11:51 CHINA EAST AIR<00670> - Announcement (7) (ii) Expansion of geographical operation and aviation network At present, the geographical coverage of the Group's aviation network is primarily focused in Eastern China, with its 10 major bases all located in the eastern and middle regions of China. Through the Proposed Acquisition, it is believed that the Group's aviation business over other areas having considerable development potentials in the market, such as the northwest and southwest regions of China, will expand. Air routes of the Group covering Southeast Asia and its neighbouring countries will also increase. As a result, the Company is expected to establish and consolidate an enhanced air route network, with Shanghai, Xi'an and Kunming as major departure cities, which will cover destinations in most cities in the PRC and certain major cities overseas. This will further strengthen the market position of the Company as one of the three major airline companies in the PRC. The following illustrates the domestic aviation network of the Group and the Enlarged Group before and after the Proposed Acquisition: Before the Proposed Acquisition Shijiazhuang Taiyuan Jinan Qingdao Nanjing Hefei Shanghai Wuhan Ningbo Nanchang After the Proposed Acquisition Shijiazhuang Taiyuan Jinan Qingdao Lanzhou Xi'an Nanjing Hefei Shanghai Wuhan Ningbo Nanchang Kunming Zhuhai (iii) Expansion of aircraft fleet and size of operation As at 31st December, 2004, the Group operated 103 large and medium transportation aircraft.* Following the transfer of altogether 60 commercial passenger and cargo aircraft of CEA Northwest and CEA Yunnan pursuant to the Proposed Acquisition, the number of aircraft of the Group will increase by approximately 58%. The following demonstrates the expected expansion of the Group's aircraft fleet and its operations after completion of the Proposed Acquisition: Before the Proposed Acquisition (as at 31st December, 2004) After the Proposed Acquisition Approximate Percentage increase Number of aircraft 103 163 58% Available tonne kilometers, or ATKs 7,071 million 8,852 million 25% Available seat kilometers, or ASKs 41,599 million 57,160 million 37% Revenue passenger kilometres, or RPKs 27,581 million 38,517 million 40% Passenger volu me 17,711,000 26,823,000 51% These statistics demonstrate that the Proposed Acquisition will strengthen the favourable market position of the Group and significantly enhance its economy of scale. * The Company recently entered into various aircraft purchase agreements, including, for example, its agreements with Airbus SAS of 9th October, 2004, 16th March, 2005 and 21st April, 2005 to purchase twenty A330 aircraft, five A319 aircraft and fifteen A320 series aircraft, respectively. Details of these agreements and the relevant transactions are set out in the Company's announcements dated 13th October, 2004, 17th March, 2005 and 21st April, 2005, respectively.