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Significant accounting policies (Tables)
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Summary of Operating Lease Commitments
 
The following table reconciles the operating lease commitments as disclosed in Note 51(b) as at December 31, 2018 to the opening balance for lease liabilities recognized as at January 1, 2019:
 
 
  
January 1, 2019
RMB million
 
Operating lease commitments at December 31, 2018
  
 
75,729
 
Less: commitments relating to leases exempt from capitalization:
  
   
- short-term leases, other leases with remaining lease term ending on or before December 31, 2019 and leases of
low-value
assets
  
 
(924
) 
- leases contracts entered before December 31, 2018 but the lease period start after January 1, 2019
  
 
(16,612
) 
Less: total future interest expenses
  
 
(10,037
) 
 
  
 
 
 
Present value of remaining lease payments, discounted using the incremental borrowing rates at January 1, 2019
  
 
48,156
 
Add: finance lease liabilities recognized as at December 31, 2018
  
 
72,221
 
 
  
 
 
 
Total lease liabilities recognized at January 1, 2019
  
 
120,377
 
 
  
 
 
 
Summary of Impacts of the Adoption of IFRS 16
The following table summarizes the impacts of the adoption of IFRS 16 on the Group’s consolidated statement of financial position:
 
 
  
 
 
  
Adoption of IFRS 16
 
  
 
 
 
  
Carrying
amount at
December 31,
2018
 
  
Remeasurement
 
  
Reclassification
 
  
Carrying
amount at
January 1,
2019
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
Line items in the consolidated statement of financial position impacted by the adoption of IFRS 16:
  
   
  
   
  
   
  
   
Property, plant and equipment, net
  
 
170,692
 
  
 
—  
 
  
 
(88,880
) 
  
 
81,812
 
Right-of-use
assets
  
 
—  
 
  
 
45,437
 
  
 
91,914
 
  
 
137,351
 
Lease prepayments
  
 
2,970
 
  
 
—  
 
  
 
(2,970
) 
  
 
—  
 
Interest in associates
  
 
3,181
 
  
 
(527
) 
  
 
—  
 
  
 
2,654
 
Deferred tax assets
  
 
1,566
 
  
 
717
 
  
 
—  
 
  
 
2,283
 
Other assets
  
 
1,776
 
  
 
—  
 
  
 
(210
) 
  
 
1,566
 
Total
non-current
assets
  
 
222,877
 
  
 
45,627
 
  
 
(146
) 
  
 
268,358
 
Prepaid expenses and other current assets
  
 
3,659
 
  
 
(811
) 
  
 
—  
 
  
 
2,848
 
Total current assets
  
 
24,072
 
  
 
(811
) 
  
 
—  
 
  
 
23,261
 
Lease liabilities
  
 
—  
 
  
 
6,969
 
  
 
9,952
 
  
 
16,921
 
Current portion of obligations under finance leases
  
 
9,555
 
  
 
—  
 
  
 
(9,555
) 
  
 
—  
 
Accrued expenses
  
 
15,682
 
  
 
(83
) 
  
 
(397
) 
  
 
15,202
 
Total current liabilities
  
 
83,687
 
  
 
6,886
 
  
 
—  
 
  
 
90,573
 
Net current liabilities
  
 
59,615
 
  
 
7,697
 
  
 
—  
 
  
 
67,312
 
Total assets less current liabilities
  
 
163,262
 
  
 
37,930
 
  
 
(146
) 
  
 
201,046
 
Line items in the consolidated statement of financial position impacted by the adoption of IFRS 16:
  
   
  
   
  
   
  
   
Lease liabilities
  
 
—  
 
  
 
40,790
 
  
 
62,666
 
  
 
103,456
 
Obligations under finance leases
  
 
62,666
 
  
 
—  
 
  
 
(62,666
) 
  
 
—  
 
Provision for major overhauls
  
 
2,831
 
  
 
780
 
  
 
—  
 
  
 
3,611
 
Deferred benefits and gains
  
 
906
 
  
 
—  
 
  
 
(146
) 
  
 
760
 
Deferred tax liabilities
  
 
676
 
  
 
(178
) 
  
 
—  
 
  
 
498
 
Total
non-current
liabilities
  
 
84,793
 
  
 
41,392
 
  
 
(146
) 
  
 
126,039
 
Net assets
  
 
78,469
 
  
 
(3,462
) 
  
 
—  
 
  
 
75,007
 
Reserves
  
 
52,990
 
  
 
(3,124
) 
  
 
—  
 
  
 
49,866
 
Total equity attributable to equity shareholders of the Company
  
 
65,257
 
  
 
(3,124
) 
  
 
—  
 
  
 
62,133
 
Non-controlling
interests
  
 
13,212
 
  
 
(338
) 
  
 
—  
 
  
 
12,874
 
Total equity
  
 
78,469
 
  
 
(3,462
) 
  
 
—  
 
  
 
75,007
 
 
Summary of Estimated Impact on the Adoption of IFRS 16 on the Operating Results and the Financial Results Including Cash Flow
The following tables give an indication of the estimated impact of the adoption of the IFRS 16 on the Group’s financial result and cash flows for the year ended December 31, 2019, by adjusting the amounts reported under IFRS 16 in these consolidated financial statements to compute estimates of the hypothetical amounts that would have been recognized under IAS 17 if this superseded standard had continued to apply to 2019 instead of IFRS 16, and by comparing these hypothetical amounts for 2019 with the actual 2018 corresponding amounts which were prepared under IAS 17.
 
 
  
2019
 
 
2018
 
 
  
Amounts
reported
under
IFRS 16
 
 
Add back:
IFRS 16
depreciation,
maintenance
and interest
expenses, net
 
  
Add back:
net effect
between IAS
17 and IFRS
16 relating to
share of
associates’
results
 
  
Deduct:
estimated
amounts
related to
operating
leases as if
under IAS
17 (Note (i))
 
  
Hypothetical
amounts
for 2019
as if under
IAS 17
 
 
Compared to
amounts
reported for
2018 under
IAS 17
 
 
  
(A)
 
 
(B)
 
  
(C)
 
  
(D)
 
  
(E=A+B+C-D)
 
 
 
 
 
  
RMB million
 
 
RMB million
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
 
RMB million
 
Financial result for the year ended December 31, 2019 impacted by the adoption of IFRS 16:
  
   
 
   
  
   
  
   
 
   
Operating profit
  
 
10,838
 
 
 
7,580
 
  
 
—  
 
  
 
9,491
 
  
 
8,927
 
 
 
8,819
 
Interest expense
  
 
(5,845
) 
 
 
2,380
 
  
 
—  
 
  
 
—  
 
  
 
(3,465
) 
 
 
(3,202
) 
Exchange loss, net
  
 
(1,477
) 
 
 
756
 
  
 
—  
 
  
 
—  
 
  
 
(721
) 
 
 
(1,853
) 
Share of associates’ results
  
 
(178
) 
 
 
—  
 
  
 
216
 
  
 
—  
 
  
 
38
 
 
 
263
 
Profit before income tax
  
 
4,055
 
 
 
10,716
 
  
 
216
 
  
 
9,491
 
  
 
5,496
 
 
 
4,364
 
Profit for the year
  
 
3,084
 
 
 
10,716
 
  
 
216
 
  
 
9,491
 
  
 
4,525
 
 
 
3,364
 
 
 
  
2019
 
  
2018
 
 
  
Amounts
reported
under
IFRS 16
 
  
Estimated
amounts related
to operating
leases as if
under IAS 17
(Notes (i) & (ii))
 
  
Hypothetical
amounts for
2019 as if
under
IAS 17
 
  
Compared to
amounts
reported for
2018 under
IAS 17
 
 
  
(A)
 
  
(B)
 
  
(C=A+B)
 
  
 
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
Line items in the consolidated cash flow statement for the year ended December 31, 2019 impacted by the adoption of IFRS 16:
  
   
  
   
  
   
  
   
Cash generated from operating activities
  
 
39,728
 
  
 
(9,491
) 
  
 
30,237
 
  
 
21,174
 
Interest paid
  
 
(7,014
) 
  
 
2,380
 
  
 
(4,634
) 
  
 
(4,255
) 
Net cash generated from operating activities
  
 
31,175
 
  
 
(7,111
) 
  
 
24,064
 
  
 
15,388
 
Capital element of lease rentals paid (Note (iii))
  
 
(17,784
) 
  
 
7,111
 
  
 
(10,673
) 
  
 
(10,433
) 
Net cash (used in)/generated from financing activities
  
 
(21,833
) 
  
 
7,111
 
  
 
(14,722
) 
  
 
5,220
 
Notes:
(i)
The “estimated amounts related to operating leases” is an estimate of the amounts of the cash flows in 2019 that relate to leases which would have been classified as operating leases, if IAS 17 had still applied in 2019. This estimate assumes that there were no differences between rentals and cash flows and that all of the new leases entered into in 2019 would have been classified as operating leases under IAS 17, if IAS 17 had still applied in 2019. Any potential net tax effect is ignored.
(ii)
In this impact table these cash outflows are reclassified from financing to operating in order to compute hypothetical amounts of net cash generated from operating activities and net cash used in financing activities as if IAS 17 still applied.
(iii)
The capital element of finance leases under IAS 17 previously presented as “Repayment of principal under finance lease obligations” in 2018 consolidated cash flow statement.
Summary of Impact of Transition to IFRS 9 on Retained Earnings and Reserves and Related Tax Impact
The following table summarizes the impact of transition to IFRS 9 on retained earnings and reserves and the related tax impact at January 1, 2018.
 
Retained earnings
  
RMB million
 
Transferred from fair value reserve (recycling) relating to financial assets now measured at fair value through profit or loss (FVPL)
  
 
30
 
Remeasurement of other investments in equity securities now measured at FVPL at January 1, 2018
  
 
23
 
Related tax
  
 
(5
) 
Effect of the above changes on
non-controlling
interests
  
 
(8
) 
 
  
 
 
 
Net increase in retained earnings at January 1, 2018
  
 
40
 
 
  
 
 
 
Fair value reserve (recycling)
  
   
Transferred to retained earnings relating to financial assets now measured at FVPL
  
 
(30
) 
Transferred to fair value reserve
(non-recycling)
relating to equity securities now measured at fair value through other comprehensive income (FVOCI)
  
 
(210
) 
 
  
 
 
 
Net decrease in fair value reserve (recycling) at January 1, 2018
  
 
(240
) 
 
  
 
 
 
Fair value reserve
(non-recycling)
  
   
Transfer and remeasurement effect of other investments in equity securities now measured at FVOCI at January 1, 2018
  
 
334
 
Related tax
  
 
(31
) 
 
  
 
 
 
Net increase in fair value reserve
(non-recycling)
at January 1, 2018
  
 
303
 
 
  
 
 
 
Non-controlling
interests
  
   
Remeasurement of other investments in equity securities now measured at FVPL in
non-controlling
interests at January 1, 2018
  
 
8
 
 
  
 
 
 
 
Summary of Original Measurement Categories For Each Class of Financial Assets Under IAS 39 and Reconciles Carrying Amounts of Financial Assets Determined in Accordance with IAS 39 to those Determined in Accordance with IFRS 9
The following table shows the original measurement categories for each class of the Group’s financial assets under IAS 39 and reconciles the carrying amounts of those financial assets determined in accordance with IAS 39 to those determined in accordance with IFRS 9.
 
 
  
IAS 39
carrying
amount at
December 31,
2017
 
  
Reclassification
 
  
Remeasurement
 
  
IFRS 9
carrying
amount at
January 1,
2018
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
Financial assets measured at FVOCI
(non-recyclable)
  
   
  
   
  
   
  
   
Other equity instrument investments
  
 
—  
 
  
 
637
 
  
 
124
 
  
 
761
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Financial assets carried at FVPL
  
   
  
   
  
   
  
   
Other non-current financial assets
  
 
—  
 
  
 
88
 
  
 
23
 
  
 
111
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Financial assets classified as
available-for-sale
under IAS 39
  
   
  
   
  
   
  
   
Available-for-sale
financial assets
  
 
622
 
  
 
(622
) 
  
 
—  
 
  
 
—  
 
Other investments in equity securities
  
 
103
 
  
 
(103
) 
  
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Summary of Impact of Transition to IFRS 15 on Total Equity
The following table summarizes the impact of transition to IFRS 15 on total equity at January 1, 2018:
 
 
  
RMB million
 
Total equity
  
   
Earlier recognition of ticket breakage revenue
  
 
682
 
Change in measurement of revenue under frequent flyer award programs
  
 
89
 
Related income tax
  
 
(192
) 
 
  
 
 
 
Total equity
  
 
579
 
Representing:
  
   
Attributable to equity shareholders of the Company
  
 
526
 
Non-controlling
interests
  
 
53
 
 
  
 
 
 
Summary of Estimated Impact of Adoption of IFRS 15
The following tables summarize the estimated impact of adoption of IFRS 15 on the Group’s consolidated financial statements for the year ended December 31, 2018, by comparing the amounts reported under IFRS 15 in these consolidated financial statements with estimates of the hypothetical amounts that would have been recognized under IAS 18 and IAS 11 if those superseded standards had continued to apply to 2018 instead of IFRS 15. These tables show only those line items impacted by the adoption of IFRS 15:
 
 
  
Amounts
reported in
accordance
with
IFRS 15
 
  
Hypothetical
amounts
under
IASs 18
and 11
 
  
Difference:
Estimated
impact of
adoption of
IFRS 15 on
2018
 
 
  
(A)
 
  
(B)
 
  
(A)-(B)
 
 
  
RMB million
 
  
RMB million
 
  
RMB million
 
Line items in the consolidated income statement for year ended December 31, 2018 impacted by the adoption of IFRS 15:
  
   
  
   
  
   
Traffic revenue
  
 
138,064
 
  
 
136,641
 
  
 
1,423
 
Other operating revenue
  
 
5,559
 
  
 
6,855
 
  
 
(1,296
) 
Total operating revenue
  
 
143,623
 
  
 
143,496
 
  
 
127
 
Profit before income tax
  
 
4,364
 
  
 
4,237
 
  
 
127
 
Income tax
  
 
(1,000
) 
  
 
(968
) 
  
 
(32
) 
Profit for the year
  
 
3,364
 
  
 
3,269
 
  
 
95
 
Profit attributable to:
  
   
  
   
  
   
Equity shareholders of the Company
  
 
2,895
 
  
 
2,805
 
  
 
90
 
Non-controlling
interests
  
 
469
 
  
 
464
 
  
 
5
 
Earnings per share
  
   
  
   
  
   
Basic and diluted
  
 
RMB0.27
 
  
 
RMB0.26
 
  
 
RMB0.01
 
Line items in the consolidated statement of comprehensive income for year ended December 31, 2018 impacted by the adoption of IFRS 15:
  
   
  
   
  
   
Total comprehensive income for the year
  
 
3,619
 
  
 
3,524
 
  
 
95
 
Total comprehensive income attributable to:
  
   
  
   
  
   
Equity shareholders of the Company
  
 
3,048
 
  
 
2,958
 
  
 
90
 
Non-controlling
interests
  
 
571
 
  
 
566
 
  
 
5
 
Line items in the consolidated statement of financial position as at December 31, 2018 impacted by the adoption of IFRS 15:
  
   
  
   
  
   
Deferred tax assets
  
 
1,566
 
  
 
1,570
 
  
 
(4
) 
Non-current
assets
  
 
222,877
 
  
 
222,881
 
  
 
(4
) 
Contract liabilities
  
 
(1,693
) 
  
 
—  
 
  
 
(1,693
) 
Sales in advance of carriage
  
 
(8,594
) 
  
 
(9,357
) 
  
 
763
 
Deferred revenue
  
 
—  
 
  
 
(1,808
) 
  
 
1,808
 
Current income tax
  
 
(369
) 
  
 
(130
) 
  
 
(239
) 
Total current liabilities
  
 
(83,687
) 
  
 
(84,326
) 
  
 
639
 
Total assets less current liabilities
  
 
163,262
 
  
 
162,627
 
  
 
635
 
Deferred revenue
  
 
—  
 
  
 
(2,057
) 
  
 
2,057
 
Other
non-current
liabilities
  
 
(2,036
) 
  
 
(18
) 
  
 
(2,018
) 
Total
non-current
liabilities
  
 
(84,793
) 
  
 
(84,832
) 
  
 
39
 
Reserves
  
 
(52,990
) 
  
 
(52,374
) 
  
 
(616
) 
Total equity attributable to equity shareholders of the Company
  
 
(65,257
) 
  
 
(64,641
) 
  
 
(616
) 
Non-controlling
interests
  
 
(13,212
) 
  
 
(13,154
) 
  
 
(58
) 
Total equity
  
 
(78,469
) 
  
 
(77,795
) 
  
 
(674
) 
Line items in the reconciliation of profit before income tax to cash generated from operating activities for year ended December 31, 2018 (Note 34(b)) impacted by the adoption of IFRS 15:
  
   
  
   
  
   
Profit before income tax
  
 
4,364
 
  
 
4,237
 
  
 
127
 
Increase in contract liabilities
  
 
232
 
  
 
—  
 
  
 
232
 
Increase in sales in advance of carriage
  
 
1,441
 
  
 
1,504
 
  
 
(63
) 
Increase in deferred revenue
  
 
—  
 
  
 
514
 
  
 
(514
) 
Increase in other
non-current
liabilities
  
 
218
 
  
 
—  
 
  
 
218
 
Estimated Useful Lives for Depreciation Using Straight Line Method of Other Property, Plant and Equipment
Except for components related to overhaul costs, the depreciation of other property, plant and equipment is calculated to write off the cost of items, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:
 
Buildings
  
 
5 to 35 years
 
Owned aircraft
  
 
15 to 20 years
 
Other flight equipment
  
   
– Jet engines
  
 
15 to 20 years
 
– Others, including rotables
  
 
3 to 15 years
 
Machinery and equipment
  
 
4 to 10 years