11:49     CHINA EAST AIR<00670> - Announcement (2)                            

    Acquisition Agreement                                                     
                                                                              
    On 12th May, 2005, the Company (as the acquirer), CEA Holding (as         
    the seller), CEA Northwest and CEA Yunnan (as the parties effecting       
    the transfers of the relevant assets and liabilities to the Company)      
    entered into the Acquisition Agreement, pursuant to which the             
    Company has agreed to acquire from CEA Holding certain assets and         
    liabilities relating to the aviation businesses of CEA Northwest and      
    CEA Yunnan. The assets and liabilities being acquired by the              
    Company under the Proposed Acquisition are particularised in the          
    paragraph headed "Proposed Acquisition - Assets and liabilities to be     
    acquired by the Company" below.                                           
                                                                              
    Approvals from the State-owned Assets Supervision and                     
    Administration Commission of the PRC State Council in respect of (i)      
    the transaction under the Proposed Acquisition and (ii) the results of    
    the independent valuation as of 31st December, 2004 of the assets         
    and liabilities to be acquired by the Company under the Proposed          
    Acquisition (as described in the paragraph headed "Proposed               
    Acquisition - Consideration and payment terms - acquisition price"        
    below) have been obtained in early May 2005, as required under PRC        
    laws and regulations.                                                     
                                                                              
    Parties and their relationship                                            
                                                                              
    For the chart sets forth the shareholding structure of the                
    Company, CEA Northwest and CEA Yunnan, please refer to the press announcem
                                                                              
    CEA Holding 61.64%                                                        
    100%                                                                      
    CEA Northwest                                                             
    CEA Yunnan                                                                
    H share shareholders                                                      
    32.20%                                                                    
    A share shareholders                                                      
    6.16%                                                                     
    Company                                                                   
                                                                              
    Since only the aviation businesses of CEA Northwest and CEA Yunnan        
    will be acquired by the Company under the Proposed Acquisition, the       
    shareholding structure will be the same immediately before and            
    immediately after completion of the Proposed Acquisition.                 
                                                                              
    Each of the Company, CEA Holding, CEA Northwest and CEA Yunnan            
    is principally engaged in the civil aviation business.                    
                                                                              
    Assets and liabilities to be acquired by the Company                      
                                                                              
    As mentioned above, pursuant to the Acquisition Agreement, the            
    Company will acquire from CEA Holding certain assets and liabilities      
    relating to the aviation businesses of CEA Northwest and CEA Yunnan,      
    and will, in accordance with and following completion of the              
    agreement, assume and undertake the aviation operations and               
    businesses currently carried out by CEA Northwest and CEA Yunnan.         
    The relevant air routes will also be injected into the Company with       
    such aviation businesses. The assets and liabilities being acquired by    
    the Company include the relevant aircraft, engines and aviation           
    equipment and facilities, certain employees and operating contracts,      
    and other relevant fixed and current assets (whether owned or leased      
    assets) and liabilities of CEA Northwest and CEA Yunnan, and are          
    particularised as follows:                                                
                                                                              
    The assets (with the relevant aggregate book value as at 31st             
    December, 2004 stated below) to be acquired by the Company in             
    relation to the aviation businesses of CEA Northwest and CEA Yunnan       
    include:                                                                  
                                                                              
    (i)     current assets amounting to approximately RMB1,541,520,000,       
    including cash and cash equivalents, accounts receivable,                 
    prepayments and other receivables, and flight equipment spare             
    parts;                                                                    
                                                                              
    (ii)    long-term investments amounting to approximately RMB5,803,000,    
    including long-term equity investments;                                   
                                                                              
    (iii)   fixed assets amounting to approximately RMB6,835,883,000,         
    including buildings, aircraft, engines, mechanical equipments,            
    electronic equipments and transport equipments;                           
                                                                              
    (iv)    projects under construction and the installation of related       
    equipments amounting to approximately RMB7,240,000; and                   
                                                                              
    (v)     long-term deposits and prepayments amounting to approximately     
    RMB762,397,000, including bank deposits, deposits for aircraft            
    under operating leases and fuel, and other prepayments.                   
                                                                              
    The liabilities (with the relevant aggregate book value as at 31st        
    December, 2004 stated below) to be acquired by the Company in             
    relation to the aviation businesses of CEA Northwest and CEA Yunnan       
    include: