2026 Interim Report

Summary of Financial Information

Notes:

(1)        EBITDA represents earnings before finance income and finance costs, exchange gains/losses, income tax, share of profits or losses of associates and joint ventures, depreciation and amortization as computed under IFRS Accounting Standards.

(2)        EBITDAR represents EBITDA before deducting aircraft and engine lease expense as well as other lease expenses.

(3)        EBITDA and EBITDAR are non-IFRS measures employed by the management to monitor business performance and may not be comparable to similar measures presented by other companies.

(4)        The EBITDA for the Reporting Period represents earnings before finance income of RMB159 million, finance costs of RMB2,409 million, exchange gains of RMB652 million, income tax expense of RMB296 million, share of profits of associates and joint ventures of RMB1,532 million, depreciation and amortization of RMB15,806 million, adjusted from the loss for the period of RMB3,428 million computed under IFRS Accounting Standards. EBITDAR for the Reporting Period represents the above EBITDA before deducting aircraft and engine lease expenses of RMB604 million as well as other lease expenses of RMB318 million.

Summary of Operating Data

The following is the operating data summary of the Company, Shenzhen Airlines (including Kunming Airlines), Shandong Airlines, Beijing Airlines, Dalian Airlines, Air China Inner Mongolia and Air Macau.

Note:    Any discrepancies in the numerical figures shown in this report are due to rounding.

Development of Fleet

During the first half of 2026, the Group introduced a total of 17 aircraft, including 11 A320 series aircraft, four B737 series aircraft and two C919 aircraft; and phased out nine aircraft, including one A330 series aircraft, seven A320 series aircraft and one B737 series aircraft. As at the end of the Reporting Period, the Group had a total of 972 aircraft with an average age of 10.60 years, of which the Company operated a fleet of 536 aircraft in total with an average age of 10.16 years. During the Reporting Period, the Company introduced eight aircraft and phased out five aircraft.

Details of the fleet of the Group are set out in the table below:

Note:    Please refer to the actual operation for the introduction and phase-out of the Group's fleet in the future.

Business Overview

Safe Operations

The Group fully implemented the holistic approach to national security, strengthened the fulfilment of safety responsibilities with resolute political commitment, and remained steadfast in upholding the principle of "safety first". It continued to improve its safety accountability system and ensured that political responsibilities for safety were fulfilled at every level. Adhering to the concept of "guidance by one overarching philosophy, consolidating the foundation through four major systems, strengthening the foundation through seven key teams, and forging a shield through comprehensive safety", the Group systematically advanced its critical operation-safety campaign. Focusing on enhancing safety management effectiveness, it rigorously implemented all tasks designated for the "Year of Efficiency Enhancement" under the three-year action plan to strengthen fundamental operation safety, further developed the four major systems, exercised rigorous operation safety management and control, reinforced the cultivation of sound work practices among safety personnel, made full use of modern information technology, and enhanced risk early-warning, prevention and control capabilities to drive a shift in work safety efforts towards "proactive root-cause management". During the Reporting Period, the Group achieved 1.470 million safe flight hours and successfully completed major transportation support missions, including those for the Milano Cortina Olympic Winter Games, "Two Sessions" and evacuation operations in the Middle East.

Operational Performance

Pursuing its full-year operating targets, the Group made every effort to enhance quality and efficiency. It steadfastly implemented the "Four Maximizations" principle of production organization, aligned its fleet capacity with market demand amid high oil prices, and increased the scale of effective investment in capacity. The Group deepened the development of its hub network, seized the opportunities arising from the development of the "3+7+N" international aviation hubs and various opportunities presented by changes in the international landscape, continuously optimized its route network, and increased its share of the Asia-Europe flight transit market. It actively supported high-standard opening-up and prioritized the development of markets in Belt and Road Initiative partner countries. The Group developed multi-dimensional customer segments to unlock the potential value of high-value customers; launched a new Gold and Silver Card Challenge, optimized products in its "Business Travel Prime Zone", and continuously innovate digital assets; deepened brand promotion for the Beijing hub, developed a hub promotion matrix and deployed overseas online advertising programs across six major regions; and diversified revenue boosting measures, further tapped the consumption potential of customer groups for branded fare products, launched new products such as paid meals and expanded sales channels. It focused on developing direct sales channels and conducted live-streaming activities on a regular basis; optimized mobile functions, upgraded its AI capabilities, and achieved notable performance in marketing effectiveness through digital and intelligent empowerment. The Group continued to deepen synergistic development and advanced the coordination and integration of resources among Air China family carriers. It continued to promote the regular cost management and control, implemented cost reduction and efficiency enhancement throughout the entire operational chain, focused on core costs such as jet fuel, maintenance, take-off and landing charges and labor to further enhance targeted initiatives, further unlocked cost-saving potential and increased contributions to performance. The Group continued to strengthen fund coordination and debt risk management and control, enhanced capital utilization efficiency while ensuring fund security, and reduced finance costs.

Quality Service

Adhering to a passenger-centric approach and guided by its 4C-based service philosophy, the Group further upgraded its service quality. It deepened coordination between service and marketing, established a full-process management mechanism for marketing and service products, thereby developing five major product portfolios, including "Smart Enjoyment". The Group launched the convenient "Stress-free Journey, Enjoyable Boarding" service. Automatic check-in services achieved full coverage across all principal bases and branches, and the number of transfer points offering interline through check-in services increased to 26. The Group enriched its in-flight meal offerings and promoted the catering reservation system, providing passengers with a wider range of choices. It accelerated large-scale retrofitting for air-ground connectivity, with eight aircraft retrofitted and put into operation. Smart services were applied more extensively. The Group iteratively optimized mobile functions to enhance user experience, expanded self-service scenarios, and fully deployed 15 AI agents. It introduced 11 convenient in-app services, including paid seat selection for multiple passengers and meal opt-out for multiple meal types, introduced a self-service refund and change calculator, and optimized both the booking process and the Air China Travel Assistant. The Group further deepened the development of its service quality management system, making multi-dimensional efforts in standards optimization, quality improvement and team building to steadily enhance the end-to-end travel experience for passengers. It continued to optimize service standards by systematically rationalizing the hierarchy of standards and completing the supporting framework, with a total of 45 service standards documents optimized. Two AI agents for service knowledge Q&A and compensation and reimbursement enquiries were launched, covering approximately 50,000 frontline employees and effectively improving frontline service response efficiency and execution accuracy. The Group strengthened proactive control of service risks and, through its internal platform, pushed 30-second quick-reference service tips to frontline staff, ensuring rapid reach across frontline operations; it conducted tiered and category-based training on service standards, skills and professionalism, and continuously strengthened the service capabilities of frontline staff, thereby reinforcing team foundation for steady improvements in service quality.

Digital Transformation

Focusing on "developing systems, governing data and deploying AI", the Group advanced the digital and intelligent transformation. In terms of system development, it focused on key areas such as safe operations and marketing services, strengthened business digitalization, and promoted online synergies across core business operations. In safe operations, the Group established unified flight data management and application capabilities, integrated QAR data, and enhanced flight quality analysis capabilities across Air China family carriers. It launched the "Smart Flight - Digital Task Sheet" system, enabling paperless task management for all personnel across four major occupational categories - flight crew, cabin crew, aviation security officers and aircraft maintenance personnel. In terms of marketing services, the meal selection and opt-out services under the passenger in-flight catering reservation management system covered 854 domestic and international routes with catering services. The Group launched 17 paid in-flight products in five categories, including "Yunxiang Light Beverages", and expanded new in-flight service scenarios to key domestic and international routes departing from Beijing Capital International Airport for destinations including Chengdu Shuangliu International Airport and John F. Kennedy International Airport, New York, driving the transformation of in-flight services from the traditional support model to one that meets passengers' personalized needs. In terms of data governance, the Group strengthened fundamental data capabilities and unlocked the value of data resources. It delivered a unified Group-level data base, accelerated data governance and application in the service areas, and supported precision marketing and precision services. In terms of AI deployment, the Group deepened the application of AI and accelerated the intelligent transformation of its business. In response to actual business needs, it advanced the exploration and incubation of AI application scenarios in an orderly manner, launched 15 scenario-based applications including intelligent contract review and the "Yiyutong" AI-powered broadcasting system, accelerated the development of Wing of Air China 5.0, and continued to enhance the level of digital and intelligent development across all areas.

Brand Building

Anchoring its efforts to the goal of building a "world-renowned brand" as part of the accelerated development into a world-class enterprise, the Group focused on building a world-class brand. It defined the overall approach, principal tasks and supporting measures for brand building during the 15th Five-Year Plan period, further improved brand management related systems and systematically developed an annual brand communication framework. Fully leveraging the core strengths of the Beijing international aviation hub and its portfolio of overseas social media platforms, the Group innovated the promotion of distinctive content featuring the culture and tourism of various cities, significantly increasing content exposure and user engagement rates and steadily enhancing its brand influence in overseas markets. The Group coordinated integrated online and offline communications. During the Spring Festival travel rush, it held special themed events at Beijing Capital International Airport, effectively converting strong passenger flows into momentum for brand communication. The Group also actively participated in leading domestic and international exhibitions, including IMEX Frankfurt, Germany, the 8th Western China International Fair for Investment and Trade, and the 9th China-Eurasia Expo. Through a coordinated communication network integrating internal and external efforts, the Group continued to enhance its brand image as the national flag carrier.

REVIEW OF ENHANCING QUALITY AND EFFICIENCY AND MAXIMIZING RETURNS

During the Reporting Period, the Group seized market opportunities, actively responded to the new norm of industry development, expedited the enhancement of quality and efficiency of its principal business operations, and further promoted quality improvement and efficiency enhancement. During the Reporting Period, the Group's cumulative available seat kilometers (ASK) reached 180.676 billion, representing a year-on-year increase of 1.75%. The Group transported 79.6983 million passengers, representing a year-on-year increase of 3.35%, which resulted in an increase in passenger load factor of 4.02 percentage points. The Group recorded revenue of RMB89,268 million, representing a year-on-year increase of RMB8,510 million.

The production organization was optimized to enhance the efficiency of core resource utilization. The Company fully tapped the potential of engine resources, accelerated the introduction of key components, and implemented a range of measures to increase aircraft availability. It improved maintenance quality, optimized the operations in "three aspects", and further enhanced the utilization rate of available aircraft. It strengthened the market layout optimization and the capacity synergy of Air China family carriers, upgraded and expanded express routes and main routes, and concentrated flight capacity to enhance investments in hubs, principal operating bases and strategic markets with high potential. It actively expanded international routes along the "Belt and Road". Air China launched or resumed services on seven international routes, expanding its "Belt and Road" route network to 77 routes serving 32 countries. The Company implemented refined revenue management to expand revenue streams. By systematically managing the relationship between capacity and pricing, it deepened synergies within the Air China family carriers to foster a competitive alliance. Additionally, it established an aviation ecosystem through multi-dimensional and cross-industry collaborations to fully tap the market potential. It optimized existing products based on market demand and proactively developed innovative products to boost revenue from ancillary businesses. It adhered to the mechanism of the integration of passenger and cargo operations to fully utilize bellyhold cargo capacity, thus expanding diverse revenue streams. During the Reporting Period, yield per RPK increased by 2.74% year-on-year, and the efficiency of production and investment was further improved. It further focused its efforts on cost control to lower the cost level. Firmly upholding the principle of "living frugally", and on the basis of ensuring investments in safety, it systematically established a cost control system covering all employees, all processes and the entire value chain, striving to achieve tangible results in cost optimization.

The Company continued to refine its corporate governance mechanism pursuing "statutory authority and accountability, transparency of authority and accountability, coordinated operations, and effective checks and balances", as well as a modern corporate system with Chinese characteristics, consistently transforming its institutional strengths into governance effectiveness. Firstly, the corporate governance system has been further refined. The Company optimized 16 corporate governance regulations centered on the Articles of Association, and based on the rules of procedure with ancillary working rules. Secondly, the development of the Board has been continuously strengthened. The independent Directors of the Company faithfully and diligently fulfilled their duties, playing the role