In 2018, we generated a net cash inflow from operating activities of RMB22,338 million
as a result of cash generated from operations of RMB24,047 million less income tax we paid in 2018. Our cash generated from operations was mainly due to operating profit before working capital changes of RMB24,115 million and negative
changes in working capital of RMB68 million. The operating profit before working capital changes of RMB24,115 million was a result of the profit before income tax of RMB3,856 million, mainly adjusted for: (i) depreciation of
property, plant and equipment and amortization of other non-current assets of RMB15,084 million, (ii) interest expenses of RMB3,727 million and (iii) net foreign exchange losses of
RMB1,983 million. Negative changes in working capital mainly consisted of (i) prepayments and other receivables of RMB2,056 million and (ii) other long-term liabilities of RMB525 million, partly offset by (i) contract
liabilities of RMB1,051 million and (ii) trade and
bills payables of RMB856 million.
Cash Flows from Investing Activities
In
2020, our net cash outflow from investing activities was RMB6,283 million. Our net cash outflow for investing activities mainly consisted of additions to property, plant and equipment and other
non-current assets of RMB7,247 million. These cash outflows were partly offset by proceeds from disposal of property, plant and equipment of RMB894 million.
In 2019, our net cash outflow from investing activities was RMB4,899 million. Our net cash outflow for investing activities mainly
consisted of additions to property, plant and equipment and other non-current assets of RMB7,589 million. These cash outflows were partly offset by proceeds from novation of purchase rights of
RMB2,366 million.
In 2018, our net cash outflow from investing activities was RMB12,780 million. Our net cash outflow for
investing activities mainly consisted of (i) advanced payments on acquisition of aircraft of RMB15,342 million and (ii) additions of property, plant and equipment of RMB10,653 million. These cash outflows were partly offset by
(i) proceeds from novation of purchase rights of RMB7,483 million and (ii) proceeds from disposal of property, plant and equipment of RMB5,493 million.
Cash Flows from Financing Activities
In
2020, our net cash inflow from financing activities was RMB11,426 million. Our net cash inflow for financing activities mainly consisted of (i) proceeds from issuance of short-term debentures of RMB77,200 million, (ii) proceeds
from draw-down of short-term bank loans of RMB28,883 million, (iii) proceeds from draw-down of long-term bank loans of RMB10,823 million and (iv) proceeds from issuance of long-term debentures and bonds of RMB1,998 million.
These cash outflows were partly offset by (i) repayments of short-term debentures of RMB69,200 million, (ii) repayments of principal of lease liabilities of RMB18,439 million, (iii) repayments of short-term bank loans of
RMB9,130 million, (iv) repayments of long-term debentures and bonds of RMB2,453 million and (v) repayments of long-term bank loans of RMB1,948 million.
In 2019, our net cash outflow from financing activities was RMB23,375 million. Our net cash outflow for financing activities mainly
consisted of (i) repayments of short-term debentures of RMB35,000 million, (ii) repayments of principal of lease liabilities of RMB23,895 million, (iii) repayments of short-term bank loans of RMB12,868 million,
(iv) repayments of long-term debentures and bonds of RMB5,567 million and (v) repayments of long-term bank loans of RMB4,033 million. These cash outflows were partly offset by (i) proceeds from issuance of short-term
debentures of RMB39,000 million, (ii) proceeds from issue of shares of RMB9,442 million, (iii) proceeds from issuance of long-term debentures and bonds of RMB7,755 million and (iv) proceeds from draw down of short-term
bank loans of RMB6,986 million.
In 2018, our net cash outflow from financing activities was RMB13,558 million. Our net cash
outflow for financing activities mainly consisted of (i) repayments of short-term bank loans of RMB36,066 million, (ii) repayments of short-term debentures of RMB26,500 million, (iii) repayments of principal of finance lease
obligations of RMB9,629 million and (iv) repayments of long-term bank loans of RMB7,592 million. These cash outflows were partly offset by (i) proceeds from issuance of short-term debentures of RMB31,000 million,
(ii) proceeds from draw down of short-term bank loans of RMB19,144 million, (iii) proceeds from draw down of long-term bank loans and other financing activities of RMB18,693 million and (iv) proceeds from issuance of
long-term debentures and bonds of RMB2,938 million.
Working Capital and Liabilities
We have, and in the future may continue to have, substantial debts. In addition, we generally operate with a working capital deficit. As of
December 31, 2020, our current liabilities exceeded our current assets by RMB77,310 million. In comparison, our current liabilities exceeded our current assets by RMB58,620 million as of December 31, 2019. Our current liabilities
increased by 27.4% from RMB78,363 million as of December 31, 2019 to RMB99,808 million as of December 31, 2020, primarily due to the increase in the current portion of lease liabilities. Our current assets increased by 14.0% from
RMB19,743 million as of December 31, 2019 to RMB22,498 million as of December 31, 2020, primarily due to the increase in cash and cash equivalents. Short-term loans outstanding totaled RMB25,233 million and
RMB57,150 million as of December 31, 2019 and 2020, respectively. Long-term outstanding bank loans totaled RMB26,604 million and RMB30,745 million as of December 31, 2019 and 2020, respectively.
As of December 31, 2020, our debt ratio, representing total liabilities divided by total assets, was 79.2%. The interest expenses
associated with these debts may impair our future profitability. We expect that cash from operations and bank borrowings will be sufficient to meet our operating cash flow requirements, although events that materially and adversely affect our
operating results can also have a negative impact on liquidity.
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