09:49     CNAC<01110> - 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 NATIONAL AVIATION COMPANT LIMITED                                   
    (incorporated in Hong Kong with limited liability)                        
    (Stock Code: 1110)                                                        
                                                                              
    CONTINUING CONNECTED TRANSACTION:                                         
                                                                              
    LEASING OF OFFICE PREMISES AND                                            
    CAR PARKS                                                                 
                                                                              
    On 26 July, 2004, Air Macau entered into the Tenancy                      
    Agreement with the Landlords for the leasing by Air                       
    Macau from Landlords of the Premises for use by Air                       
    Macau to carry out its commercial activities and to                       
    support the carrying out of such activities.                              
                                                                              
    The Tenancy Agreement was negotiated on an arm's                          
    length basis between the parties and their terms are                      
    determined on an arm's length basis. The Directors                        
    (including independent non-executive Directors)                           
    considered that the Tenancy Agreement has been                            
    entered into on normal commercial terms and are fair                      
    and reasonable so far as the Company and its                              
    shareholders are concerned.                                               
                                                                              
    Each of the Landlords is an indirect wholly owned                         
    subsidiary of CNAH. Air China, a non-wholly owned                         
    subsidiary of CNAH, is the controlling shareholder                        
    of the Company. Each of the Landlords is therefore                        
    an associate of Air China and is a connected person                       
    under Chapter 14A of the Listing Rules. The Tenancy                       
    Agreement is regarded as a continuing connected                           
    transaction for the Company under the Listing Rules                       
    and is subject to reporting and announcement                              
    requirements.                                                             
                                                                              
    The Company's failure to issue a public announcement                      
    concerning the continuing connected transaction has                       
    constituted a breach of Rule 14A.34 of the Listing                        
    Rules. The Stock Exchange has indicated to the Company                    
    that it reserves the rights to take appropriate action                    
    against the Company and the Directors in respect of                       
    such breach of the Listing Rules.                                         
                                                                              
    TENANCY AGREEMENT                                                         
    Date:   26 July, 2004                                                     
                                                                              
    Parties:        Air Macau, as tenant                                      
    Easy Advance and Wise Advice, as landlords                                
                                                                              
    Premises Leased                                                           
    1.      16 car parks in the basement of the Building;                     
                                                                              
    2.      1 shop on the Ground Floor of the Building with                   
    a gross floor area of 2,226 square feet; and                              
                                                                              
    3.      7 floors, from 12th to 18th Floors, B to M of the                 
    Building with a gross floor area of 101,556 square                        
    feet.                                                                     
                                                                              
    Rent                                                                      
    The monthly rent for the use of:                                          
                                                                              
    1.      1 shop on the Ground Floor of the Building and                    
    between 12th and 18th Floors, B to M of the Premises                      
    is MOP133,800.40 (equivalent to approximately