11:51     CHINA EAST AIR<00670> - Announcement (6)                            

    Under the Acquisition Agreement, CEA Holding has agreed to                
    complete all such required amendments and necessary registration          
    and/or filing procedures in accordance with the relevant PRC laws         
    and regulations within 90 days after the Effective Date. Further, CEA     
    Holding has undertaken to the Company in the Acquisition Agreement        
    that all necessary third-party consents (including consents from the      
    relevant creditors, aircraft lessors and/or financiers and                
    counterparties of certain operating contracts in connection with the      
    aviation businesses and daily operations of CEA Northwest and CEA         
    Yunnan) required to effect the transfers will be obtained as soon as      
    practicable after the Effective Date.                                     
                                                                              
    Non-competition undertaking                                               
                                                                              
    Under the Acquisition Agreement, each of CEA Holding, CEA                 
    Northwest and CEA Yunnan has undertaken that at any time after            
    completion of the Acquisition Agreement, it will not, and will            
    procure its respective subsidiaries and associated companies              
    (including members of the CEA Holding Group) not to, carry out,           
    engage in or otherwise become involved or interested in any business      
    which competes or may compete, either directly or indirectly, with        
    the Company's aviation business following completion of the               
    Acquisition Agreement. The undertaking is not made for any definite       
    period.                                                                   
                                                                              
    Reasons for and benefits of the Proposed Acquisition                      
                                                                              
    The Group is principally engaged in the business of civil aviation in     
    the PRC. The Board believes that the Proposed Acquisition provides        
    the Group with an opportunity to capitalise on the growing market         
    potentials in the PRC civil aviation industry, and in turn to further     
    its business pursuits and developments.                                   
                                                                              
    Through the Proposed Acquisition, the Group will be able to expand        
    its scope and size of operation, effectively rearrange the deployment     
    of available market resources, integrate the existing marketing           
    network, readjust the combined air routes operated by CEA Northwest       
    and CEA Yunnan under CEA Holding, and capitalise on the                   
    transportation potentials of its aircraft fleet as will be expanded       
    after the Proposed Acquisition. In addition, the optimisation of          
    resources allocation according to market demands being made               
    possible following the Proposed Acquisition will facilitate reduction     
    of the Group's operating costs, improvement of its service quality,       
    and in turn enhancement of its overall strength and market                
    competitiveness. The Group, with its streamlined and strengthened         
    operations, will, as is expected, be equipped and able to enter into      
    the rivalry of international air transportation market.                   
                                                                              
    As a result, it is believed that the Group will integrate and             
    capitalise its business resources, and increase its future revenue        
    after the Proposed Acquisition, thereby enhancing its operation           
    efficiency, profitability and thus shareholders' return. In addition,     
    the Proposed Acquisition is expected to eliminate any competition         
    among the Company, CEA Northwest and CEA Yunnan, and reduce the           
    volume of relevant connected transactions.                                
                                                                              
    (i)     A need to face the competition brought by international aviation  
    alliances                                                                 
                                                                              
    Following the progress of economic globalisation, it has been the         
    prevailing trend in the international civil aviation industry that        
    international strategic alliances are established among airline           
    companies. Statistics, based on the Company's analysis, reveal            
    that among the 41 top airline companies (in terms of passenger            
    volume) in the world, around 35 of such airline companies are             
    members of international strategic alliances, such as the Star            
    Alliance, One World and Sky Team alliances, occupying the                 
    majority of the market share. By sharing codes, these alliances           
    enter the PRC market and put significant pressure on Chinese              
    enterprises which engage in aviation businesses. In order to              
    compete with these international strategic alliances in the future        
    and to better equip the Company with ability to meet challenges           
    and handle expected competition in the PRC aviation industry              
    following the accession of China into the World Trade                     
    Organisation, the Company needs to increase its size and scale by         
    way of the Proposed Acquisition.