AIR CHINA FIRST QUARTERLY REPORT 2017

Items in consolidated balance sheet	Balance at the end of the Reporting Period	Balance at the beginning of the year	Amount of Change	Percentage	Reasons for Change
Cash and bank	15,680,112	7,322,356	8,357,756	114.14%	Mainly due to the impact of fund raising through the non-public issue of A shares during the Reporting Period.
Prepayments	3,038,397	1,136,826	1,901,571	167.27%	Increase in prepayment of aviation oil during the Reporting Period.
Held-for-sale assets	538,598	918,587	-379,989	-41.37%	Disposal of some aircraft held for sale during the Reporting Period.
Other current assets	2,102,876	3,053,370	-950,494	-31.13%	Decrease in the financial assets held by China National Aviation Finance Co., Ltd., a subsidiary of the Group, at the end of the Reporting Period.
Domestic air traffic liabilities	1,639,834	2,933,845	-1,294,011	-44.11%	Decrease in outstanding air traffic tickets at the end of the Reporting Period.
Capital reserve	26,270,841	16,509,531	9,761,310	59.13%	Mainly due to the impact of the non-public issue of A shares during the Reporting Period.

Items in consolidate cash flow statement	Amounts for the Reporting Period	Amounts for the corresponding period of the previous year	Amount of Change	Percentage	Reasons for Change
Other cash received relating to operating activities	725,989	1,449,552	-723,563	-49.92%	Mainly due to net decrease in deposits from clients by China National Aviation Finance Co., Ltd., a subsidiary of the Group, during the Reporting Period as compared to the corresponding period of the previous year.
Cash paid for goods purchased and services received	18,515,079	13,413,663	5,101,416	38.03%	Increase in operating costs and prepayments for aviation fuel during the Reporting Period.
Net cash proceeds from disposal of fixed assets and intangible assets	372,961	126,093	246,868	195.78%	Increase in disposal amount received from disposal of aircraft held for sale during the Reporting Period as compared to the corresponding period of the previous year.
Other cash received relating to investment activities	34,144	283,413	-249,269	-87.95%	Mainly due to decrease in the balance of secured deposits during the Reporting Period is less than that of the corresponding period of the previous year.
Cash paid for purchase of fixed assets and other long-term assets	3,332,804	6,995,326	-3,662,522	-52.36%	Decrease in prepayments for the purchase of aircraft and payment of the balance of purchase prices of aircraft during the Reporting Period as compared to the corresponding period of the previous year.
Cash received from issue of debentures	-	4,800,000	-4,800,000	-100.00%	Mainly due to that the Group issued short-term bonds in the corresponding period of the previous year.
Cash received from capital injection	11,201,374	-	11,201,374	100.00%	Raising capital by non-public issue of shares during the Reporting Period.
Cash paid for repayment of debentures	1,200,000	600,000	600,000	100.00%	Increase in repayment of short-term bonds by a subsidiary of the Group during the Reporting Period as compared to the corresponding period of the previous year.

Items	Balance at the end of the period	Balance at the beginning of the year
CURRENT ASSETS:
Cash and bank	15,680,112	7,322,356
Provisions on payables
Contributions made
Financial assets at fair value through profit or loss	10,229	222
Derivative financial assets
Bills receivable	598	837
Accounts receivable	3,443,407	3,286,091
Other receivables	1,754,976	1,923,459
Prepayments	3,038,397	1,136,826
Premium receivable
Receivables on reinsurance
Provisions for reinsurance contracts
Interest receivable
Dividend receivable
Other receivables
Purchase of financial assets resold
Inventories	1,976,963	1,680,633
Held-for-sale assets	538,598	918,587
Non-current assets due within a year
Other current assets	2,102,876	3,053,370
Total current assets	28,546,156	19,322,381

Items	Balance at the end of the period	Balance at the beginning of the year
CURRENT ASSETS:
Cash and bank	10,872,576	2,221,952
Financial assets at fair value through profit or loss
Derivative financial assets
Bills receivable
Accounts receivable	3,313,576	3,028,488
Prepayments	2,685,437	683,229
Interest receivable
Dividend receivable
Other receivables	2,296,572	2,449,640
Inventories	135,330	130,941
Held-for-sale assets	537,147	917,136
Non-current assets due within a year
Other current assets	746,566	829,828
Total current assets	20,587,204	10,261,214

Items	Amounts for the period	Amounts for the corresponding period of the previous year
I. Revenue from operations	28,968,982	26,388,811
Including: Revenue
Interest income
Premium earned
Fees and commission income

II. Total operating costs
Including: Operating costs	23,435,307	20,031,270
Interest expenses
Fees and commission expenses
Returned premium
Net reimbursement paid
Net amounts of provisions on insurance contracts drawn
Bonus paid on insurance policy
Reinsurance premium
Business taxes and other levies	62,818	77,502
Selling expenses	1,528,115	1,453,115
General and Administrative expenses	925,965	963,807
Finance expenses	496,915	616,743
Impairment loss of assets	6,141	6,632
Add: Gains from changes in fair value (loss is represented by "-" sign)	82	78
Investment income (loss is represented by "-" sign)	-141,592	330,690
Including: Share of profits less losses of associates and joint ventures	-153,770	315,674
Exchange gains (loss is represented by "-" sign)

Items	Amounts for the period	Amounts for the corresponding period of the previous year
I. Revenue from operations	19,511,606	17,873,234
Less: Operating costs	15,958,142	13,743,590
Business taxes and other levies	18,601	27,659
Selling expenses	1,153,433	1,075,197
General and Administrative expenses	363,780	366,783
Finance expenses	400,399	529,088
Impairment loss of assets
Add: Gains from changes in fair value (loss is represented by "-" sign)
Investment income (loss is represented by "-" sign)	85,092	172,900
Including: Share of profits less losses of associates and joint ventures	85,092	172,900

II. Profit from operations (loss is represented by "-" sign)	1,702,343	2,303,817
Add: Non-operating income	15,553	30,743
Including: Gains arising from disposal of non-current assets	13	52
Less: Non-operating expenses	2,683	4,195
Including: Loss arising from disposal of non-current assets	0	333

III. Total profit (total loss is represented by "-" sign)	1,715,213	2,330,365
Less: Income Taxation	384,468	512,159

IV. Net profit (net loss is represented by "-" sign)	1,330,745	1,818,206

V. Other comprehensive income after taxation
(I) Other comprehensive income that cannot be subsequently reclassified to profit or loss
1. Change arising from re-measurement of net liabilities or net assets in defined benefit plans
2. Share of other comprehensive income of the investees accounted for using the equity method that cannot be reclassified to profit or loss
(II) Other comprehensive income that will be subsequently reclassified to profit or loss
1. Share of other comprehensive income of the investees accounted for using the equity method that will be subsequently reclassified to profit or loss
2. Gains or losses arising from changes in fair value of available-for-sale financial assets
3. Gains or losses arising from reclassification of held-to-maturity investments to available-for-sale financial assets
4. Effective portion of profit or loss on cash flow hedge
5. Exchange difference on translation of financial statements in foreign currency
6. Others

VI. Total comprehensive income	1,330,745	1,818,206

VII. Earnings per share:
(I) Basic earnings per share (RMB per share)
(II) Diluted earnings per share (RMB per share)

Items	Amounts for the period	Amounts for the corresponding period of the previous year
I. Cash flows from operating activities:
Cash received from sales of goods and provision of services	29,017,429	26,625,375
Net increase in deposits from clients and placements from other banks
Net increase in borrowings from central bank
Net increase in contributions made to other financial institutions
Cash received from premiums of original insurance contracts
Net cash receipt from reinsurance operations
Net increase in reserve of the insured and investment
Net increase in disposal of financial assets at fair value through profit or loss
Cash received from interests, fees and commission
Net increase in contributions received
Net increase in cash from repurchase operations
Refund of tax and levy	7,267	4,719
Other cash received relating to operating activities	725,989	1,449,552
Subtotal of cash inflows of operating activities	29,750,685	28,079,646
Cash paid for goods purchased and services received	18,515,079	13,413,663
Net increase in loans and advances to clients
Net increase in deposits in central bank and other banks
Cash paid in respect of claims under original insurance contracts
Cash paid for interests, fees and commission
Cash paid for bonus paid on insurance policy
Cash paid to or on behalf of employees	5,378,811	4,892,136
Tax and levies paid	1,401,135	1,086,502
Other cash paid relating to operating activities	1,983,111	1,868,151
Subtotal of cash outflows from operating activities	27,278,136	21,260,452
Net cash flows from operating activities	2,472,549	6,819,194

Items	Amounts for the period	Amounts for the corresponding period of the previous year
I. Cash flows from operating activities:
Cash received from sales of goods and provision of services	19,071,678	17,638,277
Refund of tax and levies
Other cash received relating to operating activities	560,776	404,165
Subtotal of cash inflows of operating activities	19,632,454	18,042,442
Cash paid for goods purchased and services received	13,981,210	9,575,772
Cash paid to or on behalf of employees	2,152,973	2,140,424
Tax and levies paid	936,328	666,973
Other cash paid relating to operating activities	1,573,503	1,599,806
Subtotal of cash outflows from operating activities	18,644,014	13,982,975
Net cash flows from operating activities	988,440	4,059,467

II. Cash flows from investment activities:
Cash received from sales and redemption of investments
Cash received from investment income	86,818	975
Net cash proceeds from disposal of fixed assets, intangible assets and other long-term assets	362,761	7,523
Net cash proceeds from disposal of subsidiaries and other business units
Other cash received relating to investment activities	14,420	13,263
Subtotal of cash inflows from investment activities	463,999	21,761
Cash paid for purchase of fixed assets, intangible assets and other long-term assets	2,252,618	5,896,293
Cash paid for investments
Net cash payments for acquisition of subsidiaries and other business units
Other cash paid relating to investment activities
Subtotal of cash outflows from investment activities	2,252,618	5,896,293
Net cash flows from investment activities	-1,788,619	-5,874,532

Companies

Air China Ltd. (AIRC)

UK 100

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Name of absent director	Position of absent director	Reason(s) for absence	Name of proxy

Feng Gang	Director	Business engagement	Cai Jianjiang
John Robert Slosar	Director	Business engagement	-

	At the end of the Reporting Period	At the end of the previous year	Increase/decrease at the end of the Reporting Period as compared to the end of the previous year
			(%)

Total assets	233,352,304	224,128,192	4.12
Net asset attributable to shareholders of the listed company	81,388,740	68,876,496	18.17

	For the period from the beginning of the year to the end of the Reporting Period	For the corresponding period of the previous year	Increase/ decrease as compared to the corresponding period of the previous year
			(%)

Revenue	28,968,982	26,388,811	9.78
Net profit attributable to shareholders of the listed company	1,466,400	2,435,293	-39.79
Net profit attributable to shareholders of the listed company after deducting non-recurring profits and losses	1,439,366	2,384,011	-39.62
Weighted average return on net assets (%)	2.03	3.99	Decrease by 1.96 ppts
Basic earnings per share (RMB per share)	0.11	0.20	-46.06
Diluted earnings per share (RMB per share)	N/A	N/A	N/A

Items	Amounts for the Reporting Period

Gains or losses on disposal of non-current assets	-1,490
Government subsidies recorded in the income statement for the current period (exclusive of government subsidies which are closely related to the business of the Company and entitled pursuant to unified standard quota or amount under the government policy)	45,904
Gains or losses from changes in fair value of financial assets/liabilities held for trading and investment gains from disposal of financial assets/liabilities held for trading and available-for-sale financial assets (except for hedging activities related to the Company's normal operating business)	25
Other non-operating income and expenses not covered by the above	3,197
Effect of minority shareholders' interests (after tax)	-8,366
Effect of income tax	-12,236

Total	27,034

Particulars of the top 10 shareholders
Name of shareholder (full name)	Number of shares held as at the end of the period	Shareholding percentage	Number of shares held subject to selling restrictions	Shares pledged or frozen		Nature of shareholder
Name of shareholder (full name)	Number of shares held as at the end of the period	Shareholding percentage	Number of shares held subject to selling restrictions	Status	Number	Nature of shareholder
		(%)

China National Aviation Holding Company	5,952,236,697	40.98	513,478,818	Frozen	127,445,536	State
Cathay Pacific Airways Limited	2,633,725,455	18.13		Nil		Foreign legal person
HKSCC NOMINEES LIMITED	1,683,174,520	11.59		Nil		Foreign legal person
China National Aviation Corporation (Group) Limited	1,556,334,920	10.72		Frozen	36,454,464	Foreign legal person
China National Aviation Fuel Group Corporation	471,409,114	3.25	385,109,114	Nil		State-owned legal person
Zhongyuan Equity Investment Management Co., Ltd.	262,569,409	1.81	256,739,409	Unknown	262,569,405	State-owned legal person
China Structural Reform Fund Co., Ltd.	231,065,468	1.59	231,065,468	Nil		State-owned legal person
China Securities Finance Corporation Limited	224,397,428	1.54		Nil		State-owned legal person
Sinotrans Air Transportation Development Co., Ltd.	75,800,000	0.52		Nil		State-owned legal person
National Social Security Fund 118	49,219,106	0.34		Nil		Unknown

Particulars of the top 10 shareholders not subject to selling restrictions

Name of shareholder	Number of tradable shares held not subject to selling restrictions	Class and number of shares
Name of shareholder		Class	Number

China National Aviation Holding Company	5,438,757,879	RMB ordinary shares	5,438,757,879
Cathay Pacific Airways Limited	2,633,725,455	Overseas listed foreign shares	2,633,725,455
HKSCC NOMINEES LIMITED	1,683,174,520	Overseas listed foreign shares	1,683,174,520
China National Aviation Corporation (Group) Limited	1,556,334,920	RMB ordinary shares	1,332,482,920
China National Aviation Corporation (Group) Limited		Overseas listed foreign shares	223,852,000
China Securities Finance Corporation Limited	224,397,428	RMB ordinary shares	224,397,428
China National Aviation Fuel Group Corporation	86,300,000	RMB ordinary shares	86,300,000
Sinotrans Air Transportation Development Co., Ltd.	75,800,000	RMB ordinary shares	75,800,000
National Social Security Fund 118	49,219,106	RMB ordinary shares	49,219,106
China Merchants Securities Co., Ltd.	34,848,900	RMB ordinary shares	34,848,900
Tianan Property Insurance Co., Ltd- BAO YING NO. 1	23,918,908	RMB ordinary shares	23,918,908
Explanation on connected relationship or action in concert among the above shareholders	China National Aviation Corporation (Group) Limited is a wholly-owned subsidiary of China National Aviation Holding Company. Accordingly, China National Aviation Holding Company is directly and indirectly interested in 51.70% of the shares of the Company.
Explanation of holders of preference shares with restored voting rights and number of shares held	Nil

Company name		Air China Limited
Legal representative		Cai Jianjiang
Date		27 April 2017

Items	Balance at the end of the period	Balance at the beginning of the year

NON-CURRENT ASSETS:
Loans and advances
Available-for-sale financial assets	1,244,368	1,152,704
Held-to-maturity investments	10,000	10,000
Long-term receivables	889,383	898,845
Long-term equity investments	14,899,551	15,168,760
Investment properties	333,354	337,551
Fixed assets	146,604,258	148,910,057
Construction in progress	31,886,669	29,320,914
Construction materials
Disposal of fixed assets
Biological assets for production
Oil and gas assets
Intangible assets	4,221,131	4,252,314
Development expenses
Goodwill	1,102,185	1,102,185
Long-term deferred expenses	653,431	669,414
Deferred tax assets	2,961,818	2,983,067
Other non-current assets
Total non-current assets	204,806,148	204,805,811
Total assets	233,352,304	224,128,192

Items	Balance at the end of the period	Balance at the beginning of the year

NON-CURRENT LIABILITIES:
Long-term loans	10,359,272	12,835,222
Debentures payable	24,998,274	24,998,024
Including: Preference shares
Perpetual bonds
Long-term payables	3,705,022	3,546,586
Obligations under finance leases	34,502,027	36,295,471
Defined benefit obligations	269,742	269,742
Specific payables
Accrued liabilities	341,919	341,919
Deferred income	3,272,472	3,092,841
Deferred tax liabilities	2,374,211	2,428,313
Other non-current liabilities
Total non-current liabilities	79,822,939	83,808,118
Total liabilities	144,026,207	147,654,552

OWNER'S EQUITY
Issued capital	14,524,815	13,084,751
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve	26,270,841	16,509,531
Less: Treasury shares
Other comprehensive income	-2,218,128	-2,062,598
Specific reserves
Surplus reserves	7,829,643	7,829,643
General risk provisions	66,709	66,709
Retained earnings	34,914,860	33,448,460
Total owner's equity attributable to equity shareholders of the Company	81,388,740	68,876,496
Non-controlling interests	7,937,357	7,597,144
Total owner's equity	89,326,097	76,473,640
Total liabilities and owner's equity	233,352,304	224,128,192

Items	Balance at the end of the period	Balance at the beginning of the year

NON-CURRENT ASSETS:
Available-for-sale financial assets	22,783	22,784
Entrusted loans	1,020,000	1,020,000
Held-to-maturity investments
Long-term receivables	467,961	470,648
Long-term equity investments	26,994,096	26,909,004
Investment properties
Fixed assets	95,357,124	97,170,211
Construction in progress	24,962,770	22,939,247
Construction materials
Disposal of fixed assets
Biological assets for production
Oil and gas assets
Intangible assets	2,531,605	2,555,719
Development expenses
Goodwill
Long-term deferred expenses	318,981	338,712
Deferred tax assets	1,910,934	1,865,409
Other non-current assets
Total non-current assets	153,586,254	153,291,734
Total assets	174,173,458	163,552,948

Items	Balance at the end of the period	Balance at the beginning of the year

CURRENT LIABILITIES:
Short-term loans	15,508,504	13,637,422
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Bills payable
Accounts payable	11,050,630	10,286,723
Domestic air traffic liabilities	1,106,739	1,904,317
International air traffic liabilities	2,826,330	3,005,001
Receipts in advance	71,432	87,372
Employee compensations payable	502,272	644,294
Taxes payable	718,050	857,313
Interest payable	640,812	644,030
Dividend payable
Other payables	6,702,314	6,975,454
Held-for-sale liabilities
Non-current liabilities due within a year	7,737,271	7,769,333
Other current liabilities
Total current liabilities	46,864,354	45,811,259

NON-CURRENT LIABILITIES:
Long-term loans	1,271,472	3,025,373
Debentures payable	24,000,000	24,000,000
Including: Preference shares
Perpetual bonds
Long-term payables	1,876,461	1,821,218
Obligations under finance leases	21,060,039	22,519,793
Defined benefit obligations
Specific payables
Accrued liabilities	7,760	7,760
Deferred income	2,808,092	2,614,384
Deferred tax liabilities	102,654	102,654
Other non-current liabilities
Total non-current liabilities	51,126,478	54,091,182
Total liabilities	97,990,832	99,902,441