Clarificatory Announcement

Air China Ld
17 March 2005


The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.


             AIR CHINA LIMITED                  CHINA NATIONAL AVIATION COMPANY
(A joint stock limited company incorporated                 LIMITED
  in the People's Republic of China with          (Incorporated in Hong Kong
          limited liability)                       with limited liability)
          (Stock Code: 753)                           (Stock Code: 1110)



                          JOINT CLARIFICATORY ANNOUNCEMENT

Air China and CNAC have noted media reports speculating about possible changes
in the controlling shareholding interests of Air China, Cathay Pacific and
Dragonair. Whilst the Air China Group and Cathay Pacific continue to explore
opportunities to develop a closer cooperation in various business and
operational areas, there is currently no agreement or arrangement between the
parties which is discloseable under the Listing Rules. In particular, Air China
has no intention to acquire a controlling equity interest in Cathay Pacific
whilst CNAHC has informed Air China that it intends to remain as Air China's
controlling shareholder.



(1) STRATEGIC COOPERATION BETWEEN THE AIR CHINA GROUP AND CATHAY PACIFIC


This clarificatory announcement is made at the request of The Stock Exchange of 
Hong Kong Limited.

The boards of Air China and CNAC have noted various articles appearing in
today's newspapers which speculate on Air China and Cathay Pacific being in
discussion on a number of possible transactions, principally being that: (a) Air
China may acquire a controlling equity interest in Cathay Pacific; (b) Swire
Pacific may become the single largest shareholder of Air China; and (c) there
may be further cooperation between Cathay Pacific and Dragonair which may or may
not involve a change in the business operations of or shareholding interests in
Dragonair.

As announced jointly by Air China and Cathay Pacific on 20 October 2004, Air
China and Cathay Pacific agreed to develop a long-term strategic relationship,
the key components of which involved an investment by Cathay Pacific in Air
China pursuant to Air China's IPO as well as mutual cooperation between the two
companies' aviation-related business in Hong Kong and mainland China.

Following completion of Air China's IPO in December 2004, in which Cathay
Pacific took a 10% equity interest in Air China, the parties have explored
further avenues of cooperation and to date the following initiatives have taken
place:


   •   Cooperation on improving in-flight service;
   •   Joint research on financial risk control; and
   •   Co-ordination on engineering, ground handling and marketing.


The Air China Group and Cathay Pacific continue to explore opportunities to
develop closer cooperation in various business and operational areas, including
in relation to enhancing cooperation in the Hong Kong-China aviation market.The
cooperation discussions, which are broad ranging and preliminary in nature,
necessarily involved Dragonair. However, such discussions have not resulted in
any definitive proposal. There is currently no agreement or arrangement between
the Air China,  CNAC and Cathay Pacific which is discloseable under the Listing
Rules.

In particular, Air China has no intention to acquire a controlling equity
interest in Cathay Pacific.   Air China's controlling shareholder, CNAHC, has
informed Air China that CNAHC intends to remain as Air China's controlling
shareholder.


(2) EXCEPTIONAL MOVEMENTS IN THE PRICE AND TRADING VOLUME OF CNAC'S SHARES

The board of directors of CNAC note today's increase in the price and trading
volume of the shares of CNAC and wish to state that, save as disclosed above,
they are not aware of any reasons for such increase.

Save as disclosed in this announcement, the board of directors of CNAC also
confirms that there are no negotiations or agreements relating to intended
acquisitions or realisations which are discloseable under Rule 13.23; neither is
the board of directors of CNAC aware of any matter discloseable under the
general obligation imposed by Rule 13.09, which is or may be of a price-
sensitive nature. The statements by CNAC herein are made by order of CNAC the
board of which individually and jointly accept responsibility for their
accuracy.

In the meantime, shareholders of and potential investors in Air China and CNAC 
are recommended to exercise caution when dealing in the shares of Air China 
and CNAC.



Directors

As at the date of this announcement, the Directors of Air China are:

Li Jiaxiang, Kong Dong, Wang Shixiang, Yao Weiting, Ma Xulun, Cai Jianjiang, Fan
Cheng, Hu Hung Lick, Henry, Wu Zhipan and Zhang Ke.

As at the date of this announcement, the Directors of CNAC are:

Kong Dong, Chuang Shih Ping, Zhang Xianlin, Tsang Hing Kwong, Thomas, Gu Tiefei,
Zhao Xiaohang, Lok Kung Nam, Hu Hung Lick, Henry, Ho Tsu Kwok, Charles, Li Kwok
Heem, John and Chan Ching Har, Eliza.


Definitions


'Air China'               Air China Limited, a joint stock limited company 
                          incorporated in the People's Republic of China

'Air China Group'         Air China and its subsidiaries, including CNAC

'Cathay Pacific'          Cathay Pacific Airways Limited, a company incorporated 
                          in Hong Kong with approximately 46.5% of its share 
                          capital owned by Swire Pacific

'CNAC'                    China National Aviation Company Limited, a company 
                          incorporated in Hong Kong with approximately 69% of 
                          its share capital owned by Air China


'CNAHC'                   China National Aviation Holding Company, a state-owned 
                          enterprise incorporated in the People's Republic of 
                          China, which currently owns approximately 65.80% of 
                          the share capital of Air China directly and indirectly

'Dragonair'               Hong Kong Dragon Airlines Limited, a company 
                          incorporated in Hong Kong with approximately 43.29% 
                          of its share capital owned by CNAC and approximately 
                          17.79% of its share capital owned by Cathay Pacific


'IPO'                     Initial public offering

'Listing Rules'           The Rules Governing the Listing of Securities on 
                          The Stock Exchange of Hong Kong Limited

'Swire Pacific'           Swire Pacific Limited, a company incorporated in 
                          Hong Kong



By Order of the Board            By Order of the Board
Air China Limited                China National Aviation Company Limited
Fan Cheng and Li Man Kit         Li Man Kit
Joint Company Secretaries        Company Secretary
Beijing, 16 March 2005           Hong Kong, 16 March 2005


Please refer to the published version of this announcement in The Hong Kong
Economic Times and The South China Morning Post.


                      This information is provided by RNS
            The company news service from the London Stock Exchange