CHINA'S LEADING AIRLINE, CHINA SOUTHERN, BECOMES PHOENIX INFORMATION Systems' New Joint Venture Partner in China China Southern Airlines Buys Out Phoenix's Former Partner, Hainan Airlines, and Agrees to Make an Additional Investment to Boost its Stake in the Joint Venture Which is Now Operating a Travel Information and Reservation Network in China ST. PETERSBURG, Fla., Nov. 15 /PRNewswire/Asianet/ -- Phoenix Information Systems Corp. ("Phoenix" or the "Company") is pleased to announce that China Southern Airlines Company Ltd., the leading domestic airline in the People's Republic of China ("China Southern"), has become Phoenix's new joint venture partner in Hainan Phoenix Information Systems Ltd., a company now operating a travel information and reservation system in China based on Phoenix's proprietary technology (the "Joint Venture"). In a trilateral agreement between Phoenix, China Southern, and the Company's former Joint Venture partners Hainan Airlines, China Southern acquired the entire equity interest held by Hainan Airlines, representing 30% of the Joint Venture, for US$2,580,000. Further, China Southern agreed to invest an additional US$4,780,000 in cash and real estate capital contributions in exchange for an additional 15% interest in the Joint Venture, raising China Southern's stake to 45%. Phoenix retains 55% ownership of Hainan Phoenix Information Systems, and agreed to invest an additional US$3,000,000 in cash to the Joint Venture's ongoing operations and development. Phoenix's Chairman and CEO, Robert P. Gordon, commented: "We are very pleased to he working with China Southern. Their industry leadership, knowledge of the market, and appreciation of the increasing role that Hainan Phoenix's China Travel Network will play in China's burgeoning travel and tourism industry, make them an ideal partner and a valuable asset to the business. We believe that their involvement in operations will help to greatly accelerate overall expansion of the network from a technical standpoint. We further believe that their participation as a customer will strongly influence other travel suppliers throughout the industry in their decisions to also become customers." Captain Yu Yan' en of China Southern has been appointed to the position of Chairman of the Board of Directors of the Joint Venture. He commented: "We are very pleased to be a part of this exciting business opportunity. As the premier airline in China, we look forward to gaining the benefits of utilizing the technology throughout our organization. We also look forward to great success for the investment." He also stated: "The China Travel Network information and reservation system installed by Hainan Phoenix Information Systems is exceptionally capable, and serves a vital need in the further modernization of China's travel and tourism infrastructure. In turn, this will translate into far greater efficiency and profitability at every level of the industry, and an even faster rate of growth in the number of business and leisure travelers coming to China. The overall benefits to China's rapidly expanding economy will be felt well into the next century." Hainan Phoenix Information Systems is the only licensed commercial operation of its kind in the PRC today. To date, the Joint Venture has signed contracts with two domestic airlines -- China Southern and Hainan Airlines -- and plans to install network hub centers in thirteen important travel destination cities throughout the country in early 1997. That number is expected to increase to over 70 cities by July 1998, with the capacity to support up to 60,000 individual terminals. The China Travel Network provides a fully automated means for airlines to manage their flight schedules, passenger bookings, and ticketing operations; allows hotels to dramatically expand the distribution of room sales; and permits travel agencies to provide advance reservations for virtually any type of domestic transportation and lodging. The system utilizes PC-based distributed processing and advanced client-server technology, and is highly cost-efficient to install and operate. Moreover, the system is bilingual (Chinese / English), and is linked to worldwide markets through international airline industry networks as well as over the Internet (the Joint Venture's web site can be found at: www.hpis.com). The Chinese domestic airline industry is presently growing at the rate of 20% a year; a rate that industry experts believe will continue for the foreseeable future. In 1995, the industry flew approximately 50,000,000 domestic passengers, and expects to exceed 60,000,000 for 1996. Next year, airline passenger bookings should reach 72,000,000. China Southern is the largest Chinese domestic airline, with a 28% market share. They presently serve 60 domestic and 12 international cities with 213 scheduled routes. The airline has a fleet of 89 aircraft including 52 Boeing 737, 757, 767, and 777's which carried over 12 million passengers in 1995. They have projected passenger volume to grow to over 16 million passengers in 1996. Phoenix is an information system and services company that has developed technologies to address the growing worldwide demand for automation in the travel and tourism industry. The Company's proprietary airline and hotel information and reservation system can be used by airlines, travel agencies, and other travel organizations and is well suited for rapidly developing economic regions around the world. CONTACT: Paul W. Henry, Managing Director of Phoenix Information Systems, 800-664-7472, or 813-894-8021; or Philippe Niemetz of WPH Consultants Ltd., 800-477-7570/