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Segment reporting
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Segment reporting
6
Segment reporting
 
(a)
Business segments
The Group has two reportable operating segments “airline transportation operations” and “other segments”, according to internal organization structure, managerial needs and internal reporting system. “Airline transportation operations” comprises the Group’s passenger and cargo and mail operations. “Other segments” includes hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services.
For the purposes of assessing segment performance and allocating resources between segments, the Group’s chief operating decision maker (“CODM”) monitors the results, assets and liabilities attributable to each reportable segment based on financial results prepared under the People’s Republic of China Accounting Standards for Business Enterprises (“PRC GAAP”). As such, the amount of each material reconciling item from the Group’s reportable segment revenue, profit before taxation, assets and liabilities, which arises from different accounting policies, are set out in Note 6(c).
Inter-segment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.
Information regarding the Group’s reportable segments as provided to the Group’s CODM for the purposes of resource allocation and assessment of segment performance is set out below.
 
The segment results of the Group for the year ended December 31, 2019 are as follows:
 
 
  
Airline
transportation
operations
 
  
Other
segments
 
  
Elimination
 
 
Unallocated*
 
 
Total
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
 
RMB million
 
 
RMB million
 
Disaggregated by timing of revenue recognition
  
   
  
   
  
   
 
   
 
   
Point in time
  
 
2,996
 
  
 
2,747
 
  
 
(2,401
) 
 
 
—  
 
 
 
3,342
 
Over time
  
 
149,799
 
  
 
2,785
 
  
 
(1,604
) 
 
 
—  
 
 
 
150,980
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
  
 
152,591
 
  
 
1,731
 
  
 
—  
 
 
 
—  
 
 
 
154,322
 
Inter-segment sales
  
 
204
 
  
 
3,801
 
  
 
(4,005
) 
 
 
—  
 
 
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment revenue
  
 
152,795
 
  
 
5,532
 
  
 
(4,005
) 
 
 
—  
 
 
 
154,322
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment profit before taxation
  
 
3,020
 
  
 
558
 
  
 
2
 
 
 
490
 
 
 
4,070
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment profit after taxation
  
 
2,224
 
  
 
446
 
  
 
2
 
 
 
423
 
 
 
3,095
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Other segment information
  
   
  
   
  
   
 
   
 
   
Income tax
  
 
796
 
  
 
112
 
  
 
—  
 
 
 
67
 
 
 
975
 
Interest income
  
 
64
 
  
 
41
 
  
 
(31
) 
 
 
—  
 
 
 
74
 
Interest expense
  
 
5,833
 
  
 
43
 
  
 
(31
) 
 
 
—  
 
 
 
5,845
 
Depreciation and amortization
  
 
24,256
 
  
 
354
 
  
 
—  
 
 
 
—  
 
 
 
24,610
 
Impairment loss
  
 
38
 
  
 
—  
 
  
 
—  
 
 
 
—  
 
 
 
38
 
Credit loss
  
 
11
 
  
 
2
 
  
 
—  
 
 
 
—  
 
 
 
13
 
Share of associates’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
(178
) 
 
 
(178
) 
Share of joint ventures’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
365
 
 
 
365
 
Remeasurement of the originally held equity interests in a joint venture
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
13
 
 
 
13
 
Change in fair value of financial assets / liabilities
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
265
 
 
 
265
 
Non-current
assets additions during the year
#
  
 
44,851
 
  
 
739
 
  
 
—  
 
 
 
—  
 
 
 
45,590
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
The segment results of the Group for the year ended December 31, 2018 are as follows:
 
 
  
Airline
transportation
operations
 
  
Other
segments
 
  
Elimination
 
 
Unallocated*
 
  
Total
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
 
RMB million
 
  
RMB million
 
Disaggregated by timing of revenue recognition
  
   
  
   
  
   
 
   
  
   
Point in time
  
 
2,532
 
  
 
1,975
 
  
 
(1,596
) 
 
 
—  
 
  
 
2,911
 
Over time
  
 
139,671
 
  
 
3,822
 
  
 
(2,781
) 
 
 
—  
 
  
 
140,712
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Revenue from external customers
  
 
141,968
 
  
 
1,655
 
  
 
—  
 
 
 
—  
 
  
 
143,623
 
Inter-segment sales
  
 
235
 
  
 
4,142
 
  
 
(4,377
) 
 
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Reportable segment revenue
  
 
142,203
 
  
 
5,797
 
  
 
(4,377
) 
 
 
—  
 
  
 
143,623
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Reportable segment profit before taxation
  
 
3,448
 
  
 
604
 
  
 
(60
) 
 
 
495
 
  
 
4,487
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Reportable segment profit after taxation
  
 
2,567
 
  
 
457
 
  
 
(60
) 
 
 
492
 
  
 
3,456
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Other segment information
  
   
  
   
  
   
 
   
  
   
Income tax
  
 
881
 
  
 
147
 
  
 
—  
 
 
 
3
 
  
 
1,031
 
Interest income
  
 
107
 
  
 
18
 
  
 
—  
 
 
 
—  
 
  
 
125
 
Interest expense
  
 
3,054
 
  
 
148
 
  
 
—  
 
 
 
—  
 
  
 
3,202
 
Depreciation and amortization
  
 
14,084
 
  
 
282
 
  
 
—  
 
 
 
—  
 
  
 
14,366
 
Impairment loss
  
 
12
 
  
 
—  
 
  
 
—  
 
 
 
—  
 
  
 
12
 
Credit loss
  
 
2
 
  
 
1
 
  
 
—  
 
 
 
—  
 
  
 
3
 
Share of associates’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
263
 
  
 
263
 
Share of joint ventures’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
200
 
  
 
200
 
Fair value movement of financial instruments
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
12
 
  
 
12
 
Non-current
assets additions during the year
#
  
 
37,155
 
  
 
406
 
  
 
—  
 
 
 
—  
 
  
 
37,561
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
The segment results of the Group for the year ended December 31, 2017 are as follows:
 
 
  
Airline
transportation
operations
 
  
Other
segments
 
  
Elimination
 
 
Unallocated*
 
 
Total
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
 
RMB million
 
 
RMB million
 
Revenue from external customers
  
 
126,077
 
  
 
1,412
 
  
 
—  
 
 
 
—  
 
 
 
127,489
 
Inter-segment sales
  
 
159
 
  
 
2,823
 
  
 
(2,982
) 
 
 
—  
 
 
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment revenue
  
 
126,236
 
  
 
4,235
 
  
 
(2,982
) 
 
 
—  
 
 
 
127,489
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment profit before taxation
  
 
7,708
 
  
 
529
 
  
 
—  
 
 
 
561
 
 
 
8,798
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Reportable segment profit after taxation
  
 
5,875
 
  
 
381
 
  
 
—  
 
 
 
577
 
 
 
6,833
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Other segment information
  
   
  
   
  
   
 
   
 
   
Income tax
  
 
1,833
 
  
 
148
 
  
 
—  
 
 
 
(16
) 
 
 
1,965
 
Interest income
  
 
74
 
  
 
15
 
  
 
—  
 
 
 
—  
 
 
 
89
 
Interest expense
  
 
2,724
 
  
 
23
 
  
 
—  
 
 
 
—  
 
 
 
2,747
 
Depreciation and amortization
  
 
13,112
 
  
 
201
 
  
 
—  
 
 
 
—  
 
 
 
13,313
 
Impairment loss
  
 
440
 
  
 
2
 
  
 
—  
 
 
 
—  
 
 
 
442
 
Share of associates’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
420
 
 
 
420
 
Share of joint ventures’ results
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
99
 
 
 
99
 
Remeasurement of the originally held equity interests in a joint venture
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
88
 
 
 
88
 
Fair value movement of derivative financial instruments
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
(64
) 
 
 
(64
) 
Non-current
assets additions during the year
#
  
 
30,776
 
  
 
1,828
 
  
 
—  
 
 
 
—  
 
 
 
32,604
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
The segment assets and liabilities of the Group as at December 31, 2019 and December 31, 2018 are as follows:
 
 
  
Airline
transportation
operations
 
  
Other
segments
 
  
Elimination
 
 
Unallocated*
 
  
Total
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
 
RMB million
 
  
RMB million
 
As at December 31, 2019
  
   
  
   
  
   
 
   
  
   
Reportable segment assets
  
 
295,439
 
  
 
7,048
 
  
 
(3,662
) 
 
 
7,821
 
  
 
306,646
 
Reportable segment liabilities
  
 
230,738
 
  
 
2,458
 
  
 
(3,604
) 
 
 
—  
 
  
 
229,592
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
As at December 31, 2018
  
   
  
   
  
   
 
   
  
   
Reportable segment assets
  
 
234,755
 
  
 
6,479
 
  
 
(1,829
) 
 
 
7,250
 
  
 
246,655
 
Reportable segment liabilities
  
 
167,806
 
  
 
2,391
 
  
 
(1,769
) 
 
 
44
 
  
 
168,472
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
*
Unallocated assets primarily include interest in associates and joint ventures, derivative financial assets and equity securities. Unallocated results primarily include the share of results of associates and joint ventures, dividend income from equity securities, and the fair value movement of financial instruments recognized through profit or loss.
#
The additions of
non-current
assets do not include interest in associates and joint ventures, other equity instrument investments, other
non-current
financial assets, derivative financial assets and deferred tax assets.
 
(b)
Geographical information
The Group’s business segments operate in three main geographical areas, even though they are managed on a worldwide basis.
The Group’s revenue by geographical segment are analysed based on the following criteria:
 
 
(1)
Traffic revenue from services of both origin and destination within the PRC (excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan (“Hong Kong, Macau and Taiwan”)), is classified as domestic revenue. Traffic revenue with origin and destination among PRC, Hong Kong, Macau and Taiwan is classified as Hong Kong, Macau and Taiwan revenue; while that with origin from or destination to other overseas markets is classified as international revenue.
 
 
(2)
Revenue from commission income, hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services are classified on the basis of where the services are performed.
 
 
  
2019
 
  
2018
 
  
2017
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
Domestic
  
 
110,112
 
  
 
103,287
 
  
 
92,986
 
International
  
 
41,651
 
  
 
37,773
 
  
 
32,117
 
Hong Kong, Macau and Taiwan
  
 
2,559
 
  
 
2,563
 
  
 
2,386
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
 
154,322
 
  
 
143,623
 
  
 
127,489
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The major revenue earning asset of the Group is its aircraft fleet which is registered in the PRC and is deployed across its worldwide route network. Majority of the Group’s other assets are located in the PRC. CODM considers that there is no suitable basis for allocating such assets and related liabilities to geographical locations. Accordingly, geographical segment assets and liabilities are not disclosed.
 
(c)
Reconciliation of reportable segment revenue, profit before income tax, assets and liabilities to the consolidated figures as reported in the consolidated financial statements
 
   
             
   
             
   
             
   
             
 
 
 
 
2019
 
  
2018
 
  
2017
 
 
  
Note
 
 
RMB
million
 
  
RMB
million
 
  
RMB
million
 
Revenue
  
   
 
   
  
   
  
   
Reportable segment revenue
  
 
6(a)
 
 
 
154,322
 
  
 
143,623
 
  
 
127,489
 
Reclassification of expired sales in advance of carriage
  
 
(i)
 
 
 
—  
 
  
 
—  
 
  
 
396
 
Reclassification of sales tax
  
   
 
 
—  
 
  
 
—  
 
  
 
(65
) 
Adjustments arising from business combinations under common control
  
 
(iv)
 
 
 
—  
 
  
 
—  
 
  
 
(14
) 
 
  
   
 
 
 
 
  
 
 
 
  
 
 
 
Consolidated revenue
  
   
 
 
154,322
 
  
 
143,623
 
  
 
127,806
 
 
  
   
 
 
 
 
  
 
 
 
  
 
 
 
 
   
             
   
             
   
             
   
             
 
 
  
 
 
 
2019
 
  
2018
 
  
2017
 
 
  
Note
 
 
RMB
million
 
  
RMB
million
 
  
RMB
million
 
Profit before income tax
  
   
 
   
  
   
  
   
Reportable segment profit before taxation
  
 
6(a)
 
 
 
4,070
 
  
 
4,487
 
  
 
8,798
 
Capitalization of exchange difference of specific loans
  
 
(ii)
 
 
 
(16
) 
  
 
(124
) 
  
 
47
 
Government grants
  
 
(iii)
 
 
 
1
 
  
 
1
 
  
 
21
 
Adjustments arising from business combinations under common control
  
 
(iv)
 
 
 
—  
 
  
 
—  
 
  
 
8
 
 
  
   
 
 
 
 
  
 
 
 
  
 
 
 
Consolidated profit before income tax
  
   
 
 
4,055
 
  
 
4,364
 
  
 
8,874
 
 
  
   
 
 
 
 
  
 
 
 
  
 
 
 
 
 
  
 
 
 
2019
 
  
2018
 
 
  
Note
 
 
RMB million
 
  
RMB million
 
Assets
  
   
 
   
  
   
Reportable segment assets
  
 
6(a)
 
 
 
306,646
 
  
 
246,655
 
Capitalization of exchange difference of specific loans
  
 
(ii)
 
 
 
56
 
  
 
72
 
Government grants
  
 
(iii)
 
 
 
(6
) 
  
 
(7
) 
Adjustments arising from business combinations under common control
  
 
(iv)
 
 
 
237
 
  
 
237
 
Others
  
   
 
 
(5
) 
  
 
(8
) 
 
  
   
 
 
 
 
  
 
 
 
Consolidated total assets
  
   
 
 
306,928
 
  
 
246,949
 
 
  
   
 
 
 
 
  
 
 
 
 
 
  
 
 
 
2019
 
  
2018
 
 
  
 
 
 
RMB million
 
  
RMB million
 
Liabilities
  
   
 
   
  
   
Reportable segment liabilities
  
 
6(a)
 
 
 
229,592
 
  
 
168,472
 
Others
  
   
 
 
7
 
  
 
8
 
 
  
   
 
 
 
 
  
 
 
 
Consolidated total liabilities
  
   
 
 
229,599
 
  
 
168,480
 
 
  
   
 
 
 
 
  
 
 
 
 
Notes:
 
(i)
Expired sales in advance of carriage are recorded under
non-operating
income in the 2017 PRC GAAP financial statements. Such income is recognized as other operating revenue in the IFRS financial statements. Effective from January 1, 2018, ticket breakage revenue is included in traffic revenue, as a result of the adoption of IFRS 15 (see Note 2(b)), and the same adjustment was also adopted in the PRC GAAP financial statements.
 
(ii)
In accordance with the PRC GAAP, exchange difference arising on translation of specific loans and related interest denominated in a foreign currency is capitalized as part of the cost of qualifying assets. Under IFRSs, such exchange difference is recognized in income statement unless the exchange difference represents an adjustment to interest.
 
(iii)
In accordance with the PRC GAAP, assets related government grants (other than special funds) are deducted from the cost of the related assets. Special funds granted by the government and clearly defined in the approval documents as part of “capital reserve” are accounted for as increase in capital reserve. Under IFRSs, assets related government grants are deducted to the cost of the related assets. The difference is resulted from government grants received in previous years and are recognized in capital reserve under PRC GAAP.
 
(iv)
In accordance with the PRC GAAP, the Company accounts for the business combination under common control by applying the
pooling-of-interest
method. Under the
pooling-of-interest
method, the difference between the historical carrying amount of the acquiree and the consideration paid is accounted for as an equity transaction. Business combinations under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established; for this purpose, relevant comparative figures are restated under PRC GAAP. Under IFRSs, the Company adopts the purchase accounting method for acquisition of business under common control.