CHINA SOUTHERN AIRLINES CO LTD [CHKIF] Filings

CHINA SOUTHERN AIRLINES CO LTD [CHKIF] Filings

CHINA SOUTHERN AIRLINES CO LTD [ZNHYY] Filings

20-F 1 d217310d20f.htm FORM 20-F Form 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year

ended December 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file

number

001-14660

中国南方航空股份有限公司

(Exact name of Registrant as specified in its charter)

CHINA SOUTHERN AIRLINES COMPANY LIMITED

(Translation of Registrant’s name into English)

THE PEOPLE’S REPUBLIC OF CHINA

(Jurisdiction of incorporation or organization)

68 QI XIN ROAD

GUANGZHOU, 510403

PEOPLE’S REPUBLIC OF CHINA

(Address of principal executive offices)

Mr. Xie Bing

Telephone: +86 20 86112480

E-mail:

ir@csair.com

Fax: +86 20 86659040

Address: 68 QI XIN ROAD

GUANGZHOU, 510403

PEOPLE’S REPUBLIC OF CHINA

(Name, Telephone,

E-mail

and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary H Shares of par value RMB1.00 per share represented by American Depositary Shares	ZNH	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report

: 12,673,293,179 A Shares of par value RMB1.00 per share and 4,275,144,849 H Shares of par value RMB1.00 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes

☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes

☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒

Yes

☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒

Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Yes ☐ No

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP ☐		International Financial Reporting Standards as issued by the International Accounting Standards Board ☒		Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). ☐ Ye

s ☒

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TABLE OF CONTENTS


FORWARD-LOOKING STATEMENTS			1

INTRODUCTORY NOTE			2

GLOSSARY OF AIRLINE INDUSTRY TERMS			3

PART I			5

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			5

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE			5

ITEM 3. KEY INFORMATION			5

A. SELECTED FINANCIAL DATA			5

B. CAPITALIZATION AND INDEBTEDNESS			7

C. REASONS FOR THE OFFER AND USE OF PROCEEDS			7

D. RISK FACTORS			7

ITEM 4. INFORMATION ON THE COMPANY			27

A. HISTORY AND DEVELOPMENT OF OUR COMPANY			27

B. BUSINESS OVERVIEW			29

C. ORGANIZATIONAL STRUCTURE			51

D. PROPERTY, PLANTS AND EQUIPMENT			52

ITEM 4A. UNRESOLVED STAFF COMMENTS			53

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			54

A. OPERATING RESULTS			58

B. LIQUIDITY AND CAPITAL RESOURCES			62

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.			64

D. TREND INFORMATION			64

E. CRITICAL ACCOUNTING ESTIMATES			64

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			65

A. DIRECTORS AND SENIOR MANAGEMENT			65

B. COMPENSATION			72

C. BOARD PRACTICES			73

D. EMPLOYEES			75

E. SHARE OWNERSHIP			77

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			77

A. MAJOR SHAREHOLDERS			77

B. RELATED PARTY TRANSACTIONS			78

C. INTERESTS OF EXPERTS AND COUNSEL			84

ITEM 8. FINANCIAL INFORMATION			84

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION			84

B. SIGNIFICANT CHANGES			85

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ITEM 9. THE OFFER AND LISTING			85

A. OFFER AND LISTING DETAILS			85

B. PLAN OF DISTRIBUTION			85

C. MARKETS			85

D. SELLING SHAREHOLDERS			86

E. DILUTION			86

F. EXPENSES OF THE ISSUE			86

ITEM 10. ADDITIONAL INFORMATION			86

A. SHARE CAPITAL			86

B. MEMORANDUM AND ARTICLES OF ASSOCIATION			86

C. MATERIAL CONTRACTS			96

D. EXCHANGE CONTROLS			97

E. TAXATION			97

F. DIVIDENDS AND PAYING AGENTS			103

G. STATEMENT BY EXPERTS			103

H. DOCUMENTS ON DISPLAY			103

I. SUBSIDIARY INFORMATION			104

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			104

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			106

A. DEBT SECURITIES			106

B. WARRANTS AND RIGHTS			106

C. OTHER SECURITIES			106

D. AMERICAN DEPOSITARY SHARES			106
PART II			107

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			107

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			107

A. MATERIAL MODIFICATIONS TO THE INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS			107

B. MATERIAL MODIFICATIONS TO THE RIGHTS OF REGISTERED SECURITIES BY ISSUING OR MODIFYING ANY OTHER CLASS OF SECURITIES			108

C. WITHDRAWAL OR SUBSTITUTION OF A MATERIAL AMOUNT OF THE ASSETS SECURING ANY REGISTERED SECURITIES			108

D. CHANGE OF TRUSTEES OR PAYING AGENTS FOR ANY REGISTERED SECURITIES			108

E. USE OF PROCEEDS			108

ITEM 15. CONTROLS AND PROCEDURES			108

ITEM 16A. AUDIT AND RISK MANAGEMENT COMMITTEE FINANCIAL EXPERT			110

ITEM 16B. CODE OF ETHICS			110

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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES			110

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT AND RISK MANAGEMENT COMMITTEE			111

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			111

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT			111

ITEM 16G. CORPORATE GOVERNANCE			111

ITEM 16H. MINE SAFETY DISCLOSURE			115

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS			116

ITEM 17. FINANCIAL STATEMENTS			116

ITEM 18. FINANCIAL STATEMENTS			116

ITEM 19. EXHIBITS			116

iii

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FORWARD-LOOKING STATEMENTS

This Annual Report includes forward-looking statements for the purpose of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements appear in a number of different places in this Annual Report. A forward-looking statement is usually identified by the use in this Annual Report of certain terminology such as “estimate”, “project”, “expect”, “intend”, “believe”, “plan”, “anticipate”, “may”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include statements regarding the outlook for our future operations, forecasts of future costs and expenditures, evaluation of market conditions, the outcome of legal proceedings (if any), the adequacy of reserves, and other business plans. Forward-looking statements are, by their nature, subject to inherent risks and uncertainties, some of which are beyond our control, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in particular circumstances. We caution you that a number of risks and assumptions could cause actual outcomes to differ, or differ materially, from those expressed in any forward-looking statements.

These risks and assumptions, in addition to those identified under Item 3. “Key Information—Risk Factors,” include:

•

general economic and business conditions in markets where our Company operates, including changes in interest rates;

•

the effects of competition on the demand for and price of our services;

•

natural phenomena;

•

the impact of unusual events on our business and operations, including

COVID-19

and other pandemics, and the effect of governmental actions taken in response;

•

actions by government authorities, including changes in government regulations, and changes in CAAC’s regulatory policies;

•

our relationship with China Southern Air Holding Company Limited;

•

uncertainties associated with potential legal proceedings;

•

technological development;

•

our ability to attract key personnel and attract new talent;

•

future decisions by management in response to changing conditions;

•

the Company’s ability to execute prospective business plans;

•

the availability of qualified flight personnel and airport facilities; and

•

misjudgments in the course of preparing forward-looking statements.

Our Company advises you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to our Company, our Group and persons acting on their behalf.

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INTRODUCTORY NOTE

In this Annual Report, unless the context indicates otherwise, “we”, “us”, “our”, “the Company” and “our Company” refer to China Southern Airlines Company Limited, a joint stock company incorporated in China on March 25, 1995, our “Group” means our Company and our consolidated subsidiaries, and “CSAH” means China Southern Air Holding Company Limited, our Company’s parent company which directly and indirectly held 64.20% interest in our Company as of April 22, 2022

References to “China” or the “PRC” are to the People’s Republic of China, excluding, for purpose of this Annual Report, Hong Kong, Macau and Taiwan. References to “Renminbi” or “RMB” are to the currency of China, references to “U.S. dollars”, “USD”, “$” or “US$” are to the currency of the United States of America (the “U.S.” or “United States”), and references to “HK$” are to the currency of Hong Kong. References to the “Chinese government” are to the national government of China. References to “Hong Kong” or “Hong Kong SAR” are to the Hong Kong Special Administrative Region of the PRC. References to “Macau” or “Macau SAR” are to the Macau Special Administrative Region of the PRC.

Our Group presents our consolidated financial statements in Renminbi. The consolidated financial statements of our Group have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term include all applicable individual IFRSs, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (the “IASB”).

Solely for the convenience of the readers, this Annual Report contains conversions of certain Renminbi into U.S. dollars at the rate of US$1.00 = RMB6.3757, which was the average of the buying and selling rates as quoted by the People’s Bank of China at the close of business on December 31, 2021. No representation is made that the Renminbi amounts or U.S. dollar amounts included in this Annual Report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. Any discrepancies in the tables included herein between the amounts listed and the totals are due to rounding.

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GLOSSARY OF AIRLINE INDUSTRY TERMS

In this Annual Report, unless the context indicates otherwise, the following terms have the respective meanings set forth below.


Capacity

“available seat kilometers” or “ASK”		the number of seats made available for sale multiplied by the kilometers flown

“available ton kilometers” or “ATK”		the tons of capacity available for the transportation of revenue load (passengers and cargo) multiplied by the kilometers flown

Traffic

“revenue passenger kilometers” or “RPK”		i.e. passenger traffic volume, the number of passengers carried multiplied by the kilometers flown

“revenue ton kilometers” or “RTK”		i.e. total traffic volume, the load (passenger and cargo) in tons multiplied by the kilometers flown

“revenue ton kilometers-cargo” or “RFTK”		i.e. cargo and mail traffic volume, the load for cargo and mail in tonnes multiplied by the kilometers flown

“revenue ton kilometers-passenger”		the load for passenger in tons multiplied by the kilometers flown

“ton”		a metric ton, equivalent to 1,000 kilograms

Yield

“yield per RFTK”		revenue from cargo operations divided by RFTK

“yield per RPK”		revenue from passenger operations divided by RPK

“yield per RTK”		revenue from airline operations (passenger and cargo) divided by RTK

Cost

“operating cost per ATK”		operating expenses divided by ATK

Load Factors

“overall load factor”		RTK expressed as a percentage of ATK

“passenger load factor”		RPK expressed as a percentage of ASK

Utilization

“utilization rates”		flight hours that aircraft can service during specified time

Equipment

“expendables”		aircraft parts that are ordinarily used up and replaced with new parts

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“rotables”		aircraft parts that are ordinarily repaired and reused

Others

“ADS”		American Depositary Share

“A Shares”		Shares issued by our Company to investors in the PRC for subscription in RMB, with par value of RMB1.00 each

“Board”		board of directors of the Company

“CAAC”		Civil Aviation Administration of China

“CAOSC”		China Aviation Oil Supplies Company

“CSAH”		China Southern Air Holding Company Limited

“CSRC”		China Securities Regulatory Commission

“Hong Kong Stock Exchange”		The Stock Exchange of Hong Kong Limited

“Hong Kong Listing Rules”		The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“H Shares”		Shares issued by our Company, listed on The Stock Exchange of Hong Kong Limited and subscribed for and traded in Hong Kong dollars, with par value of RMB1.00 each

“Nan Lung”		Nan Lung Holding Limited (a wholly-owned subsidiary of CSAH)

“NDRC”		National Development and Reform Commission of China

“SAFE”		State Administration of Foreign Exchange of China

“Finance Company”		China Southern Airlines Group Finance Company Limited

“SASAC”		State-owned Assets Supervision and Administration Commission of the State Council

“SEC”		United States Securities and Exchange Commission

“SPVs”		special purpose vehicles exclusively set up by the Company and its subsidiaries for leased aircraft

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PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

A. SELECTED FINANCIAL DATA

The following tables present selected financial data for the five-year period ended December 31, 2021. The selected consolidated income statement data (other than ADS data) for the three-year period ended December 31, 2019, 2020 and 2021 and selected consolidated statement of financial position data as of December 31, 2020 and 2021 are derived from the audited consolidated financial statements of us, included elsewhere in this Annual Report. The selected consolidated income statement data (other than ADS data) for the years ended December 31, 2017 and 2018 and selected consolidated statement of financial position data as of December 31, 2017, 2018 and 2019 are derived from our audited consolidated financial statements that are not included in this Annual Report.

Moreover, the selected financial data should be read in conjunction with the rest of the Annual Report, including our audited consolidated financial statements together with accompanying notes and “Item 5. Operating and Financial Review and Prospects” which are included elsewhere in this Annual Report. Our consolidated financial statements are prepared and presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRSs.

We have initially applied IFRS 16 on January 1, 2019 and IFRS 15 and IFRS 9 on January 1, 2018. According to the adopted transition plan, the comparative data has not been restated.


	Year ended December 31,
	2021 US$			2021 RMB			2020 RMB			2019 RMB			2018 RMB			2017 RMB
	(in million, except per share and per ADS data)
Consolidated Income Statement Data
Operating revenue		15,942			101,644			92,561			154,322			143,623			127,806
Operating expenses		(18,247	)		(116,340	)		(109,111	)		(148,608	)		(140,242	)		(123,098	)
Operating (loss)/profit		(1,557	)		(9,929	)		(11,864	)		10,838			8,819			9,156
(Loss)/profit before income tax		(2,182	)		(13,910	)		(15,195	)		4,055			4,364			8,874
(Loss)/profit for the year		(1,728	)		(11,016	)		(11,827	)		3,084			3,364			6,898
(Loss)/profit attributable to:
Equity shareholders of our Company		(1,899	)		(12,106	)		(10,847	)		2,640			2,895			5,961
Non-controlling interests		171			1,090			(980	)		444			469			937
Basic and diluted (loss)/earnings per share		(0.12	)		(0.75	)		(0.77	)		0.22			0.27			0.60
Basic and diluted (loss)/earnings per ADS (1)		(5.86	)		(37.36	)		(38.58	)		10.76			13.50			30.03
Other Financial Data
Cash dividends declared per share		—			—			—			—			0.05			0.10

(1)

Basic and diluted earnings per share have been computed by dividing profit attributable to our equity shareholders by the weighted average number of shares in issue. Basic and diluted earnings per ADS have been computed as if all of our issued or potential ordinary shares, including A shares and H shares, are represented by ADSs during each of the years presented. Each ADS represents 50 H shares.

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	As of December 31,
	2021 US$		2021 RMB		2020 RMB		2019 RMB		2018 RMB		2017 RMB
	(in million, except per share and per ADS data)
Consolidated Statement of Financial Position Data:
Cash and cash equivalents		3,365		21,456		25,419		1,849		6,928		6,826
Total current assets, excluding cash and cash equivalents		2,574		16,410		13,566		14,889		17,144		11,058
Property, plant and equipment, net		14,302		91,186		86,146		84,788		170,692		158,926
Right-of-use assets		21,714		138,439		151,065		153,211		—		—
Total assets		50,694		323,211		326,383		306,928		246,949		218,718
Current borrowings		9,083		57,913		40,099		37,543		38,741		27,568
Current portion of obligations under finance leases		—		—		—		—		9,555

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company