Further to the announcement made on September 2, 2007, regarding a strategic investment in China Eastern Airlines, Singapore Airlines Limited ("SIA") has concluded the definitive transaction agreements with China Eastern Airlines Corporation Limited ("CEA"), China Eastern Air Holding Company ("CEA Holding") and Lentor Investments Pte. Ltd. ("Lentor"), a wholly owned subsidiary of Temasek Holdings (Private) Limited ("Temasek").

There are four agreements signed by the parties, namely: Subscription Agreement, Shareholders Agreement, Strategic Cooperation Agreement and Secondment Agreement, relating to the partnership and strategic investment in CEA by SIA and Temasek (which owns 54.6% of SIA).

Completion of subscriptions contemplated by the Subscription Agreement is subject to, among other things, approvals of the relevant regulatory authorities and shareholders of CEA.

Share Subscription

SIA will subscribe for 1,235,005,263 new H-shares in CEA, representing approximately 15.73% of the enlarged issued share capital of CEA upon completion. The price payable by SIA is HK$3.80 per H-share. The last closing price of CEA’s H-shares was HK$3.73 per H-share as at May 21, 2007, being the last trading day prior to the suspension of trading in CEA shares on May 22, 2007. CEA shares resumed trading on September 3, 2007.

The total consideration payable by SIA in the subscription amounts to approximately HK$4.7 billion (approximately S$870m), being an amount which is less than 5% of SIA’s market capitalisation on Wednesday, November 7, 2007.

Temasek will subscribe for 649,426,737 new H-shares in CEA at HK$3.80 per H-share, representing approximately 8.27% of the enlarged issue share capital of CEA upon completion.

Separately, CEA Holding will also subscribe for 1,100,418,000 new H-shares in CEA. Upon completion, CEA Holding will be interested in an aggregate of 4,004,418,000 shares in CEA, representing 51% of the enlarged issued share capital of CEA. The price payable by CEA Holding is HK$3.80 per H-share.

Subject to certain limited exceptions, SIA, Temasek and CEA Holding will not dispose of any of the newly issued H-shares within three years from the date of completion of the subscription by the respective parties.

SIA will be entitled to subscribe for additional shares in CEA in order to maintain its percentage shareholding of 15.73% of the total issued share capital of CEA as a result of an issue of any share capital of CEA or an issue of any securities convertible into or exchangeable into any shares of CEA or any warrants or other rights to subscribe for any shares of CEA. SIA will also have the right to increase its percentage shareholding in CEA in the event that PRC foreign ownership restriction laws are relaxed.

Board and Management Participation

Commensurate with its stake in CEA, SIA will nominate two directors to a 14-member board of CEA. Additionally, SIA will nominate one director to the boards of key subsidiaries of CEA, and one director to each of the board committees of CEA. CEA will establish a new Board Finance Committee, including representatives from SIA and Temasek, to study and review and make proposals to the board of CEA on key financial matters.

SIA Chairman Stephen Lee, and SIA Chief Executive Officer, Chew Choon Seng, will be SIA's nominees to the board of CEA.

Under the Secondment Agreement, SIA will second its personnel to certain executive positions in CEA. SIA is proposing to send senior staff to work in key positions in various areas in CEA, including Sales and Marketing, Finance, Planning, Products and Services and Engineering.

Through SIA's board and management involvement, SIA will work with CEA to implement best practices in corporate governance standards, improve operational efficiency and performance, raise product and service standards, and enhance the brand identity and image of CEA.

Strategic Partnership and Cooperation

Under the Strategic Cooperation Agreement, SIA and CEA will pursue opportunities for cooperation in marketing, commercial purchasing, technical and engineering cooperation, flight operations, ground and station operations, and human resources and training.

The Strategic Cooperation Agreement acts as a framework for further arrangements in the specific areas. The cooperation will be in areas where there are commercial synergies for both parties, and it will also be in the form of sharing of knowledge and experiences for mutual benefit and the benefit of consumers.

SIA and CEA have distinct route networks that are complementary, and this provides for many opportunities for marketing cooperation, such as twinning of the Singapore and Shanghai hubs, codeshare on all services between Singapore and Shanghai , and the possibility of joint operations beyond both airlines' respective hubs. Through such cooperation, SIA and CEA will improve convenience, accessibility and choice for consumers in Singapore and China, and assist CEA to make Shanghai the premier air hub in China. SIA and CEA will also undertake joint marketing activities in various commercial areas.

In the area of human resources and training, aside from the secondment of SIA staff to CEA, there will also be a corresponding attachment of 12 CEA staff members to SIA in various areas.

There will also be other forms of training assistance provided by SIA to CEA. Senior executives from CEA's training, purchasing and flight operations departments have visited SIA to obtain a better understanding of SIA's organisation and processes.

Next Steps

A shareholders circular will be issued by CEA shortly, to call for shareholder meetings where the shareholders of CEA will be asked to vote on, among other things, the share subscriptions by SIA, Temasek and CEA Holding in CEA.

Further announcements will be made when the definitive agreements have been approved by the shareholders of CEA and the relevant regulatory authorities.

In the meantime, shareholders or potential shareholders of SIA are asked to note this position, and keep it in mind in respect of any trading of SIA shares prior to any further announcement.

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