Announcement on Fuel Hedging
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim 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
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 753)
Announcement on Fuel Hedging Activities
(Overseas Regulatory Announcement)
Since 16 January 2009 when Air China Limited (the 'Company') made an announcement regarding its fuel hedging activities up to 31 December 2008, the prices of international crude oil continued to linger at low levels. For the purpose of making a further announcement regarding the Company's exposure to the changes in the fair value of its fuel hedging contracts for the year 2009, the Company has done a sensitivity analysis on the fair value of its fuel hedging contracts as at 31 December 2009 as follows.
According to the amount and prices of the Company's fuel hedging contracts as at 31 December 2008 and based on major assumptions such as oil price trend in futures market, the volatility rate of oil price, and convergence rates adopted by an independent third party valuation firm in the estimating of the Company's fair value losses of its fuel hedging contracts up to 31 December 2008 and the shorter remaining contract period, as set out in the table below, if the New York West Texas Intermediate (WTI) crude oil price changes from the closing price as at 31 December 2008, the fair value losses of the Company's fuel hedging contracts as at 31 December 2009 would change correspondingly. Such changes in the fair value of the fuel hedging contracts would have an impact on the Company's profit and loss and financial position for 2009.
|
The percentage of increase (+) or decrease (-) of the closing price of WTI oil price as at 31 December 2009 compared with that as at 31 December 2008 |
The amount of increase (+) or decrease (-) of the fair value losses of the fuel hedging contracts as at 31 December 2009 compared with that as at 31 December 2008 (RMB million) |
|
-30% |
+600 |
|
-20% |
-600 |
|
-10% |
-1,500 |
|
+10% |
-3,200 |
|
+20% |
-3,800 |
|
+30% |
-4,400 |
Investors are reminded to note that the assumptions adopted under the above sensitivity analysis are based on projections of the market movements in the future based on the currently available market information, which may, to a certain extent, be different from the actual situation as at 31 December 2009. Accordingly, the actual fair value losses of the fuel hedging contracts as at 31 December 2009 may differ from the results of the above analysis.
Investors are advised to exercise caution in dealing in shares of the Company.
This announcement is issued by the Company pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
By order of the Board
Air China Limited
Huang Bin Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 27 February 2009
As at the date of this announcement, the Directors of the Company are Mr. Kong Dong, Ms. Wang Yinxiang, Mr. Wang Shixiang, Mr. Christopher Dale Pratt, Mr. Chen Nan Lok, Philip, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr. Hu Hung Lick, Henry*, Mr. Wu Zhipan*, Mr. Zhang Ke* and Mr. Jia Kang*.
* Independent non-executive Directors of the Company
This information is provided by RNS
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