09:50     CNAC<01110> - Announcement (2)                                      

    (equivalent to approximately HK$2,796,300) per month                      
    is payable by Air China in three installments. The                        
    total fixed rental payment under the Wet Lease                            
    Agreement will amount to US$2,180,000 (equivalent to                      
    approximately HK$17,004,000).                                             
                                                                              
    The fixed rental payment covers the provision of the                      
    Aircraft, the cockpit crew and the maintenance crew                       
    and Aircraft related insurance.                                           
                                                                              
    Air China is also required to pay a monthly                               
    maintenance hourly payment for each block hour flown                      
    at US$470 (equivalent to approximately HK$3,666) per                      
    block hour. It is anticipated that the total maximum                      
    maintenance hourly payment under the Wet Lease                            
    Agreement will amount to US$1,043,400 (equivalent to                      
    approximately HK$8,138,520).                                              
                                                                              
    Air Macau has been receiving the monthly fixed rental                     
    payment and the monthly maintenance hourly payment                        
    in respect of the wet lease of the Aircraft since the                     
    commencement of the lease term, i.e. since 20 October,                    
    2004.                                                                     
                                                                              
    The lease payments have been arrived at after arm's                       
    length negotiation between the parties taking into                        
    consideration the prevailing market level of rent                         
    payable for the wet leases of Airbus A319-100 and the                     
    provision of services under the Wet Lease Agreement.                      
                                                                              
    Other costs:    Air China shall be responsible for                        
    other costs incurred in connection with the operation                     
    of the Aircraft (e.g., landing and navigation fees,                       
    airport and aircraft handling fees, fuel).                                
                                                                              
    Other compensation:     Air Macau shall pay Air China the                 
    amount of US$11,373 (equivalent to approximately                          
    HK$88,709) per day when there is no operation of the                      
    Aircraft due to Air Macau's mechanic breakdown or                         
    other flight crew-related causes calculated at the                        
    end of the lease term, provided that such situation                       
    exceed 10 operating days for the entire lease term.                       
                                                                              
    Proposed Cap                                                              
    Based on the terms of the Wet Lease Agreement and                         
    assume that the Aircraft will fly the number of block                     
    hours according to the flight schedule under the Wet                      
    Lease Agreement together with any delay that may occur,                   
    the Directors propose that the maximum aggregate                          
    annual value contemplated under the Wet Lease                             
    Agreement shall be US$3,223,400 (equivalent to                            
    approximately HK$25,142,520).                                             
                                                                              
    Reasons for and benefits of the Wet Lease Agreement                       
    The Directors consider it to be in the interest of                        
    Air Macau to enter into the Wet Lease Agreement as                        
    the lease payments to be received by Air Macau under                      
    the Wet Lease Agreement will generate a steady stream                     
    of income for Air Macau. Furthermore, the entering                        
    into of the Wet Lease Agreement will enable Air Macau                     
    to enhance its aircraft utilization.                                      
                                                                              
    The Directors, including the independent                                  
    non-executive Directors, are of the view that the                         
    terms of the Wet Lease Agreement are fair and                             
    reasonable and in the interest of the shareholders                        
    of the Company as a whole.                                                
                                                                              
    REASONS FOR THE DELAY IN DISCLOSURE                                       
    The Wet Lease Agreement was not entered into between                      
    the parties until some 5 months after the commencement                    
    of the wet lease of the Aircraft