China Eastern Airlines : 20160831-CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTION

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.

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

Reference is made to the announcement of the Company dated 30 August 2013 and the circular of the Company dated 25 September 2013 in relation to, amongst others, the Existing Continuing Connected Transactions in respect of agreements for the provision of goods and/or services between certain members of the CEA Holding Group and the Group.

In order to better manage the Existing Continuing Connected Transactions and to regulate the continuing business relationships between the Group and the CEA Holding Group, the Company entered into the respective renewed agreements relating to the Existing Continuing Connected Transactions.

In respect of the provision of deposit services under the Financial Services Renewal Agreement, the relevant percentage ratios applicable to such transactions for the purpose of Chapter 14A of the Listing Rules is expected to exceed 5% on an annual basis in the on-going performance of the agreement. Such transactions together with the Annual Caps therefore are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under the Listing Rules. Furthermore, as the relevant applicable percentage ratios set out in the Listing Rules in respect of such transactions are expected to exceed 5% but be less than 25%, they also constitute discloseable transactions pursuant to the Listing Rules and are accordingly subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

In respect of the provision of loan and financing services under the Financial Services Renewal Agreement, since the services are being provided by the Eastern Air Finance Entities to the Group at interest rates not higher than the relevant rates set by the People's Bank of China and negotiated on arm's length basis and determined by market principles and by reference to the interest rates set by independent third-party financial institutions, the transaction involves provision of financial assistance by the Eastern Air Finance Entities for the benefit of the Group on normal commercial terms (or better to the Group) where no security over the assets of the Group is granted in respect of the financial assistance. This part of the transaction is therefore exempt from the reporting, announcement, annual review and Independent Shareholders' approval requirements, by virtue of Rule 14A.90 of the Listing Rules.

In respect of the provision of the "other financial services" under the Financial Services Renewal Agreement, the relevant services provided by the Eastern Air Finance Entities and the CES Finance Entities for each of the two financial years ended 31 December 2014 and 2015 are minimal and any future transactions that may take place between the Group (on the one hand) and the Eastern Air Finance Entities or the CES Finance Entities (on the other hand) in respect of such services is expected to be minimal. Accordingly, pursuant to Rule 14A.76, such transactions are exempt from all reporting, announcement, annual review and Independent Shareholders' approval requirements. Should the actual transaction amount exceeds the de minimis threshold in future, the Company will comply with the applicable connected transaction regulatory requirements under Chapter 14A of the Listing Rules.

Apart from the transactions relating to the provision of deposit services under the Financial Services Renewal Agreement, as the relevant applicable percentage ratios set out in the Listing Rules in respect of the transactions under each Renewed Continuing Transaction are expected to be more than 0.1% but less than 5% on an annual basis, such transactions fall within Rule 14A.76 of the Listing Rules and are subject to the reporting, announcement and annual review requirements only and are exempt from Independent Shareholders' approval under the Listing Rules.

With respect to: (i) the transactions relating to the provision of loan and financing services under the Financial Services Renewal Agreement; and (ii) the transactions under the Catering Services Renewal Agreement, pursuant to the relevant provisions of the Shanghai Listing Rules, such transactions will be subject to Independent Shareholders' approval at the EGM.

A notice of EGM will be despatched on or around 9 September 2016. A circular containing further information in relation to (i) the transactions relating to the provision of deposit services under the Financial Services Renewal Agreement and the associated Annual Caps, (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders; and (iii) a letter of advice by Octal Capital Limited to the Independent Board Committee and the Independent Shareholders, will be issued by the Company and despatched to its shareholders no later than 21 September 2016, because additional time is required to prepare the information to be inserted in the circular.

1. RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS Background

   Reference is made to the announcement of the Company dated 30 August 2013 and the circular of the Company dated 25 September 2013 in relation to, amongst others, the Existing Continuing Connected Transactions in respect of agreements for the provision of goods and/or services between certain members of the CEA Holding Group and the Group.

   In order to better manage the Existing Continuing Connected Transactions and to regulate the continuing business relationships between the Group and the CEA Holding Group, the Company entered into the respective renewed agreements relating to the Existing Continuing Connected Transactions. These agreements are set out as follows:

   Agreements Counterparties and connected person relationship

2. Property Leasing Renewal Agreement

   CEA Holding, which is directly or indirectly interested in approximately 56.38% of the Company's issued share capital, and is a controlling shareholder of the Company and thus a connected person thereof.

3. Financial Services Renewal Agreement

   東航集團財務有限責任公司 (Eastern Air Group Finance Co., Ltd.) (the " Eastern Air Finance Company"), which is directly interested as to approximately 53.75% by, and is thus an associate of, CEA Holding.

   東航金控有限責任公司 (CES Finance Holding Co., Ltd.) ("CES Finance"), a wholly-owned subsidiary of CEA Holding.

4. Import and Export Services Renewal Agreement

   (previously known as

   Import and Export Agency Renewal Agreement)

   東方航空進出口有限公司 (Eastern Aviation Import & Export Co., Ltd.) ("Eastern Aviation Import & Export Company "), which is directly interested as to 55% by, and is thus an associate of, CEA Holding.

5. Catering Services Renewal Agreement

   東方航空食品投資有限公司 (China Eastern Air Catering Investment Co., Ltd.) ("Eastern Air Catering Company"), which is directly interested as to 55% by, and is thus an associate of, CEA Holding.

   Agreements Counterparties and connected person relationship

6. Complementary Services Renewal Agreement

   (previously known as

   Maintenance and Repair

   Services Renewal Agreement)

   東航實業集團有限公司 (CEA Development Co., Ltd.) ("CEA Development"), a wholly- owned subsidiary of CEA Holding.

7. Advertising Services Renewal Agreement

東方航空傳媒股份有限公司 (China Eastern Airlines Media Co., Ltd.) ("CEA Media"), which is directly interested as to 55% by, and is thus an associate of, CEA Holding.

Certain charges for the services under the above agreements are determined based on tariffs, if available and applicable, set by the relevant PRC or industry regulatory authorities. Those transactions where the charges are not set by reference to prescribed regulatory tariffs are determined based on commercial negotiations between the parties, in each case on an arm's length basis. The terms of these transactions are, as currently anticipated, no less favourable than the terms as may be available to the Group from independent third parties and are, in the Directors' view, fair and reasonable and in the interests of the Company and its shareholders as a whole.

In compliance with the relevant requirements under the Listing Rules, the Company has set maximum annual consideration or values, or annual caps, in respect of each of the Renewed Continuing Connected Transactions. These annual caps are, to the extent appropriate, determined by reference to factors including historical figures and expected future business growth which, in the Directors' view, are fair and reasonable.

1. Property Leasing Renewal Agreement

   CEA Holding is a wholly PRC state-owned enterprise. It is principally engaged in managing all the state-owned assets and equity interest formed and invested by the state in CEA Holding and its invested enterprises.

   Please refer to the paragraphs headed "Property Leasing Renewal Agreement" on pages 4 to 7 of the Company's announcement dated 30 August 2013 for the background and history of the Existing Property Leasing Agreement.

   On 30 August 2016, the Company entered into an agreement relating to the renewal of the Existing Property Leasing Agreement with CEA Holding (the "Property Leasing Renewal Agreement"). Pursuant to the Property Leasing Renewal Agreement, the Company will lease from CEA Holding and its subsidiaries the following properties, for use by the Group in its daily airlines and other business operations:

2. altogether 17 land properties owned by CEA Holding in Lanzhou, Gansu, covering an aggregate site area of approximately 234,989 square metres together with a total of 81 building properties, construction, structures and other ancillary facilities occupying an aggregate floor area of approximately 54,290 square metres;