CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4, 5, 7 and 31)
Available-for-sale financial assets - current (Notes 4, 8 and 31)
Derivative financial assets for hedging - current (Notes 4, 5, 9 and 31)
Receivables:
Notes and accounts, net (Notes 4, 5 and 11)
Notes and accounts - related parties (Note 32)
Other receivables
Current tax assets (Notes 4 and 27)
Inventories, net (Notes 4 and 12)
Other assets - current (Notes 6 and 17)June 30, 2014 (Reviewed)
Amount%June 30, 2013 (Reviewed)
Amount%$ 19,039,082
103,901
95,93987,3259-$ 19,007,649
215,673
75,504135,0039-$ 15,840,849
417,820
58,105
112,104

7-7,934,950
7,693
564,888
13,1406,745,445
3,190,065

4
3
1

7,774,730
14,517
587,665
16,9596,791,453
2,465,919

4
3
1

7,721,285
12,768690,995
12,341
6,472,789
2,726,089

4
3
1

37,782,428

17

37,085,072

17

34,065,145

15

26,276
1,986
464,215
2,778,096
144,530,626
2,076,600
615,954
8,207,940
26,023,470

1
65
1
4
12

28,7685,617
468,476
2,687,755
149,662,068
2,076,740
489,412
9,127,014
19,344,977

1
68
1
4
9

30,2404,346
467,548
2,636,253
155,704,856
1,497,864
434,330
10,004,582
15,049,100

1
71
1
5
7

184,725,163

83

183,890,827

83

185,829,11985$ 222,507,591

100$ 220,975,899

100$ 219,894,264

100$204,0362,799
22,853779,176432,535
14,339,082
88,9278,850,384
4,780,000
25,265,961
4,399,039
2,741,236

7
4
2
12
2
1

$

Total current assets
NONCURRENT ASSETS
Available-for-sale financial assets - noncurrent (Notes 4, 8 and 31)
Derivative financial assets for hedging - noncurrent (Notes 4, 5, 9 and 31)
Financial assets carried at cost - noncurrent (Notes 10 and 31)
Investments accounted for by the equity method (Notes 4 and 13)
Property, plant and equipment (Notes 4, 5, 14 and 33)
Investment properties (Notes 4 and 15)
Other intangible assets (Notes 4 and 16)
Deferred income tax asset (Notes 4, 5 and 27)
Other assets - noncurrent (Notes 17, 33 and 34)
Total noncurrent assets
TOTAL

December 31, 2013 (Audited)
Amount%LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term loans (Note 18)
Short-term notes and bills payable (Note 18)
Financial liabilities at fair value through profit or loss - current (Notes 4, 5, 7 and 31)
Derivative financial liabilities for hedging - current (Notes 4, 5, 9 and 31)
Notes and accounts payable
Notes and accounts payable - related parties (Note 32)
Other payable (Note 21)
Current tax liabilities (Notes 4 and 27)
Deferred revenue - current (Notes 4, 5 and 22)
Bonds payable - current portion (Notes 19 and 31)
Loans and debts - current portion (Notes 18, 31 and 33)
Capital lease obligations - current portion (Note 4, 20, 31 and 33)
Other current liabilities (Note 26)

3,969,209
1,823,184
22,10922,993772,083
451,437
14,295,705
73,536
9,527,086
8,585,000
18,327,239
3,882,755
4,300,369

2
1
7
4
4
8
2
2

66,052,705

30

61,906,028

2,685
18,832,818
63,133,470
3,376,623
417,577
7,745,791
1,793,301
10,334,997
1,531,020

8
28
2
3
1
5
1

Total noncurrent liabilities

107,168,282

Total liabilities

Total current liabilities
NONCURRENT LIABILITIES
Derivative financial liabilities for hedging - noncurrent (Notes 4, 5, 9 and 31)
Bonds payable - noncurrent (Notes 19 and 31)
Loans and debts - noncurrent (Notes 18, 31 and 33)
Provisions - noncurrent (Notes 4, 5 and 23)
Deferred tax liabilities (Notes 4 and 27)
Capital lease obligations - noncurrent (Notes 4, 20, 31 and 33)
Deferred revenue - noncurrent (Notes 4, 5 and 22)
Accrued pension costs (Notes 4, 5 and 24)
Other noncurrent liabilities (Note 26)

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 19 and 25)
Capital stock
Capital surplus
Accumulated deficit
Legal reserve
Special reserve
Accumulated deficit
Total accumulated deficit
Other equity
Treasury shares
Total equity attributable to owners of the Company
NONCONTROLLING INTERESTS (Note 25)
Total equity
TOTAL

$

5,625,000
849,720
22
90,332412,684
432,543
12,827,957
64,615
8,357,756
4,780,000
16,732,471
4,835,532
2,769,486

3
6
4
2
8
2
1

28

57,778,118

26

2,026
27,368,023
53,239,582
3,302,484
628,820
8,641,834
1,909,749
10,410,907
676,086

12
24
2
4
1
5-

5,200
21,885,000
58,281,727
3,668,616
1,106,728
11,608,019
2,008,073
10,504,126
973,141

10
27
2
5
15-

48

106,179,511

48110,040,630

50

173,220,987

78

168,085,539

76

167,818,748

76

52,000,000
1,924,015

23
1

52,000,000
1,924,015

23
1

52,000,000
1,405,394

24
1(6,921,599)(6,921,599)
53,053(43,372)

(3)
(3)
-

321,891
3,926,293(7,409,299)(3,161,115)
86,936(43,372)

2
(3)
(1)
-

321,891
3,926,293(7,312,747)(3,064,563)(13,285)(43,372)

2
(4)
(2)
-

47,012,097

21

50,806,464

23

50,284,174

23

2,274,507

1

2,083,896

1

1,791,342

1

49,286,604

22

52,890,360

2452,075,516

24$ 222,507,591

100$ 220,975,899

100$ 219,894,264

100

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Loss Per Share)(Reviewed, Not Audited)

For the Three Months Ended June 30
2014
2013
Amount%Amount

For the Six Months Ended June 30
2014
2013
Amount%Amount%%REVENUES (Notes 4 and 32)
Passenger
Cargo
Others$ 23,621,592
10,935,359
2,390,78664
30
6$ 22,159,330
9,719,944
2,308,343

65
28
7$ 46,710,613
20,664,715
4,819,28265
287$ 44,258,225
18,551,849
4,453,461

66
27
7

Total revenues

36,947,737

100

34,187,617

100

72,194,610

100

67,263,535

100

COSTS (Notes 9, 12, 26, 32 and34)
Flight operations
Terminal and landing fees
Passenger services
Aircraft maintenance
Others23,621,149
5,094,837
2,357,492
1,775,365
1,459,997

64
14
6
5
4

21,241,133
4,592,269
2,196,193
1,729,870
1,544,645

62
13
6
5
5

46,590,396
9,911,578
4,660,232
3,520,186
3,199,343

65
14
6
5
4

42,581,647
9,078,0524,354,687
3,369,206
3,053,397

63
14
6
5
5

Total costs

34,308,840

93

31,304,110

91

67,881,735

94

62,436,989

93

GROSS PROFIT

2,638,897

7

2,883,507

9

4,312,875

6

4,826,546

7

OPERATING EXPENSES (Note26)
Marketing and selling
General and administrative

1,902,147
936,1225
31,866,170
836,5256
23,519,471
1,865,815

52

3,590,711
1,714,237

5
3

Total operating expenses

2,838,269

8

2,702,695

8

5,385,286

75,304,948

8

OPERATING INCOME (LOSS)(199,372)(1)

180,8121(1,072,411)(1)(478,402)(1)

338,958

1204,432

1630,487

1480,742

1(128,021)-

16,347-(1,674,414)(2)(194,988)-(511,709)(1)(532,322)(2)(1,018,658)(2)(1,089,647)(2)

140,381-

110,050-

263,308-

211,272-(160,391)-(201,493)(1)(1,799,277)(3)(592,621)(1)

PRETAX LOSS

(359,763)(1)(20,681)-(2,871,688)(4)(1,071,023)(2)

INCOME TAX EXPENSE (Notes
4, 5 and 27)

599,776

250,732-

790,282

1

100,646-

NET LOSS(959,539)(3)(71,413)-(3,661,970)(5)(1,171,669)(2)(45,805)-

21,424-(10,815)-

69,811

-

3,213

-

(6,468)-

17,944-(11,818)-

40,045-(36,996)-(52,253)

-

1,715

-

NONOPERATING INCOME
Other income (Notes 15 and26)
Other gains and losses (Notes 9and 26)
Finance cost (Notes 9, 26 and32)
Share of the profit of associates
and joint ventures (Note 13)
Total nonoperating
incomeOTHER COMPREHENSIVEINCOME (LOSS)
Exchange differences ontranslating foreign operations(Notes 4 and 25)
Unrealized gain (loss) on
available-for-sale financialassets (Notes 4 and 25)
Cash flow hedges (Notes 4 and25)(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Loss Per Share)(Reviewed, Not Audited)

For the Three Months Ended June 30
2014
2013
Amount%Amount

For the Six Months Ended June 30
2014
2013
Amount%Amount%%Share of other comprehensive
loss of associates and jointventures (Notes 4 and 25)
Income tax relating tocomponents of othercomprehensive income (Note27)

(72)

-

(766)

-

(448)

-

(1,029)

-

220

-

4,122

-

7,722

-

(10,390)-

Other comprehensive
income for the year, netof income tax(2,399)-(18,684)-(37,850)-

48,289-TOTAL COMPREHENSIVELOSS FOR THE YEAR$(961,938)(3)$(90,097)-$ (3,699,820)(5)$ (1,123,380)(2)

NET INCOME (LOSS)ATTRIBUTABLE TO:
Owner of the Company
Non-controlling interests$ (1,033,556)
74,017(3)-$(116,232)
44,819-$ (3,760,484)
98,514(5)-$ (1,222,875)
51,206(2)-$(959,539)(3)$(71,413)-$ (3,661,970)(5)$ (1,171,669)(2)$ (1,032,255)
70,317(3)-$(138,650)
48,553-$ (3,794,367)
94,547(5)-$ (1,175,598)
52,218(2)-$(3)$(90,097)-$ (3,699,820)(5)$ (1,123,380)(2)

TOTAL COMPREHENSIVEINCOME (LOSS)ATTRIBUTABLE TO:
Owner of the Company
Non-controlling interests

LOSS PER SHARE (NEWTAIWAN DOLLARS;
Note 28)
Basic(961,938)$(0.20)$(0.03)$(0.72)$(0.24)(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

Share Capital(Note 25)

Capital Surplus(Notes 18 and 25)

BALANCE AT JANUARY 1, 2013

$ 52,000,000$1,405,394

Appropriations of the 2012 earnings
Legal reserve
Special reserve--

Net income (loss) for the six months ended June 30, 2013

-Other comprehensive income for the six months ended June 30, 2013, netof income tax

Equity Attributable to Owners of the Company
Other Equity (Note 25)
Exchange
Differences on
Unrealized Gain
Retained Earning (Notes 24 and 25)
Translating(Loss) on
UnappropriatedForeign
Available-for-sale
Legal Reserve
Special Reserve
EarningsOperations
Financial Assets$

316,010$

3,873,369$ (6,031,067)$(60,381)$(16,666)

5,881-

52,924(5,881)(52,924)-----(1,222,875)------

Total comprehensive income (loss) for the six months ended June 30, 2013----

Cash dividend from subsidiaries paid to non-controlling interest---Treasury Shares
Held bySubsidiaries

Cash Flow
Hedges$16,485$

Total

Non-Controlling
Interests(Note 25)

Total Equity$

1,831,137$ 53,290,909(43,372)$ 51,459,772--------(1,222,875)

51,206(1,171,669)

55,109(9,255)

1,423-

47,277

1,012

48,289(1,222,875)

55,109(9,255)

1,423-(1,175,598)

52,218(1,123,380)-------(92,013)(92,013)BALANCE AT JUNE 30, 2013

$ 52,000,000$

1,405,394$

321,891$

3,926,293$ (7,312,747)$(5,272)$(25,921)$

17,908$(43,372)$ 50,284,174$

1,791,342$ 52,075,516

BALANCE AT JANUARY 1, 2014

$ 52,000,000$

1,924,015$

321,891$

3,926,293$ (7,409,299)

$

1,843

$

(11,486)$

96,579$(43,372)$ 50,806,464$

2,083,896$ 52,890,360

Accumulated deficit offset by reserve
Legal reserve
Special reserve--(321,891)-(3,926,293)

321,891
3,926,293

--

-

---

-

Net income (loss) for the six months ended June 30, 2014----

(3,760,484)----(3,760,484)

98,514(3,661,970)

Other comprehensive income for the six months ended June 30, 2014, netof income tax

-

-

-

-

-

(5,938)15,425(43,370)-(33,883)(3,967)(37,850)

Total comprehensive income (loss) for the six months ended June 30, 2014

-

-

-

-

(3,760,484)(5,938)15,425(43,370)-(3,794,367)

94,547(3,699,820)

Issue of common shares for cash from subsidiaries

--

-

-----

-

-

200,000

200,000

Cash dividend from subsidiaries paid to non-controlling interest----------(103,936)(103,936)-$ (6,921,599)(43,372)$ 47,012,097

2,274,507$ 49,286,604

BALANCE AT JUNE 30, 2014

$ 52,000,000$

1,924,015$-$$(4,095)

$

3,939

$

53,209$$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Six Months Ended
June 302014
2013
CASH FLOWS FROM OPERATING ACTIVITIESNet loss
Adjustments to reconcile net loss to net cash generated from (used in)operating activities:
Depreciation expenses
Amortization expenses
Bad-debt expense
Net loss on fair value change of financial liabilities held for trading
Net gain on fair value change of financial assets held for trading
Interest income
Dividend income
Share of profit of associates and joint ventures
Gain on disposal of property, plant and equipment
Gain on disposal of investments accounted for by the cost method
Loss on inventories and property, plant and equipment
Net loss (gain) on foreign currency exchange
Finance costs
Recognition of provisions
Amortization of unrealized gain on sale-leaseback
Amortization of deferred credits
Changes in operating assets and liabilities
Decrease in financial assets held for trading
Decrease (increase) in notes and accounts receivable
Increase in accounts receivable - related parties
Decrease (increase) in other receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable
Increase in accounts payable - related parties
Increase (decrease) in other payables
Increase (decrease) in deferred revenue
Decrease in provisions
Increase in other current liabilities
Decrease in accrued pension liabilities
Increase (decrease) in other liabilities
Cash generated from operations
Interest received
Dividend received
Interest paid
Income tax paid
Net cash generated from operating activities$ (2,871,688)$ (1,071,023)

8,667,215
26,61888
19,310(14,018)(238,810)(27,964)(263,308)(27,101)(2,550)292,141
137,610
1,018,658
602,330(7,256)(2,862)

8,625,147
25,42499
22(135,683)(161,365)(3,180)(211,272)(4,061)
188,140
413,452
1,089,647488,770(7,256)(28,329)

125,790(271,263)(77,273)(228,447)
53,796(786,899)(18,620)
191,754
1,949,874
560,173(545,217)
1,410,551(85,284)(465,282)
9,122,066
247,065
42,656(1,010,657)(18,138)

1,209,209(130,991)(88,061)(127,415)
338,097
942,903
14,68921,395
1,490,414
160,062(257,883)
301,313(72,534)
11,546
13,021,276
151,390
50,261(1,023,892)(59,745)

8,382,992

12,139,290(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Six Months Ended
June 302014
2013

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of investments accounted for by the cost
methodAcquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in prepayment to equipment
Increase in computer software cost
Decrease in restricted assets

4,616(3,305,738)
37,605(174,186)
202,333(7,407,051)(153,160)
202,019(3,337,487)
18,795(42,633)
309,540(3,260,239)(34,754)
38,138(10,593,562)(6,308,640)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issue of common shares to non-controlling interest
Increase short-term loans
Decrease short-term loans
Increase short-term notes and bills payable
Issue of bonds payable
Repayments of bonds payable
Issue of long-term debts and capital lease obligations
Repayments of long-term debts and capital lease obligations
Proceeds of guarantee deposits received
Refund of guarantee deposits received
Cash dividend paid to non-controlling interest

200,000
6,918,912(3,095,000)
1,823,184(4,780,000)
11,789,343(10,336,437)
104,527(135,501)(103,936)

4,025,000
849,720
10,900,000(5,460,000)
1,140,000(12,399,252)
119,217(70,589)(92,013)

Net cash generated from (used in) financing activities

2,385,092(987,917)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES(143,089)

166,985

31,433

5,009,718

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD19,007,649

10,831,131

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$ 19,039,082$ 15,840,849

Net cash used in investing activities

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS(Concluded)