The following methods and assumptions were used to estimate the fair value for each class of financial instruments:
–  
Cash and cash equivalents, trade receivables, other receivables and other current assets, trade and bills payables, taxes payable and other liabilities

The carrying values approximate their fair values because of the short maturities of these instruments.

–  
Financial assets/liabilities

The fair values of fuel option contracts and foreign exchange forward option contracts are determined by reference to quoted market values.

–  
Available-for-sale equity securities

The fair value is determined based on quoted market prices without any deduction for transaction costs.

ANNUAL REPORT 2008

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)
49 COMMITMENTS (cont’d)
(b) Operating lease commitments
As at 31 December 2008, the total future minimum lease payments under non-cancellable operating leases in respect of properties, aircraft and flight equipment were payable as follows:
The Group The Company 2008 2007 2008 2007 RMB million RMB million RMB million RMB million
Payments due 
Within 1 year  4,357  3,512  3,573  3,091 
After 1 year but within 5 years  15,828  13,836  13,081  11,597 
After 5 years  13,632  10,831  11,936  9,451 

33,817 28,179 28,590 24,139
(c) Investing commitments As at 31 December 2008, the Group and the Company committed to make capital contributions in respect of:
2008 2007 RMB million RMB million
–
A subsidiary  133

50 CONTINGENT LIABILITIES
(a)  The Group leases from CSAHC certain land in Guangzhou and certain land and buildings in Wuhan, Haikou and Zhengzhou cities. The Group has a significant investment in buildings and other leasehold improvements located on such land. However, such land in Guangzhou and such land and buildings in Wuhan, Haikou and Zhengzhou
lack adequate documentation evidencing CSAHC’s rights thereto.
Pursuant to an indemnification agreement dated 22 May 1997, CSAHC has agreed to indemnify the Group against any loss or damage caused by any challenge or interference with the Group’s use of these land and buildings.
ANNUAL REPORT 2008 133

(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)

Notes to the Financial Statements
134 ANNUAL REPORT 2008

(b)  A writ of summons was issued on 30 May 2007 by the High People’s Court of Guangdong Province relating to a claim that certain sales agents in Taiwan (the “plaintiffs”) against the Company for the alleged breach of certain terms and conditions of a cooperative agreement (the “cooperative agreement”). The plaintiffs have made a claim against the Company for a total sum of approximately HKD107 million and an unspecified compensation for early termination of the cooperative agreement.
On 7 May 2008, the court rejected the claims made by the plaintiffs, and the plaintiffs were ordered to bear all litigation expenses in respect of the first trial. The plaintiffs have submitted an appeal to the Supreme People’s Court of the PRC and the outcome is pending the conduct of the second trial.
The directors consider that the claim is without merit and has no material adverse effect on the financial position of the Group, and accordingly no provision in respect of the claims has been made.
(c)  
The Company entered into agreements with its pilot trainees and certain banks to provide guarantees on personal bank loans amounting to RMB90,858,000 (2007: RMB90,858,000) to be granted to its pilot trainees to finance their respective flight training expenses. As at 31 December 2008, an aggregate of personal bank loans of RMB13 million (2007: Nil), under these guarantees, were drawn down from the banks.
　
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