Financial risk management and fair values (Tables)

12 Months Ended

Dec. 31, 2019

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Remaining Contractual Maturities of Non-derivative Financial Liabilities Based on Contractual Undiscounted Cash Flows

The following tables show the remaining contractual maturities at the end of the reporting period of the Group’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and the earliest date the Group can be required to pay:

	2019 Contractual undiscounted cash outflow
	Within 1 year or on demand RMB million		More than 1 year but less than 2 years RMB million		More than 2 years but less than 5 years RMB million		More than 5 years RMB million		Total RMB million		Carrying amount at December 31 RMB million
Borrowings		38,304		4,251		8,720		2,007		53,282		51,180
Lease liabilities		25,404		23,860		63,003		44,814		157,081		134,074
Trade and other payables and accrued charges		21,300		—		—		—		21,300		21,300
		85,008		28,111		71,723		46,821		231,663		206,554

	2018 Contractual undiscounted cash outflow										Carrying amount at December 31 RMB million
	Within 1 year or on demand RMB million		More than 1 year but less than 2 years RMB million		More than 2 years but less than 5 years RMB million		More than 5 years RMB million		Total RMB million
											(Note)
Borrowings		40,121		8,272		6,335		2,188		56,916		54,417
Obligations under finance leases		12,062		11,738		36,765		22,200		82,765		72,221
Trade and other payables and accrued charges		21,292		—		—		—		21,292		21,292
		73,475		20,010		43,100		24,388		160,973		147,930

Sensitivity Analysis of Significant Foreign Exchange Rates and Impact on Profit after Tax and Retained Profits

The following table indicates the instantaneous change in the Group’s profit after tax and retained profits that would arise if foreign exchange rates to which the Group has significant exposure at the end of the reporting period had changed at that date, assuming all other risk variables remained constant. The range of such sensitivity was considered to be reasonably possible at the end of the reporting date.

	2019
	Appreciation/(depreciation) of Renminbi against foreign currency			Increase/(decrease) on profit after tax and retained profits RMB million
USD		1	%		434
		(1	%)		(434	)
Euro		1	%		26
		(1	%)		(26	)
Japanese Yen		10	%		94
		(10	%)		(94	)

	2018
	Appreciation/(depreciation) of Renminbi against foreign currency			Increase/(decrease) on profit after tax and retained profits RMB million
USD		1	%		195
		(1	%)		(195	)
Euro		1	%		28
		(1	%)		(28	)
Japanese Yen		10	%		103
		(10	%)		(103	)

	2017
	Appreciation/(depreciation) of Renminbi against foreign currency			Increase/(decrease) on profit after tax and retained profits RMB million
USD		1	%		278
		(1	%)		(278	)
Euro		1	%		31
		(1	%)		(31	)
Japanese Yen		10	%		116
		(10	%)		(116	)

Disclosure of Exposure to Credit Risk and Expected Credit Losses for Air Ticket Receivables

The following table provides information about the Group’s exposure to credit risk and ECLs for air ticket receivables as at December 31, 2019 and 2018:

	December 31, 2019
	Expected loss rate %			Gross carrying amount RMB million		Loss allowance RMB million
Within 3 months		0.01	%		1,877		—
More than 3 months but less than 1 year		50.00	%		11		6
More than 1 year but less than 2 years		100.00	%		7		7
More than 2 years but less than 3 years		100.00	%		—		—
More than 3 years		100.00	%		16		16
					1,911		29

	December 31, 2018
	Expected loss rate %			Gross carrying amount RMB million		Loss allowance RMB million
Within 3 months		0.01	%		1,940		—
More than 3 months but less than 1 year		50.00	%		8		4
More than 1 year but less than 2 years		100.00	%		2		2
More than 2 years but less than 3 years		100.00	%		6		6
More than 3 years		100.00	%		16		16
					1,972		28

Schedule of Movement in the Allowances for Loan Losses

Movement in the loss allowance account in respect of trade receivables during the year is as follows:

	2019 RMB million			2018 RMB million
Balance at January 1		36			37
Amounts written off during the year		(11	)		(2	)
Impairment losses written back		(1	)		(4	)
Impairment losses recognized during the year		12			5
Balance at December 31		36			36

Carrying Value of Financial Instruments Measured at Fair Value on a Recurring Basis

					Fair value measurements as at December 31, 2019 categorized into
	Note		Fair value at December 31, 2019 RMB million		Level 1 RMB million		Level 2 RMB million		Level 3 RMB million
Recurring fair value measurement
Financial assets:
Other equity instrument investments:
-Non-listed shares		26		188		—		—		188
-Non-tradable shares		26		861		—		—		861
Other non-current financial assets:
-Listed shares		26		74		74		—		—
-Non-listed shares		26		32		—		—		32
Derivative financial assets:
-Interest rate swaps		27		3		—		3		—
-Cross currency swaps		27		187		—		187		—
-Forward foreign exchange contracts		27		31		—		31		—

						Fair value measurements as at December 31, 2018 categorized into
	Note		Fair value at December 31, 2018 RMB million			Level 1 RMB million		Level 2 RMB million			Level 3 RMB million
Recurring fair value measurement
Financial assets:
Other equity instrument investments:
-Non-listed shares		26		234			—		—			234
-Non-tradable shares		26		846			—		—			846
Other non-current financial assets:
-Listed shares		26		71			71		—			—
-Non-listed shares		26		32			—		—			32
Other financial assets		26		440			—		440			—
Derivative financial assets:
-Interest rate swaps		27		75			—		75			—
Financial liabilities:
Derivative financial liabilities:
-Cross currency swaps		27		(44	)		—		(44	)		—

Quantitative Information of Valuation Technique and Significant Unobservable Inputs Used in Measuring Financial Instruments at Fair Value on a Recurring Basis

Information about Level 3 fair value measurements

	Valuation technique	Significant unobservable inputs	Range
Other equity instruments investments
-Non-listed shares (1)&(3)	Market comparable companies	Discount for lack of marketability		22	%
-Non-tradable shares (2)&(3)	Discounted cash flow	Expected profit growth rate during the projection period		10-12	%
		Perpetual growth rate		3	%
		Perpetual dividend payout rate		80	%
		Expected dividend payout rate during the projection period		34	%
		Discount rate		9.90	%
Other non-current financial assets
-Non-listed shares (2)	Discounted cash flow	Expected profit growth rate during the projection period		11%-15	%
		Perpetual growth rate		1%-4	%
		Perpetual dividend payout rate		80	%
		Expected dividend payout rate during the projection period		27%-43	%
		Discount rate		9.90%-11.08	%

(1) The fair value of non-listed shares are determined by using comparable listed companies adjusted for lack of marketability discount. The fair value measurement is negatively correlated to the discount for lack of marketability.

(2) The fair value of these non-tradable shares and non-listed shares is determined by discounting projected cash flow series associated with respective investments. The valuation takes into account the expected profit growth rates and expected dividend payout rate of the investees. The discount rates used have been adjusted to reflect specific risks relating to respective investees. The fair value measurement is positively correlated to the expected profit growth rates during the projection period, perpetual growth rate, perpetual dividend payout rate and expected dividend payout rates during the projection period of respective investees, and negatively correlated to the discount rates.

(3) Any gain or loss arising from the remeasurement of the Group’s unlisted equity securities held for strategic purposes are recognized in the fair value reserve (non-recycling) in other comprehensive income. Upon disposal of the equity securities, the amount accumulated in other comprehensive income is transferred directly to retained earnings.

(4) From January 1, 2018, any gain or loss arising from the remeasurement of the Group’s unlisted equity securities held for strategic purposes are recognized in the fair value reserve (non-recycling) in other comprehensive income. Upon disposal of the equity securities, the amount accumulated in other comprehensive income is transferred directly to retained earnings.