investment banking class project

March 2013

Rainforest Capital Transportation M&A

Discussion of Possible Acquisition for SIA

STRICTLY CONFIDENTIAL

Rainforest capital

Agenda

2

Section!1. Overview of the Global Aviation Industry"2. Our Understanding of SIAs Current Position"3. Investment Opportunity in China"4. Deal Motivation"5. Preliminary Valuation on China Eastern Airlines"6. Transaction Structure and Considerations"7. Deal Team"

Appendix!A. Our Understanding of SIA"B. Our Understanding of China Eastern Airlines"C. List of Overlapping Routes"D. List of Acquisition Targets Profiles"E. Valuations"

Proposed Transaction

3

Proposed Transaction!

Structure can be negotiated, here we assume:" 50% Cash, 50% Debt" Stake of China Eastern is acquired

through a private placement"

25% stake to be acquired. Singapore Airlines would be the 2nd largest shareholder in China Eastern"

Board and management representation for Singapore Airlines is very likely"

A collaboration agreement can be set up with China Eastern group to cross-refer business"

New Issued Shares to SIA!

67%

Existing A and H Shareholding Base !

25%

CEA!

8%

50% Cash, 50% Debt"

Private Placement"

SIA"25%"

CEA Holding"

51%"

Others"24%"

Pro forma shareholding!

Shareholding Profile!

CEA "Holding" 59.9%"

Jin Jiang 3.0%"China National"Aviation Fuel,"3.7%"

Others" 29.6%"

Shanghai"Alliance " 3.8%"

China Eastern Air Holding Company! Controlling Shareholders of CEA" Owned by Government of China" Likely to require control after proposed

transaction"

Shanghai Alliance Investment Company! Private equity/Venture Capital Arm of

Shanghai Municipal Government "

China National Aviation Fuel! Invested in CEA in 2009 through private

placement""

Business Profile!

One of the Big Three airlines in China" Primarily focus on domestic flights: 70%

Domestic and 30% International" Base mainly out Shanghai Pudong Airport and

Hongqiao Airport" Operates a fleet of 334 aircrafts" Fly to over 120 destinations in China and

around the world"

Industry trends! Rising competition from middle eastern carriers

likely to erode market share of other full service carriers"

Liberalization of industry continues to fuel competition in the aviation space, particularly affecting short to medium haul routes"

Global aviation outlook to remain pessimistic as poor business climate in Europe continues to drag down demand of business travel"

Travel demand of emerging market continues to grow as these countries continue to drive the global recovery "

An opportunity for SIA to invest a significant stake in China Eastern Airlines to become a major strategic shareholder!

Rainforest capital 4

Overview of the Global Aviation Industry"

SECTION 1"

Overview of Global Aviation Industry Global aviation revenues rebounded from trough!Airlines face weak profitability and growth!

Tepid growth in premium passengers!Airline profitability facing pressures from fuel price!

Airline revenues declined 15.6% y-o-y in 2009 due to the economic recession. Sales have since rebounded but future growth remains uncertain"

Despite revenue growth, airline profitability remains depressed by high fuel costs. Jet fuel prices increased 79% from their low in 2009 to 2011"

The adverse economic environment has affected the premium segment the most. Growth in passengers remains subdued due to weak business confidence levels and depressed corporate travel spending budgets"

-30"

-20"

-10"

0"

10"

20"

Jan 2007" May 2008" Sep 2009" Feb 2011" Jun 2012"

YoY

grow

th"

5

0"

100"

200"

300"

400"

500"

600"

2007" 2008" 2009" 2010" 2011"

Indu

stry v

alue"

US$ bn"

Source: MarketLine!

0"

20"

40"

60"

80"

100"

120"

140"

-30"

-20"

-10"

0"

10"

20"

30"

2007" 2008" 2009" 2010" 2011"

Jet f

uel p

rice"

Indu

stry n

et p

rofit"

US$ bn" US$/bbl" %"

Source: IATA, Bloomberg! Source: IATA!

0"2"4"6"8"

10"12"14"

Africa" Asia Pacific" Europe" Latin America"

Middle East" North America"

YoY

grow

th in

traf

fic"

Nov-12" Dec-12"

%"

Intensifying Competition from Middle Eastern Carriers

0"20"40"60"80"

100"120"140"160"

Africa" Asia" Europe" North America"

Oceania" South America"

No. o

f des

tinat

ions"

2007" 2012"

Destinations served by Middle Eastern carriers!

Middle Eastern carriers have experienced strong growth in recent years. In 2012, they contributed 33% of the growth in international travel demand"

Middle Eastern carriers compete aggressively in the long haul segment by offering consumers lower prices for premium seats. This has allowed them to gain market share in markets like Australia at the expense of competitors"

These airlines have rapidly increased the number of destinations served over the past 5 years, especially within Asia and Europe. Flight destinations within Asia and Europe have increased by 33% and 63% respectively"

With their home bases in close proximity to these regions, Middle Eastern carriers are able to capitalize on strong travel demand from their home countries to destinations in Asia and Europe"

These carriers are also the main beneficiaries of transfer traffic from other regions to various parts of Asia and Europe"

Middle Eastern carriers have made strong orders of new generation aircraft such as the Boeing 777-300 ER and Airbus A380 Super jumbo, making their fleet younger and more fuel efficient "

6

Source: IATA!

Source: CAPA!

Highest growth in international passenger traffic!Middle Eastern carriers are gaining market share !

Liberalization of Industry has Fueled Competition Surge in number of new LCCs since OSP proposal !Open Sky Policy increases price competition!

Traffic growth lagging for national carriers!

The ASEAN Open Sky Policy (OSP) is likely to spur greater price competition, forcing airlines to look for new sources of growth"

The OSP was proposed during the ASEAN Economic Summit in 2003. This initiative seeks to promote trade and competition in the regions airline industry"

It is on track to be implemented in 2015 and member countries in ASEAN are likely to agree to lower price controls and capacity constraints on flight routes. Countries are also likely to agree to greater freedom of rights for airlines"

The introduction of the OSP will further increase competition on flight routes within ASEAN, especially in the budget segment"

Since the OSP was announced, the number of new low cost carriers set up each year has increased substantially"

Greater competition has led to lower prices in the budget segment. Airline carriers such as AirAsia and Tiger Airways will face greater pressures to improve productivity and aircraft utilization, or risk declining profitability as prices get depressed"

While passenger traffic at ASEAN airports are expected to increase, individual airline market shares are going to decrease with more competition. This trend will also affect national carriers who dominate key air hubs in their respective countries"

"

0"1"2"3"4"5"6"7"8"9"

2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012"

No. o

f New

LCC

s"

7

-20"

-10"

0"

10"

20"

30"

2001" 2003" 2005" 2007" 2009" 2011"YoY

grow

th in

traf

fic"

National Airports" National Carriers"

Source: Company data!

Source: Airport International Council, company data!

%!

0"1"2"3"4"5"6"7"8"

0"5"

10"15"20"25"30"35"40"45"50"

IN" CH" PH" ID" TH" MY" SK" NZ" BR" JP" SG" AY"

Fligh

ts/he

ad"

GDP

per c

apita

"

2011 per capita GDP" 2011 flights per capita"

-4%"-2%"0%"2%"4%"6%"8%"

10%"

2000" 2002" 2004" 2006" 2008" 2010" 2012"

GDP

grow

th"

Emerging Economies" Mature Economies"

The Emerging Markets Growth Story Decoupling of GDP growth rates!Positive macro trends point to growth!

Further growth headroom for in flights per capita!

24% 37% 45%

68%

76% 63% 55%

32%

0%"

20%"

40%"

60%"

80%"

100%"

1970" 1990" 2012" 2029E"

Glob

al RP

K m

arke

t sha

re"

Emerging Economies" Mature Economies"

Emerging economies expected to dominate RPK!

8

US$"

Source: Airbus!

Source: CEIC!

Source: National Bureau of Statistics!

Air travel demand is driven by increases in income levels. Since 2000, real GDP growth in emerging economies has averaged 6%, far outpacing the 2% annual growth for developed countries"

With increasing income levels, growth in demand for both domestic and international air travel in emerging markets like China and India is expected to outweigh growth in developed countries "

Total RPK market share for developing countries is expected to increase 51% by 2029"


Our Understanding of SIAs Current Position"

SECTION 2"

Since 2007, SIA passenger base has been recovering from the 2009 low of 16.5mn albeit at a gradual pace"

However, passenger recovery has fallen short of managements expectation as evident in the lag of FY 2011 RPK growth against ASK growth "

This capacity underutilization problem can be mainly attributed to the East Asia route, which saw the greatest fall of 2.4% in passenger load factor between 2010 and 2011"

" "

Lackluster Performance Following the Economic Crisis (1) Passenger base has recovered slightly post crisis..!

..with 2011 PLF falling the most for East Asia route(1)!

19.1"

18.3"

16.5" 16.6"17.2"

15"

16"

17"

18"

19"

20"

2007" 2008" 2009" 2010" 2011"

Pass

enge

rs C

arrie

d"

..but 2011 RPK has lagged behind ASK growth!

2.6%"

-1.5%"

-8.0%"

2.3%"3.6%"

1.2%"3.4%"

-10.3%"

2.3%"5.0%"

-15%"

-10%"

-5%"

0%"

5%"

10%"

2007" 2008" 2009" 2010" 2011"

mn"

2011

Fall

in P

asse

nger

Lo

ad F

acto

r"

2.4%"

1.6%"

0.5%"

0.5%"

0.1%"

0%" 1%" 2%" 3%"

EAS"

AMR"

EUR"

WAA"

SWP"

1. SWP: South West Pacific; WAA: West Asia and Africa; EUR: Europe; AMR: Americas; EAS: East Asia!

: RPK growth" : ASK growth"

10

Recovery has failed to meet managements expectations!


Source: Company data!Source: Company data!

Lackluster Performance Following the Economic Crisis (2) Narrowing passenger yield premium!

Rising costs driven by volatile fuel prices!

8.4 8.7

7.4

9.3 9.1

7.8 7.7

7.2

8.6 9.0

6

7

8

9

10

2007" 2008" 2009" 2010" 2011"

Pass

enge

r Yiel

d "

US cents / RPK"

SIA

Expe

nditu

re"

4.1" 5.4" 3.5" 4.6"5.8"

1.5"1.8"

1.9"2.3"

2.2"1.8"1.5"

1.4"2.2"

2.2"1.3"1.4"

1.3"1.6"

1.7"2.4"

2.2"2.1"

2.6"2.7"11.1"

12.2"10.2"

13.3"14.6"

0"

4"

8"

12"

16"

20"

2007" 2008" 2009" 2010" 2011"1. Average passenger yield of Emirates, Qantas, Cathay Pacific, Thai Airways and China

Airlines!

: SIA" : Regional Competitors(1)"

:Fuel" : Depreciation/Lease" : Staff": Handling/Airport" : Others"

SGD mn"

11

Underutilization compounded by compressing margins! SIA has traditionally enjoyed a pricing premium edge over its

regional competitors due to its strong branding and effective marketing strategy"

However, over the last 5 years, this premium has narrowed as evident in the difference between its passenger yield and that of its regional competitors "

While this decrease in passenger yield may be attributed to SIAs discount marketing strategy that is aimed to boost its falling passenger load factor, this may be unsustainable in the long run"

This is especially so as cost continue to rise, driven by the volatile fuel prices and rising regional airport and handling charges"

"

" "



Industry Driving the Poor Performance of SIA Growing pessimism about the aviation sector!Volume and margin pressure driven by industry!

We do not see SIA making any significant headway until the corporate world that is the cornerstone of premium travel demand begins to change its travel policies shrinking to focus on profitable and defendable routes might actually be the most appropriate response to the prevailing competitive environment.!

Credit Suisse (14 Feb 2013)"

Promotional activities continue to prop up the Group in the near-term!but SIA still lacks a clear catalyst to revive its fortunes. With competing airlines aggressively expanding their footprint e.g. Eithad Airways et al, SIA has responded with greater frequency of flights to protect their market share, and this could lead to further deterioration in passenger yields.!

OCBC (8 Feb 2013)"

Sale of Virgin to realign SIAs focus in growth markets..! ..and frees up capital for a potential inorganic acquisition!

0"

2"

4"

6"

8"

10"

2008" 2009" 2010" 2011" 2012"Net Reinvestment" BS Cash"

SGD bn"

Fall in business travel spending in Europe due to the poor business climate has forced SIA to shift its focus on the more profitable and growing its East Asia routes while cutting down on its Europe routes "

Facing rising competition from the Middle Eastern airlines as well as LCCs in this segment, SIA has embarked on a promotional marketing strategy to maintain its market share amidst the tough operating conditions "

Substantial investments in Virgin Atlantic has yielded limited returns given its marginal profitability and the failure to realize synergies"

Divestment of its asset in its non-core market will continue to allow SIA to channel more investments into its core market in Asia"

Source: Company data!12

Options to Improve Competitive Position

Load factors for premium sector expected !to remain weak!

Intensifying competition from Middle-Eastern airlines in

Europe and Asia !Sales of Virgin allows for focus and expansion on Asia Pacific!

13

Organic growth ! Hard to execute as airport landing spots are difficult to

secure from international airports due to limited supply of airspace"

In addition, flying licenses are tightly controlled by government regulators such as the Civil Aviation Administration of China, which has the right to approve new companies and grant them routes"

Current underperformance of East Asia route points out that achieving organic growth in an increasingly competitive but growing sector will take time"

"

Inorganic growth ! Sale of 49% stake in Virgin for SGD440 mn adds to

growing cash pile amounting to c. SGD4.85 bn"

An acquisition of an airline with exposure to a fast growing aviation market allows for quick access to new pool of passengers"

Reputation as an award winning international carrier makes it an attractive partner for other airlines companies to work with"


Investment Opportunity in China"SECTION 3"

Chinas Aviation Sector Remains Attractive Country! Macroeconomics! Regulations! Competition! Infrastructure! Score!

pGDP growth expected to rebound in 1Q13 to an annualized 8.0%, with CPI remain at a low 2.6%"

pGovernment plans to shift to a more consumption based economy"

pCAAS announced that airspace regulations will be relaxed from 2013 and encourages private investment in aviation industry"

"

pConsolidation in the sector has resulted with only the big 4 aviation carriers in oligopolistic control of the key domestic routes "

qRegional LCCs has intensified competition in the SE Asia-China routes"

pAddition of 78 new airports over the next 10 years, along with the spending of RMB250 bn in aviation infrastructure, under Chinas 12th 5-year plan "

pGDP growth expected continue growing at c. 6.0%, driven by strong consumer and government spending"

pInflation expected to dip to 3.1% in 2013 due to a robust economy with higher capacity"

pCAB approved rules to open skies to foreign airlines, specifically to any airports but Ninoy Aquino International Airport (NAIA)"

pASEAN open skies agreement to take effect from 2015 onwards"

qRegional LCCs currently hold c. 60% of the market, resulting in a very price sensitive market "

qMassive congestion in the countrys airspace currently as its main airport, NAIA, currently serves more than 90% of all traffic"

pGDP growth expected to rebound in 1Q13 to an annualized 6.7%"

qCPI expected to ease but will remain high at c. 6.6%"

qINR to weaken as central bank keeps interest rates high to combat inflation"

pEU-India bilateral agreement in place to allow any EU airline to operate flights between India "

qOpen skies agreement between ASEAN and India yet to be established"

qEntry of regional LCCs, with the latest being a JV between AirAsia and Tata Group, has intensified competition"

qMany Indian airlines, including Kingfisher, have made massive losses due to the highly competitive market"

qAirport fees has increased significantly, with New Delhi Airport raising its fees by 342%, resulting in several foreign airlines postponing its capacity increase in India"

pGDP growth projected to expand to 6.3% in 2013, driven by strong domestic consumption and investment growth"

qInflation pressures is building up as producers pass costs resulting from a weak rupiah to consumers"

"

pASEAN open skies agreement to take effect from 2015 onwards"

qASEAN open skies to limit access to only 5 airports as government declares that it is not ready to fully open its skies"

pCompetition still not as intense as the other aviation markets as it is partially mitigated by a surging demand for air travel"

qNew entrance of LCCs, such as Pacific Royale and Batik Air, may intensify competition going forward "

qMajor airports in Jakarta and Surabaya are currently operating at 250% above capacity, resulting in flight delays and increased aircraft waiting time"

"

Source: Wall Street Journal India, Central Statistics Office of India, Bangko Sentral ng Pilipinas, World Bank! 15

China has seen its GDP per capita double over the past five years, and Is poised to reach US$11,040 per capita by 2017"

Average annual wage has increased by a CAGR of 12% over the past five years, and is estimated to increase to US$976 monthly for the next five years, indicating a trend of rising affluence amongst Chinese nationals"

The governments attempt to shift towards a consumption based economy has seen forecasted consumption reaching 41% of GDP by 2017, pointing to a rise in discretionary spending which includes air travel"

Chinese data points to increasing air travel!

Positive Macro Supporting Chinese Aviation Activity Rising GDP per capita !

16

0"

2,000"

4,000"

6,000"

8,000"

10,000"

12,000"

2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"

China

s GD

P pe

r Cap

ita"

Consumption will continue to drive GDP growth !

30%"

32%"

34%"

36%"

38%"

40%"

42%"

2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"

Cons

umpt

ion a

s a %

of G

DP"

0"

200"

400"

600"

800"

1000"

1200"

2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016"

Chine

se a

vera

ge w

age

level"

Steadily increasing wage rate!Source: EIU!

Source: EIU! Source: EIU!

US$"

US$/annum"

40%"

42%"

44%"

46%"

48%"

50%"

52%"

54%"

2008" 2009" 2010" 2011" 2012"

Urba

nizat

ion R

ate"

More than half of Chinese are urbanized !

30"35"40"45"50"55"60"65"70"75"80"

2008" 2009" 2010" 2011" 2012"

Num

ber o

f leisu

re tr

avele

rs"

Domestic Market has Driven International Traffic

17

0

10

20

30

40

50

60

0"

50"

100"

150"

200"

250"

300"

2008" 2009" 2010" 2011" 2012"Domes2c Passengers Interna2onal Passengers

International travel an indirect beneficiary" Chinas urban population has increased rapidly to 53% of total

population, driving demand for transportation facilities and services, including air travel"

As a result of increased affluence, Chinese residents departure for private purpose in the past five years has increased at a CAGR of 14%, and they often seek international destinations as well in the process"

Therefore, the positive impact from Intra China air travel is seen on international passengers, which is poised to increase by 34 million international passengers in the next five years"

Chinese residents are increasingly travelling for leisure ! Domestic passengers aids growth of international !Source: CEIC!

Source: CEIC! Source: CAAC!

% of Total Population"

mn"mn"

250"182"

65"50"

40"34"33"30"28"

22"

0 50 100 150 200 250 300

US"CN"JP"

GR"UK"FR"IT"

SK"BR"CA" Chinas exports has hit the US$2 bn mark, making it a major

trade partner of the world. Forecasted exports and imports are estimated to increase at an average of 8% y-o-y until 2017 "

China also has achieved industrial outputs of around RMB910 bn, and the figure is poised to grow to RMB1.3 t by 2013"

Therefore, trade activities level are set to drive business spending, with business travel spending set to increase by 21% in 2013 to US$245 bn, overtaking the US by 2015 as the country spending the highest on corporate travel "

China the trade partner of the world !

Business Travel Spending Well Supported Ranked 2nd but poised to overtake US by 2015!

0"

0.5"

1"

1.5"

2"

2.5"

3"

3.5"

2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"

China

s im

ports

and

exp

orts"

Imports Exports

Exports and imports poised to grow 8% y-o-y!

0"

20"

40"

60"

80"

100"

120"

140"

2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"

China

s ind

ustri

al ou

tput

"

Industrial output rapidly reaching the RMB trillion mark!

Source: EIU!Source: EIU!

Source: Global Business Travel Foundation !

bn" bn"

bn"

18

RPK has grown at an average of 11.6% the past five years. This is accompanied by an increase in load factor to 80% in 2012"

China is estimated to grow at an average rate of 7% the next 20 years, and will account for 15.1% of the worlds RPK by 2031"

Domestic PRC routes is set to be the highest passenger volume route by 2031, amounting to 10.4% of market share of the worlds RPK. This will lead to better accessibility to the hubs in Shanghai, Guangzhou and Beijing for international aviation travel"

Positive outlook for the Chinese aviation sector !

China Remains as Main Driver of Global RPK Growth

0" 200" 400" 600" 800" 1000"1200"1400"1600"Domestic PRC"

Domestic US"Intra Western Europe "Western Europe to US"

Domestic India"Western Europe to South America"

Asia to PRC"Intra Asia"

Asia to Western Europe"Domestic Brazil"

2011" 2031"

0%"

5%"

10%"

15%"

20%"

25%"

2008" 2009" 2010" 2011" 2012"

China

s RP

K an

d ASK

gro

wth

rate

"

ASK" RPK"

RPK growth has outpaced ASK growth !

19

2 PRC routes to make up top 10 routes by 2031! Load factors has picked up steadily since 2008!

72%"73%"74%"75%"76%"77%"78%"79%"80%"81%"82%"

2008" 2009" 2010" 2011" 2012"

China

s pa

ssen

ger l

oad

facto

r"

Source: Airbus!

Source: CAAC!

Source: CAAC!

12th 5-Year Plan Supports Aviation Infrastructure Spending

20

RMB1.5 bn to be spent developing the sector! The focus on improving domestic consumption should help

drive demand for air travel both domestically and internationally"

The Civil Administration Administration of China is also set to open up part of its low altitude airspace to promote the countrys aviation sector, and also to facilitate the training of pilots"

An estimated RMB1.5 bn is to be spent developing Chinas aviation industry by the Chinese Government. These measures include increasing the number of airport by 26% to 220 and increasing the number of aviation aircrafts by 60% to 4,500 aircrafts nationwide"

A second airport is also expected to be built in Beijing, in order to cater to the rising passenger volume"

In the 12th 5-Year Plan, China will continue extending its rail network, investing RMB700 bn annually in rail projects, and connecting every city with a population of at least 500,000. Greater rail connectivity will allow greater accessibility to international hubs such as Beijing, Shanghai and Guangzhou, which will facilitate greater air travel"

As such, the total commercial aviation market is set to reach US$238.96 bn of revenues by 2020 from US$62.15 bn in 2011, rising at a CAGR of 16.15%.This is driven by mostly airlines which will account for 87% of the total commercial aviation market in 2020"

"

2012! 2017!

Airports! 175" 220"

Aircrafts! 2,500" 4,500"

Increase in airports/aircrafts under 12th 5-Year Plan!

0"

50"

100"

150"

200"

250"

2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" 2019" 2020"Airports" Airlines" General Aviation"

Chinese aviation market to reach US$240 bn by 2020!Source: China 12th 5 Year Plan!

Source: Frost and Sullivan!

US$bn"

Unique Opportunities for Growth Big 4 places have successfully established their own hubs!

0%" 10%" 20%" 30%" 40%" 50%" 60%" 70%" 80%" 90%"100%"

Beijing- Shanghai"

Beijing- Shenzhen"

Beijing- Chengdu"

Beijing- Guangzhou"

Shanghai- Guangzhou"

Shanghai- Shenzhen"

Air China" CEA" CSA" Hainan" Others"

The Chinese Airline industry is highly regulated by the Civil Aviation Administration of China (CAAC), which has the right to approve new airlines companies and grant them routes"

CAAC encourage major carriers to build dominance in their respective hubs, so as to avoid pricing wars. Hence, the Big 4 places are well dispersed geographically in their aviation hubs"

The top three players (CEA, CSA and Air China) have control of 90% of key flight routes, which possess the highest yield, and more importantly, are the gateways to the international travel which most Chinese will demand in the coming years"

"

CAAC encouraged consolidation in past decade!

Big 4 have dominance over most key routes!

Beijing!

Guangzhou!

Shanghai!

Air China ! ! China Southern Airlines!"China Eastern Airline ! Hainan Airlines!

21 Source: CAAC!

China Eastern: An Ideal Partner for SIA Target! Operational Strength! Strength of Hub! Synergic Potential! Availability! Score!

pExtensive domestic and international routes network, offering excellent connectivity and access to new customers"

pBased out of Shanghai, a major transportation hub for both international and domestic travel in China"

pOverlapping routes to Shanghai and Kunming, with over 35 flights to common destinations weekly "

pActively looking for strategic partner. Held talks with SIA for possible tie-up previously"

"

pMost extensive domestic network in China, flying to over 110 destination. 6th largest airline in the world with excellent customer base"

"

pBased out of Guangzhou, the 3rd busiest air travel hub in China"

"

qSingaporeGuangzhou being only overlapping routes operated by CSA and SIA. With 14 weekly flights operated by SIA, there is limited syneric potential"

qMajority shareholding held under unlisted holding company, limiting any option to friendly deals"

"

pOnly airline to be awarded 5 stars by Skytrax"

qLess extensive domestic network compared to Big Three provides limited connectivty and customer base "

"

qPrimarily operates out of Haikou, which is not among the major hub in China. "

"

qAbsence of existing overlapping routes with SIA limits opprtunties for operational synergies"

"

pDispersed shareholding structure allows for the additional option for a hostile move"

"

pLargest exposure to the international market among the Big Three airlines, allowing extensive code sharing opporunities"

"

pBased out of Beijing, the busiest air transportation hub for both domestic and international air travel in China"

"

pSingapore-Beijing being the major overlapping routes. With SIA operating 28 flights weekly, significant synergic opportunities exist "

qStrategic partnership with Cathay Pacific and complex cross-shareholding effectively removing availability"

"

Source: Companies Data!

China Eastern!

China Southern!

Hainan!

Air China!

22


Deal Motivation"SECTION 4"

Investing in China Eastern to Plug Strategic Gap

SIA"

SilkAir"

Tiger Airways"China Eastern"

CEA + SIA"

-10"

-5"

0"

5"

10"

15"

20"

25"

5-ye

ar re

venu

e pa

ssen

ger C

AGR"

Premium Service"No Frills"

SIA has exposure to the entire aviation spectrum through its subsidiaries and associate companies. These include short-haul budget carriers like Tiger Airways to regional premium carriers like SilkAir"

From 2007 to 2011, operational performance at SIAs core business has lagged behind companies in its portfolio"

There exists a performance and operational gap which SIA can fill with a strategic acquisition"

Underperformance highlights need for growth avenues! Investment into China Eastern to fill strategic gap! An investment into China Eastern will complement SIA

strategically and elevate growth in its core business" SIA can leverage on China Easterns foothold in a key

international air hub like Shanghai and gain access to Chinas burgeoning demand for air travel services"

With its premium long-haul services and extensive international route network, a cooperation with China Eastern will yield substantial operational synergies for SIA"

Competitive positioning map underscores existence of performance gap!

Source: Capital IQ!

24

Shanghais Status as an Aviation Hub Shanghais development into an international hub! Further growth in passenger numbers expected!

Shanghai is one of the three international aviation hubs in China and there are two major airports in the city Shanghai Pudong International Airport and Shanghai Hongqiao International Airport"

Key economic reforms and infrastructure development have cemented the city as Chinas financial centre. It represents the gateway to China for both international and business travelers "

Total passenger traffic at both Shanghai airports increased at a CAGR of 9.04% over the past 5 years, driven events such as the World Expo in 2010. Growth in total passenger throughout was stronger relative to Beijing, Guangzhou and Singapore"

The Shanghai government is planning to expand the size of Terminal One at Shanghai Pudong Airport by 80% in order to cater to the expected increase in passenger traffic"

When completed in 2014, total passenger handling capacity in Shanghai is expected to reach 130 million passengers annually, an increase of 30% from current levels"

Going forward, gaining access into Shanghai as a base of operations will allow Singapore Airlines to benefit from strong growth in both inbound and outbound travel demand in China"

25

Strong growth in passengers throughput!

0"10"20"30"40"50"60"70"80"90"

2008" 2009" 2010" 2011" 2012"

Pass

enge

rs h

andle

d"

Shanghai" Beijing" Guangzhou"

mn"

Source: ACI, CAPA! Source: Shanghai Airport Authority!

Airport handling capacity set to expand!

0"

20"

40"

60"

80"

100"

120"

140"

2004" 2008" 2014"

Pass

enge

r han

dling

capa

city"

mn"

E"

China Easterns Presence in Shanghai

China Eastern 50%

Air China 23%

China Southern 22%

Others 5%

China Easterns foothold in Shanghai air market! China Easterns represents the best point of entry into the

Shanghai market, with dominant shares in both Shanghai airports"

Total passengers carried by China Eastern has experienced strong growth in line with traffic at both Shanghai airports. From 2008 - 2011, total passengers carried by China Eastern grew at a CAGR of 16.6%"

China Eastern is currently the dominant player in Shanghai, with leading market shares of 50% and 37% of all passenger traffic at Shanghai Hongqiao Airport and Shanghai Pudong Airport respectively"

China Eastern 37%

Air China 21%

China Southern 18%

Others 24%

26

Keyed into Shanghais growth as an air hub!

similar dominance in Shanghai Pudong!

Source: Company data! Source: Company data!

Dominant airline in Shanghai Hongqiao!


0"10"20"30"40"50"60"70"80"

2008" 2009" 2010" 2011"

Reve

nue

pass

enge

rs"

mn"

China Easterns Presence in Shanghai

Gaining access to China Easterns base of operations in Shanghai will also give SIA greater flexibility in terms of planning its routes and capitalizing on demand disparities between different regions. SIA and China Eastern can maximize aircraft utilization and passenger yield on flight routes by coordinating travel demand from their respective home markets "

" With its proximity to Europe and North America, Shanghai can act as a launching pad for Singapore Airlines to key destinations such as

Los Angeles and New York and allow it to capitalize on increasing travel demand to these regions from China. This opens up opportunities for SIA in terms of demand for new destinations"

27

China Eastern has developed extensive route network from strategic base in Shanghai !

Potential for cooperation on flight route planning and aircraft utilization underpins deal attractiveness!Source: Company data!

Operational Synergy Through Code Sharing Code-sharing on existing overlapping routes!

High-frequency of flights connecting Shanghai and Singapore provides excellent opportunity for significant cost saving through code-sharing and elimination of redundant flights (East Asia load factor for SIA in 2012: 82% and International load factor for CEA in 2012: 79%)!

Potential to consolidate flights on Singapore-Shanghai with the use of larger aircraft, like A380, which enhance further cost saving (SIA uses B777 and CEA uses A330/B767)."

Flexibility to eliminate redundant flights connecting Singapore-Kunming by adjusting flight timings"

Source: Company!

Singapore- "Beijing"Singapore- Guangzhou"

Singapore-"Beijing"

Singapore-Guangzhou"

Enhancing competitiveness on non-overlapping routes!

Source: Company!

Singapore-Shanghai"35 Flights Weekly"

Singapore-Shanghai"28 Flights Weekly"

Singapore- Kunming"5 Flights Weekly"

Singapore-Kunming"4 Flights Weekly"

*See Appendix C for Flight Details!

Existing regulation by CAAC disallow more than one of the big three airline to operate a common international flight routes"

Air China and China Southern Airlines has the exclusive rights for operating Singapore-Beijing and Singapore-Guangzhou routes respectively."

SIA operates 28 and 14 weekly flights connecting Singapore-Beijing and Singapore-Guangzhou respectively."

Potential for SIA to gain unique competitive advantage over other international airlines by leveraging CEAs domestic connections to Beijing and Guangzhou. "

28

Operational Synergy Through New Routes/Customers Maximize aircraft utilization by combining flight routes!

SIA and CEA currently fly to several common SE Asia Destinations like Phuket, Bangkok and Kuala Lumpur."

SIA operates over 35 weekly flights to each of the above three destinations from Singapore,"

Excellent opportunity for combination of flight route (i.e. Singapore to Shanghai via Bangkok) to maximize utilization of aircraft and achieving other cost synergies like reducing staff cost and airport charges."

Potential to add new flight routes connecting other destinations in South-East Asia (like Bali and Jakarta) with synergies created from the combination"

SIA operates 135 weekly direct flights to 13 destinations in China, including many tier two cities like Chongqing and Tianjin."

CEA has a strong customer base, with over 15 mn members part of its Eastern Miles frequent flyer program."

The combination of the two airlines will allow SIA to gain valuable access to a ready customer pool that is unmatched by its international airlines competitors."

Transferability of frequent flyers miles between CEAs Eastern Mile program and SIAs Krisflyer program will significantly increase the attractiveness of SIAs flight offering in China and brings added revenue synergies." 29

Common SE Asia Destinations for SIA and CEA:"Kuala Lumpur"Phuket"Bangkok"

Source: Company!

Gaining access to CEA customer pool!

13 Destinations"135 Flights Weekly"

Source: Company!

Airlines! Outstanding orders!6th" American Airlines" 373"7th" Delta Air Lines" 304"8th" China Eastern + SIA! 277!9th" GOL" 205"10th" Norwegian " 203"

Airlines! Outstanding orders!1st" ILFC" 719"2nd" Air Asia" 475"3rd" GECAS" 426"4th" China Eastern + SIA! 354!5th " Lufthansa" 337"

Additional Non-routes Operational Synergy Superior bargaining power in aircraft purchases!

Key Customers of Airbus (by outstanding orders)!

Key Customers of Boeing (by outstanding orders)!

The combination of SIA and CEA will allow them to have increased bargaining power in the purchase of aircrafts"

CEA can combined its future order of wide-bodied aircraft with SIAs purchases, and SIA can combined the purchase of narrow-bodied aircraft by its subsidiaries (Silkair/Tiger) with CEAs purchase to lower purchasing price through increased volume"

Strong growth in the Chinese MRO market!

0.0"

1.0"

2.0"

3.0"

4.0"

5.0"

6.0"

7.0"

China" APAC ex

China"

Middle East"

Eastern Europe"

Latin America"

Africa" Western Europe"

North America"

Incr

ease

in M

RO S

ales (

2011

-202

1)"

Source: ICF!

The MRO market in China is expected to grow strongly along with the civil aviation industry boom in the country"

The MRO industry in China is expected to grow by US$6 bn in the 10 year period at a CAGR of 9.5%"

CEA currently operates a couple of MRO operation through joint-ventures with Boeing, Pratt & Whitney and Rockwell Collins"

SIA Engineering currently has no exposure to the MRO market with the closest facility to the region being located in Hong Kong"

A combination of the two airline may present SIA Engineering an unique opportunity to enter the lucrative MRO market in China "

30

Source: Airbus & Boeing!

US$ bn"

Threat of Opposition to SIA Bid is Minimal

31

Air China no longer poses a threat to SIA bid!

In 2008, Air Chinas parent holding, China National Aviation Holding Company, made an offer of HKD5.00 dollar per share prior to the shareholding meetings to decide on SIA bid for a 24% stake in China Eastern"

China Eastern and Chinese Authorities were against Air China as a Strategic Partner: China Eastern management rejected Air Chinas offer citing lack of sincerity as well as synergies. Civil Aviation Administration of China opposed the deal due to lack of competition"

Air China is unlikely to make a counter-bid for any offers for China Eastern given the CEA management and regulators preference for a foreign strategic investors"

Air China No Longer Has a Significant Stake in China Eastern: China Airline had a 12% stake in China Eastern in 2007, allowing it to have significant influence in opposing SIAs bid. It has since reduced its stake in China Eastern, lacking any significant shareholding to oppose any bid for China Eastern"

Source: Bloomberg!

2"3"4"5"6"7"8"9"

10"

Apr" May" Jun" Jul" Aug" Sep" Oct" Nov" Dec" Jan" Feb"

HKD"

SIA Oer Price: HKD3.80

Market Share of Available Seats to Europe!

According to China Business News, China Easterns Chairman, Liu Shaoyong, is still looking for strategic investors to invest in China Eastern"

Low Exposure in the International Scene: Amongst the Chinese airlines, China Eastern is one of the least exposed to international routes, capturing only 5.6% of market share of flights to Europe"

Modest Service Quality: SkyTrax rates China Eastern as a 3 star airline, making it the least preferred airline of the big 4 airlines in China"

China Eastern would welcome Singapore Airlines as a strategic partner, given its strength in service quality and its experience in international aviation travel"

Source: RoutesOnline!Note: As of 01 Jan 2013"

Available Seats" Market Share"Air China" 1,241,684" 16.10%"Cathay Pacific" 1,153,587" 15.00%"Lufthansa" 874,199" 11.30%"Air France" 682,573" 8.90%"KLM Royal Dutch" 509,998" 6.60%"Aeroflot Russian" 468,587" 6.10%"China Southern" 459,903" 6.00%"China Eastern! 432,517! 5.60%!British Airways" 422,493" 5.50%"Finnair" 367,131" 4.80%"

China Eastern still seeking for strategic partner!

Management has plans to expand its international presence and boast its market share in key lucrative international routes"

Most Aircrafts are Short to Medium Haul Aircrafts: Currently, most of its aircrafts are suited for short to medium haul flights that serves the domestic and regional flight route, lacking the capability to compete on longer haul routes"

Acquisition of Long Haul Aircraft Needed: To expand internationally, especially into key markets such as North America, China Eastern has to acquire more longer haul aircrafts"

Financing Required to Meet Management Objective: Singapore Airlines will be able to provide the necessary capital injection required to fund China Easterns growth"

China Eastern in Need of Financing

32

Source: Company !

China Eastern needs to acquire to expand regionally! China Eastern looking to reduce debt!

190.9%"

121.6%" 114.1%"

81.3%"

7.2%"0%"

20%"40%"60%"80%"

100%"120%"140%"160%"180%"200%"

CEA" AirChina" CSA" Cathay" SIA"

LT d

ebt t

o eq

uity r

atio"

China Eastern has one of the highest LT Debt to Equity ratio in the region at 190.9% "

Raising Equity to Lower Debt: Management has set a target of reducing debt to asset to below 70% by 2015 by raising funds through capital injections"

Government Has Been Injecting Capital: Main shareholder, China Eastern Air Holdings, injected 4.6 bn yuan (SGD 920 mn) in Sep 12 through a private placement"

Strategic Stake Help Meet Management Expectations: A strategic stake by Singapore Airlines will help China Eastern reduce it debt and move in line with management expectation to reduce debt to asset ration to 70%"

Source: CapitalIQ!Note: As of 31 Dec 2011!

Aircraft Model! Range! Self-Owned !Operating

Leased"A340 - 600" Long" 5" -"A340 - 300" Long" 5" -"A330 - 300" Medium" 8" 7"A330 - 200" Medium" 4" 3"A300 600R" Short/Medium" 7" -"A321" Short/Medium" 22" -"A320" Short/Medium" 88" 24"A319" Short/Medium" 5" 10"B767" Long" 6" 1"B757 - 200" Short/Medium" 5" 5"B737 800" Short/Medium" 16" 48"B737 -700" Short/Medium" 35" 19"B737 - 200" Short/Medium" 16" -"


Preliminary Valuation of China Eastern"SECTION 5"

$- " $2.00 " $4.00 " $6.00 " $8.00 " $10.00 "

Valuation Summary of CEA

34

Precedent Transactions Comparable"

Discounted Cash Flow"

P/E"

P/BV"

EV/EBITDAR"

Public Companies

Trading Comparable"

P/E"

P/BV"

EV/EBITDAR"

52 Weeks Trading Range"

2.5x 5.1x"

1.3x - 4.0x"

12.6x 23.5x"

4.3x 7.0x"

1.1x 1.3x"

13.0x 19.4x"

LTM EBITDAR"HK$17,280m"

FY2012 Q3 BV"HK$2.66/Share"

LTM EPS"HK$0.27/ Share"

LTM EBITDAR"HK$17,280m"

FY2012 Q3 BV"HK$2.66/Share"

LTM EPS"HK$ 0.27/Share"

Min to Max"Range" Metric" Recommended Offer Price: HK$3.98 !

0.91! 4.90!

2.66! 10.64!

3.40! 6.45!

3.73! 7.48!

2.89! 3.44!

3.50! 5.24!

2.99! 5.71!

2.12! 3.73!


Transaction Structure and Consideration"

SECTION 6"

Transaction Structure Transaction structure! Key transactional terms!

3 Rounds of Shareholder Approval by H Shareholders, A Shareholders and Both"

Private placement is likely to be the preferred choice by China Eastern management as it requires capital injection to tackle its high debt level"

Current Chinese regulations allows a single foreign shareholder to hold no more than 25% of an airline"

Additional placement of shares to CEA Holdings is needed to maintain its controlling interest in China Eastern"

67%

Existing A and H Shareholding Base !

New Issued Shares to SIA!

25%

CEA!

8%

Singapore Airlines"

China Eastern"

China Eastern Shareholders"

New Shares Issued via Private Placement of H Shares"

No delisting intent, Singapore Airlines to become a strategic partner alongside

controlling shareholder, CEA Holdings!Delisting!

Offer price of HKD3.98, representing "a 20% premium over its 1 month "

VWAP H Shares"Offer price!

66.7% of minority shares by each of the groups of shareholders: "

A Shares, H Shares and Both"

Minimum !acceptance !

level!

Chinese regulations only allows 49% of an airlines to be foreign owned, of which not more than 25% is held by a single foreign

shareholder"

Maximum !Shareholding!

Requires approvals from state agencies, including the Assets Supervision and

Administrative Commission "Regulatory!

36

Funding Options

Equity Offer!1! Description: Shares of SIA to be

offered to China Eastern based on the exchange ratio determined by the offer price / SIA price"

Dilution Accretion Analysis (50% Equity, 50% Cash): FY15 EPS Accretion: $0.09 (16%)"

Key Considerations:!1. No initial cash outlay from

Singapore Airlines, however, given Singapore Airlines strong cash position and low debt level, dilution impact caused by issuance of equity may be unnecessary "

2. Key majority shareholder will be able to maintain its controlling interest in SIA"

3. China Eastern prefers a cash offer as it requires capital injections to significantly reduce its debt level"

Cash Offer via Raising Debt!2! Description: Cash offer via raising

debt"

Dilution Accretion Analysis (50% Debt, 50% Cash): FY15 EPS Accretion: $0.13 (24%)"

Key Considerations:!1. More accretive mode of funding

than issuance of shares"2. No dilution to existing SIA

shareholders"3. SIA has a low debt to equity level

of 9%, issuance of debt is likely to help optimize its currently underleverage capital structure"

4. SIA has a relatively low cost of debt, its latest bond offering stands at 2.15% yield, below the 3% corporate bond yield level"

Cash Offer by Using Existing Cash!3!

Description: Cash offer using existing cash as well as funds from sale of Virgin Atlantic"

Dilution Accretion Analysis (100% Cash): FY15 EPS Accretion: $0.15 (28%)"

Key Considerations:!1. Most accretive mode of funding "2. Strong cash position of S$4.85 bn

as of 31 Dec 12"3. Impending sale of Virgin Atlantic to

Delta to further increase high cash level"

4. No dilution effect to existing SIA shareholders"

5. Least complex method of funding the deal"

100% Cash Offer via Raising Debt and Using Existing Cash is the Recommended Method of Funding!

37

50%"50%"

25%!!

51%!CEA Holding!

24%!Others!

Recommended Deal Structure Proposed deal structure! Underlying rationale of recommendation !

Cash funded by existing cash!

Cash funded via raising debt!

A 100% cash deal would be a preferred option for the management of China Eastern, given its need of capital injection to reduce its high debt level as well as to acquire aircraft to fuel its international growth expectations"

It is likely to be a more beneficial move for SIA due to its high cash balance as well as its low cost of borrowing"

In addition, it eliminates the effect of any potential dilution associated with an equity deal"

Proposed shareholding structure of China Eastern! Dilution / Accretion analysis!FY15! Pre Acquisition! Post Acquisition!Revenue" 16,000" 16,000"Cost of Sales" -15,370" -15,370"Gross Profit! 630! 630!Associates (ex CEA)" 150" 150"Non-Op Exceptional" 80" 80"Pre Tax Profit! 856! 856!Tax" -146" -146"Extraordinary" -61" -61"Reported Net Profit! 649! 649!Add Share of China Eastern Net Profits! -" 179"Less Interest Expense! -" -21"Adjusted Net Profits! 649! 807!

Weighted Average ordinary shares" 1,187" 1,187"Post Acquisition EPS! 0.55! 0.68!

SGD 2.4 Bn

38

Associated Transaction Risks Risks! Overview! Mitigants!

Opposition by Regulators"

Multiple rounds of regulatory approvals required" At least 5 rounds of regulatory approvals are required before

Singapore Airlines have the go-ahead to table an offer for a stake in China Eastern Airlines"

Regulatory body include Assets Supervision and Administrative Commission and Civil Aviaition Authority of China"

Current Head of Civil Aviation Authority of China is Li Jiaxiang, a former head at Air China. He is known to favour a consolidation of the Chinese aviation industry and may reject Singapore Airlines bid in preference of a local bidder "

Regulators previously approved SIA bid for China Eastern!

Singapore Airlines previous bid was approved by authorities and it is likely that SIA will not faced any political oppositions"

Rejection by Minority Shareholders!

Minority shareholders may reject Singapore Airline bid! Previously, minority shareholders rejected Singapore Airlines

bid for China Eastern as then key shareholder, Air China, rejected Singapore Airlines offer and subsequently made a competing offer, prompting other shareholders to reject Singapore Airline offer"

Air China no longer a shareholder of China Eastern!

Air China does not has a vested interest in China Eastern and is unlikely to make a competing bid as China Eastern management and regulators are not in favour of an acquisition by Air China"

Competing Bids Made by SIAs Competitors!

Stagnating growth in local market prompts partnership and acquisition in emerging markets!

Singapore Airlines key competitors may be interested in acquiring China Eastern for its growth potential"

Airlines such as Qantas and Etihad are partnering China Eastern in JVs and code-sharing"

Qantas will be setting up a Jetstar with China Eastern and Etihad has code-share agreements with China Eastern"

SIA is likely to be the preferred choice amongst its competitors!

Backed by its experience in international routes, Singapore Airlines is likely to be preferred choice as it can offer key expertise to China Eastern"

Moreover, SIA is likely to be the only bidder given its operational synergies in the region and its strong financial position"

39

Proposed Transaction Timeline

40

April! May! June! July! August!

Process Management"

Documentation""

Advisors Role"

Preparation of Pitch-book"

Meeting with SIA senior management"

Confidentiality"Agreement"With SIA "

Collect information from SIA"

Preparation of proposed term sheet"

Meet and Propose deal to CEA "

Confidentiality"Agreement"with CEA"

Meetings with CEA Management-Access interest"

Due Diligence Meetings with CEA"

Act on CEA/SIAs comments "

Revise Term Sheet "

Negotiations between SIA and CEA"

Finalize "Term Sheet"

Facilitate Negotiations"

Full Scale Due Diligence on CEA"

Facilitate Legal, Commercial and "Accounting Due "Diligence"

Deliver Final Bid"

Prepare Due Diligence Materials"

Prepare Offer Documents"

Finalize Deal"Consummation "

Finalize"Private Placement"

Prepare Meeting"Minutes "


Deal Team"SECTION 7"

M&A Deal Team

42

JOSHUA NG!!Director!!Head of Transportation Sector Coverage !

ANG SER KENG!!Managing Director!!Head of Investment Banking!

Senior Management!

Project Team Leaders!LEE LIN ZE!!Director!!Head of South East Asian !M&A!

Project Team Members!

TAN MING XIAN!!Vice-President!!Investment Banking Department (Corporate Finance)!

ADWYN CHONG!!Associate!!Investment Banking Department (Corporate Finance)!

CHAN JING!!Director!!Head of Greater China M&A!

Leading Transportation M&A Advisory Franchise

43

Rainforest Capital Strong Track Record!

US tr

ansa

ctio

ns!

EUR

tran

sact

ions

!AP

AC t

rans

actio

ns!

US$1.6 billion!Buyside Advisor in the sale of AirTran

Holdings stake"Sep 2010"

US$360 million!Sellside Advisor in the sale of Virgin

Atlantic stake"Sep 2012"

US$7.1 billion!Buyside Advisor in

the sale of Continental Airlines"

May 2010"

US$673 million!Sellside Advisor in the sale of Cathay

Pacific stake"Aug 2009"


the sale of Aer Lingus stake"

Jun 2012"

US$1.3 billion!Buyside Advisor in the sale of Austrian

Airlines stake"Feb 2009"


the sale of Northwest Airlines stake"

Apr 2008"


the sale of Shanghai Airlines stake"

Jun 2009"

US$1.5 billion!Buyside Advisor in the sale of Iceland

Airlines stake"Nov 2008"

Rainforest Capital has continued to play a leadership role in many of the key transportation transactions globally in the last 5 years, "

Closed a total of US$15 bn worth of deal transaction so far"

"" "


Our Understanding of SIA"Appendix A"

Company Profile of Singapore Airlines

Overview of SIA!

SIA is the flag carrier of Singapore, providing passenger, cargo air transportation and engineering services ""The company operates mainly in the premium long haul business segment, but has exposure to the mid haul segment through its wholly owned subsidiary Silkair"

The company also has exposure to the budget segment through its low cost carrier Scoot and a 33% equity stake in Tiger Airways "

In the financial year ending 2012, SIAs net revenue increased by 5.7% y-o-y to $1.17 bn, yielding a net profit of $269 mn "

Recent corporate news!

Oct 30, 2012: Announced the sale of Tiger Australia to Virgin for $33.2 million"

Dec 12, 2012: Announced the divestment of its 49% stake in Virgin for $440 million"

Flies to more than 60 destinations in 30 countries!

Total amount of passengers carried in FY 2012: 17.1 million!Total RPK in FY 2012: 87,824 million!

45

Geography and Financials

East Asia" Europe" South West Pacific" Americas" West Asia and Africa"

Geographical revenue!

53% of SIAs revenue is attributed to East Asia, with South West Pacific making the next biggest contributor at 17%"

East Asia recorded a revenue growth of 1.5% y-o-y, on the back of stronger economic growth in the region"

Europe fell by approximately 1% y-o-y, with austerity measures in Europe curbing aviation travels "

0%"2%"4%"6%"8%"

10%"12%"14%"16%"

2007" 2008" 2009" 2010" 2011"

Retu

rn o

n Ass

ets/E

quity

"

Return on Assets %" Return on Equity %"

Profitability ratios!

Financial summary!

SGD mn! FY12! FY11!

Total Cash" "

4,702.7 " "

7,434.2 "

Total Assets" "

22,043.0 " "

24,544.5 "

Total Equity" "

12,893.4 " "

14,204.4 "

Basic EPS" " 0.28 "

"0.91 "

Net Income" "

335.9 " "

1,092.0 "46

Source: Company Report!


Product Segmentation Gross profit margin!

SIAs gross profit margins has fell from 23.6% in 2007 to 19.3% in 2011"

This is largely attributed to the fall in passenger yield, which has fallen from 12.1 cents to 11.8 cent per RPK for the same time period, a 2.5% decrease"

Fuel cost also spiked by 29.1% y-o-y due the 31.7% increase in jet fuel prices to US$133 per barrel, contributing to the fall in gross profit margin"

Segmental revenue!

SIA recorded revenues of S$14.87 bn after intra company eliminations, resulting in a 5 year CAGR of 0.32%"

The company is dependant on airline operations, which made up 76% of its revenue in 2011. "

Revenue from airline operations have fallen at a CAGR of 3.5% over the past 5 years, due to competition from LCCs"

0"2,000"4,000"6,000"8,000"

10,000"12,000"14,000"16,000"18,000"20,000"

2007" 2008" 2009" 2010" 2011"

Reve

nue"

Airport Terminal and Food Operations" Others"Cargo Operations" Engineering Services"Airline Operations"

23.6% " 23.0% "

28.2% "

20.3% "

19.3% "

15%"

17%"

19%"

21%"

23%"

25%"

27%"

29%"

2007" 2008" 2009" 2010" 2011"

Gros

s Mar

gin"

47



S$ mn"

SIA Airline Operating Performance

15.0 " 15.5 " 16.0 " 16.5 " 17.0 " 17.5 " 18.0 " 18.5 " 19.0 " 19.5 "

FY 08" FY 09" FY 10" FY 11" FY 12"

Reve

nue

Pass

enge

rs C

arrie

d"

Decline in revenue passengers carried!

Unit yield has rebounded but remains under pressure!

Load factors have stagnated !

60%"

65%"

70%"

75%"

80%"

85%"

FY 08" FY 09" FY 10" FY 11" FY 12"

Load

Factors

Breakeven Load Factor" Load Factor (%)"

-12%"

-8%"

-4%"

0%"

4%"

8%"

12%"

FY 08" FY 09" FY 10" FY 11" FY 12"

RPK

Grow

th"

RPK y-o-y growth has dropped 4 of the last 5 years !Source: Company Report! Source: Company Report!


10.0 "

10.5 "

11.0 "

11.5 "

12.0 "

12.5 "

13.0 "

FY 08" FY 09" FY 10" FY 11" FY 12"

Passen

ger Y

ield


%"

48

Shareholders Profile

Rank! Name! % of shareholdings!

1" Temasek Holdings (Private) Limited" 55.9%"

2" DBS Group Holdings Limited, Asset Management Arm" 3.1%"

3" Aberdeen Asset Management PLC (LSE:ADN)" 1.9%"

4"BNP Paribas, Private &

Investment Banking Investments"

1.7%"

5" BlackRock, Inc. (NYSE:BLK)" 0.93%"

6" The Vanguard Group, Inc." 0.46%"

7" Norges Bank Investment Management" 0.33%"

8" Dimensional Fund Advisors LP" 0.27%"

9" Sparinvest Fondsmglerselskab A/S" 0.26%"

10" Merrill Lynch & Co. Inc., Asset Management Arm" 0.22%"

Top 10 Shareholders!Shareholding Profile!SIAs majority shareholder is Temasek Holdings, Singapores sovereign wealth fund, who holds 55.9%"

The public makes up the second largest group of shareholders, making up 31% "

The institutional profile shareholders who control 12% of SIA are fragmented, with the largest institutional investor holding approximately only 3.1%""

Institutions"

Corporations (Private)"

Individuals/Insiders"

Sovereign Wealth Funds (>5% stake)"

Public and Other"

Type of Shareholders!

49

Fleet Operations

50

Fleet Type! In Service!Airbus A330-330" 19"

Airbus A340-500" 5"

Airbus A319-100" 6"

Airbus A320-200" 16"

Airbus A380-800" 19"

Boeing 777-200" 19"

Boeing 777-200 ER" 13"

Boeing 777-300" 7"

Boeing 777-300 ER" 19"

Fleet type and size customized to SIA and Silk Airs Need !SIAs has a fleet mainly of wide body aircraft such as Boeing 777-300 ER and Airbus 380-800 to allow it to ply its long haul routes which make up a large proportion of its flying portfolio "

SIA currently has orders for 40 A350 Fleets from Airbus as they are more fuel efficient than a Boeing 787, and have the potential to bring SIAs fuel expense down by 8% "

Silk Air, on the other hand, is SIAs medium haul carrier in the region, and is more accustomed to narrow body aircraft such as Airbus A319-100 and A320-200""

Chinese Destination! Weekly Freq!Shanghai Pudong " 35"

Beijing " 28"

Guangzhou " 14"

Tianjin**" 8"

Chongqing *" 7"

Wuhan *" 7"

Xiamen *" 7"

Qingdao**" 6"

Shenyang (via Qingdao)**" 6"

Chengdu*" 5"

Kunming*" 5"

Shenzhen*" 4"

Changsha*" 3"

SIA has limited route exposure to China as compared to other regional carriers such as DragonAir, but has most routes to

Shanghai, Beijing and Guangzhou!

0"

1"

2"

3"

4"

5"

6"

7"

8"

-15%"

-10%"

-5%"

0%"

5%"

10%"

15%"

3/16/12" 4/16/12" 5/16/12" 6/16/12" 7/16/12" 8/16/12" 9/16/12" 10/16/12" 11/16/12" 12/16/12" 1/16/13" 2/16/13"

Volum

e "

Shar

e Re

turn

"

Singapore Airlines Volume" Straits Times Index"

Singapore Airlines Share Pricing"

Singapore Airlines Share Performance

Source: Capital IQ!

mn"

51


Our Understanding of China Eastern Airlines"

Appendix B"

China Eastern Company Profile

Overview ! China Eastern Airlines offers a wide range of

services which includes passenger, cargo, mail delivery and other transportation services"

It boast an extensive domestic network, flying to over 109 destination across China"

The Company operates mainly out of its key hub of Shanghai, with Kunming and Xian serving as key regional hubs"

" The company is headquartered in Shanghai, China

and has over 59,000 employees as of 31 December 2011"

Recent corporate news!

Dec 20, 2012: Purchased a 29.7% stake in Shanghai Eastern Logistics Co from China Ocean Shipping group"

Nov 09 2012: Announced a private placement of 698,865,000 A shares at CNY 3.28 per share and 698,865,000 H at HKD 2.32 per share "

Total amount of passengers carried in FY 2012: 68.7 mn!Total RPK in FY 2012: 100,895 mn!

China Eastern Route Map !

53

Financial Performance

0"2000"4000"6000"8000"

10000"12000"14000"16000"18000"

FY 07 FY 08 FY 09 FY 10 FY 11

Revenue!CEAs revenue has increased at a CAGR of 15.1% over the past five years, leveraging on the strong economic GDP growth of China. ""The company has continued to dominate the Shanghai market following its merger with Shanghai airlines, and the increasingly wealthy home market has continued to underpin the companys earning growth "

As a member of the Skyteam Global Alliance, CEA has been able to capture high yield international premium traffic, and still maintains a high ROE of 23.9%"

Profitability Ratios !

-20%"-10%"

0%"10%"20%"30%"40%"50%"60%"70%"

FY 07" FY 08" FY 09" FY 10" FY 11"

Return on Assets %" Return on Equity %"

Financials Snapshot!

FY12! FY11!

Total Cash" "

793.3" "

598.2"

Total Assets""

23,573.5" "

20,082.8"

Total Equity""

4,479.2" "

3,218.8"

Basic EPS" "0.08"

"0.09"

Net Income""

940.1""

963.6"

54

Revenue has increased at CAGR of 15% !Source: Company Report!


Airline Operating Performance

Revenue Passengers have steadily increased! Load Factors growth remains robust!

0"

10"

20"

30"

40"

50"

60"

70"

80"

FY 07" FY 08" FY 09" FY 10" FY 11" 70%"71%"72%"73%"74%"75%"76%"77%"78%"79%"80%"

FY 07" FY 08" FY 09" FY 10" FY 11"


-10%"

0%"

10%"

20%"

30%"

40%"

50%"

60%"

FY 07" FY 08" FY 09" FY 10" FY 11"10"11"11"12"12"13"13"14"14"15"

FY 07" FY 08" FY 09" FY 10" FY 11"

Capturing the Shanghai Market allows for Margin Expansion! Volatile RPK y-o-y growth due to high growth in FY 10 !Source: Company Report! Source: Company Report!

55

Shareholders Profile

Rank! Name!

% of shareholding

s!

1"China Eastern Air Shareholding

Company " 60.0%"

2"Shanghai Alliance Investment Ltd" 3.8%"

3"China National Aviation Fuel Group

Corporation" 3.7%"

4"Jin Jiang International Holdings Co

Ltd" 3.0%"

5"JP Morgan Asset Management

Holdings Inc" 2.1%"

6" Aerospace Capital Holdings Ltd" 0.9%"

7" Sinotrans & CSC Holdings Co Ltd" 0.7%"

8"JP Morgan & Chase Private Banking

& Investment Banking Operations" 0.7%"

9" Harvest Fund Management Co Ltd" 0.5%"

10"China International Fund

Management Limited" 0.4%"

Top 10 Shareholders!Shareholding Profile!China Easterns major shareholder is China Eastern Air Shareholding Company, a parent company of 21 subsidiaries of air transportation and related aviation services company who holds 60% of the total shareholdings"

Corporations make up the biggest group of shareholders, accounting for almost 69% of the company"

The largest institutional shareholder is JP Morgan Asset Management Holdings, making up just 2.1% of the company"

Type of Shareholders!

56 Institutions" Corporations (Private)"Individuals/Insiders" Public and Other"

Fleet Operations

57

Fleet Type! In Service!A340 - 600" 5"A340 - 300" 5"A330 - 300" 15"A330 - 200" 7"

A300 600R" 7"A321" 22"A320" 112"A319" 15"B767" 7"

B757 - 200" 10"B737 800" 64"B737 -700" 54"B737 - 200" 16"

CEA operates one of the largest fleet in World, with over 300 aircraft in operation"

The majority of CEAs fleet consist of narrow body aircraft, such as Airbus A320s and Boeing 737s that are designed to serve short/medium haul flights"

Limited number of wide body aircraft serve as constraints to growth in international/long haul flights "

Selected International Destinations! Weekly Freq!Singapore" 32"

Bangkok" 21"

Frankfurt" 14"

Los Angeles" 14"

Vancouver" 11"

Melbourne" 7"

Paris" 7"

Sydney " 5"

Hamburg" 4"

London " 3"

New York" 3"

Moscow" 2"

Phuket" 2"Kuala Lumpur" 1"

Despite having a strong international network, connecting China to South-East Asia, Europe and USA, CEAs flight

network is remains limited compared to Air China!

Fleet Optimised for Domestic Routes!

China Eastern Share Performance

0

10

20

30

40

50

60

70

80

90

100

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

3/13/12 4/13/12 5/13/12 6/13/12 7/13/12 8/13/12 9/13/12 10/13/12 11/13/12 12/13/12 1/13/13 2/13/13

Volim

e (m

ns)

Stock Return

CEA Volume Hang Seng Index

CEA Share Pricing China Airlines Index

Components of China Airlines Index (Equal Weighted):! China Eastern Airlines" China Southern Airlines" Air China" Hainan Airlines"

58


List of Overlapping Routes"Appendix C"

Flight Details for Overlapping Routes

60

Flight No.! Departure Timing! Weekly Frequency! Aircraft!SQ826" 0110 " 7" B777"

SQ828 " 0730" 7" B777"

SQ830 " 1015" 7" B777"

SQ832" 1245" 7" B777"

SQ836" 1725" 7" B777"

Source: Company

Flight No.! Departure Timing! Weekly Frequency! Aircraft!MU546" 1010" 7" A330"

MU548" 1635" 7" B767"

MU566 " 2325" 7" B767"

MU544" 0055" 7" B767"Source: Company

Flight No.! Departure Timing! Weekly Frequency! Aircraft!MI912" 0820 " 3" A320"

MI916 " 1110" 2" A320"

Source: Company

Flight No.! Departure Timing! Weekly Frequency! Aircraft!MU5094" 0300" 4" A320"

Source: Company

SIA Flight Details for Singapore-Shanghai! SIA Flight Details for Singapore-Kunming!

CEA Flight Details for Singapore-Shanghai! CEA Flight Details for Singapore-Kunming!


List of Acquisition Targets Profile"Appendix D"

(SGD m)! FY09! FY10! FY11!

Revenue" 8,286.8 " 14,471.7 " 17,148.1 "

Gross Profit" 2,053.0 " 4,904.1 " 5,260.5 "

EBITDA" 685.8 " 2,331.3 " 2,390.7 "

EBIT" (379.4) " 1,024.0 " 970.6 "

Net Income" 34.7 " 963.6 " 940.1 "

EPS (cents)" 0.01 " 0.09 " 0.08 "

Stock Ticker: SEHK:000670"52 Week Range: HK$2.12 HK$3.73"Market Capitalization: S$6,730.5m"Enterprise Value: S$11,872.7m"Price/Earnings (LTM): 11.7x"Price/Book (LTM): 1.2x"EV/EBITDA (LTM): 5.5x"EV/EBITDAR (LTM): $3,125.8"

0"10"20"30"40"50"60"70"80"90"100"

-50%"-40%"-30%"-20%"-10%"

0%"10%"20%"30%"40%"50%"

Volim

e (m

illio

ns)!

Sto

ck R

etur

ns!

Hang Seng Index CEA Share Pricing

China Eastern Airlines (SEHK:000670)

62"

China Eastern Airlines, together with its subsidiaries, operate as one of the three major players in Chinas civil aviation industries"

The Company offers a wide range of services which includes passenger, cargo, mail delivery and other transportation services"

The Company owned controlling stakes in over 21 subsidiaries including Shanghai Airlines, Yunan Airlines and China United Airlines "

China Eastern Airlines boast an extensive domestic network, flying to over 109 destination across China"

The company also has a wide international network, operating weekly flights to destinations in North America, Europe, Asia and Oceania"

The Company operates mainly out of its key hub of Shanghai, with Kunming and Xian serving as key regional hubs"

The Company command a strong market position in Shanghai, account for over 52% and 39% of all traffic out of Shanghai Honqqiao Airport and Shanghai Pudong Airport respectively in 2011"

China Eastern Airlines operates a fleet of 339 aircrafts, with Airbus A320 and Boeing 737 accounting for the majority of the fleet"

The company is headquartered in Shanghai, China and has over 59,000 employees as of 31 December 2011"

"

China International Taiwan Source: Company!

2011 Revenue Breakdown!

Source: Capital IQ!

Source: Company

Shareholding Structure!Shareholders! Shareholdings!

China Eastern Holding Company" 59.9%"

Shanghai Alliance Investment Ltd." 3.8%"

China National Aviation Fuel Group" 3.7%"

Jin Jiang International Holding Co." 3.0%"

JP Morgan Asset Management" 2.1%"

Aerospace Capital Holdings" 0.8%"

Sinotrans & CSC Holdings" 0.7%"

Others" 26.0%"Source: Capital IQ!

Stock Performance against HSI!Source: Company, Capital IQ!

(SGD m)! FY09! FY10! FY11!

Revenue" 11,275.0 " 14,866.7 " 18,572.0 "

Gross Profit" 2,446.5 " 4,149.0 " 4,557.6 "

EBITDA" 1,522.3 " 2,643.7 " 2,571.9 "

EBIT" 278.4 " 1,263.9 " 984.5 "

Net Income" 67.3 " 1,125.7 " 1,049.9 "

EPS (cents)" 0.01 " 0.14 " 0.11 "

China Other Asia International Source: Capital IQ!

0"20"40"60"80"100"120"140"160"180"200"

-40%"-30%"-20%"-10%"

0%"10%"20%"30%"40%"

Volu

me

(mill

ions

)!

Stoc

k Re

turn

s!

Hang Seng Index" CSA Share Pricing"

China Southern Airlines (SHSE:600029)

63

China Southern Airlines, together with its subsidiaries, operate as one of the three major players in Chinas civil aviation industries"

The Company primarily operates commercial flights within Greater China, but also provide cargo transports and other international flights "

The Company owned controlling/significant stakes in many smaller domestic airlines including Xiamen Airlines, Chongqing Airlines and Sichuan Airlines"

China Southern Airlines has the most extensive domestic network among the three major domestic airlines, flying to 117 destinations across China"

The company also has a wide international network, operating weekly flights to destinations in four continents"

The Company operates mainly out of its key hubs of Guangzhou and Beijing, with Chongqing and Urumuqi serving as the regional hubs for the company"

The Company command a strong market position in Guangzhou, operating more than 425 flights out of Guangzhou Baiyun International Airport every week"

China Southern Airlines operates a fleet of over 425 aircrafts, with Airbus A320 and Boeing 737 accounting for majority of the fleet"

China Southern Airlines is also the first airline in China to operate the Airbus A380 " The company is headquartered in Guangzhou, China and has over 71,000 employees

as of 31 December 2011"

Source: Company!


Source: Capital IQ

Source: Company!


China Southern Air Holding Company" 53.1%"

Fidelity Investments" 4.2%"

Anhui Conch Venture Investment Co." 1.8%"

Zhong Hang Xin Gang Guarantee Co.," 1.6%"

Wuhu RuiJian Investment Co. Ltd." 1.5%"

AEGON-Industrial Fund Management " 1.2%"

Zhao, Xiao Dong" 1.2%"

Others" 35.4%"

Stock Performance against HSI!

Stock Ticker: SHSE:600029"52 Week Range: RMB 3.26 RMB 5.35"Market Capitalization: S$6,930.8m"Enterprise Value: S$20,280.2m"Price/Earnings (LTM): 19.4x"Price/Book (LTM): 1.1x"EV/EBITDA (LTM): 8.1x"EV/EBITDAR (LTM): $3343.8m " Source: Company, Capital IQ!

(SGD m)! FY09! FY10! FY11!

Revenue" 10,560.9 " 15,794.7 " 19,906.6 "

Gross Profit" 2,850.6 " 4,391.5 " 4,515.3 "

EBITDA" 2,579.6 " 3,582.1 " 2,960.1 "

EBIT" 1,128.9 " 1,916.7 " 995.8 "

Net Income" 998.7 " 2,333.2 " 1,455.1 "

EPS (cents)" 0.08 " 0.2 " 0.12 "

Stock Ticker: SEHK:000753"52 Week Range: HK$4.40 HK$7.41"Market Capitalization: S$13,637.2m"Enterprise Value: S$26,869.0m"Price/Earnings (LTM): 18.2x"Price/Book (LTM): 1.3x"EV/EBITDA (LTM): 9.1x"EV/EBITDAR (LTM): $3,697.0m"

0"20"40"60"80"100"120"140"160"180"200"

-40%"-30%"-20%"-10%"

0%"10%"20%"30%"40%"

Volu

me

(mill

ions

)!

Stoc

k Re

turn

s!

Hang Seng Index " Air China Share Pricing"Source: Capital IQ!

China Greater China Interna2onal

Air China (SEHK:000753)

64

Air China is the official exclusive flag carrier airline of China. It take the responsibility to provide flight services for national leaders on official trips"

The Company compete with China Eastern Airlines and China Southern Airlines to provide domestic flights services, international flight services and cargo services"

The Company has several domestic airlines subsidiary including Air Macau, Dalian Airlines and Shenzhen Airlines"

Air China is also a major shareholder in Cathay Pacific, holding 29.99% stake in the company"

Air China has a very extensive domestic flight network in China, flying to 95 destinations across the country"

The company has a wide international network, flying to destinations in 5 continents. Air China is also the only airline in China that provide flights to South America"

The Company operates mainly out of its key hubs of Beijing, with Chengdu and Shanghai Pudong serving as important secondary hubs for the company"

The Company command a strong market position in Beijing, operating more than XXX flights out of Beijing Capital International Airport every week"

Air China operates a fleet of over 432 aircrafts, with Airbus A320 and Boeing 737 accounting for majority of the fleet"

The company is headquartered in Beijing, China and has over 54,000 employees"

Source: Company!


Source: Capital IQ

Source: Company!


China National Aviation Holding " 53.6%"

Cathay Pacific Airways Ltd. " 19.3%"

BlackRock, Inc. " 1.5%"

Fidelity Investments" 0.7%"

New China Life Insurance Co., Ltd." 0.7%"

China National Aviation Fuel Group " 0.7%"

SINOTRANS & CSC Holdings Co., Ltd." 0.7%"

Others" 23.0%"


(SGD m)! FY09! FY10! FY11!

Revenue" 3,198.9 " 4,151.8 " 5,277.2 "

Gross Profit" 471.6 " 1,140.8 " 1,271.3 "

EBITDA" 504.0 " 1,253.3 " 1,277.1 "

EBIT" 134.4 " 779.4 " 829.3 "

Net Income" 68.9 " 585.8 " 540.6 "

EPS (cents)" 0.02 " 0.14 " 0.13 "

Stock Ticker: SHSE:600221"52 Week Range: RMB 3.65 RMB 5.28"Market Capitalization: S$4,761.3m"Enterprise Value: S$9,316.0m"Price/Earnings (LTM): 8.9xx"Price/Book (LTM): 0.9x"EV/EBITDA (LTM): 8.1x"EV/EBITDAR (LTM): $1,199.5m

0.0"0.5"1.0"1.5"2.0"2.5"3.0"3.5"4.0"4.5"5.0"

-40%"-30%"-20%"-10%"

0%"10%"20%"30%"40%"

Volu

me

(mill

ions

)!

Shar

e Re

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s!

Hang Seng Index" Hainan Airlines Share Pricing"Source: Capital IQ!

China Interna2onal

Hainan Airlines (SHSE:600221)

65

Hainan Airlines in the fourth largest airline in China behind the the three main players in the civil aviation industry"

The Company provide air passenger transportation services, cargo transportation services and plane chartering services"

Hainan Airlines is one of the six airlines being awarded a five-star rating by Skytrax, and is the only Chinese airline to receive the honour"

The Company owned controlling/significant stakes in several domestic airlines like Hong Kong Airlines, Changan Airlines and Beijing Capital Airlines"

Hainan Airlines has a commendable domestic flight network in China, flying to 63 destinations across the country"

The company also offers international flights solutions to over 90 international cities in 4 continents "

The Companys main operating hub is in Haikou, with a secondary hub in Beijing international airport"

The Company has also been named as the best airline in China by Skytrax in their annual customer survey in 2012"

Hainan Airlines operates a fleet of over 113 aircrafts, with Boeing 737 accounting for majority of the fleet"

The company is headquartered in Haikou, China and has over 9,500 employees"

Source: Company!


Source: Capital IQ

Source: Company!


Grand China Airlines Holding Corp. Ltd." 28.2%"

Haikou Meilan International Airport Co." 7.1%"

HNA Group Limited" 4.9%"

Hainan Development Holdings Co." 4.9%"

Changjiang Leasing Co., Ltd." 4.2%"

Soros Fund Management LLC" 1.8%"

Everbright Pramerica Fund " 0.5%"

Grand China Airlines Holding Corp. Ltd." 48.5%"



Valuations"Appendix E"

Comparable Companies (1/2) Company Name!

Geographic Locations!

Business Description! Market Cap(1) (2)!

P/E! P/B! EV/Sales! EV/EBITDA!

EV/EBIT!

EV/EBITDAR!

Air China Limited (SEHK:753)"

China (Primary)"

Air China Limited, provides airline, airline-related services primarily in the Mainland China, Hong Kong, and Macau. It offers air passenger and air cargo services; and aircraft engineering services, air catering services, and airport ground handling services. As of December 31, 2011, it owned and operated 432 aircrafts primarily Boeing and Airbus aircrafts. The company was founded in 1988 and is headquartered in Beijing, the Peoples Republic of China. "

15,226.0 " 18.6 " 1.3 " 1.4 " 9.2 " 28.7 " 7.3 "

Cathay Pacific Airways Ltd. (SEHK:293)"

Hong Kong (Primary)"

Cathay Pacific Airways Limited, operates as an international airline that offers scheduled passenger and cargo services. The company conducts airline operations principally to and from Hong Kong. As of July 24, 2012, it offered scheduled passenger and cargo services to approximately 160 destinations in Asia, North America, Australia, Europe, and Africa through a fleet of 136 aircrafts. The company was founded in 1946 and is headquartered in Lantau, Hong Kong."

9,428.1 " 32.7 " 1.1 " 0.9 " 9.2 " 28.1 " 6.0 "

China Eastern Airlines Corp. Ltd. (SEHK:670)"

China (Primary)"

China Eastern Airlines Corporation Limited, operates in the civil aviation industry. It provides passenger, cargo, mail delivery, and other transportation services. The company operates a fleet of passenger aircrafts and freighters, as well as approximately 11,216 scheduled flights per week. It has operations in China, Hong Kong, Macau, Taiwan, and internationally. The company was founded in 1988 and is based in Shanghai, the Peoples Republic of China. "

7,640.3 " 12.4 " 1.3 " 0.7 " 5.7 " 15.7 " 3.8 "

China Southern Airlines Co. Ltd. (SHSE:600029)"

China (Primary)"

China Southern Airlines Company Limited, provides commercial airline services in Mainland China, Hong Kong, Macau, Taiwan, southeast Asia, and internationally. It also offers air cargo and mail services. As of December 31, 2011, the company operated 720 routes, of which 576 were domestic, 106 were international, and 38 were regional; and had a fleet of 444 aircraft. China Southern Airlines Company Limited is headquartered in Guangzhou, China."

7,810.8 " 19.7 " 1.1 " 1.1 " 8.2 " 22.7 " 6.1 "

67

Comparable Companies (2/2) Company Name!

Geographic Locations!

Business Description! Market Cap (1) (2)!

P/E! P/B! EV/Sales! EV/EBITDA!

EV/EBIT!

EV/EBITDAR!

PT Garuda Indonesia (Persero) Tbk (JKSE:GIAA)"

Indonesia (Primary)"

PT. Garuda Indonesia (Persero) Tbk provides passenger and cargo airline services in Indonesia and internationally. The company also provides computerized reservation system, aircraft maintenance and overhaul, catering and ticketing, information technology, travel agency and transportation, and ground handling services, as well as operates and manages hotels. As of October 06 2012, it had a fleet of 94 aircraft. The company was founded in 1949 and is headquartered in Jakarta, Indonesia."

1,846.9 " 14.6 " 1.6 " 0.6 " 6.8 " 11.0 " 2.8 "

!Market

Cap! P/E! P/B! EV/Sales!EV/

EBITDA!EV/

EBIT!EV/

EBITDAR!

Mean! 6,929.5 " 17.9 " 5.8 " 1.1 " 23.3 " 19.8 " 6.1 "

Median! 7,640.3 " 16.6 " 1.3 " 1.0 " 8.3 " 19.2 " 6.1 "

25th Percentile! 3,610.2 " 13.0 " 1.1 " 0.8 " 7.5 " 13.3 " 4.9 "

75th Percentile! 8,619.5 " 19.4 " 1.4 " 1.2 " 9.2 " 26.8 " 7.5 "

Note: 1. Denoted in SGD millions 2. As of 11 March 2013

68

Comparable Transactions (1/4) Date! Target! Buyer! Business Description!

Transaction Value (1) (2)! P/E! P/B!

EV/Sales!

EV/EBITDA!

EV/EBIT!

EV/EBITDAR!

May 10" Continental Airlines, Inc."

United Continental Holdings, Inc. (NYSE:UAL)"

Continental Airlines, Inc. transports people and cargo. As of December 31, 2012, the company operated 348 mainline aircrafts and 276 regional aircrafts. It operates flights to destinations in the United States, Canada, and Latin America, as well as in the Atlantic and Pacific regions. The company was founded in 1934 and is based in Chicago, Illinois."

7,100.4 " 22.5" 6.37 " 0.48 " 12.4 " 12.8" 2.0"

April 08" Northwest Airlines Corporation"

Delta Air Lines Inc. (NYSE:DAL)"

Northwest Airlines Corporation, through its principal subsidiary, Northwest Airlines, Inc., operates passenger and cargo airlines worldwide. The company serves countries principally in North America, Asia, and Europe. The company was founded in 1926 and is based in Eagan, Minnesota."

6,607.9 " -" 1.0 " 0.57 " 5.5 " 9.2 " 5.5"

Aug 10" TAM S.A." LATAM Airlines Group S.A. (SNSE:LAN)"

TAM S.A. provides passengers and cargo air transportation services in Brazil and internationally. It also engages in the aircraft acquisition, financing, and debt issuance activities. It operates a fleet of approximately 156 aircrafts. The company was founded in 1961 and is based in So Paulo, Brazil. "

5,276.3 " -" 7.7 " 1.2 " 13.6 " 33.9 " 5.9"

Jun 09" Shanghai Airlines Co., Ltd."

China Eastern Airlines Corp. Ltd. (SEHK:670)"

As of January 29, 2010, Shanghai Airlines Co., Ltd. was acquired by China Eastern Airlines Corp. Ltd. Shanghai Airlines Co., Ltd. operates as a commercial airline in China. It offers domestic, international, and regional air passenger, cargo, mail transport, and agent services. The company operates a fleet of 59 aircrafts, which features Boeing 737, 757, 767, CRJ, HAWKER, and MD-11. It operates approximately 130 air routes covering 48 Chinese cities and 5 international cities. The company was incorporated in 1985 and is headqu