11:50     CHINA EAST AIR<00670> - Announcement (4)                            

    Acquisition price                                                         
                                                                              
    The aggregate acquisition price to be paid by the Company under the       
    Acquisition Agreement is RMB985,692,800 (equivalent to                    
    approximately HK$929,898,868), subject to adjustments as described        
    below. The Company will also assume aggregate liabilities of              
    RMB8,556,199,600 (equivalent to approximately HK$8,071,886,415)           
    under the Proposed Acquisition. The acquisition price was determined      
    on the basis of the results of the independent valuation as of 31st       
    December, 2004 of the assets and liabilities to be acquired conducted     
    by * (China Consultants of Accounting and                                 
    Financial Management Co. Ltd.) as described above. According to           
    such valuation, as of 31st December, 2004, the appraised value of the     
    aggregate assets to be acquired under the Proposed Acquisition was        
    RMB9,541,892,400 (equivalent to approximately HK$9,001,785,283)           
    and that of the aggregate liabilities to be acquired was                  
    RMB8,556,199,600 (equivalent to approximately HK$8,071,886,415),          
    and thus the appraised value of the aggregate net assets was              
    RMB985,692,800 (equivalent to approximately HK$929,898,868).              
                                                                              
    Under the Acquisition Agreement, the acquisition price shall be           
    adjusted by the profit generated or loss incurred by the aviation         
    businesses of CEA Northwest and CEA Yunnan during the period from         
    31st December, 2004 to the Effective Date, to which CEA Holding           
    shall be entitled. The amount of such profit/loss will be determined      
    with reference to the relevant financial statements prepared under        
    PRC Accounting Standards and Regulations for the period from 31st         
    December, 2004 to the Effective Date, to be audited by independent        
    PRC accountants jointly appointed by the Company and CEA Holding.         
    The adjustment mechanism, as the Directors believe, is customary in       
    arms' length acquisition transactions, such that any profit generated     
    or loss incurred by the aviation businesses of CEA Northwest and          
    CEA Yunnan being acquired by the Company before completion will           
    effectively be adjusted against the acquisition price being paid.         
                                                                              
    Payment terms                                                             
                                                                              
    The acquisition price shall be payable by the Company in the manner       
    as follows:                                                               
                                                                              
    (i)     70% of the initial acquisition price (i.e., RMB689,984,960        
    (equivalent to approximately HK$650,929,208)) shall be payable            
    within five days from the Effective Date; and                             
                                                                              
    (ii)    the balance of the adjusted acquisition price shall be payable    
    within 15 days from the date of occurrence of the last of the             
    following events:                                                         
                                                                              
    (a)     the issue of an audit report by independent PRC accountants       
    being jointly appointed by the Company and CEA Holding on                 
    the financial statements in respect of the aviation businesses            
    of CEA Northwest and CEA Yunnan prepared under PRC                        
    Accounting Standards and Regulations for the period from 31st             
    December, 2004 to the Effective Date;                                     
                                                                              
    (b)     consents having been obtained from parties who are entitled       
    to pre-emptive rights in respect of assets to be transferred to           
    the Company under the Proposed Acquisition;                               
                                                                              
    (c)     consents having been obtained from lessors and/or financiers      
    of aircraft regarding the novation of the relevant aircraft               
    finance leases and operating leases from CEA Northwest and                
    CEA Yunnan to the Company; and                                            
                                                                              
    (d)     consents having been obtained from the relevant creditors         
    regarding transfers to the Company of liabilities relating to             
    the aviation businesses of CEA Northwest and CEA Yunnan.                  
                                                                              
    The parties have been in discussions in obtaining these third-party       
    consents. As further elaborated below, CEA Holding has undertaken         
    to the Company that all necessary third-party consents required to        
    effect the relevant transfers will be, if not then already have been,     
    obtained as soon as practicable after the Effective Date.                 
                                                                              
    Funding                                                                   
                                                                              
    The Company currently intends to fund the cash payment for the            
    consideration as to approximately 50% with its internal cash              
    resources and the remaining by way of financing arrangements with         
    financial institutions depending on the financial position of the         
    Company at the material time. The Company will issue further              
    announcement if there is a material change to the actual source of        
    funding deployed as and when considered appropriate.