09:57 CHINA EAST AIR<00670> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. * CHINA EASTERN AIRLINES CORPORATION LIMITED (A joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock code: 670) PURCHASE OF FIVE A319 AIRCRAFT DISCLOSEABLE TRANSACTION On 16th March, 2005, the Company entered into the Aircraft Purchase Agreement with Airbus SAS, pursuant to which the Company has agreed to purchase five A319 aircraft (with engines) from Airbus SAS. The Aircraft Purchase Agreement constitutes a discloseable transaction of the Company under the Listing Rules as applied by the Stock Exchange. The Company will issue and despatch to its shareholders a circular containing details of the Aircraft Purchase Agreement in compliance with Rule 14.38 of the Listing Rules. AIRCRAFT PURCHASE AGREEMENT On 16th March, 2005, the Company entered into the Aircraft Purchase Agreement with Airbus SAS, pursuant to which the Company has agreed to purchase the Aircraft from Airbus SAS in accordance with the terms and conditions thereof. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, Airbus SAS and its ultimate beneficial owner(s) are third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company, and are not connected persons of the Company. Aircraft to be acquired : The Aircraft (i.e. five A319 aircraft (with engines)) The asset value of each of the Aircraft (as determined based on the relevant 2000 price catalog of Airbus SAS) is approximately RMB380 million (approximately HK$350 million), and the total asset value of the Aircraft amounts in aggregate to approximately RMB1,900 million (approximately HK$1,770 million). The Company has not conducted any independent valuation on the Aircraft. Consideration and payment terms : The aggregate consideration for the Aircraft to be purchased by the Company pursuant to the Aircraft Purchase Agreement (which was determined as a matter of commercial decision after arm's length negotiations) is less than the total asset value of the Aircraft as stated above. The relevant "percentage ratio" calculated under Rule 14.07 of the Listing Rules is more than 5% but less than 25%, thus the transaction constitutes a discloseable transaction of the Company. The consideration is payable by cash in United States dollars in instalments, and is being funded principally by way of financing arrangements with banking institutions. Delivery : The Aircraft are expected to be delivered to the Company in stages from February 2006 to July 2007. GENERAL The Company and Airbus SAS : The Company is principally engaged in the business of civil aviation. Airbus SAS, to the Directors' knowledge, is principally engaged in the business of manufacturing and selling commercial aircraft. Reasons for entering into the transaction and benefits expected to accrue to the Company : The Aircraft being acquired from Airbus SAS will be introduced to the Company's fleet, principally to cater for the increasing market demand in the foreseeable future. A319 aircraft, among Airbus SAS' A320 series, are installed with equipment for hault and high operations, and are well-tailored to serve routes over plateau areas and hault and high routes. The Aircraft being acquired by the Company are therefore expected to be beneficial to the Company and its business pursuits, particularly in developing such routes. The Directors believe that the Aircraft will also be able to provide more comfortable, convenient and high quality services to the Company's passengers, enhancing its operating capability and strengthening its safety administration in the aviation industry, both domestic and international alike.