Cornerstone Laid For New China Southern/MTU Joint Venture; Engine Overhaul Facility to Open in '02; Capacity of 150 Engines by '06.

Business & Travel Editors

ZHUHAI, China--(BUSINESS WIRE)--May 22, 2001

China Southern Airlines (NYSE:ZNH) (HKSE:1055), the largest airline in The People's Republic of China, and MTU Munchen, at a ceremony here, have laid the cornerstone for the new MTU Maintenance Zhuhai Co. Ltd.

Originally created on May 28, 2000, the MTU Maintenance Zhuhai Co. Ltd. is an engine maintenance joint venture created by China Southern Airlines and MTU, who will take 50% of the shares respectively. The total investment is US $189.29 million with the registered asset capital of US $63.1 million.

The location of the new engine overhaul facility in Zhuhai (one of China's Special Economic Zones) is close to Hong Kong and Macao, offering easy transportation for airline companies seeking new aircraft maintenance work from the new facility, which will work on V2500 and other aircraft engines. The engine maintenance center will open in 2002, and, by 2006, the capacity of aircraft overhauls will be up to 150 engines per year.

"When the engine overhaul center opens, it will be at the same technological level and similar in scale as MTU has previously done in Germany. And it will provide high quality aircraft services at internationally competitive prices for both China Southern Airlines and other airlines throughout the region," said Yan Zhi Qing, president of the Southern Airlines Group.

Yan added: "This facility will provide comprehensive and aircraft engine quality services to China Southern Airlines and other airlines throughout China, Southeast Asia and around the world. The establishment of this new company aids in meeting China Southern's long-range goals of improving its airframe maintenance capability, ensuring continued aircraft airworthiness and thus lowering overall operational costs."

In attendance at the Zhuhai cornerstone ceremony were Fang Xuan, mayor of Zhuhai Municipal Government; Xian Wen, executive vice mayor of Zhuhai Municipal Government; and Paul Egon Grall, executive vice president of MTU Aeroengines.

Named the Best Airline in China by SKYTRAX, China Southern Airlines (www.cs-air.com -- Chinese) (www.cs-air.com/en -- English) connects more than 80 cities around the globe. Major business and vacation destinations served in China include: Beijing, Chengdu, Guangzhou, Guilin, Hong Kong, Kunming, Shanghai, Shenzhen and Wuhan and as well as international service, including: Amsterdam, Bangkok, Hanoi, Ho Chi Minh City, Kuala Lumpur, Jakarta, Los Angeles, Manila, Melbourne, Osaka, Penang, Phnom Penh, Seoul, Singapore and Sydney.

For China Southern Airlines reservations and information, contact your local travel agent.