09:38     CNAC<01110> - Announcement (3)                                      

    The Group is principally engaged in the provision of                      
    air transportation services through Dragonair and Air                     
    Macau, airline catering services, airport ground                          
    handling services and logistics services. For the two                     
    years ended 31 December 2003 and 2004, the Group                          
    recorded an audited loss attributable to shareholders                     
    of the Company of approximately HK$18,747,000 and an                      
    audited profit attributable to shareholders of the                        
    Company of approximately HK$367,470,000,                                  
    respectively. The audited net asset value of the Group                    
    as at 31 December, 2004 was approximately                                 
    HK$2,967,636,000.                                                         
                                                                              
    INFORMATION ON AIR CHINA                                                  
                                                                              
    Air China is principally engaged in the provision of                      
    air transportation services and investment in                             
    aviation-related businesses. Air China is the flag                        
    carrier of the PRC and as at 31 December 2004 has a                       
    fleet size of about 150 aircraft.                                         
                                                                              
    GENERAL                                                                   
                                                                              
    Air Macau is principally engaged in the operation of                      
    international air services and programme charter                          
    services in Macau. Air Macau is indirectly owned as                       
    to 51% by the Company, which in turn is owned as to                       
    approximately 69% by Air China. Since Air China is                        
    a substantial shareholder of the Company, the                             
    transaction under the Wet Lease Agreement and the Wet                     
    Lease Extension Agreement constitutes a continuing                        
    connected transaction for the Company under the                           
    Listing Rules and since its annual consideration                          
    exceeds the amount allowed by the de minimus rule                         
    under Rule 14A.33(3) of the Listing Rules but is less                     
    than 2.5% of each of the percentage ratios (as defined                    
    in the Listing Rules) (other than the profits ratio                       
    (as defined in the Listing Rules), it is subject to                       
    reporting and announcement requirements under Rule                        
    14A.34 of the Listing Rules.                                              
                                                                              
    The transaction contemplated under the Wet Lease                          
    Agreement and the Wet Lease Extension Agreement will                      
    be subject to the annual review requirement and the                       
    reporting requirement under Rules 14A.37 to 14A.41                        
    and Rules 14A.45 and 14A.46 of the Listing Rules.                         
                                                                              
    DEFINITIONS                                                               
                                                                              
    "Air China"     Air China Limited, a joint stock limited                  
    company incorporated under the laws of the PRC with                       
    limited liability, whose H shares are listed on the                       
    Stock Exchange and the London Stock Exchange plc                          
                                                                              
    "Air Macau"     Air Macau Company Limited, a company                      
    incorporated under the laws of Macau with limited                         
    liability and a 51% indirectly owned subsidiary of                        
    the Company                                                               
                                                                              
    "Aircraft"      the Airbus A319-100 aircraft with                         
    Macanese registration mark B-MAO                                          
                                                                              
    "Announcement"  the announcement of the Company                           
    dated 21 March 2005 regarding the Wet Lease Agreement                     
                                                                              
    "Board" the board of Directors                                            
                                                                              
    "Company"       China National Aviation Company Limited,                  
    a company incorporated under the laws of Hong Kong                        
    with limited liability, whose shares are listed on                        
    the Stock Exchange