Hong Kong, 22 September 2005 – Air China Limited (“Air China” or the “Company”) (HKEX: 753; LSE: AIRC) today announced the completion of issuance of RMB3 billion corporate bonds (the “Bonds”) on 16 September 2005. 

          The 10-year Bonds will pay out interest on a yearly basis with the annual fixed rate of 4.50%.  The principal, together with the last coupon interest, will be paid out at maturity.  The Bonds receive an irrevocable and joint guarantee from the Agricultural Bank of China, Beijing Branch. The Bonds also obtain a AAA rating from The China Chengxin International Credit Rating Company Limited.

The Bonds are in book-entry form.  CITIC Securities Co., Ltd. was the leading underwriter for the issue while both China National Aviation Finance Co. and West China Securities Co., Ltd. acted as financial advisors.  The Bonds are under firm underwriting by the syndicate.

The issue period of the Bonds was set for 5 working days, during which legal and non-legal entities or persons within China (except those who are prohibited by the laws and regulations of the PRC) could subscribe through the distribution networks set up by the syndicate.  The Bonds were well received by investors during the early subscription period.   

The proceeds will be used to finance the purchase of the 10 A330-200 aircraft and 15 B787 aircraft. 

Air China has been growing rapidly over the past few years.  Benefiting from increasing operating income every year, the company enjoys an adequate cash flow and steadily increasing profitability.  The Company’s capital structure has also improved greatly after the restructuring and the IPO in 2004.  Thanks to the dedicated cooperation of the underwriting syndicate, the Bonds were oversubscribed (10 times) on the very first day of the subscription period.  This shows the strong confidence from the public for the  company’s future development.        

The bond issuance is another important direct financing activity accomplished by Air China since its IPO. It highlights the company’s compatibility of both capital operation and business operation, which are crucial for the harmonious development of the business. The bond issuance, together with the recent short-term commercial paper, provides a new platform for the Company to raise money.  The main features of this bond issuance are: First, a low interest rate (4.5%), the lowest in 3 years.  It helps lower finance costs and strengthen the Company’s debt structure.  Second, it is a fixed rate, free from interest increase. The 10-year term of the Bonds helps to lock the cost and protects against the risk of increasing interest rates.  Third, the Bonds will be listed and traded publicly. Air China will be the only listed company with stocks, bonds and short-term commercial paper simultaneously listed on a stock exchange and thus, the company brand value will be further enhanced.  Lastly, the proceeds from this new issue will enable the Company to finance its fleet expansion, and accelerate the build-up of the Beijing hub and strengthen its domestic and international routes network.  As the sole official carrier partner of the 2008 Beijing Olympics Games, the Company will endeavor to do its best with its increasing fleet.  The current bond issuance has not only improved the capacity of Air China, it has also enhanced its competitiveness and brand, helping Air China realize its strategic goal of being the most recognized airline by main stream passengers, the most profitable, the most valuable and the most globally competitive airline among all Chinese carriers.          

About Air China: