Right-of use assets

12 Months Ended

Dec. 31, 2019

21	Right-of-use assets


	Aircraft and engines			Land use rights		Buildings		Others		Total
	RMB million			RMB million		RMB million		RMB million		RMB million
				(Note 1)
Cost:
At January 1, 2019		187,991			3,671		1,300		138		193,100
Additions		20,609			225		1,490		51		22,375
Transfer from construction in progress (Note 20)		10,202			110		—		203		10,515
Reclassification with investment properties (Note 19)		—			16		—		—		16
Transferred to property, plant and equipment on exercise of purchase option (Note 19)		(2,641	)		—		—		—		(2,641	)
Disposals		(780	)		—		—		—		(780	)

At December 31, 2019		215,381			4,022		2,790		392		222,585

Accumulated amortization:
At January 1, 2019		55,048			701		—		—		55,749
Amortization charge for the year		14,485			107		637		34		15,263
Reclassification with investment properties (Note 19)		—			5		—		—		5
Transferred to property, plant and equipment on exercise of purchase option (Note 19)		(874	)		—		—		—		(874	)
Disposals		(769	)		—		—		—		(769	)

At December 31, 2019		67,890			813		637		34		69,374

Net book value:
At December 31, 2019		147,491			3,209		2,153		358		153,211

At January 1, 2019		132,943			2,970		1,300		138		137,351

Note 1:

The Group was formally granted the rights to use certain parcels of land by the relevant PRC authorities for periods of 30 to 70 years, which expire between 2020 and 2073.

As at December 31, 2019 and up to the date of approval of these financial statements, the Group is in the process of applying for land use right certificates in respect of certain land used by the Group. As at December 31, 2019, carrying value of such land use rights of the Group amounted to RMB843 million (December 31, 2018: RMB922 million). The Directors of the Company are of the opinion that the use of and the conduct of operating activities at the land referred to above are not affected by the fact that the Group has not yet obtained the relevant land use right certificates.

As at December 31, 2019, certain land use rights of the Group with an aggregate carrying value of approximately RMB87 million (December 31, 2018: lease prepayments of RMB88 million) were mortgaged for certain bank borrowings (Note 36(a)(i)).

In addition to the amortization charged, the analysis of expense items in relation to leases recognized in profit or loss is as follows:


	2019			2018			2017
	RMB million			RMB million			RMB million
				(Note)			(Note)
Interest on lease liabilities (Note 15)		5,302			2,409			2,009
Interest rate swaps: cash flow hedge, reclassified from equity (Note 15)		(18	)		(13	)		17
Expense relating to leases with remaining lease term ending on or before December 31, 2019		2,092			—			—
Expense relating to leases of variable lease payments not included in the measurement of lease liabilities		81			—			—
Total minimum lease payments for leases previously classified as operating leases under IAS 17		—			9,920			8,996

Note: The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at January 1, 2019 to recognize

right-of-use

assets relating to leases which were previously classified as operating leases under IAS 17. The depreciated carrying amount of the finance lease assets which were previously included in property, plant and equipment and lease prepayments is also identified as

right-of-use

assets. After initial recognition of

right-of-use

assets at January 1, 2019, the Group as a lessee is required to recognize the amortization of

right-of-use

assets, instead of the previous policy of recognizing rental expenses incurred under operating leases on a straight-line basis over the lease term. Under this approach, the comparative information is not restated. See Note 2(b).

During the year, additions to

right-of-use

assets were primarily related to the capitalized lease payments payable under new tenancy agreements and newly acquired leasehold aircraft.

Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in Note 34(d) and Note 37 respectively.