||||||||||||
|
|
|
operations RMB million |
|
|
segments RMB million |
|
|
Elimination RMB million |
|
|
Unallocated* RMB million |
|
|
Total RMB million |
| |||||
| Disaggregated by timing of revenue recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Point in time |
|
|
2,996 |
|
|
|
2,747 |
|
|
|
(2,401 | ) |
|
|
– |
|
|
|
3,342 |
|
| Over time |
|
|
149,799 |
|
|
|
2,785 |
|
|
|
(1,604 | ) |
|
|
– |
|
|
|
150,980 |
|
| Revenue from external customers |
|
|
152,591 |
|
|
|
1,731 |
|
|
|
– |
|
|
|
– |
|
|
|
154,322 |
|
| Inter-segment sales |
|
|
204 |
|
|
|
3,801 |
|
|
|
(4,005 | ) |
|
|
– |
|
|
|
– |
|
| Reportable segment revenue |
|
|
152,795 |
|
|
|
5,532 |
|
|
|
(4,005 | ) |
|
|
– |
|
|
|
154,322 |
|
| Reportable segment profit before taxation |
|
|
3,020 |
|
|
|
558 |
|
|
|
2 |
|
|
|
490 |
|
|
|
4,070 |
|
| Reportable segment profit after taxation |
|
|
2,224 |
|
|
|
446 |
|
|
|
2 |
|
|
|
423 |
|
|
|
3,095 |
|
| Other segment information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax |
|
|
796 |
|
|
|
112 |
|
|
|
– |
|
|
|
67 |
|
|
|
975 |
|
| Interest income |
|
|
64 |
|
|
|
41 |
|
|
|
(31 | ) |
|
|
– |
|
|
|
74 |
|
| Interest expense |
|
|
5,833 |
|
|
|
43 |
|
|
|
(31 | ) |
|
|
– |
|
|
|
5,845 |
|
| Depreciation and amortisation |
|
|
24,256 |
|
|
|
354 |
|
|
|
– |
|
|
|
– |
|
|
|
24,610 |
|
| Impairment loss |
|
|
38 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
38 |
|
| Credit loss |
|
|
11 |
|
|
|
2 |
|
|
|
– |
|
|
|
– |
|
|
|
13 |
|
| Share of associates’ results |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(178 | ) |
|
|
(178 | ) |
| Share of joint ventures’ results |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
365 |
|
|
|
365 |
|
| Remeasurement of the originally held equity interests in a joint venture |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
13 |
|
|
|
13 |
|
| Change in fair value of financial assets/ liabilities |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
265 |
|
|
|
265 |
|
| Non-current assets additions during the year# |
|
|
44,851 |
|
|
|
739 |
|
|
|
– |
|
|
|
– |
|
|
|
45,590 |
|
|
|
|
|
The segment results of the Group for the year ended 31 December 2018 are as follows: |
|
|
|
Airline transportation operations RMB million |
|
|
Other segments RMB million |
|
|
Elimination RMB million |
|
|
Unallocated* RMB million |
|
|
Total RMB million |
| |||||
|
|
|
(Note) |
|
|
(Note) |
|
|
(Note) |
|
|
(Note) |
|
|
(Note) |
| |||||
| Disaggregated by timing of revenue recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Point in time |
|
|
2,532 |
|
|
|
1,975 |
|
|
|
(1,596 | ) |
|
|
– |
|
|
|
2,911 |
|
| Over time |
|
|
139,671 |
|
|
|
3,822 |
|
|
|
(2,781 | ) |
|
|
– |
|
|
|
140,712 |
|
| Revenue from external customers |
|
|
141,968 |
|
|
|
1,655 |
|
|
|
– |
|
|
|
– |
|
|
|
143,623 |
|
| Inter-segment sales |
|
|
235 |
|
|
|
4,142 |
|
|
|
(4,377 | ) |
|
|
– |
|
|
|
– |
|
| Reportable segment revenue |
|
|
142,203 |
|
|
|
5,797 |
|
|
|
(4,377 | ) |
|
|
– |
|
|
|
143,623 |
|
| Reportable segment profit before taxation |
|
|
3,448 |
|
|
|
604 |
|
|
|
(60 | ) |
|
|
495 |
|
|
|
4,487 |
|
| Reportable segment profit after taxation |
|
|
2,567 |
|
|
|
457 |
|
|
|
(60 | ) |
|
|
492 |
|
|
|
3,456 |
|
| Other segment information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax |
|
|
881 |
|
|
|
147 |
|
|
|
– |
|
|
|
3 |
|
|
|
1,031 |
|
| Interest income |
|
|
107 |
|
|
|
18 |
|
|
|
– |
|
|
|
– |
|
|
|
125 |
|
| Interest expense |
|
|
3,054 |
|
|
|
148 |
|
|
|
– |
|
|
|
– |
|
|
|
3,202 |
|
| Depreciation and amortisation |
|
|
14,084 |
|
|
|
282 |
|
|
|
– |
|
|
|
– |
|
|
|
14,366 |
|
| Impairment loss |
|
|
12 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
12 |
|
| Credit loss |
|
|
2 |
|
|
|
1 |
|
|
|
– |
|
|
|
– |
|
|
|
3 |
|
| Share of associates’ results |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
263 |
|
|
|
263 |
|
| Share of joint ventures’ results |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
200 |
|
|
|
200 |
|
| Fair value movement of financial instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12 |
|
|
|
12 |
|
| Non-current assets additions during the year# |
|
|
37,155 |
|
|
|
406 |
|
|
|
– |
|
|
|
– |
|
|
|
37,561 |
|
|
|
Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 3. |
|
|
|
|
The segment assets and liabilities of the Group as at 31 December 2019 and 31 December 2018 are as follows: |
|
|
|
Airline transportation operations RMB million |
|
|
Other segments RMB million |
|
|
Elimination RMB million |
|
|
Unallocated* RMB million |
|
|
Total RMB million |
| |||||
| As at 31 December 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reportable segment assets |
|
|
295,439 |
|
|
|
7,048 |
|
|
|
(3,662 | ) |
|
|
(7,821 | ) |
|
|
306,646 |
|
| Reportable segment liabilities |
|
|
230,738 |
|
|
|
2,458 |
|
|
|
(3,604 | ) |
|
|
– |
|
|
|
229,592 |
|
| As at 31 December 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reportable segment assets (Note) |
|
|
234,755 |
|
|
|
6,479 |
|
|
|
(1,829 | ) |
|
|
7,250 |
|
|
|
246,655 |
|
| Reportable segment liabilities (Note) |
|
|
167,806 |
|
|
|
2,391 |
|
|
|
(1,769 | ) |
|
|
44 |
|
|
|
168,472 |
|
|
|
Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 3. |
|
|
|
|
|
|
* |
Unallocated assets primarily include interest in associates and joint ventures, derivative financial assets and equity securities. Unallocated results primarily include the share of results of associates and joint ventures, dividend income from equity securities, and the fair value movement of financial instruments recognised through profit or loss. |
|
|
|
|
|
|
# |
The additions of non-current assets do not include interest in associates and joint ventures, other equity instrument investments, other non-current financial assets, derivative financial assets and deferred tax assets. |
|
|
(c) | Geographic information |
|
|
|
|
|
|
|
The Group’s business segments operate in three main geographical areas, even though they are managed on a worldwide basis.
The Group’s revenues by geographical segment are analysed based on the following criteria: |
|
|
(1) | Traffic revenue from services of both origin and destination within the PRC (excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan (“Hong Kong, Macau and Taiwan”)), is classified as domestic revenue. Traffic revenue with origin and destination among PRC, Hong Kong, Macau and Taiwan is classified as Hong Kong, Macau and Taiwan revenue; while that with origin from or destination to other overseas markets is classified as international revenue. |
|
|
|
|
(2) | Revenues from commission income, hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services are classified on the basis of where the services are performed. |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
| Domestic |
|
|
110,112 |
|
|
|
103,287 |
|
| International |
|
|
41,651 |
|
|
|
37,773 |
|
| Hong Kong, Macau and Taiwan |
|
|
2,559 |
|
|
|
2,563 |
|
|
|
|
|
154,322 |
|
|
|
143,623 |
|
|
|
|
The major revenue earning assets of the Group are its aircraft fleet which is registered in the PRC and is deployed across its worldwide route network. Majority of the Group’s other assets are located in the PRC. CODM considers that there is no suitable basis for allocating such assets and related liabilities to geographical locations. Accordingly, geographical segment assets and liabilities are not disclosed. |
|
|
(d) | Reconciliation of reportable segment profit before income tax, assets and liabilities to the consolidated figures in the financial information |
|
|
2019 RMB million |
|
|
2018 RMB million |
| |||
| Profit before income tax |
|
|
|
|
|
|
|
|
| Reportable segment profit before taxation |
|
|
4,070 |
|
|
|
4,487 |
|
| Capitalisation of exchange difference of specific loans |
|
|
(16 | ) |
|
|
(124 | ) |
| Government grants |
|
|
1 |
|
|
|
1 |
|
| Consolidated profit before income tax |
|
|
4,055 |
|
|
|
4,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December |
|
|
31 December |
| ||
|
|
2019 RMB million |
|
|
2018 RMB million |
| |||
| Assets |
|
|
|
|
|
| ||
| Reportable segment assets |
|
|
306,646 |
|
|
|
246,655 |
|
| Capitalisation of exchange difference of specific loans |
|
|
56 |
|
|
|
72 |
|
| Government grants |
|
|
(6 | ) |
|
|
(7 | ) |
| Adjustments arising from business combinations under common control |
|
|
237 |
|
|
|
237 |
|
| Others |
|
|
(5 | ) |
|
|
(8 | ) |
| Consolidated total assets |
|
|
306,928 |
|
|
|
246,949 |
|
|
|
|
|
|
31 December |
|
|
31 December |
| ||
|
|
2019 RMB million |
|
|
2018 RMB million |
| |||
| Liabilities |
|
|
|
|
|
| ||
| Reportable segment liabilities |
|
|
229,592 |
|
|
|
168,472 |
|
| Others |
|
|
7 |
|
|
|
8 |
|
| Consolidated total liabilities |
|
|
229,599 |
|
|
|
168,480 |
|
| 5 |
FLIGHT OPERATION EXPENSES |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
|
|
|
|
|
|
(Note) |
| ||
| Jet fuel costs |
|
|
42,814 |
|
|
|
42,922 |
|
| Flight personnel payroll and welfare |
|
|
12,709 |
|
|
|
11,467 |
|
| Air catering expenses |
|
|
3,975 |
|
|
|
3,734 |
|
| Civil Aviation Development Fund |
|
|
2,332 |
|
|
|
2,940 |
|
| Aircraft operating lease charges |
|
|
1,412 |
|
|
|
8,726 |
|
| Training expenses |
|
|
1,142 |
|
|
|
894 |
|
| Aircraft insurance |
|
|
192 |
|
|
|
163 |
|
| Others |
|
|
5,990 |
|
|
|
5,370 |
|
|
|
|
|
70,566 |
|
|
|
76,216 |
|
|
|
Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
|
Under this approach, comparative information is not restated. See Note 3. |
| 6 | DEPRECIATION AND AMORTISATION | |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
|
|
|
|
|
|
(Note) |
| ||
| Depreciation of property, plant and equipment |
|
|
|
|
|
| ||
| – Owned assets |
|
|
9,029 |
|
|
|
8,193 |
|
| – Finance leases |
|
|
– |
|
|
|
5,776 |
|
| Depreciation of right-of-use assets |
|
|
15,263 |
|
|
|
– |
|
| Other amortisation |
|
|
328 |
|
|
|
339 |
|
|
|
|
|
24,620 |
|
|
|
14,308 |
|
|
|
Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
|
Under this approach, comparative information is not restated. See Note 3. |
|
|
| 7 | OTHER NET INCOME |
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
|
|
|
|
|
|
|
| ||
| Government grants |
|
|
4,129 |
|
|
|
4,348 |
|
| Gains on disposal of property, plant and equipment and construction in progress |
|
|
|
|
|
|
|
|
| – Aircraft and spare engines and relating construction in progress |
|
|
34 |
|
|
|
584 |
|
| – Other property, plant and equipment |
|
|
106 |
|
|
|
18 |
|
| Penalty income |
|
|
273 |
|
|
|
216 |
|
| Others |
|
|
582 |
|
|
|
272 |
|
|
|
|
|
5,124 |
|
|
|
5,438 |
|
| 8 | INTEREST EXPENSE |
|
|
|
2019 |
|
|
2018 |
| ||
|
|
RMB million |
|
|
RMB million |
| |||
|
|
|
|
|
(Note) |
| |||
|
|
|
|
|
|
|
| ||
| Interest on borrowings |
|
|
1,840 |
|
|
|
1,891 |
|
| Interest relating to leases liabilities |
|
|
5,302 |
|
|
|
– |
|
| Interest relating to obligations under finance leases |
|
|
– |
|
|
|
2,409 |
|
| Total interest expense on financial liabilities not at fair value through profit or loss |
|
|
7,142 |
|
|
|
4,300 |
|
| Less: interest expense capitalised |
|
|
(1,279 | ) |
|
|
(1,085 | ) |
|
|
|
|
5,863 |
|
|
|
3,215 |
|
|
|
|
|
|
|
|
|
|
|
| Interest rate swaps: cash flow hedge, reclassified from equity |
|
|
(18 | ) |
|
|
(13 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,845 |
|
|
|
3,202 |
|
|
|
Note: |
The Group has initially applied IFRS 16 at 1 January 2019 using the modified retrospective approach. |
|
|
|
Under this approach, comparative information is not restated. See Note 3. |
| 9 | EXCHANGE LOSS, NET |
|
|
|
|
|
Net exchange loss of RMB1,477 million was recorded in 2019, as compared with a net exchange loss of RMB1,853 million in 2018, primarily attributable to the exchange difference arising from the translation of borrowing balances and leases liabilities dominated in USD resulting from the depreciation of RMB against USD. |
|
|
| 10 |
INCOME TAX |
|
|
(a) | Income tax expense |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
| PRC income tax |
|
|
|
|
|
|
|
|
| – Provision for the year |
|
|
1,611 |
|
|
|
962 |
|
| – Under/(over)-provision in prior year |
|
|
10 |
|
|
|
(27 | ) |
|
|
|
|
1,621 |
|
|
|
935 |
|
| Deferred tax |
|
|
|
|
|
|
|
|
| Origination and reversal of temporary differences |
|
|
(650 | ) |
|
|
65 |
|
| Income tax expense |
|
|
971 |
|
|
|
1,000 |
|
|
|
In respect of a majority of the Group’s airlines operation outside mainland China, the Group has either obtained exemptions from overseas taxation pursuant to the bilateral aviation agreements between the overseas governments and the PRC government, or has sustained tax losses in those overseas jurisdictions. Accordingly, no provision for overseas income tax has been made for overseas airlines operation in the current and prior years. | |
|
|
|
|
|
|
|
For the year of 2019, the Company and its branches are liable to income tax rates ranging from 15% to 25% (2018: 15% to 25%), and the subsidiaries of the Company are liable to income tax rates ranging from 15% to 30% (2018: 15% to 30%). China Southern West Australian Flying College Pty Ltd., one of the subsidiaries of the Company, is located in Australia and is subject to income tax at 30%. Certain subsidiaries of the Company are located in Hong Kong and are subject to income tax at 16.5%. |
|
|
|
|
|
|
(b) | Reconciliation between actual tax expense and calculated tax based on accounting profit at applicable tax rates |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
|
|
|
|
|
|
|
|
|
|
| Profit before income tax |
|
|
4,055 |
|
|
|
4,364 |
|
| Notional tax on profit before taxation, calculated at the rates applicable to profits in the tax jurisdictions concerned |
|
|
964 |
|
|
|
1,089 |
|
| Adjustments for tax effect of: Non-deductible expenses |
|
|
18 |
|
|
|
23 |
|
| Share of results of associates and joint ventures and other non-taxable income |
|
|
(50 | ) |
|
|
(121 | ) |
| Unused tax losses and deductible temporary differences for which no deferred tax assets were recognised |
|
|
62 |
|
|
|
73 |
|
| Utilisation of unused tax losses and deductible temporary differences for which no deferred tax assets were recognised in prior years |
|
|
(3 | ) |
|
|
(17 | ) |
| Under/(over)-provision in prior year |
|
|
10 |
|
|
|
(27 | ) |
| Super deduction of research and development expenses |
|
|
(30 | ) |
|
|
(20 | ) |
| Tax expense |
|
|
971 |
|
|
|
1,000 |
|
| 11 | DIVIDENDS |
|
|
|
|
|
The directors did not propose any final dividend in respect of the year ended 31 December 2019 (2018: RMB0.05 per share (inclusive of applicable tax), amounting to a total dividend of RMB613 million). |
| 12 | EARNINGS PER SHARE |
|
|
|
|
|
The calculation of basic earnings per share for the year ended 31 December 2019 is based on the profit attributable to equity shareholders of the Company of RMB2,640 million (2018: RMB2,895 million) and the weighted average of 12,267,172,286 shares in issue during the year (2018: 10,718,916,979 shares).
The amounts of diluted earnings per share are the same as basic earnings per share as there were no dilutive potential ordinary shares in existence for the years ended 31 December 2019 and 2018. |
|
|
| 13 |
CONSTRUCTION IN PROGRESS |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
| Advance payment for aircraft and flight equipment |
|
|
30,919 |
|
|
|
31,680 |
|
| Others |
|
|
8,303 |
|
|
|
6,111 |
|
|
|
|
|
39,222 |
|
|
|
37,791 |
|
| 14 | RIGHT-OF-USE ASSETS |
|
|
|
Aircraft and engines |
|
|
Land use rights |
|
|
Buildings |
|
|
Others |
|
|
Total |
| |||||
|
|
|
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| |||||
| Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| At 1 January 2019 |
|
|
187,991 |
|
|
|
3,671 |
|
|
|
1,300 |
|
|
|
138 |
|
|
|
193,100 |
|
| Additions |
|
|
20,609 |
|
|
|
225 |
|
|
|
1,490 |
|
|
|
51 |
|
|
|
22,375 |
|
| Transferred from construction in progress |
|
|
10,202 |
|
|
|
110 |
|
|
|
– |
|
|
|
203 |
|
|
|
10,515 |
|
| Reclassification with investment properties |
|
|
– |
|
|
|
16 |
|
|
|
– |
|
|
|
– |
|
|
|
16 |
|
| Transferred to property, plant and equipment on exercise of purchase option |
|
|
(2,641 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(2,641 | ) |
| Disposals |
|
|
(780 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(780 | ) |
| At 31 December 2019 |
|
|
215,381 |
|
|
|
4,022 |
|
|
|
2,790 |
|
|
|
392 |
|
|
|
222,585 |
|
| Accumulated amortisation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2019 |
|
|
55,048 |
|
|
|
701 |
|
|
|
– |
|
|
|
– |
|
|
|
55,749 |
|
| Amortisation charge for the year |
|
|
14,485 |
|
|
|
107 |
|
|
|
637 |
|
|
|
34 |
|
|
|
15,263 |
|
| Reclassification with investment properties |
|
|
– |
|
|
|
5 |
|
|
|
– |
|
|
|
– |
|
|
|
5 |
|
| Transferred to property, plant and equipment on exercise of purchase option |
|
|
(874 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(874 | ) |
| Disposals |
|
|
(769 | ) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(769 | ) |
| At 31 December 2019 |
|
|
67,890 |
|
|
|
813 |
|
|
|
637 |
|
|
|
34 |
|
|
|
69,374 |
|
| Net book value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2019 |
|
|
147,491 |
|
|
|
3,209 |
|
|
|
2,153 |
|
|
|
358 |
|
|
|
153,211 |
|
| At 1 January 2019 |
|
|
132,943 |
|
|
|
2,970 |
|
|
|
1,300 |
|
|
|
138 |
|
|
|
137,351 |
|
|
|
| 15 | TRADE RECEIVABLES |
|
|
|
|
|
Credit terms granted by the Group to sales agents and other customers generally range from one to three months. Ageing analysis of trade receivables based on transaction date is set out below: |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
| Within 1 month |
|
|
2,308 |
|
|
|
2,325 |
|
| More than 1 month but less than 3 months |
|
|
555 |
|
|
|
492 |
|
| More than 3 months but less than 12 months |
|
|
297 |
|
|
|
90 |
|
| More than 1 year |
|
|
28 |
|
|
|
30 |
|
|
|
|
|
3,188 |
|
|
|
2,937 |
|
| Less: loss allowance |
|
|
(36 | ) |
|
|
(36 | ) |
|
|
|
|
3,152 |
|
|
|
2,901 |
|
| 16 |
OTHER RECEIVABLES |
|
|
|
2019 RMB million |
|
|
2018 RMB million |
| ||
| VAT recoverable |
|
|
5,214 |
|
|
|
5,342 |
|
| Government grants receivables |
|
|
1,275 |
|
|
|
982 |
|
| Rebate receivables on aircraft acquisitions |
|
|
616 |
|
|
|
686 |
|
| Other deposits |
|
|
203 |
|
|
|
426 |
|
| Others |
|
|
557 |
|
|
|
584 |
|
|
|
|
|
7,865 |
|
|
|
8,020 |
|
| Less: loss allowance |
|
|
(5 | ) |
|
|
(5 | ) |
|
|
|
|
7,860 |
|
|
|
8,015 |
|
|
|
| 17 | LEASE LIABILITIES |
|
|
|
|
|
The following table shows the remaining contractual maturities of the Group’s lease liabilities at the end of the current reporting period and at the date of transition to IFRS 16: |
|
|
|
31 December 2019 |
|
|
1 January 2019 (Note) |
| ||||||||||
|
|
|
Present value of the minimum lease payments |
|
|
Total minimum lease payments |
|
|
Present value of the minimum lease payments |
|
|
Total minimum lease payments |
| ||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Within 1 year |
|
|
19,998 |
|
|
|
25,404 |
|
|
|
16,921 |
|
|
|
21,507 |
|
| After 1 year but within 2 years |
|
|
19,249 |
|
|
|
23,860 |
|
|
|
16,018 |
|
|
|
20,033 |
|
| After 2 years but within 5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| years |
|
|
54,155 |
|
|
|
63,003 |
|
|
|
50,709 |
|
|
|
59,111 |
|
| After 5 years |
|
|
40,672 |
|
|
|
44,814 |
|
|
|
36,729 |
|
|
|
40,307 |
|
|
|
|
|
114,076 |
|
|
|
131,677 |
|
|
|
103,456 |
|
|
|
119,451 |
|
|
|
|
|
134,074 |
|
|
|
157,081 |
|
|
|
120,377 |
|
|
|
140,958 |
|
| Less: total future interest expenses |
|
|
|
|
|
|
(23,007 | ) |
|
|
|
|
|
|
(20,581 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Present value of lease liabilities |
|
|
|
|
|
|
134,074 |
|
|
|
|
|
|
|
120,377 |
|
|
|
Note: |
The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at 1 January 2019 to recognise lease liabilities relating to leases which were previously classified as operating leases under IAS 17. These liabilities have been aggregated with the brought forward balances relating to leases previously classified as finance leases. Comparative information as at 31 December 2018 has not been restated and relates solely to leases previously classified as finance leases. Further details on the impact of the transition to IFRS 16 are set out in Note 3. |
| 18 | TRADE PAYABLES |
|
|
|
|
|
Ageing analysis of trade payables based on transaction date is set out below: |
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
|
|
|
|
|
|
|
| ||
| Within 1 month |
|
|
563 |
|
|
|
406 |
|
| More than 1 month but less than 3 months |
|
|
506 |
|
|
|
829 |
|
| More than 3 months but less than 6 months |
|
|
450 |
|
|
|
476 |
|
| More than 6 months but less than 1 year |
|
|
568 |
|
|
|
423 |
|
| More than 1 year |
|
|
230 |
|
|
|
175 |
|
|
|
|
|
2,317 |
|
|
|
2,309 |
|
|
|
| B. | PREPARED IN ACCORDANCE WITH THE PRC GAAP |
|
|
|
|
|
CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2019 |
|
|
2019 |
|
2018 |
|||||
|
|
RMB million |
|
RMB million |
| ||||
| Revenue |
|
154,322 |
|
143,623 |
| |||
| Less: Operating costs |
|
135,668 |
|
128,613 |
| |||
| Taxes and surcharges |
|
348 |
|
272 |
| |||
| Selling and distribution expenses |
|
7,923 |
|
7,086 |
| |||
| General and administrative expenses |
|
4,040 |
|
3,736 |
| |||
| Research and development expenses |
|
352 |
|
221 |
| |||
| Finance expenses |
|
7,460 |
|
5,108 |
| |||
| Including: Interest expenses |
|
5,845 |
|
3,202 |
| |||
| Interest income |
|
74 |
|
125 |
| |||
| Add: Other income |
|
4,084 |
|
4,320 |
| |||
| Investment income |
|
225 |
|
483 |
| |||
| Including: Income from investment in associates and |
| |||||||
| joint ventures |
|
200 |
|
463 |
| |||
| Gain on fair value movement |
|
265 |
|
12 |
| |||
| Credit loss |
|
-13 |
|
-3 |
| |||
| Impairment loss |
|
-38 |
|
-12 |
| |||
| Gain on assets disposals |
|
148 |
|
622 |
||||
| Operating profit |
|
3,202 |
|
4,009 |
| |||
| Add: Non-operating income |
|
924 |
|
849 |
| |||
| Less: Non-operating expenses |
|
56 |
|
371 |
| |||
| Profit before income tax |
|
4,070 |
|
4,487 |
| |||
| Less: Income tax |
|
975 |
|
1,031 |
| |||
| Net profit for the year |
|
3,095 |
|
3,456 |
| (1) Net profit classified by continuity of operations: |
| |||||||
| 1. Net profit from continuing operations |
|
3,095 |
|
3,456 |
| |||
| 2. Net profit from discontinued operations |
|
– |
|
– |
||||
| (2) Net profit classified by ownership: |
| |||||||
| 1. Shareholders of the Company |
|
2,651 |
|
2,983 |
| |||
| 2. Non-controlling interests |
|
444 |
|
473 |
||||
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2019
|
|
|
31 December |
|
|
31 December |
| ||
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Assets Current assets |
|
|
|
|
|
| ||
| Cash at bank and on hand |
|
|
|
|
|
| ||
|
|
|
|
1,994 |
|
|
|
| |
|
|
|
|
|
|
|
|
7,308 |
|
| Financial assets held for trading |
|
|
– |
|
|
|
440 |
|
| Derivative financial assets |
|
|
218 |
|
|
|
– |
|
| Bills receivable |
|
|
1 |
|
|
|
2 |
|
| Accounts receivable |
|
|
3,197 |
|
|
|
2,927 |
|
| Prepayments |
|
|
1,591 |
|
|
|
3,695 |
|
| Other receivables |
|
|
2,358 |
|
|
|
2,338 |
|
| Inventories |
|
|
1,893 |
|
|
|
1,699 |
|
| Assets held for sale |
|
|
– |
|
|
|
224 |
|
| Other current assets |
|
|
5,486 |
|
|
|
5,439 |
|
| Total current assets |
|
|
16,738 |
|
|
|
24,072 |
|
| Non-current assets |
|
|
|
|
|
|
|
|
| Long-term equity investments |
|
|
6,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
5,992 |
|
| Other equity instrument investment |
|
|
1,049 |
|
|
|
1,080 |
|
| Other non-current financial assets |
|
|
106 |
|
|
|
103 |
|
| Investment properties |
|
|
304 |
|
|
|
499 |
|
| Fixed assets |
|
|
84,374 |
|
|
|
170,039 |
|
| Construction in progress |
|
|
39,344 |
|
|
|
37,881 |
|
| Right-of-use assets |
|
|
149,941 |
|
|
|
– |
|
| Intangible assets |
|
|
3,709 |
|
|
|
3,349 |
|
| Aircraft lease deposits |
|
|
457 |
|
|
|
594 |
|
| Long-term deferred expenses |
|
|
652 |
|
|
|
732 |
|
| Derivative financial assets |
|
|
3 |
|
|
|
75 |
|
| Deferred tax assets |
|
|
2,697 |
|
|
|
1,574 |
|
| Other non-current assets |
|
|
827 |
|
|
|
665 |
|
| Total non-current assets |
|
|
289,908 |
|
|
|
222,583 |
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
306,646 |
|
|
|
246,655 |
|
|
|
|
|
|
31 December |
|
|
31 December |
| ||
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Liabilities and shareholders’ equity Current liabilities |
|
|
|
|
|
| ||
| Short-term bank borrowings |
|
|
|
|
|
| ||
|
|
|
|
12,250 |
|
|
|
| |
|
|
|
|
|
|
|
|
20,739 |
|
| Derivative financial liabilities |
|
|
– |
|
|
|
44 |
|
| Bills payable |
|
|
– |
|
|
|
150 |
|
| Accounts payable |
|
|
13,797 |
|
|
|
13,921 |
|
| Contract liabilities |
|
|
1,610 |
|
|
|
1,693 |
|
| Sales in advance of carriage |
|
|
10,303 |
|
|
|
8,594 |
|
| Employee benefits payable |
|
|
3,976 |
|
|
|
3,214 |
|
| Taxes payable |
|
|
760 |
|
|
|
554 |
|
| Other payables |
|
|
7,503 |
|
|
|
7,221 |
|
| Non-current liabilities due within one year |
|
|
22,794 |
|
|
|
23,557 |
|
| Other current liabilities |
|
|
22,497 |
|
|
|
4,000 |
|
| Total current liabilities |
|
|
95,490 |
|
|
|
83,687 |
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
| Long-term bank borrowings |
|
|
2,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,422 |
|
| Bonds payable |
|
|
11,246 |
|
|
|
6,254 |
|
| Lease liabilities |
|
|
114,076 |
|
|
|
– |
|
| Obligations under finance leases |
|
|
– |
|
|
|
62,666 |
|
| Provision for major overhauls |
|
|
3,542 |
|
|
|
2,831 |
|
| Provision for early retirement benefits |
|
|
– |
|
|
|
2 |
|
| Deferred benefits and gains |
|
|
833 |
|
|
|
906 |
|
| Deferred tax liabilities |
|
|
232 |
|
|
|
668 |
|
| Other non-current liabilities |
|
|
1,782 |
|
|
|
2,036 |
|
| Total non-current liabilities |
|
|
134,102 |
|
|
|
84,785 |
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
229,592 |
|
|
|
168,472 |
|
|
|
|
|
|
31 December 2019 |
|
|
31 December 2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Shareholders’ equity Share capital |
|
|
12,267 |
|
|
|
12,267 |
|
| Capital reserve |
|
|
25,623 |
|
|
|
25,589 |
|
| Other comprehensive income |
|
|
406 |
|
|
|
494 |
|
| Surplus reserve |
|
|
2,579 |
|
|
|
2,670 |
|
| Retained earnings |
|
|
22,988 |
|
|
|
23,983 |
|
| Total equity attributable to equity shareholders of the Company |
|
|
63,863 |
|
|
|
65,003 |
|
| Non-controlling interests |
|
|
13,191 |
|
|
|
13,180 |
|
| Total equity |
|
|
77,054 |
|
|
|
78,183 |
|
| Total liabilities and equity |
|
|
306,646 |
|
|
|
246,655 |
|
|
|
| C. | RECONCILIATION OF DIFFERENCES IN FINANCIAL STATEMENTS PREPARED UNDER PRC GAAP AND IFRSs |
|
|
|
|
|
Difference in profit and equity attributable to equity shareholders of the Company under consolidated financial information in financial statements between IFRSs and PRC GAAP |
|
|
|
Profit attributable to |
|
|
Equity attributable to |
| ||||||||||
|
|
|
equity shareholders |
|
|
equity shareholders |
| ||||||||||
|
|
|
of the Company |
|
|
of the Company |
| ||||||||||
|
|
|
|
|
|
|
|
|
31 December |
|
|
31 December |
| ||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
| ||||
|
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
|
|
RMB million |
| ||||
| Amounts under PRC GAAP |
|
|
2,651 |
|
|
|
2,983 |
|
|
|
63,863 |
|
|
|
65,003 |
|
| Adjustments: Government grants |
|
|
1 |
|
|
|
1 |
|
|
|
(6 | ) |
|
|
(7 | ) |
| Capitalisation of exchange difference of specific loans |
|
|
(16 | ) |
|
|
(124 | ) |
|
|
56 |
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustment arising from the Company’s business combination under common control |
|
|
– |
|
|
|
– |
|
|
|
237 |
|
|
|
237 |
|
| Tax impact of the above adjustments |
|
|
4 |
|
|
|
31 |
|
|
|
(12 | ) |
|
|
(16 | ) |
| Effect of the above adjustments on non- controlling interests |
|
|
– |
|
|
|
4 |
|
|
|
(32 | ) |
|
|
(32 | ) |
| Amounts under IFRSs |
|
|
2,640 |
|
|
|
2,895 |
|
|
|
64,106 |
|
|
|
65,257 |
|
|
|
BUSINESS REVIEW
In 2019, the downward pressure on the world economy increased due to frequent international trade frictions, intensified global financial volatility, geopolitical risks and other factors. The World Economic Situation and Prospects 2020 issued by the United Nations shows that the global economic growth rate decreased to 2.3% in 2019, the lowest level over the past 10 years. Among which, the U.S. economy grew by 2.3% and the economy in the Euro Zone grew by 1.1%, representing a year-on-year decrease of
0.6 percentage point and 0.8 percentage point, respectively. Economic growth rate in emerging markets and developing economies was 3.5%, representing a year-on-year decrease of 0.8 percentage point.
In 2019, under the general guideline of seeking progress while maintaining stability, China took structural reform on the supply side as the main line, promoted high-quality development and did well in the “six-stability” of stabilizing employment, finance, foreign trade, foreign capital, investment and expectations, and maintained a medium-to-high-speed and healthy economic development. GDP increased by 6.1% year-on-year, among which, consumer spending contributed 57.8%.
Faced with rising risks and challenges at home and abroad, the Group accelerated the reform of its system and mechanism, made great efforts to modernise its governance system and capability, and adhered to safe development, high-quality development, innovative development, cooperative development, shared development and green development. During the reporting period, with the joint efforts of the management and all staff, the Group’s safety quality was improved continuously, passenger traffic volume reached a new record high, and brand image was greatly enhanced. In 2019, the Company handled approximately 152 million passengers, ranking first among China’s airlines for 41 consecutive years. The Company was enrolled in the “2019 China Brand Powerhouse Ceremony Model Among 100 Brands” issued by China Central Radio and Television Station, won the “Asian Service Award” issued by Asian Network for Quality (ANQ) and the “Golden Phoenix Award” issued by SINA.com, and was awarded “2019 China’s Best Airline Company” by Business Traveller.
| 1. | Safety Operation |
|
|
|
| During the reporting period, the Group started the construction of safety management, promoted the transformation of safety management to institutionalisation, systematisation and informationisation. Efforts were made to build a regular mechanism for work style and discipline, safety supervision measures were intensified, and management performance was further improved. During the reporting period, the Group achieved 2.951 million hours of safety flight, with an accumulated safe flight of 26.386 million hours. We have achieved 15,000 hours of general flight, secured aviation safety in 20 consecutive years and aviation security in 25 consecutive years, and continued to keep the best safety record among China’s airlines. | |
|
|
|
| During the reporting period, the Group further promoted the construction of integrated operation, and effectively improved the operation quality and efficiency. We improved the management mechanism, promoted unified and standardised management of operation standards, integrated operation services, and greatly enhanced the support capacity for comprehensive service. The flight on-time performance rate of the Company increased by 2.36 percentage points year-on-year, and the daily utilisation rate of aircraft increased by 0.23 hour year-on-year in 2019. |
|
|
| 2. | Network and Hub |
|
|
|
| During the reporting period, the Group started the construction of two comprehensive international hubs in Guangzhou and Beijing in accordance with the orientation of “One Headquarter, Two Hubs”. | |
|
|
|
| We have built the Beijing base with high efficiency and high quality. The CSA base have been put into use simultaneously with Beijing Daxing International Airport, successfully completing the first flight and the transition of the first 13 routes. We have worked out a hub construction plan and supporting airline network planning and marketing strategy in terms of Beijing Daxing International Airport, ensuring a high-quality start and development of the Beijing hub. According to the plan, upon finishing the transition by the end of March 2021, the Group’s market share in Beijing Daxing International Airport will reach about 43%, and it will be the largest main base airline in Beijing Daxing International Airport. | |
|
|
|
| We have continuously broadened the “Canton Route”, and promoted the coordinated development of the aviation market in Guangdong-Hong Kong-Macao Greater Bay Area, contributing to the construction of the world’s first-class bay area. During the reporting period, we have newly launched three routes including Guangzhou-Vienna, Guangzhou-Cebu and Guangzhou-Nagoya, with 66 international and regional routes in Guangzhou. We have served the construction of Shenzhen’s pilot demonstration zone, promoted the coordinated development of Guangzhou and Shenzhen markets, and newly launched route from Shenzhen to Tokyo Narita International Airport. We have given full play to the scale advantages of CSA network and introduced six “Bay Area Link” products, including CSA express line, off-site transfer and cross-city airport pickup/drop-off, making it easier and more comfortable for passengers to travel. In 2019, the number of passengers handled in Guangzhou hub increased by 6.3%, making the hub effect to emerge continuously. | |
|
|
|
| 3. | Marketing |
|
|
|
| During the reporting period, under the new market concept, the Group adhered to high-quality development and connotative development, and achieved results gradually. We emphasised the matching of transportation capacity and market, transportation capacity and freight rate, and strengthened revenue management. The Company continued to deepen and strengthen the reform in the field of marketing, promoted “tremendous income” management and conducted centralised control of core resources. It aimed at maximising the marginal contribution and continuously adjusted and optimised the route network structure. It focused on the domestic market and performed steady international market development and the profitability of international routes continued to improve. |
|
|
| We have further strengthened our customer base, given full play to our territorial advantages, vigorously expanding the Group’s customers and frequent flyer. During the year, 9.22 million new Sky Pearl members were added, increased by 62% year-on-year. The total number of Sky Pearl members reached 48.96 million, realising RMB51.7 billion of frequent flyer income, increased by 18.32% year-on-year. There were 3,243 new major customers, accounting for 13.65% of the Group’s revenue, increased by 1.9 percentage points year-on-year. We continued to enrich product shelves and introduced products such as self-service cabin upgrading and neighbour-free seats. During the year, the miscellaneous income increased significantly year-on-year. | |
|
|
|
| We focused on the high-end businesses, sought changes, adopted differentiated competitive strategies, and effectively enhanced the income from belly-hold. We integrated freight resources and took the lead in launching a mobile online sales platform in China. CSA Advanced-Class Express product , temperature controlled product and other high-end emerging businesses increased by 14% year-on-year. | |
|
|
|
| 4. | Cost Control |
|
|
|
| During the reporting period, the Group continued to strengthen cost control and fund management. The Group has deepened the transformation of its financial control system, set up a business financial center, and promoted cost control from the source. The Group has adopted various measures to reduce financing costs and continuously optimise the debt structure. The effect of refined financial management was increasingly apparent. | |
|
|
|
| We have strengthened cost controls on major items, with the fuel consumption per ton kilometer decreased by 3.95% year-on-year. We strengthened all kinds of fund control and the concentration of funds continued to increase. We vigorously reduced the balance of funds, actively expanded financing channels, reasonably matched the debt maturity structure, and increased direct debt financing. We flexibly used various direct financing tools such as ultra-short-term financing bills, medium-term notes and corporate bonds to reduce the Group’s financing costs. Measures such as hedging and optimising the US dollar debt stock were taken to hedge the exchange rate risk, greatly reducing the risk exposure and saving foreign exchange purchase cost of RMB50 million. | |
|
|
|
| 5. | External Cooperation |
|
|
|
| During the reporting period, the Group advocated the cooperation concept of open and sharing, as well as accelerated the construction of a new type of international cooperation relationship and an international business model in line with the actual situation of the Company. | |
|
|
|
|
|
| We have fully protected the rights and interests of passengers and launched “CZ Priority” service brand to ensure the members enjoy the original privileges and realise a smooth transition for leaving SkyTeam Alliance. We have deepened cooperation with mainstream airlines such as American Airlines, British Airways, Emirates and Qatar Airways. We have also continued to consolidate cooperation with member airlines of SkyTeam Alliance such as Air France-KLM and Delta Air Lines in an independent capacity. We have strengthened in-depth exchanges with international partners, absorbed management experience in operation, flight, transportation and service of world-class airlines, and steadily pushed forward internationalisation. | |
|
|
|
| Currently, the Company has cooperated with 28 domestic and foreign airlines such as American Airlines, British Airways, KLM Royal Dutch Airlines and Qantas Airways on 531 routes (including trunk routes and long-distance flight routes) for code-sharing. Xiamen Airlines Company Limited (“Xiamen Airlines”) has cooperated with 21 domestic and foreign airlines on 578 routes (including trunk routes and long-distance flight routes) for code-sharing, further expanding the sales channels and flight route network of the Group. | |
|
|
|
| 6. | Service Brand |
|
|
|
| During the reporting period, the Group fulfilled sincere service concept and systematically improved the whole process service experience of passengers. We have innovated the service mode and improved the service experience of delayed passengers regarding sales, service and information acquisition. We have implemented the requirement of “affinity and refinement”, introduced two-cabin “family service 360” products, expanded 195 fine “Kapok International” routes, and achieved full coverage of international long-haul routes and regional key routes. We promoted the baggage tracking program in an all-round way and became the first airline in Asia obtaining IATA baggage tracking compliance certification. We have implemented the upgrade of “China Southern e-Travel”, and the paperless self-service in the whole process has brought more convenient travel experience to passengers. In 2019, the proportion of non-counter check-in passengers reached 79.3%, ranking top among major domestic airlines. The overall satisfaction of passengers of the Company increased by 1.38% year-on-year. | |
|
|
|
| The Group strengthened the promotion of brand image overseas, ranking first in the overseas image communication index of central enterprises for two consecutive years. We actively participated in international exhibitions in key overseas markets, reaching more than 200,000 industry representatives and mainstream customers around the world and promoting the Company’s important products and services. We sponsored Sydney Festival and the Australian Football League (AFL), targeting more than 10 million Australian local TV audiences and gaining more than 9 million online exposure, and went deep among the international mainstream to promote our brand and international image. In the Top 50 Most Valuable Airline Brands 2019 released by Brand Finance, CSA ranked first among Chinese airlines. |
|
|
| 7. | Reform and Development |
|
|
|
| During the reporting period, the Group continuously intensified its reform efforts and consolidated its development foundation. We steadily pushed forward the “Double Hundred Action”, set up | |
|
|
|
| CSA Freight Logistics Co., Ltd. (中國南方航空貨運有限公司) and continued to improve the | |
|
|
|
| mixed-ownership reform plan for Southern Airlines General Aviation Co., Ltd.(南航通用航空有 限 公 司 ). We implemented a completely new salary system for employees and established a | |
|
|
|
| complete post management system, a total salary increase mechanism and an employee salary increase mechanism. We continued to deepen the market-oriented reform, continued to push forward the reform of the regional marketing system, and set up the European marketing center. We also continued to promote scientific and technological innovation and information construction, established the Department of Scientific and Technological Information & Process Management, and built up our core competitiveness. | |
|
|
|
| We revised and improved the Development Outline of Building World-class Air Transport Enterprises with High Quality, giving more prominence to quality, efficiency and performance. We formulated the Action Plan to Serve Guangdong-Hong Kong-Macao Greater Bay Area to promote the integrated development of Guangzhou-Shenzhen hubs. We strengthened the cooperation of “China Southern Alliance”, signed group customer settlement agreements with Xiamen Airlines and Sichuan Airlines Company Limited (the “Sichuan Airlines”), carried out route cooperation with Xiamen Airlines on 52 flight segments, and deepened marketing cooperation with Sichuan Airlines on 10 flight segments. | |
|
|
|
| 8. | Social Responsibility |
|
|
|
| The Group has always taken green development as one of its core principles. During the reporting period, we continued to improve the efficiency of aviation fuel usage and reduce greenhouse gas emissions through technological optimisation, management improvement and big data analysis. We participated in the formulation of global aviation oil data standards and provided China’s proposal for the formulation of global aviation data standards. We applied bio-aviation oil to carry out intercontinental flights for the first time, and promoted the world’s first 10,000-ton EU carbon quota and Guangdong carbon quota swap business. | |
|
|
|
| We actively served the society. Taking the advantages of the aviation business and considering the actual conditions, we helped the local people get rid of poverty and strive for a relatively comfortable life. We opened 102 routes along “The Belt and Road” by the end of the reporting period, actively getting involved into overseas communities, and helping the countries along “The Belt and Road” to achieve connectivity in facilities, trade and culture. We actively carried out special flights, voluntary public welfare and other undertakings, giving full play to our own resources and expertise to benefit the society. |
|
|
OPERATING DATA SUMMARY
The following table sets forth certain financial information and operating data by geographic regions:
|
|
|
For the year ended |
|
|
Increase/ |
| ||||||
|
|
|
31 December |
|
|
(decrease) |
| ||||||
|
|
|
|
2019 |
|
|
|
2018 |
|
|
% |
| |
| Traffic Revenue passenger kilometers (RPK) (million) |
|
|
|
|
|
|
|
|
|
|
| |
| Domestic |
|
|
195,239.18 |
|
|
|
178,972.96 |
|
|
|
9.09 |
|
| Hong Kong, Macau and Taiwan |
|
|
3,258.71 |
|
|
|
3,304.83 |
|
|
|
(1.40 | ) |
| International |
|
|
86,422.92 |
|
|
|
76,916.01 |
|
|
|
12.36 |
|
| Total: |
|
|
284,920.82 |
|
|
|
259,193.80 |
|
|
|
9.93 |
|
| Revenue tonne kilometers (RTK) (million) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
18,897.97 |
|
|
|
17,437.56 |
|
|
|
8.38 |
|
| Hong Kong, Macau and Taiwan |
|
|
312.80 |
|
|
|
315.39 |
|
|
|
(0.82 | ) |
| International |
|
|
13,414.05 |
|
|
|
12,580.72 |
|
|
|
6.62 |
|
| Total: |
|
|
32,624.82 |
|
|
|
30,333.67 |
|
|
|
7.55 |
|
| RTK – Passenger (million) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
17,182.13 |
|
|
|
15,764.81 |
|
|
|
8.99 |
|
| Hong Kong, Macau and Taiwan |
|
|
286.62 |
|
|
|
290.36 |
|
|
|
(1.29 | ) |
| International |
|
|
7,573.52 |
|
|
|
6,745.45 |
|
|
|
12.28 |
|
| Total: |
|
|
25,042.27 |
|
|
|
22,800.62 |
|
|
|
9.83 |
|
| RTK – Cargo and mail (million) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
1,715.84 |
|
|
|
1,672.75 |
|
|
|
2.58 |
|
| Hong Kong, Macau and Taiwan |
|
|
26.18 |
|
|
|
25.03 |
|
|
|
4.59 |
|
| International |
|
|
5,840.53 |
|
|
|
5,835.27 |
|
|
|
0.09 |
|
| Total: |
|
|
7,582.55 |
|
|
|
7,533.05 |
|
|
|
0.66 |
|
| Passengers carried (thousand): Domestic |
|
|
128,706.50 |
|
|
|
119,494.01 |
|
|
|
7.71 |
|
| Hong Kong, Macau and Taiwan |
|
|
2,480.54 |
|
|
|
2,527.08 |
|
|
|
(1.84 | ) |
| International |
|
|
20,445.12 |
|
|
|
17,863.96 |
|
|
|
14.45 |
|
| Total: |
|
|
151,632.16 |
|
|
|
139,885.04 |
|
|
|
8.40 |
|
|
|
|
|
|
For the year ended |
|
|
Increase/ |
| ||||||
|
|
|
31 December |
|
|
(decrease) |
| ||||||
|
|
|
2019 |
|
|
2018 |
|
|
% |
| |||
| Cargo and mail carried (thousand tonnes) |
|
|
|
|
|
|
|
|
| |||
| Domestic |
|
|
1,052.13 |
|
|
|
1,043.91 |
|
|
|
0.79 |
|
| Hong Kong, Macau and Taiwan |
|
|
23.27 |
|
|
|
21.85 |
|
|
|
6.50 |
|
| International |
|
|
688.16 |
|
|
|
666.52 |
|
|
|
3.25 |
|
| Total: |
|
|
1,763.56 |
|
|
|
1,732.28 |
|
|
|
1.81 |
|
| Capacity |
|
|
|
|
|
|
|
|
|
|
|
|
| Available seat kilometres (ASKs) (million): |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
235,216.49 |
|
|
|
216,160.94 |
|
|
|
8.82 |
|
| Hong Kong, Macau and Taiwan |
|
|
4,367.53 |
|
|
|
4,383.59 |
|
|
|
(0.37 | ) |
| International |
|
|
104,477.84 |
|
|
|
93,876.41 |
|
|
|
11.29 |
|
| Total: |
|
|
344,061.86 |
|
|
|
314,420.95 |
|
|
|
9.43 |
|
| Available tonne kilometres (ATKs) (million): |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
26,803.84 |
|
|
|
24,549.52 |
|
|
|
9.18 |
|
| Hong Kong, Macau and Taiwan |
|
|
506.71 |
|
|
|
503.53 |
|
|
|
0.63 |
|
| International |
|
|
19,123.06 |
|
|
|
17,674.93 |
|
|
|
8.19 |
|
| Total: |
|
|
46,433.61 |
|
|
|
42,727.99 |
|
|
|
8.67 |
|
| Available tonne kilometres (ATKs) – |
|
|
|
|
|
|
|
|
|
|
|
|
| Passenger Traffic (million) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
21,169.48 |
|
|
|
19,454.49 |
|
|
|
8.82 |
|
| Hong Kong, Macau and Taiwan |
|
|
393.08 |
|
|
|
394.52 |
|
|
|
(0.37 | ) |
| International |
|
|
9,403.01 |
|
|
|
8,448.88 |
|
|
|
11.29 |
|
| Total: |
|
|
30,965.57 |
|
|
|
28,297.89 |
|
|
|
9.43 |
|
| Available tonne kilometres (ATKs) – Cargo |
|
|
|
|
|
|
|
|
|
|
|
|
| and mail (million) Domestic |
|
|
5,634.36 |
|
|
|
5,095.03 |
|
|
|
10.59 |
|
| Hong Kong, Macau and Taiwan |
|
|
113.64 |
|
|
|
109.01 |
|
|
|
4.25 |
|
| International |
|
|
9,720.05 |
|
|
|
9,226.06 |
|
|
|
5.35 |
|
| Total: |
|
|
15,468.05 |
|
|
|
14,430.10 |
|
|
|
7.19 |
|
|
|
|
|
|
For the year ended 31 December |
|
|
Increase/ (decrease) Percentage |
|
|
|
| |||
|
|
|
2019 |
|
|
2018 |
|
|
point |
| |||
| Load factor Passenger load factor (RPK/ASK) (%): |
|
|
|
|
|
|
|
|
| |||
| Domestic |
|
|
83.00 |
|
|
|
82.80 |
|
|
|
0.20 |
|
| Hong Kong, Macau and Taiwan |
|
|
74.61 |
|
|
|
75.39 |
|
|
|
(0.78 | ) |
| International |
|
|
82.72 |
|
|
|
81.93 |
|
|
|
0.79 |
|
| Overall: |
|
|
82.81 |
|
|
|
82.44 |
|
|
|
0.37 |
|
| Total load factor (RTK/ATK) (%): |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
70.50 |
|
|
|
71.03 |
|
|
|
(0.53 | ) |
| Hong Kong, Macau and Taiwan |
|
|
61.73 |
|
|
|
62.63 |
|
|
|
(0.90 | ) |
| International |
|
|
70.15 |
|
|
|
71.18 |
|
|
|
(1.03 | ) |
| Overall: |
|
|
70.26 |
|
|
|
70.99 |
|
|
|
(0.73 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended |
|
|
|
|
|
|
Increase/ |
| ||
|
|
|
31 December |
|
|
|
|
|
|
(decrease) |
| ||
|
|
|
2019 |
|
|
2018 |
|
|
% |
| |||
| Yield (including fuel surcharges) Yield per RPK (RMB): |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
0.52 |
|
|
|
0.54 |
|
|
|
(3.70 | ) |
| Hong Kong, Macau and Taiwan |
|
|
0.75 |
|
|
|
0.74 |
|
|
|
1.35 |
|
| International |
|
|
0.39 |
|
|
|
0.39 |
|
|
|
– |
|
| Overall: |
|
|
0.49 |
|
|
|
0.49 |
|
|
|
– |
|
|
|
|
|
|
For the year ended |
|
|
Increase/ |
| ||||||
|
|
|
31 December |
|
|
(decrease) |
| ||||||
|
|
|
2019 |
|
|
2018 |
|
|
% |
| |||
| Yield per RFTK (RMB): |
|
|
|
|
|
|
|
|
| |||
| Domestic |
|
|
1.14 |
|
|
|
1.17 |
|
|
|
(2.56 | ) |
| Hong Kong, Macau and Taiwan |
|
|
4.67 |
|
|
|
4.67 |
|
|
|
– |
|
| International |
|
|
1.29 |
|
|
|
1.36 |
|
|
|
(5.15 | ) |
| Overall: |
|
|
1.27 |
|
|
|
1.33 |
|
|
|
(4.51 | ) |
| Yield per RTK (RMB): |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
5.50 |
|
|
|
5.60 |
|
|
|
(1.79 | ) |
| Hong Kong, Macau and Taiwan |
|
|
8.18 |
|
|
|
8.13 |
|
|
|
0.62 |
|
| International |
|
|
3.10 |
|
|
|
3.00 |
|
|
|
3.33 |
|
| Overall: |
|
|
4.54 |
|
|
|
4.55 |
|
|
|
(0.22 | ) |
| Cost Operating cost per ATK (RMB) |
|
|
3.20 |
|
|
|
3.28 |
|
|
|
(2.44 | ) |
| Flight Volume Kilometers flown (million) |
|
|
1,875.52 |
|
|
|
1,762.92 |
|
|
|
6.39 |
|
| Hours flown (thousand) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
2,249.15 |
|
|
|
2,107.10 |
|
|
|
6.74 |
|
| Hong Kong, Macau and Taiwan |
|
|
40.77 |
|
|
|
41.13 |
|
|
|
(0.88 | ) |
| International |
|
|
661.45 |
|
|
|
624.35 |
|
|
|
5.94 |
|
| Total: |
|
|
2,951.37 |
|
|
|
2,772.58 |
|
|
|
6.45 |
|
| Number of flights (thousand) |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
963.42 |
|
|
|
923.67 |
|
|
|
4.30 |
|
| Hong Kong, Macau and Taiwan |
|
|
19.07 |
|
|
|
19.44 |
|
|
|
(1.90 | ) |
| International |
|
|
135.39 |
|
|
|
126.32 |
|
|
|
7.18 |
|
| Total: |
|
|
1,117.88 |
|
|
|
1,069.43 |
|
|
|
4.53 |
|
Note: Discrepancies between the column sum and the total sum are due to rounding of numbers.
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
| I. | FINANCIAL PERFORMANCE |
|
|
|
|
|
Part of the financial information presented in this section is derived from the Group’s audited consolidated financial statements that have been prepared in accordance with IFRSs. |
|
|
|
|
|
The profit attributable to equity shareholders of the Company of RMB2,640 million was recorded in 2019 as compared to the profit attributable to equity shareholders of the Company of RMB2,895 million in 2018. The Group’s operating revenue increased by RMB10,699 million or 7.45% from RMB143,623 million in 2018 to RMB154,322 million in 2019. Passenger load factor increased by 0.37 percentage point from 82.44% in 2018 to 82.81% in 2019. Passenger yield (in passenger revenue per RPK) is RMB0.49 in 2018 and 2019. Average yield (in traffic revenue per RTK) decreased by 0.22% from RMB4.55 in 2018 to RMB4.54 in 2019. Operating expenses increased by RMB8,366 million or 5.97% from RMB140,242 million in 2018 to RMB148,608 million in 2019. As a result of increase of operating revenue netted off by the increase of operating expenses, operating profit of RMB10,838 million was recorded in 2019 as compared to operating profit of RMB8,819 million in 2018, increased by RMB2,019 million. |
|
|
|
| II. |
OPERATING REVENUE |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
| |||||||||||
|
|
|
|
Operating |
|
|
Operating |
|
|
Changes in |
| |||||||||||
|
|
|
|
revenue RMB million |
|
|
Percentage % |
|
|
revenue RMB million |
|
|
Percentage % |
|
|
revenue % |
| |||||
| Traffic revenue |
|
|
|
148,117 |
|
|
|
95.98 |
|
|
|
138,064 |
|
|
|
96.13 |
|
|
|
7.28 |
|
| Including: Passenger revenue |
|
|
|
138,502 |
|
|
|
|
|
|
|
128,038 |
|
|
|
|
|
|
|
8.17 |
|
| –Domestic |
|
|
|
101,955 |
|
|
|
|
|
|
|
95,773 |
|
|
|
|
|
|
|
6.45 |
|
| –HongKong,MacauandTaiwan |
|
|
|
2,437 |
|
|
|
|
|
|
|
2,446 |
|
|
|
|
|
|
|
(0.37 | ) |
| –International |
|
|
|
34,110 |
|
|
|
|
|
|
|
29,819 |
|
|
|
|
|
|
|
14.39 |
|
| Cargo and mail revenue |
|
|
|
9,615 |
|
|
|
|
|
|
|
10,026 |
|
|
|
|
|
|
|
(4.10 | ) |
| Other operating revenue |
|
|
|
6,205 |
|
|
|
4.02 |
|
|
|
5,559 |
|
|
|
3.87 |
|
|
|
11.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mainly including: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commission income |
|
|
|
2,952 |
|
|
|
|
|
|
|
2,619 |
|
|
|
|
|
|
|
12.71 |
|
| Ground services income |
|
|
|
409 |
|
|
|
|
|
|
|
429 |
|
|
|
|
|
|
|
(4.66 | ) |
| General aviation income |
|
|
|
564 |
|
|
|
|
|
|
|
476 |
|
|
|
|
|
|
|
18.49 |
|
| Hotel and tour operation income |
|
|
|
712 |
|
|
|
|
|
|
|
676 |
|
|
|
|
|
|
|
5.33 |
|
| Total operating revenue |
|
|
|
154,322 |
|
|
|
100.00 |
|
|
|
143,623 |
|
|
|
100.00 |
|
|
|
7.45 |
|
| Less: fuel surcharge income |
|
|
|
(7,479 | ) |
|
|
|
|
|
|
(7,454 | ) |
|
|
|
|
|
|
0.34 |
|
| Total operating revenue excluding fuel surcharge |
|
|
|
146,843 |
|
|
|
|
|
|
|
136,169 |
|
|
|
|
|
|
|
7.84 |
|
|
|
| Substantially all of the Group’s operating revenue is attributable to airlines transport operations. Traffic revenues accounted for 96.13% and 95.98% of the total operating revenue in 2018 and 2019, respectively. Passenger revenue and cargo and mail revenue accounted for 93.51% and 6.49%, respectively of the total traffic revenue in 2019. During the reporting period, the Group’s total traffic revenue was RMB148,117 million, representing an increase of RMB10,053 million or 7.28% from prior year, mainly due to the increase in transport capacity and traffic volume. The other operating revenue is mainly derived from commission income, hotel and tour operation income, general aviation income and ground services income. | |
|
|
|
| The increase in operating revenue was primarily due to 8.17% increase in passenger revenue from RMB128,038 million in 2018 to RMB138,502 million in 2019. The total number of passengers carried increased by 8.40% to 151.63 million passengers in 2019. RPKs increased by 9.93% from 259,194 million in 2018 to 284,921 million in 2019, primarily as a result of the increase in number of passengers carried. | |
|
|
|
| Domestic passenger revenue, which accounted for 73.61% of the total passenger revenue in 2019, increased by 6.45% from RMB95,773 million in 2018 to RMB101,955 million in 2019. Domestic passenger traffic in RPKs increased by 9.09%, while passenger capacity in ASKs increased by 8.82%, resulting in an increase in passenger load factor by 0.20 percentage point from 82.80% in 2018 to 83.00% in 2019. Domestic passenger yield per RPK decreased by 3.70% from RMB0.54 in 2018 to RMB0.52 in 2019. | |
|
|
|
| Hong Kong, Macau and Taiwan passenger revenue, which accounted for 1.76% of total passenger revenue, decreased by 0.37% from RMB2,446 million in 2018 to RMB2,437 million in 2019. For Hong Kong, Macau and Taiwan flights, passenger traffic in RPKs decreased by 1.40%, while passenger capacity in ASKs decreased by 0.37%, resulting in a decrease in passenger load factor by 0.78 percentage point from 75.39% in 2018 to 74.61% in 2019. Passenger yield per RPK increased from RMB0.74 in 2018 to RMB0.75 in 2019. | |
|
|
|
| International passenger revenue, which accounted for 24.63% of total passenger revenue, increased by 14.39% from RMB29,819 million in 2018 to RMB34,110 million in 2019. For international flights, passenger traffic in RPKs increased by 12.36%, while passenger capacity in ASKs increased by 11.29%, resulting in a 0.79 percentage points increase in passenger load factor from 81.93% in 2018 to 82.72% in 2019. Passenger yield per RPK is RMB0.39 in 2018 and 2019. | |
|
|
|
| Cargo and mail revenue, which accounted for 6.49% of the Group’s total traffic revenue and 6.23% of total operating revenue, decreased by 4.10% from RMB10,026 million in 2018 to RMB9,615 million in 2019. The decrease was mainly attributable to the decrease in yield per RFTK. | |
|
|
|
| Other operating revenue increased by 11.62% from RMB5,559 million in 2018 to RMB6,205 million in 2019. The increase was primarily due to the increase in commission income and general aviation income. |
|
|
| III. | OPERATING EXPENSES |
|
|
|
| Total operating expenses in 2019 amounted to RMB148,608 million, representing an increase of 5.97% or RMB8,366 million comparing to that of 2018, mainly due to the increase in depreciation and amortisation expenses as impacted by the initial adoption of IFRS 16 in 2019. Total operating expenses as a percentage of total operating revenue decreased from 97.65% in 2018 to 96.30% in 2019. |
|
|
|
2019 |
|
|
2018 |
| ||||||||||
| Operating expenses |
|
RMB million |
|
|
Percentage (%) |
|
|
RMB million |
|
|
Percentage (%) |
| ||||
| Flight operation expenses |
|
|
70,566 |
|
|
|
47.48 |
|
|
|
76,216 |
|
|
|
54.35 |
|
| Mainly including: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jet fuel costs |
|
|
42,814 |
|
|
|
|
|
|
|
42,922 |
|
|
|
|
|
| Aircraft operating lease charges |
|
|
1,412 |
|
|
|
|
|
|
|
8,726 |
|
|
|
|
|
| Flight personnel payroll and welfare |
|
|
12,709 |
|
|
|
|
|
|
|
11,467 |
|
|
|
|
|
| Maintenance expenses |
|
|
13,057 |
|
|
|
8.79 |
|
|
|
12,704 |
|
|
|
9.06 |
|
| Aircraft and traffic servicing expenses |
|
|
26,591 |
|
|
|
17.89 |
|
|
|
24,379 |
|
|
|
17.38 |
|
| Promotion and selling expenses |
|
|
7,755 |
|
|
|
5.22 |
|
|
|
7,036 |
|
|
|
5.02 |
|
| General and administrative expenses |
|
|
4,073 |
|
|
|
2.74 |
|
|
|
3,770 |
|
|
|
2.69 |
|
| Depreciation and amortisation |
|
|
24,620 |
|
|
|
16.57 |
|
|
|
14,308 |
|
|
|
10.20 |
|
| Impairment losses on property, plant and equipment |
|
|
18 |
|
|
|
0.01 |
|
|
|
– |
|
|
|
– |
|
| Others |
|
|
1,928 |
|
|
|
1.30 |
|
|
|
1,829 |
|
|
|
1.30 |
|
| Total operating expenses |
|
|
148,608 |
|
|
|
100.00 |
|
|
|
140,242 |
|
|
|
100.00 |
|
| Flight operation expenses, which accounted for 47.48% of total operating expenses, decreased by 7.41% from RMB76,216 million in 2018 to RMB70,566 million in 2019, mainly due to the decrease in operating lease charges as impacted by the initial adoption of IFRS 16 in 2019. | |
|
|
|
| Maintenance expenses, which accounted for 8.79% of total operating expenses, increased by 2.78% from RMB12,704 million in 2018 to RMB13,057 million in 2019, along with the fleet expansion. | |
|
|
|
| Aircraft and transportation service expenses, which accounted for 17.89% of total operating expenses, increased by 9.07% from RMB24,379 million in 2018 to RMB26,591 million in 2019. The increase was primarily due to a 10.50% increase in landing and navigation fees from RMB15,980 million in 2018 to RMB17,658 million in 2019, resulted from the increase in the numbers of flights. |
|
|
| Promotion and selling expenses, which accounted for 5.22% of total operating expenses, increased by 10.22% from RMB7,036 million in 2018 to RMB7,755 million in 2019, mainly due to the increase in ticket office expenses and other promotion and selling expenses. | |
|
|
|
| General and administrative expenses, which accounted for 2.74% of the total operating expenses, increased by 8.04% from RMB3,770 million in 2018 to RMB4,073 million in 2019, mainly due to the increase in general corporate expenses. | |
|
|
|
| Depreciation and amortisation, which accounted for 16.57% of the total operating expenses, increased by 72.07% from RMB14,308 million in 2018 to RMB24,620 million in 2019, mainly due to the initial adoption of IFRS 16 in 2019, based on which, depreciation expenses over the right-of-use assets were recognised. | |
|
|
|
| IV. | OPERATING PROFIT |
|
|
|
| Operating profit of RMB10,838 million was recorded in 2019 (2018: RMB8,819 million). The increase in operating profit was mainly due to the net effect of increase in operating revenue by RMB10,699 million or 7.45%, as a result of the increase in transport capacity and traffic volume; and the increase in operating expenses by RMB8,366 million or 5.97%, due to the increase in depreciation and amortisation expenses. | |
|
|
|
| V. | OTHER NET INCOME |
|
|
|
| Other net income decreased by RMB314 million from RMB5,438 million in 2018 to RMB5,124 million in 2019, mainly due to the decrease in gains on disposal of property, plant and equipment and construction in progress. | |
|
|
|
| VI. | INCOME TAX |
|
|
|
| Income tax expense of RMB971 million was recorded in 2019, decreased by RMB29 million from RMB1,000 million in 2018. | |
|
|
|
| VII. | LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE |
|
|
|
| As at 31 December 2019, the Group’s current liabilities exceeded its current assets by RMB78,752 million. For the year ended 31 December 2019, the Group recorded a net cash inflow from operating activities of RMB31,175 million, a net cash outflow from investing activities of RMB14,427 million and a net cash outflow from financing activities of RMB21,833 million, which in total resulted in a net decrease in cash and cash equivalents of RMB5,085 million. The decrease in cash and cash equivalents was benefited from the Group’s strict control on financing costs and efforts made to reduce the high levels of both saving and borrowing. |
|
|
| The Group is dependent on its ability to maintain adequate cash inflow from operations, its ability to maintain existing external financing, and its ability to obtain new external financing to meet its debt obligations as they fall due and to meet its committed future capital expenditures. The Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. As at 31 December 2019, the Group had banking facilities with several PRC banks and financial institutions for providing bank financing up to approximately RMB308,343 million (31 December 2018: RMB243,910 million), of which approximately RMB251,165 million (31 December 2018: RMB193,871 million) was unutilised. The Directors of the Company believe that sufficient financing will be available to the Group when and where needed. | |
|
|
|
|
|
The analyses of the Group’s interest-bearing liabilities are as follows: |
Composition of interest-bearing liabilities
|
|
31 December |
|
|
31 December |
| |||
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Obligations under finance leases |
|
– |
|
|
|
72,221 |
| |
| Lease liabilities |
|
|
134,074 |
|
|
|
– |
|
| Borrowings |
|
|
51,180 |
|
|
|
54,417 |
|
| Fixed rate interest-bearing liabilities |
|
|
100,660 |
|
|
|
33,692 |
|
| Floating rate interest-bearing liabilities |
|
|
84,594 |
|
|
|
92,946 |
|
| Analysis of interest-bearing liabilities by currency |
|
|
|
|
|
|
|
|
|
|
|
31 December 2019 |
|
|
31 December 2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| USD |
|
|
70,260 |
|
|
|
33,677 |
|
| RMB |
|
|
109,946 |
|
|
|
87,333 |
|
| Others |
|
|
5,048 |
|
|
|
5,628 |
|
| Total |
|
|
185,254 |
|
|
|
126,638 |
|
|
|
Maturity analysis of interest-bearing liabilities
|
|
|
31 December |
|
|
31 December |
| ||
|
|
|
2019 |
|
|
2018 |
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Within 1 year |
|
|
57,541 |
|
|
|
48,296 |
|
| After 1 year but within 2 years |
|
|
23,022 |
|
|
|
17,329 |
|
| After 2 years but within 5 years |
|
|
62,544 |
|
|
|
38,289 |
|
| After 5 years |
|
|
42,147 |
|
|
|
22,724 |
|
| Total borrowings |
|
|
185,254 |
|
|
|
126,638 |
|
|
|
|
31 December 2019 |
|
|
31 December 2018 |
|
|
Change |
| |||
| Total liabilities (RMB million) |
|
|
229,599 |
|
|
|
168,480 |
|
|
|
36.28 | % |
| Total assets (RMB million) |
|
|
306,928 |
|
|
|
246,949 |
|
|
|
24.29 | % |
| Debt ratio |
|
|
74.81 | % |
|
|
68.22 | % |
|
Increase by 6.59 |
| |
|
|
|
|
|
|
|
|
|
|
|
percentage points |
| |
| The Group monitors capital on the basis of debt ratio, which is calculated as total liabilities divided by total assets. The debt ratio increased by 6.59 percentage points, mainly due to the recognition of right-of-use assets and lease liabilities as impacted by the initial adoption of IFRS 16 at 1 January 2019. | |
|
|
|
| VIII. | MAJOR CHARGE ON ASSETS |
|
|
|
|
|
As at 31 December 2019, certain aircraft of the Group with an aggregate carrying value of approximately RMB339 million (31 December 2018: RMB373 million) were mortgaged under certain loans. |
|
|
| IX. |
COMMITMENTS AND CONTINGENCIES Commitments |
|
|
|
|
|
As at 31 December 2019, the Group had capital commitments (excluding investment commitment) of approximately RMB86,246 million (31 December 2018: RMB103,485 million). Of such amounts, RMB71,224 million (31 December 2018: RMB82,199 million) related to the acquisition of aircraft and related flight equipment and RMB15,022 million (31 December 2018: RMB21,286 million) for other projects. |
|
|
|
|
|
The Group had investment commitments as follows: |
|
|
|
31 December |
|
|
|
| ||
|
|
|
2019 |
|
|
|
| ||
|
|
|
RMB million |
|
|
RMB million |
| ||
| Authorised and contracted for |
|
|
|
|
|
| ||
| Share of capital commitments of a joint venture |
|
|
322 |
|
|
|
26 |
|
| Capital contributions for acquisition of non-controlling interests in a subsidiary |
|
|
232 |
|
|
|
|
|
| Capital contributions for acquisition of interest in a joint |
|
|
|
|
|
|
|
|
| venture |
|
|
– |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
554 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
| Authorised but not contracted for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share of capital commitments of a joint venture |
|
|
31 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
585 |
|
|
|
61 |
|
Contingent liabilities
(a) The Group entered into certain agreements with CSAH in prior years to acquire certain land use right and buildings from CSAH. The change of business registration of such land use right and buildings are still in progress. CSAH issued letters of commitment to the Company, committing to indemnify the Group against any claims from third parties to the Group, or any loss or damage in the Group’s operation activities due to lack adequate documentation of the certain properties and buildings, without recourse to the Group.
(b) The Company and its subsidiary, Xiamen Airlines, entered into agreements with certain pilot trainees and certain banks to provide guarantees on personal bank loans amounting to RMB696 million (31 December 2018: RMB696 million) that can be drawn by the pilot trainees to finance their respective flight training expenses. As at 31 December 2019, total personal bank loans of RMB275 million (31 December 2018: RMB318 million), under these guarantees, were drawn down from the banks. During the year, no payment has been made by the Group (2018: RMB1 million) due to the default of payments of certain pilot trainees.
SUBSEQUENT EVENTS
(a) On 30 October 2019, the Company entered into the A Share Subscription Agreement with CSAH, pursuant to which the Company is to issue not more than 2,453,434,457 (inclusive) new A Shares to CSAH (“the A Share Issuance”). The total funds to be raised from the A Share Issuance will be not more than RMB16,800 million (inclusive). In the meantime, the Company entered into the H Share Subscription Agreement with Nan Lung Holding Limited (a wholly-owned subsidiary of CSAH), pursuant to which the Company is to issue not more than 613,358,614 (inclusive) new H shares (“the H Share Issuance”). The total funds to be raised from the H Share Issuance will be not more than HKD3,500 million (inclusive). The consideration of A and H shares will be satisfied by cash. Both of the A Share Issuance and the H Share Issuance were approved by the Extraordinary General Meeting and the respective Class Meetings on 27 December 2019. The Company received the “Acceptance Notice of the Application for Administration Permission” issued by China Securities Regulatory Commission (“CSRC”) for the A Share Issuance and H share Issuance on 6 January 2020 and 11 February 2020, respectively. Up to the issuance date of these annual results, the A Share Issuance and H share Issuance are under review by CSRC.
|
|
(b) The COVID-19 outbreak (outbreak) since early 2020 has brought about uncertainties in the Group’s operating environment and has impacted the Group’s operations and financial position. The Group’s revenue tonne kilometers for the first two months of 2020 has decreased by 37% as compared to the same period of 2019. The Group estimates the outbreak will have an adverse impact on the Group’s business operation and operating revenue, which casts uncertainties in the Group’s operating environment. The Group has been closely monitoring the impact of the developments on the Group’s business and has put in place contingency measures. These contingency measures include: temporarily reducing the numbers of flights of certain routes, provisionally suspending certain domestic and international routes according to the travel restrictions of related countries and regions. Based on the Group’s actual performance in early 2020, contingent measures put in place and unutilised available banking facilities, etc., the Directors of the Company have carried out a review of the cash flow forecast of the Group for the eighteen months period after the balance sheet date. Based on such forecast, the Directors of the Company believe that adequate funding will be available for the working capital and capital expenditure requirements of the Group during that period. Up to the issuance date of these annual results, the outbreak hasn’t ended and the Group cannot reasonably estimate its impact on the business operation and financial performance. The Group will proactively keep contingency measures under review as the situation evolves.
CHANGE IN SHARE CAPITAL STRUCTURE
Unit: Share
|
|
31 December 2018 |
Percentage |
Increase/ (decrease) in 2019 |
|
31 December 2019 |
Percentage |
| ||||||||||||||||
| I. |
|
Shares subject to restrictions on sales |
|
Number of Shares |
|
(%) |
|
Number of Shares |
|
Number of Shares |
|
(%) |
| ||||||||||
| 1. |
|
RMB ordinary shares |
|
1,578,073,089 |
|
12.86 |
|
(1,088,870,431 |
) |
|
489,202,658 |
|
3.99 |
| |||||||||
| 2. |
|
Foreign listed shares |
|
600,925,925 |
|
4.90 |
|
– |
|
600,925,925 |
|
4.90 |
|||||||||||
|
|
Total |
|
2,178,999,014 |
|
17.76 |
|
(1,088,870,431 |
) |
|
1,090,128,583 |
|
8.89 |
| ||||||||||
| II. |
|
Shares not subject to restrictions on sales |
| ||||||||||||||||||||
| 1. |
|
RMB ordinary shares |
|
7,022,650,000 |
|
57.25 |
|
1,088,870,431 |
|
8,111,520,431 |
|
66.12 |
| ||||||||||
| 2. |
|
Foreign listed shares |
|
3,065,523,272 |
|
24.99 |
|
– |
|
3,065,523,272 |
|
24.99 |
|||||||||||
|
|
Total |
|
10,088,173,272 |
|
82.24 |
|
1,088,870,431 |
|
11,177,043,703 |
|
91.11 |
| |||||||||||
| III. |
|
Total number of shares |
|
12,267,172,286 |
|
100 |
|
– |
|
12,267,172,286 |
|
100 |
|||||||||||
|
|
PURCHASE, SALE OR REDEMPTION OF SHARES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any shares during the year ended 31 December 2019.
PRE-EMPTIVE RIGHTS
None of the articles of association of the Company provides for any pre-emptive rights requiring the Company to offer new shares to existing shareholders in proportion to their existing shareholdings when there is issuance of shares.
AUDIT AND RISK MANAGEMENT COMMITTEE
The audit and risk management committee of the Company has reviewed the audited consolidated financial statements of the Group for the year ended 31 December 2019.
COMPLIANCE WITH THE MODEL CODE
Having made specific enquiries with each of the Directors, the Directors have for the year ended 31 December 2019 complied with the Model Code (the “Model Code”) for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Rules (the “Listing Rules”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company has adopted a code of conduct which is no less stringent than the Model Code regarding securities transactions of the Directors.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
In the opinion of the Board, the Group has complied with the code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules for the year ended 31 December 2019.
|
|
DIVIDENDS
The profit distribution plan of the Company for the year 2019 was approved at the twelfth meeting of the eighth session of the Board of the Company. The Company distributed cash dividends of totally RMB1.622 billion in 2017 and 2018, accounting for more than 40% of the annual average distributable profits attributable to shareholders of the Company realized in 2017 to 2019, which is higher than the requirement stipulated under the relevant regulations for listed companies and the articles of association of the Company, that is “the cumulative profit distributed in cash in the last three years shall not be less than 30% of the annual average distributable profits realized by the Company in those three years”.
The Company’s non-public issuance of A shares and H shares, which was approved at the extraordinary general meeting and class meetings convened by the Company on 27 December 2019, is under review by the CSRC. According to the relevant regulations of the CSRC, securities cannot be issued before the completion of the implementation of profit distribution. As the distribution of cash dividends of the Company in the past three years complied with the regulations, in view of the strategic significance of the non-public issuance to the Company and in order to ensure the smooth progress of the project, after comprehensive consideration of the Company’s long term development and the interests of all shareholders of the Company, the Board did not recommend any payment of final cash dividend and conversion of capital reserve to share capital of the Company for the year ended 31 December 2019. The retained undistributed profits will be used to supplement the Company’s working capital to meet the development needs of the Company’s principal business activity.
2020 OUTLOOK
Looking forward to 2020, the world economy is still under deep adjustment following the international financial crisis, and the recovery of global economy remains fragile. At the same time, the accelerated global spread of the COVID-19 epidemic has disrupted economic activities in many countries, significantly affected global financial markets and threatened their economic prospects. The International Monetary Fund (IMF) expects the global economic to fall into recession in 2020 as a result of the epidemic, but recover in 2021.
China is in the crucial period of transforming development mode, optimizing economic structure and transforming growth momentum. Structural, institutional and periodic issues are intertwined. The “three period superimposed” effect continues to deepen and downward pressure on the economy increases. At the same time, the COVID-19 epidemic has also had some impact on China’s economy. Currently, China’s prevention and control measures have achieved positive results, and the most difficult and arduous stage has passed. The resumption of work and production of enterprises has been advanced in an orderly manner, and the economy returned to normal at a faster pace. The impact of the epidemic is short-term and generally controllable. The basic trend for China’s economy to seek progress while maintaining stability with long-term good prospects has not changed.
|
|
Faced with risks and challenges, the Group will persist in taking reform and innovation as the driving force, promote high-quality development, ensure a stable security situation, make every effort to improve quality and efficiency, and strive to build a world-class air transport enterprise with global competitiveness.
1. To prevent epidemic risks and ensure safe and stable operation.
We insist on putting the safety and health of passengers and employees first, and fully support the prevention and control of the epidemic by ensuring the safety and normality of flights. We have earnestly fulfilled our social responsibilities and actively engaged in the transportation of materials for anti-epidemic personnel and the work of ensuring the resumption of production and work. We actively respond to changes in market demand, timely adjust business strategy, and optimize the allocation of capacity. In addition, on the premise of effective prevention and control of the epidemic, the Group will strengthen the control of transport capacity, dig deep into market demand, closely track and analyze the market trends, and prepare for the recovery of the aviation market after the epidemic.
2. To put safety first and continue to improve safety quality.
We will speed up the construction of the security system and the upgrade of the information platform, and complete the seven major security systems of safety responsibility, rules and regulations manual, training and practice, process control, risk control, safety culture and scientific and technological innovation. We will consolidate infrastructure and improve the level of grass- roots safety control. We will further promote the discipline of style of work, strengthen supervision and assessment and sort out hidden dangers, strengthen the application of big data, promote hierarchical control, and embed risk prevention into the whole process of flight operation. In 2020, the Group will ensure its continuation in aviation safety as in past years.
3. To make every effort to improve quality and efficiency and enhance the profitability of the Company.
We will deepen the marketing reform, optimize the allocation of resources, and continuously deepen the matching of transportation capacity with the market, transportation capacity with freight rate and revenue management. We will maximize the marginal contribution as the goal, improve the matching degree of fleet planning and network planning, promote the accurate matching of aircraft types and routes, enhance revenue control efforts, and improve the revenue control capability and level. We will strengthen the customer base in an all-round way, value the Group’s customer development and regular customer development, and deepen the integration of marketing and service. We will enhance the management of new routes, optimize the input of transport capacity, and continuously improve the management level of international routes; strengthen sales cooperation with banks, business travel agencies, etc. and exchange of members, improve the drainage capability of our main businesses, and promote the initial formation of the China Southern Airlines business travel ecosystem.
|
|
We will take full advantage of belly-hold load factor, establish a passenger and cargo network linkage mechanism, optimize flight scheduling, and strengthen network integrated marketing. We will develop online freight service, expand high-end and cross-border express delivery services, expand the volume of emerging services, transforming into modern logistics service providers.
4. To deepen the construction of integrated operation and continue to improve the operation quality.
We will improve the centralised operation and control capability, unify the “GOC” operation standards, strengthen information and intelligent support, and give full play to the scale and network advantages of large-scale fleet and multiple bases. We will continue to carry out projects to increase flight punctuality rates, implement fine operation, precise control and lean flight, and ensure the flight punctuality rates in the leading position in the industry. We will also tap into the potential for creating operational value, make solid efforts to tap into the potential of performance and industry load, manage aviation fuel, optimize air routes, and make flight decisions and carry out other measures. We will establish an accounting model for creating operational support system value to ensure that available fuel consumption per ton kilometer continues to decline.
5. To build a first-class brand service system based on “affinity and refinement”.
We will start the “integrated service” work. Following the advanced international standards, and highlighting the characteristics of CSA, the Group will focus on air, ground, online and offline products and services, and comprehensively improve service quality. We will resolve disadvantages, and deeply improve services such as hub, flight delay, meals, luggage, ticketing, on- board hardware maintenance and environmental cleaning. We will create outstanding advantages, focus on the needs of tourists, optimize and upgrade the whole process of service to enhance our reputation. We will gradually realize data collection and analysis for the whole process of service and build a refined service control mode by means of informationisation.
6. To build the layout of double hubs and accelerate the strategic implementation.
We will ensure the high-quality development of the Beijing hub and focus on the orderly airport transfer of flights and our operation in the two airports. We will improve the control mechanism, strictly implement the responsibility assignment, and give full play to the advantages of Beijing hub facing the north of the Yangtze River, Japan, South Korea, Europe and America. We will strengthen coordination and cooperation, and strive for all-out policies such as flight schedule resources and replacement of traffic rights; revitalize idle resources at the initial stage of operation and actively explore the third-party market.
|
|
We will continue to increase investment in Guangzhou hub, enhance the market share of domestic trunk routes, and consolidate the hub’s leading position; seize the strategic opportunity, focus on the planning of Guangdong-Hong Kong-Macao Greater Bay Area, and promote the integration of markets, products, services and networks in the region. The Company shall give full play to the advantages of Guangzhou hub facing the south of Yangtze River and Oceania, Southeast Asia and South Asia, continue to forge the ” Canton Route” and further improve the capacity concentration and operation capacity of Guangzhou hub.
7. To enhance financial management and continue to enhance the level of cost control.
We will do our best to promote the integration of industry and financial resources, strictly control the costs of aviation fuel, take-off and landing, maintenance and sales, and continue to create cost advantages. We will strengthen strategic cost control, strictly formulate investment plans, improve the project reserve management system, and create more value by using existing resources. We will strengthen capital management, properly arrange financing strategies, and make full use of internal and external capital markets. We will enhance risk control, build a balanced and stable debt management system, and strengthen risk control over exchange rate, interest rate and oil price.
8. To accelerate the reform and development, and enhance the Company’s development potential.
We will firmly set up the concept of the rule of law and accelerate the modernization of corporate governance system and governance capability. We will optimize the fleet structure and dispose of old and high-energy-consuming aircraft or surrender of tenancy. We will deepen the institutional reform and the construction of incentive mechanism, and implement full-scale market-oriented accounting. We will continue to promote the Company’s intelligent construction, open up every link from marketing, operation to service, and establish an intelligent system. We will also continue to strengthen bilateral and multilateral international cooperation, deepen cooperation with major international airlines, and further establish a partnership circle around the world.
|
|
PUBLICATION OF ANNUAL REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY
The 2019 annual report of the Company, which contains consolidated financial statements for the year ended 31 December 2019, with an unmodified auditor’s report, and all other information required under Appendix 16 to the Listing Rules will be despatched to the shareholders of the Company and published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.csair. com) in due course.
|
|
|
|
|
|
|
By order of the Board China Southern Airlines Company Limited Xie Bing Company Secretary |
|
|
|
|
Guangzhou, the People’s Republic of China
30 March 2020
As at the date of this announcement, the Directors include Wang Chang Shun, Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.
|
|