09:23 CHINA SOUTH AIR<01055> - 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 SOUTHERN AIRLINES COMPANY LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 1055) VERY SUBSTANTIAL ACQUISITION The Directors of the Company hereby announce that, with the approval of the Board, the Company and Xiamen Airlines entered into the Boeing Aircraft Acquisition Agreement with Boeing for the purpose of acquiring 12 B737-700 aircraft and 33 B737-800 aircraft (15 of which are bought by Xiamen Airlines) from Boeing on April 29, 2005. The Directors believe that the acquisition of the Boeing Aircraft will further increase the transportation capacity of the aircraft fleet of the Company, as a result of which the ATK of the fleet will be raised by 15%. This will in turn improve the operating capacity of the Company, and enhance its abilities to provide premium services to its customers and to compete significantly in the industry. Therefore, the Directors believe that the terms of the Boeing Aircraft Acquisition Agreement are fair and reasonable and in the interests of the shareholders of the Company as a whole. As the relevant percentage ratio for the Transaction with regards to the Consideration Test under Rule 14.07 of the Listing Rules is above 100%, the Transaction constitutes a very substantial acquisition under the Listing Rules and is therefore subject to approval by the Company's shareholders under Rule 14.49 of the Listing Rules. None of the shareholders of the Company is required to abstain from voting in respect of the proposed resolution to approve the Transaction. The Transaction is also required to be disclosed pursuant to the relevant rules and regulations of the Shanghai Stock Exchange. The Company will send a circular containing the information required under the Listing Rules in relation to the Transaction within 21 days after the publication of this announcement. A notice to shareholders of the Company convening a general meeting of the shareholders to approve the Transaction will be dispatched to the shareholders of the Company as soon as practicable. THE BOEING AIRCRAFT ACQUISITION AGREEMENT The Board hereby announces that, with the approval of the Board, the Company and Xiamen Airlines, as purchasers, entered into the Boeing Aircraft Acquisition Agreement with Boeing, as the vendor on April 29, 2005, pursuant to which the Company will purchase 12 B737-700 aircraft and 18 B737-800 aircraft, and Xiamen Airlines will acquire 15 B737-800 aircraft from Boeing. Date April 29, 2005. Parties (i) The Company, as the purchaser. The principal business activity of the Company is that of civil aviation. (ii) Xiamen Airlines Company Limited, as the purchaser. The principal business activity of Xiamen Airlines is that of civil aviation. Under the Listing Rules, Xiamen Airlines is a subsidiary of the Company. (iii) The Boeing Company, a company incorporated in the State of Delaware of the United States of America, as the vendor. The principal business activity of Boeing is that of aircraft manufacturing. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, each of Boeing and its ultimate beneficial owners is a third party independent of the Company and its connected persons (as defined in the Listing Rules) of the Company, and is not a connected person of the Company. Aircraft to be acquired by the Company 12 B737-700 aircraft and 18 B737-800 aircraft. Aircraft to be acquired by Xiamen Airlines