ShandongAirlinesCo.,Ltd.SummaryofAnnualReport2018I.ImportantNotice
Thesummaryisabstractfromfull-textofannualreport,formoredetailsofoperatingresults,financialconditionandfuture
developmentplanoftheCompany;investorsshouldfoundinthefull-textofannualreportthatpublishedonmediaappointedby
CSRC.
OtherdirectorsattendingtheMeetingforannualreportdeliberationexceptforthefollowed

                                  Titleofthedirectornot

  Directornotpersonallyattended                                Reasonsforabsent            Mandatory

                                    personallyattended

WangMingyuan                  Director                Job-relatedreason        XuChuanyu

WangJieming                    Director                Job-relatedreason        LiXiuqin

LvHongbing                    IndependentDirector      Job-relatedreason        XuXiangyi

DuanYalin                      IndependentDirector      Job-relatedreason        HuYuanmu

Promptofnon-standardauditopinion
□Applicable  √Notapplicable
TheprofitdistributionplanthatdeliberatedandapprovedbytheBoardis:Basedontotalstockissued400,000,000shares,distributed2.00Yuan(taxincluded)bonusincashforevery10-shareholdbyallshareholders,0sharesbonusissued(taxincluded)andnocapitalizingofcommonreservescarriedout.
Profitdistributionpre-planofpreferredstockdeliberatedandapprovedbytheBoardinthereportingperiod
□Applicable  √Notapplicable
II.Basicinformationofthecompany
1.Companyprofile

Shortformofthestock            Shanhang-B              Stockcode              200152

Stockexchangeforlisting          ShenzhenStockExchange

      Person/Waytocontact                SecretaryoftheBoard                  Rep.ofsecurityaffairs

Name                          DongQiantang                        FanPeng

                                1/F,TiangongOfficeBuilding,Northof    3/F,TiangongOfficeBuilding,Northof

                                Red-crowedcranesHotel,Yaoqiang        Red-crowedcranesHotel,Yaoqiang

Officeadd.

                                InternationalAirlines,LichengDistrict,    InternationalAirlines,LichengDistrict,

                                Jinan,Shandong                      Jinan,Shandong

Fax.                            0531-85698034                        0531-85698034

Tel.                            0531-82085939                        0531-82085586

E-mail                          dongqt@sda.cn                        fanp@sda.cn

2.Mainbusinessorproductintroductioninthereportingperiod
TheCompanyismainlyengagedininternationalanddomesticairpassengerandcargotransportationbusiness;hotelcatering;aircraft
maintenance;civilaviationpersonneltraining;insuranceagency;airlineagencybusiness;groundservicesrelatedtomainbusiness;salesofaviationmaterials,generalmerchandise,food,healthfoods,handicrafts,souvenirs,etc.,andretailsalesoftobacco;leasingofaviationmaterials;leasingofpremises,rentalofhouses;businessservices;hotelaccommodationagentsandticketagents;conferenceservices;transportagencyservices,aircargostorage;andlaborservices.Amongthem,internationalanddomesticairpassengerandcargotransportationbusinessistheCompany'smainbusiness.
Formorethan20years,thecompanyhasalwaysbeengivingfirstpriorityto“ensuresafety,paycloseattentiontoefficiency,andstrivetopunctualityandqualityservice”.Asoftheendof2018,thecompanyhas122airplanesofBoeingB737series,andstridingintotheranksoflargeairlines.Atpresent,thecompanybasesitsheadquartersinJinanandhasbranchofficesandflightbasesinQingdao,Yantai,Xiamen,Chongqing,Beijing,UrumqiandGuiyang.Thecompanyoperatesmorethan200domestic,internationalandregionalairroutes,everyweekmorethan3,700flightsflytomorethan80largeandmedium-sizedcitiesacrossthecountry,aswellastheregionalroutestoTaiwanregionofChina,andtheinternationalroutestoSouthKorea,Japan,Thailand,CambodiaandIndia.
3.Mainaccountingdataandfinancialindexes
(1)Mainaccountingdataandfinancialindexesforrecentlythreeyears

                                                                                                  InRMB
                                        2018            2017      Changesoverlastyear      2016

Operatingincome                    18,765,953,326.74  16,484,713,152.23              13.84%13,742,365,545.56
Netprofitattributabletoshareholdersof

thelistedcompany                      347,379,314.89    490,353,408.15            -29.16%    532,834,567.17
Netprofitattributabletoshareholdersof

the  listed  company  after  deducting    132,549,289.96    388,452,214.55            -65.88%    409,577,360.28
non-recurringgainsandlosses
Netcashflowarisingfromoperating

activities                              2,450,017,519.48  1,870,048,122.23              31.01%  2,427,055,988.42
Basicearningspershare(RMB/Share)                0.87            1.23            -29.27%            1.33
Dilutedearningspershare(RMB/Share)              0.87            1.23            -29.27%            1.33
                                                                      4.25percentagepoints

WeightedaverageROE                          7.94%          12.19%                              14.88%
                                                                                    down

                                                                    Changesoverendoflast

                                      Endof2018      Endof2017                          Endof2016

                                                                            year

Totalassets                          16,563,979,100.41  13,351,422,839.91              24.06%12,741,974,788.53
Netassetsattributabletoshareholderof

listedcompany                        4,471,325,978.28  4,253,141,013.93              5.13%  3,836,172,828.06
(2)Quarterlymainfinancialindex

                                                                                                    InRMB
                                  Firstquarter        Secondquarter      Thirdquarter        Fourthquarter

Operatingincome                  4,496,320,014.09    4,232,958,550.56    5,715,619,936.36    4,321,054,825.73

Net  profit  attributable  to

shareholdersofthelistedcompany      248,925,753.30      -45,195,048.65      612,878,294.50    -469,229,684.26
Net  profit  attributable  to

shareholdersofthelistedcompany

afterdeductingnon-recurringgains      186,835,480.93      -124,926,168.36      582,643,401.11    -512,003,423.72
andlosses

Net  cash  flow  arising  from

operatingactivities                    607,015,387.20      251,882,775.68    1,769,003,548.15    -177,884,191.55
Whethertherearesignificantdifferencesbetweentheabove-mentionedfinancialindexoritstotalnumberandtherelevantfinancialindexdisclosedinthecompany’squarterlyreportandsemi-annualreport
□Yes√No
4.Sharesandshareholders
(1)Particularsaboutcommonstockshareholders,preferenceshareholderswithvotingrightsrecoveredandtoptenshareholders

                                                                                                  InShare
Totalcommon                                        Totalpreference

                      Totalcommonstock                                  Totalpreferenceshareholderswith

stock                                              shareholderswith

                      shareholdersatendoflast                              votingrightsrecoveredatendof

shareholdersin  15,411                        15,381votingrights          0                              0
                      monthbeforeannualreport                              lastmonthbeforeannualreport

reporting                                            recoveredatendof

                      disclosed                                            disclosed

period-end                                          reportingperiod

                                            Toptenshareholders

                                                                                      Numberofshares

                                              Proportion              Amountof        pledged/frozen

                                  Natureof              Amountof

    FullnameofShareholders                      ofshares              restrictedshares

                                  shareholder              sharesheld                  Stateof

                                                  held                    held                  Amount

                                                                                      share

                              State-ownedlegal

ShandongAviationGroup                            42.00%  168,004,000    168,004,000

                              person

                              State-ownedlegal

AirChinaLimited                                  22.80%  91,200,000    91,200,000

                              person

                              Foreignlegal

NORGESBANK                                    0.87%    3,498,479            0

                              person

VANGUARDEMERGING        Foreignlegal

                                                  0.74%    2,960,917            0

MARKETSSTOCKINDEXFUND  person
WANXIANGINTERNATIONAL    Foreignlegal

                                                  0.66%    2,636,000            0

INVESTMENTCORPORATION    person
ISHARESCOREMSCIEMERGINGForeignlegal

                                                  0.51%    2,035,324            0

MARKETSETF                person

VANGUARDTOTAL            Foreignlegal

                                                  0.47%    1,872,902            0

INTERNATIONALSTOCKINDEXperson

FUND

                              Domesticnature

HouChunhu                                        0.43%    1,731,045            0

                              person

                              Domesticnature

ChenJingjian                                      0.40%    1,595,200            0

                              person

                              Domesticnature

WangJingqing                                      0.32%    1,279,053            0

                              person

                                              1.ShandongAviationGroup(SDA)isthefirstlargestshareholderofthe
                                              Company,whoholdsthesharesoftheCompanyonbehalfoftheState
                                              withunlistedshares;

                                              2.AirChinaLimitedisthesecondlargestshareholderoftheCompany,
                                              whoholdsthesharesoftheCompanyonbehalfoftheStatewith
Explanationonrelatedrelationshiporconcertedactionunlistedshares;

amongtheabovementionedshareholders              3.Amongtheabovetoptenshareholders,AirChinaLimitedisthefirst
                                              largestshareholderoftheSDA,andthereexistsnoassociated
                                              relationshipbetweenSDAandAirChinaandtheothershareholders,and
                                              theydon’tbelongtothepersonsactinginconcertregulatedbythe
                                              ManagementRegulationofInformationDisclosureonChangeof
                                              ShareholdingforListedCompanieswiththeothershareholders.

(2)TotalpreferredstockshareholdersoftheCompanyandsharesheldbytoptenshareholderswithpreferredstockheld
TheCompanyhadnoshareholderswithpreferredstockheldinthereporting.
(3)PropertyrightandcontrollingrelationshipsbetweentheactualcontrollersoftheCompanyandtheCompanyisasfollows:

                          ShandongAviationGroup

                                      42%

                          ShandongAirlinesCo.,Ltd.

5.Corporatebonds
WhetherornottheCompanypublicofferingcorporationbondsinstockexchange,whichundueorwithoutpaymentinfullatmaturityontheapprovaldateforannualreportdisclosed
No

III.Discussionandanalysisofbusiness
1.Introductionofoperationinthereportingperiod
In2018,theCompanyhasbasicallycompletedtheintendedtarget,andvariousworksofoperationaremaintaininghealthydevelopmentwithsteadyprogress.
――Safetypositionisgenerallystable:Intranspiration,wehaveensuredsecurityflightofabout434,100hoursand205,800vehicles,arespectiveincreaseof8.1%and6.1%onayear-on-yearbasis.
――Obviousimprovementinoperationefficiency:On-timeperformancewas81.64%,a11.48percentagepointsupfromayearearlier,andrankstheNo.2intheindustry;atsecondhalfoftheyear,wewonthechampionshipsixtimesinsuccessionofpunctualityrateforlargeairlinesinChinawithintheAsiaPacificArea.
――Maintainsustainableprofitability:wecompletedaRTKof3538millionTKintheyear,andpassengertrafficvolumecameto25,462,000person-time,cargoandmailtransportvolumereached170,100tons,anincreaseof11.10%,9.88%and4.86%onay-o-ybasisrespectively;theoperationrevenuereached18.77billionYuan,anincreaseof13.84%fromayearearlier;netprofithas0.35billionYuan,adecreaseof29.16%fromayearearlier.Thepassengerloadfactor(PLF)comesto83.90%,a0.75percentagepointsuponay-o-ybasis;freightrategoesto40.44%,a0.32percentagepointsdownfromayearearlier.
――Steadyimprovementinservicequality:Passengersatisfactionachieved93.78scores,risenby2.06scoreonayear-on-yearbasis;passengercomplaintratewas0.692times/10thousandperson,a0.07times/10thousandpersondown;theacceptanceofpassengercomplaintratehasthelowestrateinmainairlinesforfiveconsecutiveyears;wonthetitleof“BestAirlinesforCivilAviationService”forcontinuousfiveyears;awardedasthe“Top500MostValuableBrandinChina”forelevenyearsinarowwithbrandvalueupto41,652millionYuan,whichrankingincreasedtoninety-ninth.
TheCompanymainlycarriedoutthefollowingwork:
1.Continuouslyperfectsafetymanagementmechanism,improvingthesafetymanagement&controllingefficiency
Firstly,improvethepoliticalpositionsandvigorouslyadvocatetheconceptofsafedevelopment.SeriouslystudyandimplementGeneralSecretaryXiJinping’simportantinstructionsforcivilaviationwork,correctlyhandletherelationshipbetweensafetyanddevelopment,safetyandefficiency,safetyandnormality,andsafetyandservice,continuetostrengthentheorganizationandleadershIPOfsafetywork,andimplementtheconceptofsafedevelopment.Secondly,focusonthesystemefficiencyandcontinuetopromotetheconstructionofsafetymanagementsystem.Teaseouttheblocksafetyresponsibilityinterface,adjustthebranchofficestructureandbusinessprocesses,andthecoordinationofregionalsecuritycontrolareenhanced.Thirdly,strengthenthemanagementandcontrolofqualificationsandsolidlycarryouttheconstructionof“threebasics”.Fourthly,persistintheproblem-oriented,anddeepenthehiddenproblemmanagementandtheriskpreventionandcontrol.
2.Optimizetheoperationalmanagementorganizationmechanism,andtheoperationqualityissignificantlyimproved
Thefirstistoimprovetheflightnormalitycontrolsystemandconsolidatetheoperationqualityfoundation.Focusontheadjustmentofflightoperationguaranteedutiesofbranchofficesandsalesdepartments,andconsolidatetheresponsibilityofgrassrootssecurity.Thesecondistostrengthenthesynergylinkage,andtheoperationalefficiencyisconstantlyimproved.Thethirdistogiveplaytothetechnologicaladvantagesandimprovethescientificlevelofoperationalmanagement.Basedontheoperationalneedsoflargecorps,buildaproductionandoperationinformationplatform.SteadilypromotetheEFB(ElectronicFlightBag)projectwhichhasbasicallyreachedtheindustryleadinglevel.VigorouslypromotetheapplicationofHUD(Head-UpDisplay)andrealizethetakeoffatthecapitalairportwiththelowvisibilityof90meters.
3.Vigorouslyincreaseincomeandreduceexpenditures,andstrivetoachievebetterreturns
Thefirstistocontinuetoimprovetheroutenetworkstructureandoptimizetheproductiveresourceallocation.Sparenoeffortinstrivingforthemomentresourceandimprovethecontrolofmainbases.Thesecondistoimplementtherefinedmarketingcontrolandactivelyexpandtherevenuechannels.Onlinemarketingcontrolplatform,marketanalysisandsalescontrolbecomemoreaccurateandefficient.Improvetherefundandreschedulingpolicies,increasetheproportionofdirectselling,andstrengthenthedevelopmentandmaintenanceoflargecustomers.Thethirdistovigorouslyimplementthecostcontrol,andthecuttingdownofcostbringsnotable
results.Thefourthistoactivelyobtainthesynergyincomeandachievestrongsupportforefficiencywork.Thefifthistoscientificallygraspthemarketfeatures,andtheinputandoutputaremorematched.MakeplansearlyaccordingtothemarketfeaturessuchastheSpringFestivaltravelseason,theshoulderseason,thesummervacation,andtheoffseason.Throughtheoverallarrangementofproductioninputs,theincome-increasingabilityinthepeakseasonandtheloss-reducingabilityintheoffseasonhavebeenimproved,therefore,thecostpressuressuchasoilpricesandexchangehavebeeneffectivelyovercome,andbetterreturnswereachieved.
4.Solidlypromotetheserviceinnovationandcontinuouslyoptimizethepassengerexperience
Thefirstistocontinuetoimprovethestandardspecificationsandimprovetheservicecontroleffectiveness.Thesecondistopromotetheapplicationofnewtechnologiesandimplementtheserviceinnovationandupgrading.Thethirdistoadheretotheproblem-oriented,andimprovetheserviceweakness.Vigorouslycarryoutthespecialtreatmentofluggagetransport,continuouslyimproveon-boardbroadcastingservices,andoptimizethefoodpairing.Thefourthistoenrichthecarrier,strengthenthepublicity,anddeepenthehonestbrand.
2.Whetherthemainbusinesshadmajorchangeinthereportingperiod
□Yes√No
3.Abouttheindustries,products,orregionsaccountingforover10%ofthecompany’soperatingincomeoroperatingprofit

                                                                                                  InRMB
                                                        Increase/decreaseIncrease/decreaseIncrease/decreaseof
                                              Grossprofit

    Name    Operatingrevenue  Operatingcost              ofoperating    ofoperatingcost  grossprofitratio

                                                ratio

                                                          revenuey-o-y        y-o-y            y-o-y

Airtransport                                                                                  2.79percentage
service        18,061,328,802.95  960,942,787.74    5.32%        12.95%        -25.87%        pointsdown
4.Whetherthecharacteristicsofmanagementseasonalorcyclicalneedspecialattention
□Yes√No
5.Inthereportingperiod,noteofmajorchangesinoperatingincome,operatingcost,totalnetprofitattributabletocommonstockshareholdersoflistedcompanyorcomposingthepreviousreportingperiod□Applicable√Notapplicable
6.Particularaboutsuspendedanddelisting
□Applicable√Notapplicable
7.Relevantitemsinvolvingfinancialreport
(1)Particularsaboutthechangesinaspectofaccountingpolicy,estimatesandcalculationmethodcomparedwiththefinancialreportoflastyear
ThereCompanyhasnoaccountingpolicy,estimatesandcalculationmethodchangedintheperiod
(2)Majoraccountingerrorswithinreportingperiodthatneedsretrospectiverestatement
NomajoraccountingerrorswithinreportingperiodthatneedsretrospectiverestatementfortheCompanyintheperiod.

(3)Comparewithlastyear’sfinancialreport;explainchangesinconsolidationstatement’sscope
Nochangesinconsolidationstatementscopeinthereportingperiod

                                                                                    ShandongAirlinesCo.,Ltd.
                                                                              Legalrepresentative:SunXiujiang
                                                                                              23March2019