Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F:
x
Form 20-F
¨
Form
40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
¨
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
¨
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934:
¨
Yes
x
No
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b):
n/a
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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China Eastern Airlines Corporation Limited
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(Registrant)
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Date
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December 26, 2017
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By
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/s/
Wang Jian
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Name: Wang Jian
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Title: Company Secretary
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Certain statements
contained in this announcement may be regarded as "forward-looking statements" within the meaning of the U.S. Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors,
which may cause the actual performance, financial condition or results of operations of the Company to be materially different
from any future performance, financial condition or results of operations implied by such forward-looking statements. Further
information regarding these risks, uncertainties and other factors is included in the Company's filings with the U.S. Securities
and Exchange Commission. The forward-looking statements included in this announcement represent the Company's views as of the
date of this announcement. While the Company anticipates that subsequent events and developments may cause the Company's views
to change, the Company specifically disclaims any obligation to update these forward-looking statements, unless required by applicable
laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent
to the date of this announcement.
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.
CONTINUING CONNECTED TRANSACTION
–
AIRCRAFT AND AIRCRAFT ENGINES
LEASING
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Reference
is made to the announcement of the Company dated 10 August 2017 in relation to, among other things, the entering into the Aircraft
Operating Lease Agreement between the Company (as lessee) and CES Leasing Group (as lessor). The Board is pleased to announce that
on 22 December 2017, the Company entered into the Framework Lease Agreement with CES Leasing, pursuant to which, CES Leasing Group
(as lessor(s)) agreed to provide operating leasing to the Group (as lessee(s)) in relation to the Aircraft and Aircraft Engines.
The transactions
contemplated under the Framework Lease Agreement constitute continuing connected transactions of the Company under the Hong Kong
Listing Rules. As the relevant applicable percentage ratios set out in the Hong Kong Listing Rules in respect of the transactions
contemplated under the Framework Lease Agreement are expected to be more than 0.1% but less than 5% on an annual basis, such transactions
are expected to be subject to the reporting, announcement and annual review requirements only and are exempt from Independent Shareholders’
approval requirements under the Hong Kong Listing Rules.
Furthermore, as
the term of the Lease Agreement under the Framework Lease Agreement exceeds three years, pursuant to Rule 14A.52 of the Hong Kong
Listing Rules, the Company has engaged the Independent Financial Adviser to review the Framework Lease Agreement and confirmed
that it is in the normal business practice for contracts of this type to be of such duration. Please refer to the section headed
“The View of the Independent Financial Adviser” in this announcement for further details.
The transactions
contemplated under the Framework Lease Agreement constitute continuing connected transactions of the Company under the Shanghai
Listing Rules and shall be subject to Independent Shareholders’ approval pursuant to the relevant requirements of the Shanghai
Listing Rules and the PRC law. As CES Leasing is held as to, among others, 50% by CEA Holding, the controlling shareholder of the
Company and
35%
by CES Global Holdings (Hong Kong) Limited, an indirect wholly-owned subsidiary of CEA Holding, CEA Holding and its associates
will abstain from voting on the ordinary resolutions approving the Framework Lease Agreement and the transactions contemplated
thereunder. For further details, please refer to the announcement published by the Company on the website of the Shanghai Stock
Exchange (
www.sse.com.cn
).
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INTRODUCTION
Reference is made
to the announcement of the Company dated 10 August 2017 in relation to, among other things, the entering into the Aircraft Operating
Lease Agreement between the Company (as lessee) and CES Leasing Group (as lessor). The Board is pleased to announce that on 22
December 2017, the Company entered into the Framework Lease Agreement with CES Leasing, pursuant to which, CES Leasing Group (as
lessor(s)) agreed to provide operating leasing to the Group (as lessee(s)) in respect of the Aircraft and Aircraft Engines.
In respect of the
proposed transactions under the Framework Lease Agreement, the Company invited bidding offer by way of public tender. Having considered
the relevant proposals, the Group considered that the rental in respect of the lease of the Aircraft and Aircraft Engines proposed
by the CES Leasing Group is the lowest and the terms of the lease arrangement are in line with the requirements of the Group.
FRAMEWORK LEASE
AGREEMENT
The major terms of the Framework Lease
Agreement are set out below:
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Date:
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22 December 2017
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Parties:
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(1) CES Leasing; and
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(2) the Company.
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Subjects to be leased:
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(1) The Aircraft which comprises of (i) B737 series and B787 series new Boeing Aircraft; (ii) A320 series, A330 series and A350 series new Airbus Aircraft; and (iii) part of the Old Aircraft; and
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(2) part of the Aircraft Engines.
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Term of Lease:
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Upon successful bidding of the tender of the Aircraft and/or Aircraft Engines during the period between 1 January 2018 and 31 December 2019 by CES Leasing Group, the term of each of the Lease Agreement shall be not more than 144 months for each leasing of the Aircraft and Aircraft Engines by CES Leasing Group (as the lessor(s)) to the Group (as the lessee(s))
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Rental and other lease-related payments:
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The rental for the Aircraft and Aircraft Engines (i) were determined after arm’s length negotiation between the parties and on normal commercial terms; and (ii) are comparable to the prevailing market rate for aircraft lease transactions of comparable nature. The annual rental payable for the Aircraft and the Aircraft Engines shall not exceed 30% of the same kind of business of the Company in 2016 and the monthly rental payable for each Aircraft and Aircraft Engine shall not exceed 0.8% of each of their respective purchase price.
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;
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In 2018 and 2019, the total annual rental payable by the Group to CES Leasing Group for all of the Aircraft and Aircraft Engines under the Lease Agreement(s) shall be not more than RMB8 billion and RMB8 billion, respectively. The 2018 annual rental payable for the Aircraft Engines and the Aircraft shall be not more than RMB75 million and RMB0.625 billion, respectively. The 2019 annual rental payable for the Aircraft Engines and the Aircraft shall be not more than RMB60 million and RMB1.34 billion, respectively.
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The rental is payable by the Group on a monthly basis.
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Historical Amounts and Proposed
Annual Caps
Save for the leasing of B737
series Boeing aircraft, the Lease contemplated under the Framework Lease Agreement is a new continuing connected transaction with
CES Leasing Group, no historical data is available for reference as far as the determination of the Proposed Annual Caps for the
other Aircraft or Aircraft Engines is concerned.
As at the date of this announcement,
pursuant to the Aircraft Operating Lease Agreement, the Group has leased five B737-800 Boeing aircraft from CES Leasing Group since
August 2017 and the Company has paid CES Leasing Group rental amount of RMB33,669,500 in total in accordance with the terms of
the Aircraft Operating Lease Agreement. The rental payable for the B737 series Boeing Aircraft under the Framework Lease Agreement
may be different depending on the fluctuation of the actual purchase price of aircraft.
The Proposed Annual Cap is
determined with reference to (i) the aggregate monthly rental payable by the Group to CES Leasing Group in respect of the Aircraft
and Aircraft Engines as stipulated in the Framework Lease Agreement; (ii) the projected size of the Group’s fleet; (iii)
the expected aircraft and aircraft engine utilisation of the Group; and (iv) other operating parameters (such as the percentage
of the Proposed Annual Cap compared to the same kind of business of the Company).
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For the year ending
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Proposed Annual Cap
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(million RMB)
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31 December 2018
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700
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31 December 2019
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1,400
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The Framework Lease Agreement
is renewable every three years and accordingly, the Company shall set the annual caps for the years after 31 December 2019 before
the expiry of the Framework Lease Agreement. Further announcement(s) will be made by the Company as and when appropriate in accordance
with the Hong Kong Listing Rules.
REASONS FOR AND BENEFITS
OF THE TRANSACTIONS
It is considered that with
its stable operation, CES Leasing possesses the professional qualification and capacity of operating aircraft and aircraft engines
leasing business. Moreover, the level of rental and conditions provided by CES Leasing Group for the surrender of lease has competitive
edges over other tenderers. The Company’s decision on choosing CES Leasing Group for the Lease will further optimize the
asset management of the Company, reduce its capital pressure and lower the risks associated with the depreciation of aircraft.
The Directors (including
the independent non-executive Directors) are of the view that (i) the Framework Lease Agreement is conducted on normal commercial
terms or on terms no less favourable to the Group than those available from independent third parties, are entered into in the
ordinary course of business of the Group, and are fair and reasonable and in the interests of the Group and the Shareholders as
a whole; and (ii) the Proposed Annual Caps in relation to the Framework Lease Agreement are fair and reasonable and in the interests
of the Group and the Shareholders as a whole.
LISTING RULES IMPLICATIONS
CES Leasing is a non-wholly-owned
subsidiary of CEA Holding, which in turn is the controlling shareholder of the Company. Each of CES Leasing and the wholly-owned
subsidiaries of CES Leasing is thus a connected person of the Company (as defined under the Hong Kong Listing Rules).
The transactions contemplated
under the Framework Lease Agreement constitute continuing connected transactions of the Company under the Hong Kong Listing Rules.
As the relevant applicable percentage ratios set out in the Hong Kong Listing Rules in respect of the transactions contemplated
under the Framework Lease Agreement are expected to be more than 0.1% but less than 5% in aggregate on an annual basis, such transactions
are expected to be subject to the reporting, announcement and annual review requirements only and are exempt from Independent Shareholders’
approval requirements under the Hong Kong Listing Rules.
Furthermore, as the term of
the Lease Agreement under the Framework Lease Agreement exceeds three years, pursuant to Rule 14A.52 of the Hong Kong Listing Rules,
the Company has engaged the Independent Financial Adviser to review the Framework Lease Agreement and confirmed that it is in the
normal business practice for contracts of this type to be of such duration. Please refer to the section headed “The View
of the Independent Financial Adviser” in this announcement for further details.
The resolutions regarding
the Framework Lease Agreement, the transactions contemplated thereunder and the relevant Proposed Annual Caps have been considered
and passed at the eighth ordinary meeting of the Board held on 22 December 2017. As (i) Mr. Liu Shaoyong (a Director and the chairman
of the Company), Mr. Ma Xulun (a Director), Mr. Li Yangmin (a Director), Mr. Xu Zhao (a Director), Mr. Tang Bing (a Director)
and Mr. Tian Liuwen (a Director) are members of the senior management of CEA Holding; and (ii) Mr. Gu Jiadan (a Director) is a
former member of the senior management of CEA Holding within the past 12 months, they may be regarded as having a material interest
in the Framework Lease Agreement and the transactions contemplated thereunder. As such, they have abstained from voting at the
aforementioned meeting of the Board convened for the purpose of approving, among others, the Framework Lease Agreement and the
transactions contemplated thereunder. Save as aforesaid, none of the Directors has any material interest in the Framework Lease
Agreement or the transactions contemplated thereunder.
The transactions
contemplated under the Framework Lease Agreement constitute continuing connected transactions of the Company under the Shanghai
Listing Rules and shall be subject to Independent Shareholders’ approval pursuant to the relevant requirements of the Shanghai
Listing Rules and the PRC law. As CES Leasing is held as to, among others, 50% by CEA Holding, the controlling shareholder of
the Company and 35% by CES Global Holdings (Hong Kong) Limited, an indirect wholly-owned subsidiary of CEA Holding, CEA Holding
and its associates will abstain from voting on the ordinary resolutions approving the Framework Lease Agreement and the transactions
contemplated thereunder. For further details, please refer to the announcement published by the Company on the website of the
Shanghai Stock Exchange (
www.sse.com.cn
).
THE VIEW OF THE INDEPENDENT
FINANCIAL ADVISER
The Company has engaged Opus
Capital Limited as the Independent Financial Adviser to provide independent advice in respect of the Framework Lease Agreement
pursuant to the requirement under Rule 14A.52 of the Hong Kong Listing Rules to explain why a period exceeding three years for
the aircraft and engine leasing agreements under the Framework Lease Agreement is required and to confirm that it is normal business
practice for agreements of this type to be of a duration longer than three years.
Opus Capital Limited has taken
into account the following factors when formulating its opinion pursuant to Rule 14A.52 of the Hong Kong Listing Rules:
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(a)
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the Framework Lease Agreement involving aircraft and engine leasing agreements (the “
Lease
Agreement
”) provides the Company with a certainty on the availability of the aircrafts and engines for a maximum tenure,
and therefore, the business operation will not be easily disrupted due to lack of aircrafts or engines;
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(b)
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a long lease tenure will enable the Company to fix its lease rental costs and reduce the uncertainty
on its operating cash flow;
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(c)
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the lease tenure is in line with the on-going practice of the Company to enter into Lease Agreement
with independent third parties, where the majority of such lease agreements are for a duration of more than ten years; and
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(d)
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in considering whether it is a normal business practice for the Lease Agreement to have a duration
longer than three years, it has also conducted research, on a best effort basis, on other companies with similar airline operations
in China (the “
Aircraft Lease Comparables
”) and aircraft engines leasing transactions (the “
Engine
Lease Comparables
”). In the course of its review, it is noted that the terms of the aircraft and engine leasing agreements
of the Aircraft Lease Comparables and Engine Lease Comparables in general have a duration of longer than three years.
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Having considered the factors
set out above, Opus Capital Limited is of the view that it is normal business practice for the airline operating companies to enter
into aircraft and engine lease agreements with a duration longer than three years.
INFORMATION ABOUT
THE PARTIES
The Company is principally
engaged in the business of civil aviation.
CES Leasing is principally
engaged in the provision of operating and finance leasing and other leasing services, purchase of domestic and foreign lease assets,
handling salvage value and maintenance of lease assets, and provision of advisory services and guarantee etc. for lease transactions.
As of 30 September 2017, the
unaudited total assets and net assets of CES Leasing amounted to approximately RMB7.381 billion and approximately RMB1.335 billion,
respectively. For the year ended 31 December 2016, CES Leasing recorded operating revenue and net profits of approximately RMB403
million and approximately RMB0.119 billion, respectively.
DEFINITIONS
In this announcement, unless
the context otherwise requires, the following terms shall have the following meanings:
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“Airbus”
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means Airbus S.A.S., legal successor of Airbus SNC, formerly known as Airbus GIE, a société par actions simplifiée duly created and existing under French law
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“Airbus Aircraft”
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The A320 series, A330 series and A350 series new aircraft
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“Aircraft”
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means the Boeing Aircraft, Airbus Aircraft and the Old Aircraft
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“Aircraft Engine”
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means the engines used in aircraft
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“Aircraft Lease Comparables”
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has the meaning as set out in the section under “The view of the Independent Financial Adviser” of this announcement
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“Aircraft Operating Lease Agreement”
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means the five
agreements entered into on 10 August 2017 by the Company with CES Leasing Group, pursuant to which, CES Leasing Group agreed
to provide operating leasing to the Company in relation to five Boeing 737-800 aircraft. For further details, please refer to
the announcement of the Company dated 10
August 2017
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“associate(s)”
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has the meaning ascribed to it under the Hong Kong Listing Rules
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“Board”
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means the board of Directors
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“Boeing Aircraft”
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means Boeing 737 series and Boeing 787 series new aircraft
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“Boeing Company”
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means Boeing Company, a company incorporated in the State of Delaware of the United States of America
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“CEA Holding”
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means 中國東方航空集團公司 (China Eastern Air Holding
Company*), a wholly PRC state-owned enterprise and the controlling shareholder of the Company directly or indirectly holding approximately 56.38% of its issued share capital as at the date of this announcement
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“CES Leasing”
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means 東航國際融資租賃有限公司 (CES International Financial Leasing Corporation Limited), a company incorporated in the China (Shanghai) Pilot Free Trade Zone of the PRC with registered capital of RMB1 billion, and is directly held as to: (i) 50% by CEA Holding; (ii) 35% by 東航國際控股(香港)有限公司 (CES Global Holdings (Hong Kong) Limited) (an indirect wholly-owned subsidiary of CEA Holding); and (iii) 15% by 包頭盈德氣體有限 公司 (Baotou Yingde Gases Co., Ltd.) (an independent third party of the Company, the sole shareholder of which is Yingde Gases (Hong Kong) Company Limited, a company registered in Hong Kong) as at the date of this announcement
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“CES Leasing Group”
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means CES Leasing and/or the wholly-owned subsidiary(ies) established or to be established for the purpose of the Lease arrangement
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“Company”
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means 中國東方航空股份有限公司 (China Eastern Airlines Corporation Limited), a joint stock limited company incorporated in the PRC with limited liability, whose H shares, A shares and American depositary receipts are listed on the Hong Kong Stock Exchange, the Shanghai Stock Exchange and the New York Stock Exchange, Inc., respectively
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“connected person”
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has the meaning ascribed to it under the Hong Kong Listing Rules
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“Directors”
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means the directors of the Company
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“Engine Lease Comparables”
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has the meaning as set out in the section under “The view of the Independent Financial Adviser” of this announcement
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“Framework Lease Agreement”
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means the framework lease agreement entered into between the Company and CES Leasing on 22 December 2017, pursuant to which, CES Leasing Group agreed to provide operating leasing to the Group in relation to the Aircraft and the Aircraft Engines
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“Group”
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The Company and its wholly-owned or controlled subsidiaries
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“Hong Kong”
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means Hong Kong Special Administrative Region of the People’s Republic of China
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“Hong
Kong Listing Rules”
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means
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
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“Hong Kong Stock Exchange”
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means
The Stock Exchange of Hong Kong Limited
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“Independent
Financial Adviser”
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means
Opus Capital Limited, a corporation licensed under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities, being the independent
financial adviser engaged by the Company to provide an opinion pursuant to Rule 14A.52 of the Hong Kong Listing Rules
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“Independent Shareholders”
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means
the Shareholders, other than CEA Holding and its associate(s), if any
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“Lease”
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means
the leasing of the Aircraft and Aircraft Engines as contemplated under the Framework Lease Agreement
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“Lease Agreement”
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has
the meaning as set out in the section under “The view of the Independent Financial Adviser” of this announcement
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“Old Aircraft”
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means
the aircraft which have already been delivered or used
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“PRC”
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means
the People’s Republic of China
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“Proposed Annual Cap”
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means
the proposed annual caps for the two years ending 31 December
2019 in respect of the Lease
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“RMB”
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means
Renminbi, the lawful currency of the PRC
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“Shanghai Listing Rules”
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means
the Rules Governing the Listing of Stocks on Shanghai Stock Exchange
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“Shareholders”
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means
the shareholders of the Company
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“USD”
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means
United States dollar, the lawful currency of the United States of America
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For illustration
purposes only, an exchange rate of USD1.00 to RMB6.65 is used in this announcement. No representation is made that any amount in
RMB or USD is or could have been or could be converted at such rate or at any other rate or at all.
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By order of the Board
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CHINA EASTERN AIRLINES CORPORATION LIMITED
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Wang Jian
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Company Secretary
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Shanghai, the People’s Republic of China
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22 December 2017
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As at the date of this announcement,
the directors of the Company include Liu Shaoyong (Chairman), Ma Xulun (Vice Chairman, President), Li Yangmin (Director, Vice President),
Xu Zhao (Director), Gu Jiadan (Director), Tang Bing (Director, Vice President), Tian Liuwen (Director, Vice President), Li Ruoshan
(Independent non-executive Director), Ma Weihua (Independent non-executive Director), Shao Ruiqing (Independent non-executive Director)
and Cai Hongping (Independent non-executive Director).
*
For identification purpose
only