For immediate release

14th February, 2003

On 13th February, Swire Pacific Limited ("Swire Pacific") and Shanghai Eastern Airlines Investment Co. Ltd ("SEA Investment"), a subsidiary of China Eastern Airlines Co. Ltd., formally entered into an agreement to establish a new investment holding company to be known as the Shanghai Eastern Airlines Swire Investment Company Limited ("Eastern Swire"). The joint venture will focus on investment opportunities in airport management and related services at airports in Mainland China.

The 50/50 joint venture will have a registered share capital of US$30 million, to be funded equally by the two partners. The formation of the joint venture will be an opportunity for the parties to work together to invest in airport management and related aviation services projects with the aim of earning satisfactory investment returns and complementing the parties' other aviation businesses.

At the signing ceremony, Swire Pacific Chairman James Hughes-Hallett said, "Swire has been engaged in the aviation industry for more than half a century and has considerable management expertise and experience in aviation-related businesses. China Eastern is also well established and has specialist China knowledge and contacts. Together, we share a common interest and will form a powerful partnership."

Ye Yigan, President of China Eastern Airlines Group, said, "China Eastern and Swire Pacific have a long history of close contacts and cooperation. The formation of Shanghai Eastern Airlines Swire Investment Co. Ltd. marks a new page in our relationship and will open up new avenues for further development."

The formation of Eastern Swire comes at a time when the Mainland aviation industry is undergoing a restructuring process, with significant reforms to the ownership and management of China's airports. With the exception of Beijing Capital International Airport and the airports in the Tibet Autonomous Region, all airports throughout Mainland China will in future be administered by their local governments. The changes are also expected to encourage airports to restructure their operational systems and attract foreign investment and management, with private aviation companies being allowed to invest in the ownership and management of such civil aviation airports. The promulgation of the Regulations on Foreign Investment in Civil Aviation in June 2002 to encourage foreign investors to make direct or indirect investment in the Mainland's civil aviation industry also provides favourable conditions for attracting foreign investment and advanced management expertise to Mainland airports. Both parties believe the ongoing restructuring process and the stable development of the aviation industry in Mainland China will bring more opportunities for airport investment.

With broad involvement in the aviation sector, the parties are well placed to make such new investments in airport development. Previous experience has given both parties considerable knowledge and understanding of customer needs and fresh ideas in respect of the construction, operation and management of airport facilities. The common aim will be to achieve higher service quality and greater convenience to passengers, for the benefit of airports, airlines and passengers.

Swire Pacific is one of Hong Kong's leading listed companies, with net assets valued at HK$72.9 billion. It has diversified interests in five operating divisions: Property, Aviation, Beverages, Marine Services and Trading & Industrial. The company's operations are predominantly based in the Greater China region, where the Swire Group has been established for over 130 years. It has considerable experience and a good reputation in the international aviation industry with interests in airline management, cargo terminal operations, aircraft engineering and maintenance, catering and airport ground handling businesses. Its associated company, Cathay Pacific Airways, has already worked closely with China Eastern on a number of individual projects.

SEA Investment was established on 29 May 2002 with a registered capital of RMB300 million, of which RMB295 million was contributed by China Eastern Airlines Co. Ltd., representing 98.34% of its registered capital. The company mainly provides consultation services for investment and related businesses. China Eastern Airlines Co. Ltd., the major shareholder of SEA Investment, was formed after a restructuring of China Eastern Airlines in 1995. It was listed in New York, Hong Kong and Shanghai in February and November 1997 respectively. As at November 2002, it had a total asset value of RMB29.2 billion and operated more than 80 aircraft.

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