Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 I. Important Notice The summary is abstract from full-text of annual report, for more details of operating results, financial condition and future development plan of the Company; investors should found in the full-text of annual report that published on media appointed by CSRC. Prompt of non-standard audit opinion □ Applicable √ Not applicable There is no plan of cash bonus, dividend distribution and capitalizing of common reserves carried out by the Company. Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period □ Applicable √ Not applicable II. Basic information of the company 1. Company profile Short form of the stock Shanhang-B Stock code 200152 Stock exchange for listing Shenzhen Stock Exchange Person/Way to contact Secretary of the Board Rep. of security affairs Name Dong Qiantang Fan Peng 1/F, Tiangong Office Building, North of 3/F, Tiangong Office Building, North of Red-crowed cranes Hotel, Yaoqiang Red-crowed cranes Hotel, Yaoqiang Office add. International Airlines, Licheng District, International Airlines, Licheng District, Jinan, Shandong Jinan, Shandong Tel. 0531-82085939 0531-82085586 E-mail dongqt@sda.cn fanp@sda.cn 2. Main financial data and indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □Yes √ No Increase/decrease over same Current Period Same period of last year period of last year Operating revenue (RMB) 8,729,278,564.65 7,550,794,741.92 15.61% Net profit attributable to shareholders of 203,730,704.65 90,093,090.83 126.13% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting 61,909,312.57 31,207,526.00 98.38% non-recurring gains and losses (RMB) Net cash flow arising from operating 858,898,162.88 649,153,844.96 32.31% 1 Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 activities (RMB) Basic earnings per share (RMB/Share) 0.51 0.23 121.74% Diluted earnings per share (RMB/Share) 0.51 0.23 121.74% 2.36 percentage points Weighted average ROE (%) 4.68% 2.32% increase Increase/decrease over same End of current Period End of period of last year period-end of last year Total assets (RMB) 14,942,758,296.05 13,351,422,839.91 11.92% Net assets attributable to shareholder of 4,353,574,272.77 4,253,141,013.93 2.36% listed company (RMB) 3. Number of shares and share-holding In Share Total preference shareholders Total common stock shareholders in with voting rights recovered 15,428 0 reporting period-end at end of reporting period (if applicable) Particulars about shares held by top ten shareholders Number of shares Nature of Proportion of Total shares Number of uncirculated Shareholders pledged/frozen shareholder shares held hold shares State of share Amount State-owned Shandong Aviation Group 42.00% 168,004,000 168,004,000 legal person State-owned Air China Limited 22.80% 91,200,000 91,200,000 legal person Foreign legal NORGES BANK 0.87% 3,498,479 0 person VANGUARD Foreign legal EMERGING MARKETS 0.74% 2,960,917 0 person STOCK INDEX FUND WANXIANG INTERNATIONAL Foreign legal 0.65% 2,609,500 0 INVESTMENT person CORPORATION ISHARES CORE MSCI Foreign legal EMERGING MARKETS 0.44% 1,763,224 0 person ETF VANGUARD TOTAL Foreign legal INTERNATIONAL 0.43% 1,735,020 0 person STOCK INDEX FUND Domestic Hou Chunhu 0.42% 1,693,945 0 nature person Domestic Chen Jingjian 0.39% 1,554,400 0 nature person GUOTAI JUNAN Foreign legal SECURITIES(HONGKO 0.34% 1,354,378 0 person NG) LIMITED 2 Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 1. Shandong Aviation Group(SDA) is the first largest shareholder of the Company, who holds the shares of the Company on behalf of the State with unlisted shares; 2. Air China Limited is the second largest shareholder of the Company, who holds the Explanation on related relationship or shares of the Company on behalf of the State with unlisted shares; concerted action among the 3. Among the above top ten shareholders, Air China Limited is the first largest abovementioned shareholders shareholder of the SDA, and there exists no associated relationship between SDA and Air China and the other shareholders, and they don’t belong to the consistent actionist regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies with the other shareholders. 4. Changes of controlling shareholders or actual controller Controlling shareholders had no change in reporting period. Actual controller had no change in reporting period. 5. Total preferred shareholders and top 10 shares held by preferred shareholders The Company has no preferred shareholders 6. Corporate bond The Company did not has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when semi-annual report approved for released or fail to cash in full on due No III. Discussion and analysis of operation 1. Operation status in the period In the first half of 2018, the Company has basically completed the intended targets in various works of production and management. - The security situation remained stable. Ensured security flight of total 210,600 hours and 99,700 vehicles, a respective increase of 10.07% and 9.39% on a year-on-year basis; no transporting aviation incidents and above insecurity incidents occurred due to the Company and aviation safety quality evaluation index was 10.68. -Operation quality improved. The transportation main business totally organized and ensured the flights of 100334 flights, the flight punctuality rate was 78.88%, and an increase of 8.44% on a year-on-year basis; guaranteed 12 flights for important missions and dedicated class III or above, and the flight punctuality rate was 100%. -Profitability continues to improve. The Company achieved operating income of 8.73 billion Yuan, the total profit of 261.10 million Yuan. The total turnover of transportation reached 1.712 billion ton-kilometers, passenger traffic volume reached 12,186,200 person-time, cargo and mail transport volume reached 84,400 tons, an increase of 14.64%, 13.87% and 9.29% on a year-on-year basis; passenger load factor of 83.82%, an increase of 1.54% on a year-on-year basis, cargo and mail load factor of 40.15%, an increase of 0.87% on a year-on-year basis. 3 Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 -Continuous improvement of service quality. Passenger satisfaction achieved 93.46 scores, risen by 1.72 score on a year-on-year basis. The civil aviation media service ranked number four. The Company has been awarded as China Top 500 Most Valuable Brand for eleven consecutive years, ranking No. 99 with the brand value of 41.652 billion Yuan. The Company mainly carried out the following work: (i) Practice the concept of safety development and improve the safety management and control capabilities The first is to firmly establish the concept of safe development, conscientiously implement the decision-making and industry requirements of the Party Central Committee and the State Council on safety production, continue to enhance the awareness of the red line and the bottom line, and strengthen the organizational leadership of safety production. The second is to continue to strengthen the construction of a safety management system and actively promote the transformation of safety management from after-management to pre-event management and process management. The third is to pay close attention to the construction of security teams and the skills training of professional team. The fourth is to carry out in-depth security management and rectification. The fifth is to actively carry out risk prevention and control, and strengthen the investigation and management of hidden dangers and the risk management and control. (ii) Improve the operation management system and improve the flight operation efficiency The first is to enhance the operational management coordination and strengthen the cooperation and linkage among production, operation, maintenance and marketing departments so as to improve the operational support efficiency. The second is to pay close attention to the normal quality of flights, and the coincidence rate of flight time, transit time and flight connection time has been significantly improved. The third is to improve the level of release control and the capability of emergency response. (iii) Vigorously increase revenue and reduce expenditure, and improve profitability The first is to actively acquire time resources, actively consolidate the advantages of the main base, and lay out in the hot potential markets. The second is to improve the level of production resources allocation and optimize the route network layout. The third is to improve the quality of revenue control and the online marketing control platform, and the adjustment of competition strategy is more precise. The fourth is to vigorously implement cost control, adhere to giving consideration to both large and small, formulate cost control measures, improve the quality of benefits through large cost monitoring, and increase the cost awareness of all employees through small cost reduction. The fifth is to actively mould the collaborative advantages and continue to promote the synergy of the Air China system. (iv) Improve the service management and control efficiency, and continuously optimize the passenger experience The first is to continuously improve the service management system. The second is to put forth efforts to improve the presentation of product services, sort out the high-end passenger service standard process, reflect the differentiated services, continue to improve the service weakness, and enhance the passenger experience. The third is to strengthen the construction of service team, focus on giving play to the demonstration and leading role of the brands, such as “Luyan Crew” of the cabin department, “Sunshine Team” of the ground service department, and “Luyin Service Team” of the marketing committee; continue to promote the construction of “Confucius School in the Air” project, highlight the “Honest and Kind” service culture characteristics, and continuously enhance the brand influence. 2. Matters relevant to financial report (1) Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the accounting period of last year The Company had no particulars about the changes in aspect of accounting policy, estimates or calculation method in the reporting period. 4 Shandong Airlines Co., Ltd. Summary of Semi-Annual Report 2018 (2) Particulars about retroactive restatement on major correction for accounting errors in reporting period The company had no particulars about retroactive restatement on major correction for accounting errors in the reporting period. (3) Particulars about the change of consolidation range compared with the accounting period of last year No changes of consolidation range occurred in the period. BOD Shandong Airlines Co., Ltd. 24 August 2018 5