Spokesperson & Deputy SpokesmanƝ
Spokesman
Name
Lu, Shwu-Huoy
Title
Vice President, CORPORATE COMMUNICATIONS OFFICE
Tel
886-3-399-8888
Fax
886-3-399-8640
Emailmarian.lu@china-airlines.com
Headquarter, Branches and PlantƝ
OrganizaƟon Unit
Address
Headquarter
Taipei Branch
Cargo Sales & Service, Taiwan
Kaohsiung Branch
Tainan Branch
Taichung Branch
Maintenance Div.
Cargo Sales & Services Mainland China
Beijing OĸceShanghai OĸceGuangzhou OĸceShenzhen OĸceXian Oĸce
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Cargo Sales & Services, JapanTokyo Branch
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Shizuoka StaƟon
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Kagoshima StaƟon
Miyazaki StaƟon
Nagoya Branch
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Takamatsu StaƟon
Kumamoto StaƟon
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Honolulu Branch
Canada Branch
Cargo Sales & Services The Americas
Guam Branch
Netherlands Branch
Germany Branch
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Cargo Sales & Services, Europe
Austria Branch
The United Kingdom Branch

Deputy Spokesman
Wang, Wei
Vice President, FINANCE DIV.
886-3-399-8888
886-3-399-8313
wei.wang@china-airlines.com

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Auditors:Name:
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Auditors: Huang, Jui-Chan ; Cheng, Shiuh-Ran
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Tel:886-2-2725-9988

Contents

I. Letter to Shareholders............................................................................................................................................. 1
II. Company Profile....................................................................................................................................................... 7
2.1 Date of Incorporation .............................................................................................................................................. 8
2.2 Company History ..................................................................................................................................................... 8III. Corporate Governance Report ......................................................................................................................... 12

3.1 Organization .......................................................................................................................................................... 13
3.2 Directors, and Management Team ........................................................................................................................ 17
3.3 Implementation of Corporate Governance ............................................................................................................37
3.4 Information Regarding the Company’s Audit Fee and Independence ...................................................................76
3.5 Replacement of CPA .............................................................................................................................................. 77
3.6 Audit Independence .............................................................................................................................................. 78
3.7 Changes in Shareholding of Directors, Managers and Major Shareholders .......................................................... 78
3.8 Relationships among the Top Ten Shareholders ................................................................................................... 80
3.9 Ownership of Shares in Affiliated Enterprises ....................................................................................................... 81

IV. Capital Overview ................................................................................................................................................... 82

4.1 Capital and Shares................................................................................................................................................. 83
4.2 Bonds .................................................................................................................................................................... 86
4.3 Other Securities-Related Issues ............................................................................................................................ 88
4.4 Financing Plans and Implementation.................................................................................................................... 88

V. Operational Highlights ......................................................................................................................................... 89
5.1 Business Activities ................................................................................................................................................. 90
5.2 Market and Sales Overview .................................................................................................................................. 98
5.3 Human Resources ............................................................................................................................................... 104
5.4 Environmental Protection Expenditure............................................................................................................... 104
5.5 Labor Relations ................................................................................................................................................... 109
5.6 Major Contracts .................................................................................................................................................. 112

VI. Financial Information........................................................................................................................................ 115

6.1 Five-Year Financial Summary .............................................................................................................................. 116
6.2 Five-Year Financial Analysis................................................................................................................................. 120
6.3 Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019, and Independent
Auditors’ Report .................................................................................................................................................. 122
6.4 Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 andIndependent Auditors’ Report ............................................................................................................................ 122
6.5 Audit Committee’s Report .................................................................................................................................. 123

VII. Review of Financial Conditions, Financial Performance, and Risk Management ........................ 124

7.1 Analysis of Financial Status ................................................................................................................................. 124
7.2 Analysis of Financial Performance ...................................................................................................................... 126
7.3 Analysis of Cash Flow .......................................................................................................................................... 126
7.4 Major Capital Expenditure Items ........................................................................................................................ 126
7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans andInvestment Plans for the Coming Year ................................................................................................................ 126
7.6 Analysis of Risk Management ............................................................................................................................. 126
7.7 Other important Matters .................................................................................................................................... 132

VIII. Special Disclosure ............................................................................................................................................ 133

8.1 Summary of Affiliated Companies ....................................................................................................................... 134
8.2 Private Placement Securities in the Most Recent Years ...................................................................................... 140
8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years...................................... 140
8.4 Special Notes ....................................................................................................................................................... 140
8.5 Situations with Major Impacts on Shareholder Equity or Share Prices ............................................................... 140(Appendix 1) Consolidated Financial Statements for the Years Ended December 31, 2020
and 2019 and Independent Auditors’ Report ........................................................................ 141(Appendix 2) Parent Company Only Financial Statements for the Years Ended December 31,
2020 and 2019 and Independent Auditors’ Report ............................................................. 193(Summary Translation)
This document is prepared in accordance with the Chinese version and is for reference only. In theevent of any discrepancy between the English version and the Chinese version, the Chinese version
shall prevail.

Letter to Shareholders
1.1 Operating Performance in 2020
1.2 Business Plan for 2021
1.3 Development Strategies

Letter to Shareholders

1

I. Letter to Shareholders
2020 was a devastating year for both China Airlines
and the aviation industry around the globe. Travel
restriction and disease prevention measures
implemented in most of the countries greatly struck
the aviation market, forcing many airline companies
to step out of the market or undertake reform.
Facing unprecedented upheaval, China Airlines
captures the market trend and creates revenue by
leveraging 18 freighters, mitigating the impacts with
air cargo shipment. China Airlines has overcome thedrawbacks together with our employees and theprofessional operation of our cargo fleet hasreceived universal recognition.
In the epidemic prevention, China Airlines adopted
the health care measures implemented by thehealth competent authority to provide passengers asafe and sound travel experience. This has gained
passengers’ higher trust for China Airlines inresuming flights in the upcoming future. To maintainnormal operation, China Airlines made several
financial strategies to ensure stable finance,
including internal cost control, cutting flights,
financial assistance from the government, and aging
freights retirement, etc. For passenger flights, China
Airlines cut and adjusted the flights, timely
rearranging the capacity to reduce losses. For cargoflights, China Airlines utilized the belly hold of thepassenger flights to carry cargo. It also provided
high-value goods shipment and charter service toexpand its profit.
2021 is still a challenging year. Yet as the overall
economy gradually recovers, the demands for IT
equipment delivery and vaccine delivery appear.
Thus, air cargo is still the main operation for China
Airlines. China Airlines is the only carrier in Taiwan
to be certified by the IATA Center of Excellence for
Independent Validators in Pharmaceutical Logistics(CEIV Pharma) for temperature-controlled cold chain
logistics so far. Recently introducing 18 new
747-400F aircraft and 3 new-gen 777F freighters,
China Airlines will continue to leverage Taiwan's
position as a transport hub to provide air cargo
shipment. Passengers' safety and health are our top
priority. China Airlines will closely follow the
pandemic condition and properly evaluate the flightresumption. During the spread of COVID-19, China
Airlines never stopped training employees andoptimizing the operation procedure. Digitaltransformation has been what China Airlines doing,
and we will make full preparation when the aviationindustry gets back to normal.

2 Letter to Shareholders

In line with the six main strategies, safety,
governance, fleet network, product service, groupcollaboration, and brand recognition, China Airlines
has put the effort into the economy, environment,
and society relentlessly. Since early 2020 of the
COVID-19 outbreaks, China Airlines has served as
the National Sky Team by giving international
humanitarian assistance and delivering medical
resources to countries with severe infection. China
Airlines also offered special flights to carry
Taiwanese stranded overseas back to the country. In
the future, China Airlines will continue to bear the
responsibility as a national carrier and create
sustainable value for the public.
As the aviation industry has suffered from a serious
downturn, China Airlines will take a discreet attitudeand flexible strategies to fight together with our
employees. We will timely adjust and consolidate
the resources in the Group to cope with theever-changing market. We expect the full recoveryof the economy will bring China Airlines thriving
performance.

1.1 Operating Performance in
2020
Operating revenue in NT dollars (same hereafter)
was NT$106.327 billion, a 27.36% decrease over the
past year, and the after-tax net profit was NT$0.14
billion (which is an increase of 1.34 billion over thelast year), for a basic after-tax net profit of NT$0.03
per share.

1.1.1 Results of the businessstrategy
A. Fleet:Two 777F aircraft were introduced in the lastquarter of 2020 to optimize the fleet structure. As ofthe end of December 2020, our fleet size was 93
vessels, including 70 passenger aircraft (including
leased aircraft) and 23 cargo aircraft.

B. Passenger flights:
Revenue from passenger business was NT$20.508
billion, a 78.68% decrease over the past year andaccounting for 19.29% of total operating revenue. Asof the end of 2020, the China Airlines Group flew to
23 countries and 72 passenger destinations,spanning Asia, Europe, the Americas, and Oceania.

On average, there are 352 round-trip flights per
week.

C. Cargo flights:
Revenue from cargo business was NT$81.693 billion,an 88.21% increase over the past year, accounting
for 76.83% of total operating revenue. As of the endof 2020, the China Airlines Group flew 20 cargoplanes in cargo operations to 17 countries and 39
destinations. On average, there were an average of
115 cargo flights per week.

D. Other operating income:
Other operating revenue included in-flight duty-freesales revenue, totaling NT$4.126 billion, a 39.23%
decrease over the past year, accounting for 3.88% of
the total operating revenue.

E. Investments and earnings:
As of the end of 2020, the Company had investment
in a total of 31 companies, in areas of business suchas air business, ground services, logistics, aircraft
maintenance, air cargo station business, etc., which
contributed NT$1.85 billion in loss over the year.

1.1.2 Business cash-flow budget andprofitability analysis
A. Cash flow:
Operating revenue was NT$106.327 billion, areduction of 40.045 billion over last year.
Operating costs and expenses were NT$101.442
billion, a reduction of NT$44.85 billion over lastyear.
Pre-tax net profit was NT$0.171 billion, an increaseof NT$1.358 billion over the past year.
After-tax net profit was NT$0.14 billion, an increaseof NT$1.34 billion over last year.

B. Budget execution:
Projected operating revenue was NT$153.045 billion,
and the actual operating revenue was NT$106.327
billion, for a 69.47% attainment; projected operating
costs and fees were NT$151.084 billion, and actual
operating costs were NT$101.442 billion, at aspending rate of 67.14%. Projected losses from
non-operating activities totalled NT$0.76 billion,
with actual losses from non-operating activities at
NT$4.714 billion. Projected annual pre-tax net profit
was NT$1.201 billion, and actual pre-tax net profit
was NT$0.171 billion.

C. Profitability:

Return on assets
0.89%
Return on equity
0.25%
After-tax profit margin
0.13%
After-tax earnings per share
NT$0.03

1.1.3 Research and development
A. "Solid root first, innovation as a supplement" wasthe main strategy for IT development in 2020.
China Airlines solidified the core business systems
and reinforced the infrastructure to strengthen
the risk management control of information
safety. China Airlines also adopted innovative
services such as robot customer service, process
automation, big data analysis, mobile application,
cloud computing, and VR/AR usage, etc. These
applications have enhanced CAL's competency,
increased revenue, cut down costs, and increased
work efficiency.
B. Revenue Management System (RMS) is the coresystem to manage the sales of flight seats, which
enhanced aviation network and competency.
The new O&D (Original & Destination) RMS was
implemented after evaluation and was officiallyoperated on July 30, 2020. O&D RMS calculates
the value of each seat by considering thebooking information in the history and priceinformation. Through dynamic deployment,routes and areas with high value will behighlighted, maximizing the passenger flightrevenue.
C. In 2020, China Airlines continued to optimize theflight booking system and interface. The time foronline booking has been extended to 80 minutes
before the flight departure. For the ticket
purchase on the CAL website, the 3-D secure
protocol was implemented to safeguard thesafety of credit card transactions for passengers
around the globe; WeChat Pay was allowed forpassengers in mainland China, leveling up theconvenience for online ticket purchase. China
Airlines established the pandemic section in
response to the spread of COVID-19. Entry
restrictions in Taiwan and other countries havebeen regularly updated, as well as schedulechanges, ticket changes, ticket refunds, andother epidemic prevention measures. This was tofacilitate passengers to keep up to date with thetravel information and offer a friendlier
experience in ticket purchases online.
D. Customer Relationship Management (CRM)
project put passengers' travel experience in mind
to fulfill a digitized service. By reviewing eachphase in travel, from ticket purchase,
preparation, check-in at the airport, and arrival,
China Airlines built comprehensive, digitized, andLetter to Shareholders

3passenger-oriented services. The services include
accessing travel information on the mobile app,enjoying more friendly airport and in-flight
services, and receiving swift support for the flightchange.
E. China Airlines leveraged the marketing funnel
strategy and analyzed the browsing behaviors of
CAL website visitors. By maximizing digitaladvertisement, approaching more consumers,
and selecting potential target audiences using
data analysis, China Airlines placed brandmarketing advertisements on target consumers.
Along with the promotion via eDM, app, and text
messages, China Airlines displayed discount offers
to potential customers, boosting customer
consumption. In addition to newsletter marketing,content marketing, and social media, China
Airlines continuously held physical campaigns andrealized the corporate brand visions.

1.2 Business Plan for 2021
To prevent the spread of COVID-19, border
lockdown and travel restrictions have been
implemented in most of the countries, causing
international flights to plummet and hitting hard on
the aviation industry. China Airlines followed the
pandemic prevention regulations in different
countries and remained the normal operations ofimportant routes to satisfy the market demand. For
air cargo, as the delivery of the pandemic prevention
resources and e-commerce goods remained strong,
China Airlines agilely adjusted the capacity ofpassenger flights and cargo flights to enhance theoverall capacity and increase revenue.

continue to work with other airline companies toboost overall performance. Meanwhile, China
Airlines will keep track of the market trend andfollow the diplomatic policies of the government toadjust aviation structure. By evaluating the market
potential and adding more flights, China Airlines willremain steadfast as a leading carrier.

A. Northeast Asian Routes:
In response to the strong demand for air cargo
shipment during the COVID-19 pandemic, China
Airlines remains normal operations for flights
between Taiwan and Japan (Taoyuan-Narita/
Osaka/Fukuoka/Nagoya) The flight to Nagoya is
exclusively provided by China Airlines. For flights
between Taiwan and South Korea, theTaoyuan-Seoul route remains a normal operation. As
border control in different countries is constantly
changing, China Airlines closely oversees thechanges and adjusts accordingly. China Airlines will
also control the ticket prices in the appropriate
range to ensure company revenue.

B. Southeast Asian Routes:
Other than major routes and flights, China Airlines
offers commercial/medical chartered flight services
to destinations like Hanoi, Ho Chi Minh City, Yangon,
Bali, and Palau, etc. Taoyuan-Cebu route andTaoyuan-Chiang Mai route may be opened
depending on the tourist demand andpost-pandemic market condition.

C. Cross-Strait Routes:

In 2021, it is expected that the global aviation
market will recover as more people receive vaccines.
China Airlines will continue to focus on the
pandemic development in each area and agilely
adjust its business pattern. China Airlines will pushforward with its edge in air cargo and steadily
recover its business.

Due to the epidemic prevention policies andcancellation of business travels, the demand forcross-strait flights dropped dramatically. China
Airlines currently only provide services in Beijing,
Shanghai, Xiamen, and Chengdu. For Hong Kong
station, passengers who arrive in Hong Kong by boat
can directly depart by flight without therequirement of quarantine. This offers anotheroption for Taiwanese businesspersons to headhome.

1.2.1 Passenger Service

D. Long-Haul Routes:

Other than the normal operations of importantroutes and flights, China Airlines will keep following
the border policies around the world and thedevelopment of travel bubbles in Asia-Pacificcountries to resume more passenger flights andgrasp more opportunities.

China Airlines maintains the normal operation in
North America to connect to the southeast Asia
network and facilitate the transit of passengers.
China Airlines takes advantage of belly hold ofpassenger flights to carry cargo, and creates revenue
by utilizing passenger flights to deliver cargo.

After the market recovers, China Airlines will enter
deep into the major markets, reinforce the role of
Taoyuan International Airport as a major hub in the
Asia-Pacific region, and strengthen the transfer
capacity in the aviation network. China Airlines will

E. European Routes:

4 Letter to Shareholders

The coronavirus severely attacked Europe. Yet China
Airlines remains operations in key destinations like
London, Amsterdam, and Frankfurt to support thetraveling needs of students and family members.

F. Australia and New Zealand Routes:
China Airlines remains normal operations inAustralia and New Zealand but departure/arrival
time is adjusted. China Airlines also strengthens thetransit service from Australia/New Zealand toEurope, North America, and Northeast Asia in thehope of improving the flight service. In winter, cargoflights to New Zealand and Auckland are added,
which provide passenger seats. Cargo flight toChristchurch is also open for expanding the aviation
network of Australia and New Zealand.

1.2.2 Cargo Service
China Airlines provides differentiation services byutilizing Boeing 747-400F cargo-only freighters toload large cargoes. Meanwhile, Fuel-saving Boeing
777F freighters are deployed to improve revenue
management; China Airlines won many delivery
opportunities by holding the CEIV Pharma
certification. It will continue to provide mid-and
long-term chartered flight service and provide
customized regular/irregular charter service.

A. Long-Haul Routes
China Airlines arranges 40 long-haul routes every
week, and adds more flights according to market
change to meet the demands of high-price charter
service.
Throughinter-airline
cooperation,
expanding the import and export sources of goods inCentral and South America, extending aviation
network services, and increasing loading capacity.
After the introduction of the new 777F cargo aircraftat the end of 2020, China Airlines has prioritized
flights to US West Coast destinations to improveflight payload and optimize economic efficiency.

B. European Routes:
China Airlines maintains the operation of 6 flights
per week in cooperation with the pandemic
prevention laws and continues to promote thepotential markets of Delhi and Mumbai in India in
response to the Indian market development plan, so
as to achieve two-stage revenue benefits.

1.3 Development Strategies
1.3.1 Optimize the fleet scale and improve aircraft
assetsChina Airlines has been optimizing the fleet team.
The next-gen passenger aircraft, Airbus A321neo,
will be introduced in 2021 to replace Boeing 738
passenger aircraft. For cargo aircraft, six Boeing
777F are planned to be delivered before 2023. New
aircraft feature low fuel consumption. They are
more environmentally friendly as less CO2 is emitted.
Their higher quality lowers the unit cost, improves
airline performance, and strengthens overall
competency.
China Airlines will further decide on the treatmentof aging aircraft, sell aging Boeing 738 aircraft andreplace 744 passenger aircraft, to optimize airline
assets and reduce operational cost.
1.3.2 Cold chain logistics certification
China Airlines has been actively discovered thepharmaceutical cold chain logistic market. In April
2019, China Airlines became the first, and so far, theonly, carrier in Taiwan that passed the strict review
and received certification from the IATA Center of
Excellence for Independent Validations. China
Airlines has gained many experiences in cold chain
logistics. It can carry out vaccine delivery withinternationally acknowledged service. Deliveries forcargo chilled to as low as -80°C can now be
undertaken once dry ice is added. This has
effectively enhanced the competency, value, andperformance of China Airlines in high-price cargodelivery. The inter-airline collaboration will be
carried out to help other countries deliver vaccines.
This further strengthens China Airlines' leading rolein air cargo service in the Asia-Pacific region.
1.3.3 Inter-airline collaboration for substantial
benefits

China Airlines organizes 70 flights on regional routes
and flexibly adds flights as demands rise; Cross-strait
flights to Zhengzhou, Guangzhou, and Chongqing
remain normal; The Second Freedom Rights to
Ningbo was granted to expand China Airlines'
aviation network.

China Airlines is the first airline in Taiwan to join the
global aviation alliance. We are also the first
Taiwanese airline to conduct code-sharing
cooperation. Currently, we have cooperated with 23
airlines in code-sharing, ranking first among all
Taiwanese airlines. In addition to self-owned routes,
China Airlines actively penetrates the market
through aviation alliances, providing moreconvenient and complete services. China Airlines willseek more airlines to work with in the future andcover more services to enhance its competency.

Hong Kong route has been added to 19 flights per
week. For Northeast Asia, other than the five flights
per week as scheduled quarterly, cargo flights areadded depending on the demand to cover charter
service.

China Airlines will maintain cooperation with UPS,
DHL, FedEx, SF Express, and other international
express delivery companies to strengthen
partnerships with Japanese and American airlines in
the Asian region.

C. Regional routes:

Letter to Shareholders

51.3.4 Flexible sales strategy to increase revenue

1.4.2 Legal environment

For passenger flights, China Airlines will closely
follow the pandemic condition, border policy in eachcountry, and travel agreement development. China
Airlines will adjust the delivery capacity, taking on
the opportunity by offering more routes. China
Airlines will also utilize the belly hold of passenger
aircraft to deliver cargoes, supporting cargo delivery
while increasing revenue.

The health and quarantine-related control in
different countries may restrict cabin crew's work,
which further impairs the operational efficiency andrevenue.

For cargo flights, China Airlines will increase itsdelivery volume, improve revenue management,
and agilely adjust the capacity and pricing strategy.
1.3.5 Consolidate Group resources to enhance
performance
By rearranging the fleet capacity, China Airlines
provides aviation services with differentiation totarget customers. China Airlines offers multiple
products to customers, reinforcing its leading
position in the market.
1.3.6 Digitalization for enhanced efficiency andcompetency
China Airlines leverages technology to do online
sales in hope of enhancing the efficiency of mobile
applications. Online services have been provided for
greater convenience in cargo and passenger flight
services. The booking system and user interface
have been optimized. The website has been
localized. The 3-D secure protocol has been
implemented for credit card transactions, providing
an easier and friendlier experience in ticket
purchases.
For cargo delivery, e-AWB was adopted and became
the benchmark in the industry. Through EDI(Electronic Data Interchange) system, China Airlines
can exchange information with business partners,
greatly enhancing operational efficiency.

1.4 Effect of external competition, the legal
environment, and the overall businessenvironment

1.4.1 External competition
As the China-US trade war continues, highuncertainty remains as the regional economy isunstable, the supply chain is reconstructing, andhigh liquidity financial assets are rising. Moreover, if
the COVID-19 outbreak is not under control, stricter
border control may be adopted.

1.4.3 Overall business environment
A. As the vaccines are feasible, IATA estimated thatthe aviation industry can expect a lower loss in 2021.
The passenger flight demand will increase by 50.4%
compared with 2020. However, if the pandemic
worsens, causing tightened travel restrictions, theaviation industry may only expect a 13% rise inpassenger flight demand compared with 2020.
Cargo flights will remain strong and stable indelivering vaccines. As the capacity of belly hold ofpassenger aircraft is limited, and as the portion of
special goods (e.g., vaccines) increases, the revenue
is expected to grow 5%.
The fuel price in January was benefited from theeconomic stimulus plan in the US. However, theimpact of border control on the demand for aviationfuel remains uncertain.
B. According to IHS Markit, the growth rate of the
global economy is 5.1%. Taiwan Institute of
Economic Research anticipated a 4.3% rise in thedomestic economy in 2021. Benefiting from theremote business opportunity, 5G network, great
demand in innovative technology, and thegovernment's encouragement in green constructionthat attracts foreign investment, the domestic
economy may outshine others.
Facing with the pandemic that directly impacts theaviation market and changing political and economic
status, China Airlines will flexibly adjust its resources
to cope with the external uncertainties. China
Airlines will adjust its flight capacity and utilize the
new fleet team to reach higher fuel efficiency. Risk
control measures and countermeasures have been
made so that China Airlines can leverage its edge inair cargo service to further penetrate the market.
China Airlines will keep consolidating the Group
resources, enhance its competency, and become aleading carrier with sustainable operation.
Chairman: Hsieh, Su-Chien

President: Kao, Shing-Hwang

Finance Manager: Chen, I-Chieh

6 Letter to Shareholders

Company Profile
2.1 Date of Incorporation
2.2 Company History

Company Profile

7

II. Company Profile
2.1 Date of Incorporation
September 7, 1959

2.2 Company History
1959: China Airlines (CAL) was founded by 26 retired
members of the Air Force with TWD 400,000 incapital. The Company flew charter flights using two
rented PBY seaplanes.
1961: Provided military supply transport to Laos.
1962: Flew special cargo missions for the Vietnamese
government and USARV. Inaugurated the first
domestic route from Taipei to Hualien.
1966: Inaugurated the first international route from Taipei
to Saigon (now Ho Chi Minh City), marking ourofficial start in international aviation.
1967: Inaugurated Northeast Asia routes.
1970: Developed trans‐Pacific routes to explore the US
market.
1976: Inaugurated Middle East and Saudi Arabia routes.
1978: Invested in Taoyuan International Airport Services
Co., Ltd.
1980: Invested in Dynasty Holidays, Inc.
1983: Expanded European routes.
1986: Divided the Operations Division into Passenger and
Cargo Divisions to expand operations.
1988: Twenty‐seven shareholders gifted shares toestablish the China Aviation Development
Foundation, transferring the rights of supervisionand management to the society.
1989: Invested in Hwa Hsia Co., Ltd. and Tai Kong Ju
Investment Co., Ltd.
1990: Added Phuket and Bali destinations. Invested in
Abacus Distribution Systems (Taiwan) Ltd.
1991: Established the Hua Mei Investment Company and
Mandarin Airlines. The Ministry of Finance approved
the public offering of China Airlines shares.
1992: Resumed flights to Ho Chi Minh City. The Taiwan
Stock Exchange approved the listing of China
Airlines shares. The Company gained 100% equity
interest in Mandarin Airlines.
1993: First flight to Frankfurt, Germany. Established theGerman Branch Office. Officially listed on the
Taiwan Stock Exchange.

8 Company Profile

1994: New engine repair plant became operational andSongshan Training Minquan Building opened. Set up
China Pacific Catering Services as a joint venturewith the Swire Group.
1995: First flights to Switzerland and Italy. Entered into a
joint venture with Pratt & Whitney and SIA
Engineering Company Limited to establish AsianCompressor Technology Services Co. in Taiwan.
Invested in CAL‐Asia Investments Inc. Launched our“plum blossom” logo.
1996: Inaugurated the Taoyuan‐Penang cargo route.
1997: Inaugurated the Kaohsiung‐Hong Kong‐Jakarta route.
Established the first cargo‐only flights between Asia
and Miami. Established code share flights with
Continental Airlines and American Airlines. Invested
in Huasheng Investment Company and China Pacific
Laundry Services Ltd.
1998: Set up our Penang Branch Office and Hanoi Branch.
Began using the Third Maintenance Hangar.
1999: Inaugurated cargo flight routes to Sydney, Delhi,
and Colombo. Set up Kaohsiung Airport Catering
Services as a joint venture with TransAsia Airlines
and Far Eastern Air Transport. Established Chung
Hwa Express Corp. as a joint venture with Chunghwa
Post. Established TACT Logistics through investment
transfer.
2000: Launched Canada, Australia, and New Zealandroutes; Taoyuan‐Guam, Taoyuan‐Manila, Kaohsiung‐
Manila, Hakodate charter, and Taoyuan‐Penang
passenger flights; Frankfurt cargo flights.
Established the Shanghai office in Mainland China
and new branch offices in Canada, Australia, New
Zealand and Guam. Established YesTrip Travel
Internet Technology Co.
2001: Inaugurated cargo flight routes to Seattle andNashville. Made indirect investment in Xiamen
International Airport Co., Ltd. Set up code‐share
flights with Delta Airlines. Introduced A340-300
passenger jets.
2002: Inaugurated passenger flight routes to Delhi andcargo routes to Manchester. Received approval toinvest in China Cargo Airlines. Ordered 18 Airbus
A330 passenger aircraft and 10 Boeing 747-400
cargo and passenger aircraft. Rejoined theInternational Air Transport Association (IATA).
2003: Inaugurated the first cross‐strait Spring Festival
charter flight. Inaugurated charter flights to Seoul
and passenger routes to Brisbane and Hanoi andnon‐stop flights to Hawaii. Inaugurated cargo flightroutes to Ho Chi Minh City and Delhi. Created theParagon Card, the highest Dynasty Flyer
membership tier. Received the Outstanding Service
Award from the R.O.C. President.

2004:

Launched sea‐air transport charter flights.
Inaugurated Hiroshima passenger flights and cargoroutes to Milan and Prague. Introduced three
A330-300 passenger jets, two Boeing 747-400
passenger jets and two Boeing 747-400 freighters.

2005: Flew the first direct charter flights to Beijing, andSpring Festival charters to Guangzhou and Shanghai.
Inaugurated Vienna passenger flight route andNagoya and Vienna cargo flight routes. Invested in
China Aircraft Services Limited.
2006: Inaugurated cargo flight routes to Osaka, Hanoi,
Houston and Stockholm. Flew the first cargo charter
flight to Shanghai. Invested in Yangtze River Express
Airlines Company. Began construction on the
Taoyuan International Airport Airline Business
Operation Center.
2007: Signed a letter of intent to purchase Airbus planes.
Announced contract with AccorHotels for a new
airport hotel. Inaugurated regularly scheduled
passenger flights between Kaohsiung and Chiang
Mai.
2008: Launched cross‐strait humanitarian charter flights
direct to Chengdu to deliver disaster relief supplies
at no charge. Inaugurated cross‐strait holiday
charter flights, weekend charter flights to Shanghai,
Beijing, Xiamen, and Guangzhou, and cross‐strait
direct cargo charter flights.
2009: Inaugurated the Taoyuan‐Osaka‐Los Angeles cargoflight route. Inaugurated scheduled cross‐strait
flights to Zhengzhou, Xiamen, Xi'an, Ningbo,
Shenyang, and Changsha. Became an official
member of IATA's e‐Freight program. Inaugurated
Taiwan's largest 120,000-pound power plant testing
platform.
2010: New routes: Passenger routes between Taoyuan
and Miyazaki, London, and Qingdao, Songshan
Airport to Hongqiao and Haneda, and Kaohsiung to
Xiamen and Narita, direct cargo flights to Xiamen,
Nanjing and Fuzhou as well as special cargo charter
flight direct to Xi'an. Established Company
headquarters in China Airlines Park and won the
National Building Golden Award and National FirstAward.
2011: New routes: Taoyuan ‐ Brisbane ‐ Auckland;
Taoyuan ‐ Osaka ‐ New York; flights to and from
Taoyuan and Wuhan, Sanya, Yancheng, Haikou,
Nanchang and Dalian; Taicheng to Chongqing andNanchang; Kaohsiung to Changsha, Chongqing,
Beijing, and Kuala Lumpur. Officially joined SkyTeam,
becoming the first Taiwanese airline member of aninternational airline alliance.
2012: New routes: Songshan to Wenzhou and Gimpo
Airport, Taoyuan to Kagoshima, Shizuoka andToyama, added Auckland leg to the Taoyuan‐Sydneyroute, and Taoyuan to Seoul and Yangon. Joined the
SkyTeam Cargo, becoming the first Taiwanese

airline to join an international air cargo alliance.
Renovated the cabins of nine Boeing 747-400
passenger jets to install new cabin seats and video
systems. Signed a Memorandum of Strategic
Cooperation with Chunghwa Telecom. Signed an
OnPoint Fuel & Carbon Solutions Agreement with
GE Aviation. Awarded Business Next magazine’s
Super Green Jury Award and obtained the First
Place in the Green Brand Awards 2012
Transportation Category, Gold Award in Reader's
Digest Trusted Brands 2012, the Sports Activists
Award from Sports Affairs Council, First Place inManagement magazine’s Consumer Brand Survey,
and the 2012 Energy Conservation and Carbon
Reduction Action Label Excellence Award. The China
Airlines Maintenance Facility received ISO 14001
Environment Management System Certification.
Launched the world's first trans‐Pacific climate
observation aircraft. Became the world's first airline
to display carbon footprint and calories for in‐flightmeals.
2013: Formed Greater China Connection Partnership with
China Southern, China Eastern and Xiamen Airlines.
Launched code-sharing services with Russia's
Transaero Airlines and Hawaiian Airlines, andexpanded code-sharing services with China
Southern Airlines. Launched Taoyuan‐Takamatsu
route, Chiayi‐Shizuoka charter flights, Taoyuan‐
Hawaii direct flights, Taoyuan‐Urumqi and Lijiangroutes. Launched Taoyuan‐Ishigaki, Tainan‐HongKong, and Taoyuan‐Busan routes as well as
Songshan‐Matsuyama charter flights. Launched the
Taoyuan‐Nanjing‐Zhengzhou cargo route andTaoyuan‐Weihai
flights.
Launched
temperature-controlled product cargo services.
Once again awarded Business Next magazine’s
Super Green Jury Award and the First Place in theGreen Brand Awards 2013 Transportation Category.
Awarded Top Aviation Brand in Manager Today‘s
Power Brands Survey 2013 and Reader's Digest
Trusted Brands Gold Award. Won the National
Standardization Awards’ Corporate Standardization
Award, 3rd Taiwan Green Classics Award, Global
Views Service Excellence Award 2013, and EPA’s
22nd Business Environmental Award.
2014: Awarded the EPA’s 23rd Business Environmental
Award and the International Green Classics Award
2014; earned ISO 14001 Environment Management
System Expansion Certification and ISO 50001
Energy Management System Setup Certification.
Once again awarded Business Next magazine’s
Super Green Jury Award and earned First Place in
the Green Brand Awards Transportation Category
for the third time. Inaugurated the Songshan‐
Fuzhou and Taoyuan to Changchun, Hefei, Yantai,
and Xuzhou routes. Won the Annual Best of DesignAwards in the 2014 Golden Pin Design Award for our
NextGen 777 aircraft cabin design and named theBest Airline in North Asia by Global Traveler.
2015: Launched Taoyuan‐Wuxi; Kaohsiung to Changzhou,
Kumamoto, and Fukuoka; Taoyuan‐Melbourne with

Company Profile9

an extension to Christchurch; and Tainan‐Osakaflights. Launched social media customer services, afirst for Taiwan. Established an airplane
maintenance training center. Received the following
awards: Brand Service:
CAA 2014 Golden Wing Awards, second place in
TheDesignAir Global Passenger Choice Top 10
Airlines Awards 2015, Reader's Digest Trusted
Brands Gold Award, three top awards in the
Global Traveler reader survey.
 Corporate Social Responsibility:
TCSA Taiwan Corporate Sustainability Award,
EPA’s Business Environmental Awards.
 Product Design:
The NextGen 777-300ER passenger cabin design
was awarded the Red Dot Design Award 2015,
Family Couch design received the Global Traveler
Leisure Travel Innovation Excellence Award, won
the National Industry Innovation Award for
NexGen Aesthetics.
 Others:
Centers for Disease Control Epidemic Prevention
Award 2015.
2016: Launched the Taoyuan‐Yangzhou route andTaoyuan‐Shenzhen cargo route. Inaugurated
Chinese passenger transit through Taiwan foroutbound China Airlines flights. Increased freebaggage allowance by 10 kg and reduced regional
excess baggage charges. Took delivery of the first
A350 airliner for any Taiwanese carrier. Completed
the Air Passenger Transport Service-Product
Carbon Footprint Category Regulations together
with the Civil Aeronautics Administration. Received
the following awards:
 Brand Service:
PAX International magazine reader survey's 2016
Outstanding Food Service by a Carrier, Best
Premium Economy and Best Airline by Global
Traveler; China Airlines Dynasty In-flight Magazine
won the APEX Award of Excellence; the CAL
website was named the 2016 Best Airline Website
by WebAward.
 Corporate Social Responsibility:
Passed the third-party audits for ISO 14001 andISO 50001 Environmental Management Systems.
Received the IOSA flight safety certification andthe TCSA Taiwan Corporate Sustainability Award.
Selected as a Dow Jones Sustainability Indicesconstituent stock, the first such honor for a
Taiwanese company and emerging market airline.
 Product Design:
Received 5 iF Design Awards for the Boeing
777-300ER passenger cabin, software userinterface, tableware design, Sky Lounge design
packaging, and Taiwan Taoyuan Airport Terminal
1 Lounge. A double win at TheDesignAir Awards
2016.

10 Company Profile

2017: Inaugurated the Taoyuan‐London route, becoming
the only airline in Taiwan to offer nonstop service toLondon. Partnered with Air France on a codeshare
nonstop flight from Taoyuan to Paris. Added
codeshares on Taiwan‐Japan routes with Air Japan.
Signed a memorandum of cooperation with KLM.
Signed an agreement to enhance cooperation with
American Airlines. Signed a letter of intent with
Airbus, comprehensively strengthening cooperation
on maintenance. Established a joint venture in
Taoyuan with NORDAM Aerospace (USA) as“NORDAM Asia Ltd.” with both parties cooperating
to drive business investment and training ofaerospace maintenance personnel. Signed amemorandum of cooperation with Changgeng
Hospital of Linkou for air medical treatment.
Obtained AS 9110 Airbus certification for the
maintenance facility. Transported Taiwanesesatellites to the US on four occasions. Hosted the2017 AAPA annual conference to empower
development in the Asia-Pacific airline industry.
Provided the second A330-300 to work on plans forgreenhouse gas observation and testing in the
Pacific. Signed the Buckingham Palace Declaration
against illegal wildlife shipments. Used sustainable
alternative fuels and setting a milestone in carbon
reduction among Taiwanese airlines. Received many
awards: Brand Service:
Excellence in Global Airline Cargo Service award.
Cheers magazine's 2017 TOP 20 Most Influential
Enterprises of the New Era. Awarded the Gold
Medal for reputation by Reader’s Digest for the
19th consecutive year. Awarded the 2017 Global
Vision magazine five-star service rating.
Remained on top as Global Traveler's Best Airline
in Northeast Asia.
 Corporate Social Responsibility:
Won the Taiwan Top 50 Enterprises Sustainability
Report Gold Medal for Cargo Division, Climate
Leader Award, and Harmony with Society award.
Selected for the Dow Jones Sustainability Index
for the second consecutive year.
2018: The new US destination Taoyuan-Ontario,
California, route formally went into operation.
Served as one of the ten major members in the
IATA Nominating Committee in 2018. Launched
Kaohsiung-Hong
Kong-Jakarta
andTaoyuan-Chongqing passenger transportationroutes. Developed the cargo transport destinationin Columbus, Ohio, United States. Joined handswith Japan Airlines in developing new destinationsof Japan inland routes, including Sapporo-Niigata,
SapporoHanamaki,
Fukuoka-Miyazaki,
Fukuoka-Hanamaki,
Fukuoka-Amami,
Kagoshima-Amami and Kagoshima-Tokunoshima.
 Brand Service:
Selected as Cheers magazine's “2018 Top 20
Employers of the New Generation.” China Airlines’
in-flight magazine Dynasty received the 2018
APEX Awards for Publication Excellence in the US.

 Corporate Governance:
Ranked among the top 5% in the 4th Corporate
Governance Review.
 Corporate Social Responsibility:
China Airlines Group donated NT$10 million indisaster relief for the Hualien earthquake. The
second airline worldwide to be certified by dual
systems, ISO 14001 and ISO 50001, maintaining
the highest standards for environmental risk
management. AL Park was awarded the Diamond
Level of Green Building Label, with an annual
electricity savings of 23,000 kWh. Cooperated
with ClimateCare, a British professional
environmental facility, to launch the “ECO Travel”
carbon exchange program. Selected as aconstituent stock in the Dow Jones Sustainability
Index (DJSI). Awarded the Taiwan Corporate
Sustainability Award.
 Product Design:
OBH Magazine awarded it the “Best Premium
Economy Class Amenities Kit” for Onboard
Hospitality.

first 777F cargo aircraft entered service. The
various awards we received:
 "The Best Entry Outside of the U.S." award at the
131st Rose Parade in 2020 for the second
consecutive year.
 Ranked world’s No.3 Carrier for sustainability by
DJSI Won the award for the seventh consecutive year
at the “Oscars” of Taiwan corporate sustainability
 "#What Travel Brings You" China Airlines
commercial won CLIO Awards and the recognitionof New Yor Festival.
 Won the special prize and the first procurement
prize in 2020 Buying Power Social Innovation
Products and Services held by MOEA
 Won the 2020 Air Cargo Executive of the YearAward

2019: Flight addition on Taoyuan-Palau route. Developed
cargo transport destination in Nagoya, Japan.
Signed a letter of intent with Chung Yuan Christian
University to jointly develop aviation talent.
Approved by the US Transportation Security
Administration to join the precheck program. Moreevolution in digital services: non-stop, 24-hourautomated customer service.
 Brand Service:
Won the APEX 5-Star Award. The first cold-chaintransportation of pharmaceuticals in Taiwan forinternational certification.
 Corporate Governance:
Placed in Top 5% of the Corporate GovernanceRanking once again.
 Corporate Social Responsibility:
Evaluated as the role-model company for the
global airlines by the International Carbon
Disclosure Project. Selected as a constituent stockin the “TW ESG Index” for the first time. Selected
as a constituent stock in the DJSI for the fourthconsecutive year. Selected for the Global
Corporate Sustainability Awards for the first timeand presented with TCSA for the sixth consecutive
year.
2020: Non-stop, 24-hour automated customer service.
Implemented an online check-in service for all
tourists since June 22 in response to pandemic
prevention. Met with a delegation headed by the
President of the Senate of the Czech Republic tofoster greater economic and trade between Taiwan
and the Czech Republic. Carried out beach clean-up
activity in Guanyin shore in response to the beachcleaning promotion by the Taoyuan Government.
Aircraft livery was showcased on the new 2021
calendar to demonstrate the beauty of Taiwan. The

Company Profile

11

Corporate Governance Report
3.1 Organization
3.2 Directors and Management Team
3.3 Implementation of Corporate Governance
3.4 Information Pertaining to the Company’s Audit Fee
and Independence
3.5 Replacement of CPA
3.6 Audit Independence
3.7 Changes in Shareholding of Directors, Managers, andMajor Shareholders
3.8 Relationships among the Top Ten Shareholders
3.9 Ownership of Shares in Affiliated Enterprises

12 Corporate Governance ReportIII. Corporate Governance Report
3.1 Organization
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INFORMATIONMANAGEMENT DIV.

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०ᐒঅៈ૽ግύЈߕ೛௲‫૽ػ‬ግύЈTECHNICALTRAINING CENTEREDUCATION TRAINING CENTER

ঁၗᄤࠔ፦ᆅ౛࠻

DATA PROTECTION &QUALITY MANAGEMENT OFFICE

಻ើϩϦљ
ቺ୯ϩϦљ
GERMANYBRANCHကεճϩϦљITALY BRANCH

༫ӦճϩϦљ

εഌ೤ၮύЈCARGO SALES &SERVICES
MAINLAND CHINAቶԀᒤ٣ೀGUANGZHOUOFFICE‫ݓ‬ᅇᒤ٣ೀ

๮ч୔२ৢж߄
ASSISTANT VP,NORTH CHINAుӥᒤ٣ೀSHENZHEN
OFFICEBEIJING OFFICEԋ೿ᒤ٣ೀᘟ໚ᒤ٣ೀɉ

AUSTRIA BRANCHWUHAN OFFICECHENGDU OFFICEኻࢪ೤ၮύЈ

ᎄԀᒤ٣ೀɉख़ቼઠCARGO SALES &SERVICES, EUROPEम୯ϩϦљU.K. Branch

ZHENGZHOUOFFICECHONGQINGSTATIONੇαᒤ٣ೀߏ؅ᒤ٣ೀɉHAIKOU OFFICEΟ٥ઠ

SANYA STATIONч٧ᒤ٣ೀCHANGSHAOFFICEࠄܱઠ

NANCHANGSTATIONSHENYANG
OFFICEՋӼᒤ٣ೀXIAN OFFICE

VICE PRESIDENT,OCEANIA

VICE PRESIDENT,TAIWANSENIOR VICE PRESIDENT,
MAINLAND CHINA

๮ࠄ୔२ৢж߄
ASSISTANT VP,
SOUTH CHINA

NETHERLANDSBRANCHεࢩࢪӦ୔ೀߏ

Ѡ᡼Ӧ୔ೀߏ

εഌӦ୔२ৢж߄ኻࢪӦ୔२ৢж߄

SENIOR VICE PRESIDENT,EUROPEѠчϩϦљ๮ܿ୔२ৢж߄
ASSISTANT VP,
EAST CHINA΢ੇᒤ٣ೀSHANGHAI OFFICEคᒴઠWUXI STATION

༺ߐᒤ٣ೀɉXIAMEN OFFICETAIPEI BRANCH

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ɉ

ࠄ٧ᒤ٣ೀ

NANJING OFFICEჱ‫ݢ‬ᒤ٣ೀɉNINGBO OFFICEྕ Ԁ ઠɉ

WENZHOUSTATIONѠࠄᔼ཰‫܌‬TAINANSALES OFFICE৪ԀઠXUZHOU STATIONѠύϩϦљɉ

TAICHUNG BRANCHߙ৞ᒤ٣ೀQINGDAO OFFICEᅽ Ԁ ઠɉFUZHOUSTATION

KAOHSIUNGBRANCHܼԀᒤ٣ೀɉ
HANGZHOU
OFFICEѠ᡼೤ၮύЈCARGO SALES &SERVICE, TAIWAN३ෝϩϦљऍࢪӦ୔ೀߏ

VICE PRESIDENT,THE AMERICAS

AUSTRALIA
BRANCHεٞϩϦљࢶ‫׼‬ᕚϩϦљTOKYO BRANCHOSAKA BRANCHੀ୯ϩϦљLOS ANGELESBRANCHѲٚථҁϩϦљ
BRISBANEBRANCHӜђࡂϩϦљ

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NAGOYA BRANCHᅽ‫۝‬ϩϦљFUKUOKA BRANCHSAN FRANCISCO
BRANCHమᗌϩϦљᏀᅟҁϩϦљ

൤ξઠ

ᅜҁઠ

ફऊϩϦљ

ജ‫ٽ‬৞ઠ

ᔝ३ξϩϦљKAGOSHIMA
STATION

HONOLULU
BRANCH৐஘ઠӼ਱܎‫ݯ‬ϩϦљ

HONG KONG
BRANCHTHAILAND
BRANCHCHIANG MAI BRANCHຫࠄϩϦљ

VIETNAM BRANCH‫ݞ‬ϣϩϦљ

HANOI BRANCH

ଭٰՋ٥ϩϦљMALAYSIA BRANCHᘓࠤϩϦљPENANG
BRANCHཥу‫ڵ‬ϩϦљ

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NEW ZEALAND
BRANCHᗬ୯ϩϦљ

HIROSHIMA
BRANCHଠξϩϦљଯ݊ઠ

BUSAN BRANCH

๷ࡓᇯϩϦљ
PHILIPPINESBRANCHCEBU BRANCH጑‫ث‬ϩϦљӑѭϩϦљࢍ঵ჵϩϦљ

᯷ٚϩϦљ

ۧ੥ϩϦљ

BALI BRANCHSHIZUOKA
STATIONቶ৞ϩϦљ

KOREA BRANCHӑࡋϩϦљINDIA BRANCHܿ٧ϩϦљMELBOURNE
BRANCHSINGAPORE
BRANCHINDONESIABRANCHɉǺ๮ߞૐ‫ޜ‬੤ဦ०ૐᐞࢪϩϦљВҁӦ୔ೀߏ

VICE PRESIDENT,
JAPAN

எᜦϩϦљ

TAKAMATSU
STATIONВҁ೤ၮύЈCARGO SALES &SERVICES, JAPANKUMAMOTOSTATIONMIYAZAKISTATION༷҄ϩϦљ

SAPPORO BRANCH੥ౚϩϦљOKINAWA BRANCHNEW YORK
BRANCHANCHORAGE
BRANCHу৾εϩϦљ

CANADA BRANCH

ऍࢪ೤ၮύЈCARGO SALES &SERVICES
THE AMERICASMYANMAR
BRANCHCAMBODIABRANCHPALAU BRANCHᜢ৞ϩϦљGUAM BRANCH

Corporate Governance Report133.1.2 Major Corporate Functions
Department
General Audit Office

Functions
Responsible for auditing the internal control system, evaluate the results of theimplementation of the annual business plan.

Secretarial Office,Responsible for holding Board of Directors meetings, collating and sending meeting

Board of Directors

proceedings and overseeing matters relating to resolutions, coordination channels
with public stockholders, matters relating to juridical person shareholder
representatives, director communications and services, and budgeting and controls
for the Board and all functional committees.

Corporate

Responsible for drafting the Company’s medium- and long-term strategic operating

Development Officeplan, fleet plan, and annual business plan; securing flying rights and building
relationships between the Company and civil aviation authorities in various
countries; establishing brand position and development strategies; planningmedium- and long-term design and development of passenger cabins andentertainment systems; purchasing, selling, and leasing of aircraft.

Corporate Safety Office Drafts Company safety, security, quality assurance, environmental, and emergency
response policies and systems; establishes related management systems andconducts educational training; implements related investigations, analysis, andexaminations; coordinates with government agencies and civil aviation authorities,
manufacturers, and groups to deal with Company safety, security, quality assurance,
environmental, and emergency response-related issues.
Corporate

Responsible for external Company communications, communication links with theCommunications Office legislature and the media, planning social welfare activities, sponsoring charitable
activities, organizing inaugural flights and other holiday or celebratory activities,
publishing CAL Park Magazine, supervising and coordinating publication of Dynasty
magazine, and formulating the Company’s brand image and advertising strategy.
Legal & Insurance Div.

Responsible for reviewing all outside agreements and contracts, handling litigation,and management of insurance matters for Company assets, such as the fleet andaeronautical parts, personnel, and passenger and cargo transportation.

Finance Div.

Responsible for planning financing sources, managing use of funds, controlling thebudget, auditing accounts receivable and payable items, preparing financial
statements, managing tax-related issues, fuel purchasing, and providing accounting
and cost-analysis information. Supervising of the operational performance andmanagement of invested enterprises.

Administration Div.

Responsible for procurement of general goods, managing renovation projects andland/real estate, land transport management and vehicle maintenance, handling ofcompany licenses, monitoring and safekeeping of Company seals, sending andreceipt of prospectuses and official documents, and document management.

Cabin Crew Div.

Responsible for establishing cabin crew operating standards, managing training of
cabin crew, planning for cabin crew manpower needs, and implementing assignmentof cabin crew personnel.

14 Corporate Governance ReportDepartment
Ground Services Div.

Functions
Responsible for establishing ground services operating standards, development of
the ground services operating system, planning and implementation of a full range ofground services training, supervising ground services operations at all stations,providing ground services at Taiwan Taoyuan and Songshan Airports, and overallmanagement of ground service provider contracts.

In-Flight Service Supply Responsible for research and development, marketing and planning of various
Chain & Marketing Div. in-flight service supplies and products for sale; planning and supply management ofmeals and beverages in all flights of the entire route; supervising and controlling thelogistics and supply management, such as purchasing, warehousing, preparation andloading of various in-flight service supplies; working on improving the quality of
in-flight service products based on customer feedback and market trends.
Data Protection &Quality Management
OfficeManages the personal information and quality management system, and reports
implementation results and improvement measures to the top management;
masters the content of laws and regulations related to the protection of personal
information in various countries to ensure compliance with laws and regulation
enforcement process in every country; sets up and implements the Company’s ISO
9001 quality management system, and imparts service quality education, internal
quality auditor training and encourages further understanding of measurespertaining to quality-related issues.

Passenger Sales &Marketing Div.

Responsible for supervising the passenger transport network planning and route
management of the entire network, seat control, business promotion, digitalmarketing, customer relationship maintenance, membership marketing andinter-airline cooperation, cross-industry collaboration, determination of passenger
transport rates and various quotas, performance evaluation, and developing andmaintaining revenue management systems and passenger transport businesstraining at all levels.

Information
Management Div.
Human Resources Div.

Combines information technology with business knowledge to promotecomputerization within the Company to upgrade operational competitiveness.
Responsible for planning the Company organization and human resources, theestablishment of a personnel management system, and setting up pay standards.
Provides recruitment services, supervises personnel management, established theemployee training system and oversees future updates, provides employee healthmanagement, and manages personnel assignments to associated enterprises.

Occupational Safety &Health Dept.

Prepares the Company’s Occupational Health and Safety Manual and regulations;drafts, plans, supervises, and promotes health and safety matters and guides in theirimplementation in relevant departments to prevent occupational hazards and ensure
employee health and safety. Received ISO45001:2018 and CNS45001:2018
occupational health and safety certification following SGS audit to effectively control
occupational incident risk and improve occupational health and safety performance.

Corporate Governance Report15

Department

Functions

Cargo Sales, Marketing Formulates the cargo development strategy, supervises cargo operations on all& Services Div.

routes, plans the cargo flight timetable and controls the allocation of hold space, sets
cargo shipping rates and sales quotas, evaluates operating performance, drafts andoversees cargo services and operating standards, is responsible for passenger andcargo plane loading control operations, cargo equipment controls andreplenishment, Taipei cargo terminal operations, and accounting of the Cargo Sales,
Marketing & Services Division and Taiwan Cargo Center.

Flight Operations Div.

Responsible for cabin crew manpower requirement planning, training andmanagement of cabin crew, developing flight operating standards, controlling fuelconsumption, planning and implementation of the crew and flight assignments, anddevelopment of airplane flight manuals and maintenance of flight simulators.

System Operation

Manages the coordination of all airports in the system, oversees flight status,

Control Div.

coordinates and manages adjustment of flights in response to anomalies, guarantees
on-time performance rates, provides real-time information to aircraft in flight,
ensures flight safety, investigates causes for major delays to flights, establishes
comprehensive aircraft and statistical analysis data; operates and guides crew
allocation, plans and manages flight permits; responsible for safety management andliability related to business.

Maintenance Div.

Responsible for ensuring the maintenance of airplanes, client aircraft maintenanceservices, support and supervision of station maintenance, and development ofmaintenance capabilities.

Engineering Div.

Responsible for the planning and control of airplane maintenance, materials supply
management, controlling of maintenance costs, and planning of the information
system development strategy.

Quality Assurance Div.

Responsible for coordination and communication with other countries’ civil aviation
authorities; maintaining the validity of operating standards, repair facility licenses,
and aircraft airworthiness certificates; authorization and management ofmaintenance personnel training and task assignments; formulation andimplementation of quality audit system. Established and implements the aircraft
quality management and on-site inspection systems, ensures introduction of new
aircraft and sale or return of aircraft as stipulated in the fleet plan, and assists inaircraft incident investigations.

Technical Training

Develop type training and license conversion training that comply with CAA 05-02A

Centerrequirements. Compose training plan and execute training in accordance with EMO(Engineering & Maintenance Organization) demands and customer requests.

Branch offices

Responsible for the development of individual branches and promotion of passenger
and freight-related operations.

16 Corporate Governance Report3.2 Directors and Management Team3.2.1 Directors

MAR 27, 2021

06/27/2018

05/25/2021

07/07/1988

-

Date
Ended
Date
Elected

GenderR.O.C.

China Aviation
Development
Foundation

Date FirstElectedNationality/
Country of
Origin

Name

Title

Shareholding when
ElectedCurrent
Shareholding

Shares%Shares%

1,867,341,935

34.13%

1,867,341,935

34.45%

06/27/2018

05/25/2021

07/07/1988

06/27/2018

05/25/2021

R.O.C.

07/06/2016

R.O.C.

China Aviation
Development
Foundation-

Representative:

Male

Hsieh, Su-Chien

Chairman

48,517

1,867,341,935

05/25/2021

03/11/2021

03/11/2021

Male

R.O.C.

Representative:

Kao, Shing-Hwang

Director

62,8090.00%

48,51734.13%

1,867,341,935

0.00%

62,809Spouse & Minor
Shareholding

Shareholding by
NomineeArrangement

SharesShares

%

-

-

-

0

0.00%

0

34.45%

-

-

-

0

0.00%

Other Position

%

0.00%

0.00%

Experience(Education)

0

Executives, Directors or
Supervisors who are
Spouses or within Two
RemarkDegrees of Kinship
Title

-

-

-

Chairman, Taiwan Chairman, CAL
Air Cargo Terminal Park Co., Ltd.
Ltd.
Chairman, CAL
Senior Vice
Hotel Co., Ltd.
Chairman,President ofMarketing, China
CAL-Asia
Airlines Ltd.
Investment Inc.
Director, Taiwan
Chairman,Region and General CAL-Dynasty
Manager of Taipei International,Inc.
Branch Office,China Airlines Ltd.
General Manager,
Australia Branch
Office, China
Airlines Ltd.
General Manager,
Indonesia Branch
0.00% Office, China
Airlines Ltd.
General Manager,
Kaohsiung Branch
Office, China
Airlines Ltd.
Vice President,
Passenger SalesDiv.
Chairman, Abacus
Distribution
Systems Taiwan
Ltd.
Bachelor’s Degree,
Department of
Economics,
Soochow
University

-

0.00%

Name Relation

-

-

-

-

None

None

None

None

-

-

-

-

-

-

Senior Vice
President (VO).
Vice President,
Flight Operations
Div.
Assistant Vice
President, Flight
Operations Div.
Bachelor’s Degree,
National Cheng
Kung University

President,
China Airlines
Ltd.
Director,
Mandarin
Airlines, Ltd.
Director, Cal
Hotel Co. Ltd.
Director,
CAL-Dynasty
International,
Inc.
Director,
Dynasty
Properties Co.,Ltd.
Director,
CAL-Asia
Investment Inc.
Director,
TaoyuanInternational
Airport Services
Co., Ltd.
Director &President, Cal
Park Co. Ltd.

None

None

None

Note1

Corporate Governance Report

17

Date
Ended
Date
Elected

GenderDate FirstElectedNationality/
Country of
Origin

Name

Title

Shareholding when
ElectedShares%05/25/2021

06/27/2018

07/01/2000

Male

R.O.C.

Representative:

Chen, Charles C.Y.

190,166

05/25/2021

06/27/2018

01/28/2008

Male

R.O.C.

Representative:

Ting, Kwang-Hung

005/25/2021

06/27/2018

07/26/2016

Male

R.O.C.

Representative:

Chen, Han-Ming

005/25/2021

06/27/2018

06/27/2018

Male

R.O.C.

Ko, Sun-Ta

Representative:

0

06/27/2018

05/25/2021

06/15/2012

06/27/2018

05/25/2021

R.O.C.

06/27/2018

R.O.C.

National
Development
Fund, Executive
Yuan-

Representative:

Male

Wei, Yung-Yeh
Director

3,737

519,750,519

0.00%

0.00%

0.00%

0.00%

Current
Shareholding
Shares%

190,166

0

0

0

0.00%

3,737

9.50%

519,750,519

18 Corporate Governance Report

0.00%

0.00%

0.00%

0.00%

0.00%

9.59%

Spouse & Minor
Shareholding

Shareholding by
NomineeArrangement

SharesShares%155,849

0

0

0

0.00%

0.00%

0.00%

0.00%

0

0

0

0

Experience(Education)

Other Position

Executives, Directors or
Supervisors who are
Spouses or within Two
RemarkDegrees of Kinship

%

Title

Name Relation

Director, Wan Hai Chairman, Eyon
Lines Ltd.
Holding Group
Chairman, UTAC
Vice Chairman,
Group, Singapore Taiwan Air
Chairman, Epistar Cargo Terminal
Corp.
Ltd.
Director, Formosa Vice Chairman,
International
Taian Insurance
Hotels Ltd.
Co., Ltd.
Director, Ascendas Chairman, Wan
Pte. Ltd.
Hai
Director, Ichia
International
0.00% Technologies, Inc. Pte. Ltd.
Adjunct Associate President,
Professor, National Chen-Yung
Tsing HuaFoundation
University
Vice Chairman,
MBA, New YorkWan Hai Lines
University, U.S.A. (Singapore) Pte.
Ltd.
Director, Epistar
Corp.
Director, Shihlin
Paper Co., Ltd.

None

None

None

None

Chairman, Central Member, Risk
Trading &Committee,
Development Corp. China Airlines
Ltd.
BA in Finance,
Boston University, Group
Chairman, Phu
U.S.A.
My Hung
Holdings Group
Chairman, Phu
Yung An Corp.
Chairman, Hiep
Phuoc Power
Co., Ltd.
Chairman,
0.00%
Macro
Technologies
Inc. (Vietnam)
Ltd.
Chairman, Phu
My Hung Asia
Holdings Corp.
Vice Chairman,
TVBS Media Inc.
Director, Phu
My Hung
Development
Corp.

None

None

None

None

Director, Yuan-Chin Chairman,
Development Co., Tigerair Taiwan
Ltd.
Co., Ltd.
Member, Rotary
Chairman,Club of Taipei
Prime
TunhuaDevelopment
0.00% BA (Hons)
Co., Ltd.
Architecture,
Director,
University of
Chyn-Tay
Plymouth, UK
Bearing Co.,
MSc, Birmingham Ltd.
City University, UK
PT Lecturer,
Chairman, K
National Open
Hotels Group
Chairman, The
University
PT Lecturer,
Tango Group
National OpenChairman,
Kodak Trading
0.00% College
President, Keelung Co., Ltd.
Fund for Children Chairman, Kota
& Families
Enterprise Co.,
MBA, KeioLtd.
University, Japan

None

None

None

None

None

None

None

None

0

0.00%

0

0.00%

-

-

-

-

Jet Airplane
MaintenanceGroup, Air Force
Technical School

Member ofCouncil, China
Airlines
Employees
Union
Foreman, Line
Maintenance
Department,
Engineering &Maintenance
Division, China
Airlines Ltd.

None

None

None

Note1

-

-

-

-

-

-

Date
Ended
Date
Elected

GenderDate FirstElectedNationality/
Country of
Origin

Name

Title

Shareholding when
ElectedShares%05/25/2021

06/27/2018

06/15/2012

Male

R.O.C.

Lin, Su-Ming

Representative:

0

05/25/2021

06/27/2018

06/27/2018

FemaleR.O.C

Representative:

Wang, Shih-Szu

005/25/2021

06/27/2018

06/15/2012

Male

R.O.C.

Chung, Lo-Min

Independent Director

005/25/2021

06/27/2018

06/27/2018

FemaleR.O.C.

Chang, Hsieh Gen-Sen

Independent Director

0

0.00%

0.00%

0.00%

0.00%

Current
Shareholding
Shares

%

0

0

0

0

0.00%

0.00%

0.00%

0.00%

Spouse & Minor
Shareholding

Shareholding by
NomineeArrangement

SharesShares

%

0

0

0

0

0.00%

0.00%

0.00%

0.00%

0

0

0

0

Experience(Education)

Other Position

Executives, Directors or
Supervisors who are
Spouses or within Two
RemarkDegrees of Kinship

%

Title

Name Relation

Member, Risk
Member, Tax
Committee,
ReformChina Airlines
Commission,
Ltd.
Executive Yuan
Member, Risk
Member,Committee,
Administration
China Airlines
Appeals
Commission, Taipei Ltd.
Public Director,
City Government
TaipeiDeputy Dean,
Exchange,
College of
R.O.C.
Management,
Independent
National Taiwan
Director, Nan
0.00% University
Shan Life
Chairman,Insurance Co.,
Department andGraduate Institute Ltd.
Director, iPASSof Accounting,Corp.
National Taiwan
Professor,
University
Department &Ph.D. in
Graduate
Accounting,Institute of
Arizona State
University, U.S.A. Accounting,National Taiwan
University

None

None

None

None

Deputy Mayor,
None
Tainan City
Government
Director General,
Tourism Bureau of
Tainan City
Government
Chairperson,
Research,
Development and
Evaluation
Commission of
Tainan City
Government
Director General,
Ketagalan
0.00% Foundation
Director General,
Information
Department ofKaohsiung City
Government
Director General,
Judicial Reform
Foundation
Director General,
Taiwan Associationfor Human Rights
Master’s Degree,International
Development
Policy, Duke
University, U.S.A.
Chairman, China
Chairman, Risk
Steel ChemicalCommittee,
Corp.
China Airlines
Chairman,
Ltd.
Universal exchange Member, Audit
Inc.
Committee,
Executive Vice
China Airlines
0.00%
President, China
Ltd.
Steel Corp.
Vice President of
Finance, China
Steel Corp.
MBA, Arizona State
University, U.S.A.
Consultant,
Chairman, Audit
Legislative Council Committee,
OfficeChina Airlines
Director, Shian CPA Ltd.
Firm
Member,Adjunct Associate Remuneration
Professor, Chinese Committee,
Culture University China Airlines
Controller, Amagic Ltd.
Holographics, Inc. Member, Risk
Senior Associated Committee,
CPA, Wu, Liang,
China Airlines
Ltd.
0.00% and Huang CPAs
Staff Accountant, Member,
AAA (Auto Club of Foundation
S. California)
Management
MBA, University of Committee,
Environmental
California, Irvine,
U.S.A.
Protection
Administration
Independent
Director, K
Laser
Technology Inc.

None

None

None

None

None

None

None

None

None

None

None

None

Corporate Governance Report

19

Date
Ended
Date
Elected

GenderDate FirstElectedNationality/
Country of
Origin

Name

Title

Shareholding when
ElectedShares%Current
Shareholding
Shares%Spouse & Minor
Shareholding

Shareholding by
NomineeArrangement

SharesShares%Experience(Education)

05/25/2021

06/27/2018

06/27/2018

FemaleR.O.C.

Shen, Hui-Ya

Independent Director

Independent
Director of First
Financial Holding
Co., Ltd.
Independent
Director of Taiwan
Fertilizer Co., Ltd.
Committee of
Securities andFutures Investors
Protection Center
Master of Laws,
National Chung
Hsing University
0

0.00%

0

0.00%

0

0.00%

Other Position

%

0

0.00%

Chairman,Remuneration
Committee,
China Airlines
Ltd.
Member, Audit
Committee,
China Airlines
Ltd.
Member, Risk
Committee,
China Airlines
Ltd.
Consultant of
Public Service
Pension FundManagement
Board, Ministryof Civil Service,
Examination
Yuan
Lawyer, Lian
Yung Law Office
Independent
Director,
Formosa
Advanced
Technologies
Co., Ltd.

Executives, Directors or
Supervisors who are
Spouses or within Two
RemarkDegrees of Kinship
Title

Name Relation

None

None

None

None

Note 1: In order to avoid the concurrent appointment from influencing the objectivity and supervision of the Board of Directors, except for President Kao, Shing-Hwang and Director Wei, Yung-Yeh, who are concurrently
Directors and employees, none of the other members of the 21st Board of Directors is concurrently an employee of the Company.
Note 2: The average term of the members of the 21st Board of Directors as Directors of the Company was 6 years.
Note 3: The three Independent Directors of the 21st Board of Directors have not been appointed for more than three terms.

20 Corporate Governance ReportMajor shareholders from among institutional shareholders
Name of Institutional Shareholders

Major Shareholders

China Aviation Development Foundation

A non-corporate organization. In February 1988, all 27 shareholders of
the Company (Note) gifted the shares held and 100% of theshareholders’ equity to set up the foundation, which was reported to the
Ministry of Transportation and Communications on March 2 of the same
year. Its establishment was approved on July 6 of the same year.

National Development Fund, Executive Yuan

Government

Note: The source is “Charter for Donations to the China Aviation Development Foundation”.
Donor

Donation

AmountWu, Yueh

10,977,697 common shares of China Airlines and the profits

NT$2,530,666,534

Tsu, Jung-Chun

5,872,874 common shares of China Airlines and the profits

NT$1,353,861,897

Tien, Hsi

515,938 common shares of China Airlines and the profits

NT$118,938,155

Chang, Lin-Te

239,214 common shares of China Airlines and the profits

NT$55,145,599

Chang, Chih-Chen

515,938 common shares of China Airlines and the profits

NT$118,938,155

Lan, Ping-Chuan

515,938 common shares of China Airlines and the profits

NT$118,938,155

Fu, Jui-Yuan

515,938 common shares of China Airlines and the profits

NT$118,938,155

Hsu, Kang-Liang

2,026 common shares of China Airlines and the profits

NT$467,049

Shih, Kuang-Lin

2,026 common shares of China Airlines and the profits

NT$467,049

Liu, Chiung-Kuang

239,214 common shares of China Airlines and the profits

NT$55,145,599

Han, Te-Hui239,214 common shares of China Airlines and the profits

NT$55,145,599

Yeh, Chih-Fang

239,214 common shares of China Airlines and the profits

NT$55,145,599

Hung, Yang-Fu

239,214 common shares of China Airlines and the profits

NT$55,145,599

Liu, Ping-Kuan

239,214 common shares of China Airlines and the profits

NT$55,145,599

Chang, Tang-Tien

239,214 common shares of China Airlines and the profits

NT$55,145,599

Li, Hsueh-Yen

239,214 common shares of China Airlines and the profits

NT$55,145,599

Li, Chi-Tang

239,214 common shares of China Airlines and the profits

NT$55,145,599

Wang, Yu-Ken

239,214 common shares of China Airlines and the profits

NT$55,145,599

Yuan, Chin-Han

239,214 common shares of China Airlines and the profits

NT$55,145,599

Fan, Kuang-Hua239,214 common shares of China Airlines and the profits

NT$55,145,599

Liu, Hui-Chun239,214 common shares of China Airlines and the profits

NT$55,145,599

Yeh, I-Fan

239,214 common shares of China Airlines and the profits

NT$55,145,599

Chen, Chung-Yu

239,214 common shares of China Airlines and the profits

NT$55,145,599

Yang, Hung-Ting

239,214 common shares of China Airlines and the profits

NT$55,145,599

Tsai, Ming-Yung

222,205 common shares of China Airlines and the profits

NT$51,224,474

Wang, Wei-Ming

515,938 common shares of China Airlines and the profits

NT$118,938,155

Huang, Jen-Sheng

515,938 common shares of China Airlines and the profits

NT$118,938,155

Total

23,999,880 common shares and the profits

NT$5,532,645,517

Corporate Governance Report21Professional qualifications and independence analysis of directors
Meets One of the Following Professional Qualification
Requirements, Together with at Least Five Years of Work
Experience
Criteria
A Judge, Public
Prosecutor,
An Instructor or
Attorney, Certified
Higher Position in a
Public Accountant, Has Work
Department ofor Other
Experience in
Commerce, Law,
Professional or
the Areas ofFinance, Accounting,Technical Specialist Commerce,or Other Academic
Who Has Passed a Law, Finance,
Departments Related
Nationalor Accounting,to the BusinessExamination andor Otherwise
Needs of the
been Awarded a
Necessary for
Company in a PublicCertificate in a
the Business ofor Private Junior
Profession
the Company
Name
College, College or
Necessary for the
University
Business of theCompany
Hsieh, Su-Chien
Kao, Shing-HwangChen, Charles C.Y.

Ting, Kwang-HungChen, Han-Ming
Ko, Sun-TaWei, Yung-YehLin, Su-Ming
Wang, Shih-Szu

Chung, Lo-Min
Chang, Hsieh Gen-SenShen, Hui-Ya

Independence Criteria (Note)

1

2

3

4

5

6

7

8

9

Number of Other
PublicCompanies inWhich theIndividual is
Concurrently
10 11 12Serving as an
Independent
Director -   -   -    -   -   -     -           -           -      -     -          -           -          1
 -                                1           
1
Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during
their term in office.
1. Not an employee of the Company or any of its affiliates.
2. Not a director or supervisor of the Company or its affiliated enterprise (except for independent directors appointed in accordancewith the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent
company, its subsidiary, or a subsidiary of the same parent).
3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by
the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company
or ranking in the top 10 in holdings.
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the
managers listed in (1) or the personnel listed in (2) or (3).
5. Not a director, supervisor, or employee of a corporate shareholder who directly holds more than 5% of the total shares issued by
the Company, is among the top five shareholders, or appointed a representative to be a director or supervisor of the Company inaccordance with Article 27, Paragraph 1 or 2 of the Company Act (except for independent directors appointed in accordance with
the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent
company, its subsidiary, or a subsidiary of the same parent).
6. Not a director, supervisor, or employee of another company controlled by the same person who holds more than half of theCompany's director seats or voting shares (except for independent directors appointed in accordance with the Act or the laws andregulations of the local country by, and concurrently serving as such at, the Company and its parent company, its subsidiary, or asubsidiary of the same parent).
7. Not a director, supervisor or employee of another company or institution with the same person or spouse as the chairman,
general manager or equivalent of the company (except for independent directors appointed in accordance with the Act or the laws
and regulations of the local country by, and concurrently serving as such at, the Company and its parent company, its subsidiary ora subsidiary of the same parent).
8. Not a director, supervisor, manager or shareholder holding more than 5% of shares of a specific company or institution that has
financial or business dealings with the Company (except for independent directors appointed in accordance with the Act or thelaws and regulations of the local country by, and concurrently serving as such at, the Company and its parent company, its
subsidiary or a subsidiary of the same parent and if the specific company or institution holds more than 20% but less than 50% of
the total issued shares of the Company).
9. Not a professional who provides auditing-related services to the Company or its affiliates and who does not provide commercial,legal, financial, or accounting-related services to the Company or its affiliates with a cumulative amount of remuneration obtainedin the last two years exceeding NT$500,000; and is not an owner, partner, director, supervisor, or manager, or the spouse of any of
the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its
affiliates. However, this does not apply to the members of the Remuneration Committee, the Special Committee forMerger/consolidation and Acquisition who perform their functions and powers in accordance with relevant laws and regulations of
the Securities and Exchange Act or the Business Mergers and Acquisitions Act.
10. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
11. Not been a person of any conditions defined in Article 30 of the Company Act.
12. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

22 Corporate Governance Report3.2.2 Management Team
Title

President

Auditor General,
General Audit
OfficeDeputy Auditor
General, General
Audit Office

Name

Kao,
Shing-Hwang

Fang,
Juo-Ling

Ho,
Hui-FenNationality/
Country of Gender
OriginR.O.C.

R.O.C.

R.O.C.

Male

Date
Effective

03/18/2021

Female 05/11/2018

Female 02/01/2018

MAR 27, 2021
Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％62,809 0.00%

8,000 0.00%

0 0.00%％SharesExperience (Education)

Other Positions％
Director, Mandarin Airlines,
Ltd.
Director, Cal Hotel Co. Ltd.
Director, CAL-Dynasty
International, Inc.
Director, Dynasty
Properties Co., Ltd.
Director, CAL-Asia
Investment Inc.
Director, Taoyuan
International Airport
Services Co., Ltd.
Director & President, Cal
Park Co. Ltd

Managers Who Are
Spouses or Within Two
Degrees of Kinship
Title

Name Relation

None

None

Remark

0 0.00%Senior Vice President(VO).
Vice President, Flight
Operations Div.
0 0.00% Assistant Vice President,
Flight Operations Div.
Bachelor’s Degree,
National Cheng Kung
University

None

Note 10 0.00%Supervisor, Taiwan Airport
Service Co., Ltd.
Supervisor, China PacificVice President,
Catering Services Ltd.
AssistantAdministration Div.
Vice
Supervisor, CAL Park Co.,Fang,
Deputy Auditor General,
President,
0 0.00%Ltd.
Siblings
General Audit Office
Supervisor, Taiwan Aircraft
Cabin Yuan-Hua
Master’s Degree, Georgia
Crew Div.
Maintenance andState University, U.S.A.
Engineering Co., Ltd.
Supervisor, CAL Hotel Co.,
Ltd..

None

0 0.00%Assistant Vice President,
Finance Div.
Supervisor, Sabre Travel
General Manager, General
Network (Taiwan) Ltd.
0 0.00% Accounting Department,
Supervisor, Taiwan Air
Finance Div.
Cargo Terminal Ltd.
Master’s Degree, Soochow
University

Senior Vice
President
(VE)

Wang,
Houng

R.O.C.

Male

08/16/2017

12,069 0.00%

0 0.00%Senior Vice
President
(VV)

Wang,
Chen-Min

R.O.C.

Male

01/01/2019

35,621 0.00%

0 0.00%Chairman, Taiwan Aircraft
Maintenance andEngineering Co., Ltd.
Director, Mandarin Airlines,
Vice President,
Ltd.
Maintenance Div.
Director, Taoyuan
Vice President,International Airport
0 0.00%Engineering Div.
Services Co., Ltd.
Bachelor’s Degree, Feng Vice Chairman, NORDAM
Chia University
Asia Ltd.
Director, Cal Hotel Co. Ltd.
Chairman & President,
Kaohsiung Airport Catering
Services Ltd.
Director, CAL Hotel Co.,Ltd..
Director, Mandarin Airlines,
Vice President, Passenger
Ltd.
Sales Div. & Passenger
Chairman, Taiwan Air Cargo
Marketing Div.
Terminal Ltd.
0 0.00% General Manager, Korea
Director, Tigerair Taiwan
BranchCo., Ltd.
Bachelor’s Degree, Feng
Director, Taiwan Aircraft
Chia University
Maintenance And
Engineering Co., Ltd.
CAL-Asia Investment Inc.

None

None

None

None

None

None

None

None

None

None

None

None

Corporate Governance Report23TitleSenior Vice
President(VF)

Senior Vice
President(VO)

Data Protection
Officer, Data
Protection &Quality
Management
OfficeVice President,
Human
Resources Div.

Name

Chen,
I-Chieh

Lai,
Ming-Hui

Huang,
Ta-Fang

Yeah,
Shao-Ting

Nationality/
Country of Gender
OriginR.O.C.

R.O.C.

R.O.C.

R.O.C.

Male

Male

Date
Effective

03/18/2021

03/18/2021

Female 07/31/2020

Male

04/01/2019

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％6,161 0.00%

19,127 0.00%

0 0.00%868 0.00%％

Remark

None

None

None

0 0.00%Vice President, Flight
Operations Div.
Vice President, Corporate
0 0.00% Safety Office.
Bachelor’s Degree,
National Cheng Kung
University

Director, Mandarin Airlines,
Ltd.
Director, CAL Hotel Co.,
Ltd..

None

None

None

None

0 0.00%General Manager,
Honolulu Branch.
Vice President, Legal &0 0.00%None
Insurance Div.
MBA, Baruch College, City
University Of New York.

None

None

None

None

0 0.00%Assistant Vice President,
Human Resources Div.
General Manager, Human Director, Taoyuan
Resources &International Airport
0 0.00% Administration
Services Co., Ltd.
Department, Maintenance Director, Taiwan Airport
Div.
Services Co. Ltd.
Bachelor’s Degree,
Chinese Culture University

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

58,430 0.00%

7,144 0.00%

Vice President,
Flight Operations
Div.

Chen,
I-Ko

R.O.C.

Male

03/20/2021

23,541 0.00%

0 0.00%Assistant Vice
President, Flight
Operations Div.

Chen,
Chwen-Der

R.O.C.

Male

08/01/2018

6,299 0.00%

0 0.00%11/01/2020 241,000 0.00% 16,766 0.00%

24 Corporate Governance Report

Name Relation

None

Female 04/01/2019

Male

Title

0 0.00%R.O.C.

R.O.C.

Other Positions

Director, Mandarin Airlines,
Ltd.
Director, Tigerair Taiwan
Co., Ltd.
Chairman, Taiwan Airport
Services Co. Ltd.
Director, Taoyuan
International Airport
Services Co., Ltd.
Director, Kaohsiung Airport
Catering Services Ltd.
Director, Taiwan Aircraft
Maintenance And
Engineering Co., Ltd.

Lee,
Pei-Chen

Kang,
Yi-ChuanExperience (Education)％

Vice President, FinanceDiv.
Vice President,
Investment Development& Management Div.
0 0.00% General Manager,
Vietnam Branch
Concurrently, General
Manager, Hanoi Branch
Master’s Degree, National
Taipei University

Assistant Vice
President,
Human
Resources Div.

Assistant Vice
President, Flight
Operations Div.

SharesManagers Who Are
Spouses or Within Two
Degrees of Kinship

General Manager, Human
Resources Development
Dept., Human ResourcesDiv.
0 0.00% General Manager,
None
Administration Dept.,
Ground Services Div.
Master’s Degree, National
Taiwan Normal University
Vice President, Corporate
Safety Office.
Assistant Vice President,
0 0.00%None
Corporate Safety Office.
Associate’s Degree, United
College Of Engineering
General Manager, Flight
Operations Training Dept.,
Flight Operations Div.
General Manager,
0 0.00% Planning & Development None
Dept., Flight
Operations Div.
Master’s Degree, National
Cheng Chi University
Assistant Vice President,
Flight Operations Dep.
Mandarin Airlines.
General Manager, Crew
0 0.00%None
Scheduling Dept., Flight
Operations Div.
Master’s Degree, National
Chiao Tung University.

TitleAssistant Vice
President, Flight
Operations Div.

Vice President,
SystemOperation
Control Div.

Assistant Vice
President,
SystemOperation
Control Div.

Assistant Vice
President,
SystemOperation
Control Div.

Vice President,
Passenger
Sales &
Passenger
Marketing Div.

Assistant Vice
President,
Passenger
Sales &
Passenger
Marketing Div.

Assistant Vice
President,
Passenger Sales& Marketing Div.

Name

Tung,
Hsing-Hua

Chou,
Jyh-Shyan

He,
Cheng

Huang,
Hsiang-Piao

Peng,
Pao-ChuChen,
Pei-TiPan,
Yun-HauNationality/
Country of Gender
OriginR.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

Male

Date
Effective

03/16/2018

Male 12/01/2017

Male 11/01/2019

Male

08/01/2017

Female 01/01/2019

Female 11/01/2018

Male

05/09/2020

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％587 0.00%

9,171 0.00%

251 0.00%

1,000 0.00%

8,434 0.00%

926 0.00%

0 0.00%Experience (Education)

Other Positions

RemarkTitle

Name Relation

General Manager, Legal
Affairs Department, Legal& Insurance Div.
General Manager,
0 0.00% Business Management
None
Department, Business
Development Office
Master’s Degree, Tunghai
University

None

None

None

None

Assistant Vice President,
Corporate Safety OfficeVice President, Taiwan
0 0.00%
Airport Services Co., Ltd.
Master’s Degree, RMIT
University, AU

None

None

None

None

None

0 0.00%Control Manager ,Flight Control Dept.,
System Operation Control
Div.
0 0.00% General Manager, Bali
None
Branch, Indonesia Branch
Master’s Degree,
Assumption University,
Thailand

None

None

None

None

0 0.00%General Manager, Safety
Assurance Department,
Corporate Safety Office
General Manager,
Administration
0 0.00%Department, Ground
Services Div.
Bachelor’s Degree,
National Sun Yat-Sen
University

None

None

None

None

None

0 0.00%Vice President, Corporate
Development Office
Assistant Vice President,
0 0.00% Passenger Sales Div.
Bachelor’s Degree,
National Taiwan
University

Director, Sabre Travel
Network (Taiwan) Ltd.
Director, Everest
Investment Holdings Ltd.
Director, Mandarin Airlines,
Ltd.

None

None

None

None

0 0.00%Assistant Vice President,
Passenger Sales &Marketing Div.
General Manager, Sales
0 0.00%
None
Management Department
Bachelor’s Degree,
National Taiwan
University

None

None

None

None

4,999 0.00%

Marketing Director,
Europe.
General Manager,
Schedule Planning Dept.,
0 0.00% Passenger Marketing Div. None
Master’s Degree,
Concordia University
Aviation Management,
Canada

None

None

None

None

％

0 0.00%7,382 0.00%

SharesManagers Who Are
Spouses or Within Two
Degrees of Kinship％

Corporate Governance Report25TitleVice President,
Finance Div.

Assistant Vice
President,
Finance Div.

Assistant Vice
President,
Finance Div.

Vice President,
Corporate Safety
OfficeAssistant Vice
President,
Corporate Safety
OfficeVice President,
Legal & Insurance
Div.

Vice President,
Corporate
Communications
OfficeAssistant Vice
President,
Corporate
Communications
Office

Name

Wang,
Wei

Yen,
Yang

Huang,
Hui-NaLi,
Chih-Wei

Yu,
Yueh-Han

Chien,
Feng-Nien

Lu,
Shwu-Huoy

Lin,
Herng-Shan

Nationality/
Country of Gender
OriginR.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

Date
Effective

Female 03/18/2021

Female 05/01/2018

Female 09/01/2017

Male

Male

Male

03/20/2021

12/06/2018

01/03/2017

Female 10/11/2020

Male

04/16/2019

26 Corporate Governance Report

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％33,297 0.00%

0 0.00%16,661 0.00%

10,295 0.00%

0 0.00%0 0.00%22,605 0.00%

0 0.00%Experience (Education)

Other Positions

RemarkTitle

Name Relation

0 0.00%Assistant Vice President,
Corporate Development
Office.
0 0.00% General Manager, Austria
Branch.
MBA, George Washington
University, U.S.A.

Supervisor, NORDAM Asia
Ltd.
Supervisor, Cal Hotel Co.
Ltd.
Supervisor, Dynasty
Aerotech International
Corp.
Director, Tigerair Taiwan
Co., Ltd.

None

None

None

None

0 0.00%Supervisor, Taiwan Aircraft
General Manager, Finance
Maintenance And& Treasury Department,
Engineering Co., Ltd.
Finance Div.
Supervisor, Kaohsiung
General Manager,
Airport Catering Services
0 0.00% Economics Analysis
Ltd.
Department, Finance Div.
Director, Dynasty
Master’s Degree, The City
Properties Co., Ltd.
University of New York,
Director, Dynasty Hotel of
U.S.A.
Hawaii, Inc.

None

None

None

None

0 0.00%General Manager,
Passenger Sales Revenue
Audit & Control
Department, Finance Div.
General Manager,
Supervisor, Global Sky
0 0.00% Accounting And
Express Ltd.
Administration
Supervisor, Yestrip Co., Ltd.
Department, Taipei
BranchMaster’s Degree, Soochow
University

None

None

None

None

0 0.00%Vice President, Quality
Assurance Div.
Assistant Vice President,
0 0.00%
Maintenance Div.
Master’s Degree, Kai-nan
University.

None

None

None

None

0 0.00%General Manager, Safety
Department Corporate
Safety OfficeVice President of Safety,
0 0.00% Security, Quality &None
Environment, Tigerair
Taiwan Co., Ltd.
Master’s Degree, National
Sun Yat-sen University

None

None

None

None

0 0.00%

Director of Legal Office,Taiwan Financial Asset
Service Corporation
Head Prosecutor,
0 0.00%None
Taichung Prosecutors
OfficeMaster’s Degree, National
Taiwan Ocean University

None

None

None

None

0 0.00%General Manager,
Malaysia Branch.
Assistant Vice President,
0 0.00% Corporate Development
Office.
EMBA, National Central
University

None

None

None

None

None

0 0.00%General Manager,
Corporate Affairs
Department, Corporate
Communications Office
0 0.00%General Manager,
Employee Relations
Department, Human
Resources Div.

None

None

None

None

None

％

SharesManagers Who Are
Spouses or Within Two
Degrees of Kinship％Director, NORDAM Asia
Ltd.

TitleName

Nationality/
Country of Gender
OriginDate
Effective

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％％SharesExperience (Education)

Other Positions

Managers Who Are
Spouses or Within Two
Degrees of Kinship

RemarkTitle

Name Relation

Vice President, Ground
Services Division
Director, Dynasty Aerotech
President, Taiwan Airport
0 0.00%International Corp.
Services Co. Ltd.
Director, CAL Park Co., Ltd.
Bachelor’s Degree, Fu Jen
Catholic University

None

None

None

None

Vice President,
Administration Div.
Deputy Auditor General, Director, Sabre Travel
0 0.00%
Network (Taiwan) Ltd.
General Audit Office
Master’s Degree, National
Taiwan University

None

None

None

None

None

None

None

None

None

Director, China Pacific
Laundry Services Ltd.
Director, China Pacific
Catering Services Ltd

None

None

None

None

None

Auditor
General,General
Audit
OfficeFang,
Juo-Ling

Siblings

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

％
Master’s Degree, RMIT
University, AU

Vice President,
Administration
Div.

Vice President,
Information
Management Div.

Chen,
Wei-Tau

Chung,
Ming-Jyh

R.O.C.

R.O.C.

Male

Male

11/18/2019

11/18/2019

36,165 0.00%

638 0.00%

2,196 0.00%

0 0.00%Assistant Vice
President,
Information
Management Div.

Liu,
Duan-Shiuh

R.O.C.

Male

04/20/2017

92,608 0.00%

0 0.00%Vice President,
Cabin Crew Div.

Hong,
Tsu-Kuang

R.O.C.

Male

05/04/2017

11,816 0.00%

0 0.00%Assistant Vice
President, Cabin
Crew Div.

Fang,
Yuan-Hua

R.O.C.

Male

08/04/2018

Vice President,
Corporate
Development
OfficeChang,
Cheng-Hao

R.O.C.

Male

Assistant Vice
President,
Corporate
Development
OfficeYeh,
Jin-FuR.O.C.

Male 03/18/2021

30,348 0.00%

01/21/2019 131,905 0.00%

25,773 0.00%

0 0.00%0 0.00%0 0.00%

Corporate
Development

Liu,
Shou-Shu

R.O.C.

Female 12/01/2018

0 0.00%0 0.00%Chung,
Wan-Chun

0 0.00% Bachelor’s Degree,

None

National Taiwan

OfficeVice President,
In-Flight Service
Supply Chain &Marketing Div.

Director, Tigerair Taiwan
Vice President, Cargo
Co., Ltd.
Sales & Marketing Div.
Director, Global Sky
President, Taiwan Air
Express Ltd.
0 0.00%Cargo Terminal Ltd.
Director, China Aircraft
Master’s Degree, Cranfield Services Limited.
University, UK
Director, Taiwan Air Cargo
Terminal Ltd.
Assistant Vice President,
Administration Div.
General Manager,
0 0.00%None
Fukuoka Branch.
Master’s Degree, National
Cheng Kung University
Special Assistant of
President Office,Mandarin Airlines

Assistant Vice
President,

Assistant Vice President,
Ground Services Div.
General Manager,
Information Planning
0 0.00% Department, Information
Management Div.
Master’s Degree, National
Taipei University ofTechnology
Assistant Vice President,
Flight Operations Div.
General Manager, Food &Beverage Services
0 0.00%Department, In-Flight
Service Supply Div.
Bachelor’s Degree,
Soochow University
President, Dynasty Hotelof Hawaii, Inc.
General Manager,
0 0.00%
Qingdao Office
Master’s Degree, RMIT
University, AU

R.O.C.

Female 11/23/2019

27,687 0.00%

0 0.00%

University
General Manager, Hong
Chairman, China PacificKong Branch
Laundry Services Ltd.
Vice President, FinanceDirector, China Pacific
0 0.00% Div.
Catering Services Ltd.
Master's Degree,
Director, Kaohsiung Airport
University of Illinois At
Catering Services Ltd.
Urbana-Champaign, U.S.A.
General Manager, Supply
Dept., Engineering Div.

Assistant Vice
President,
In-Flight Service
Supply Chain &Marketing Div.

Chang,
Hsu-YuVice President,
Ground Services
Div.

Chu,
Te-Hsiu

R.O.C.

R.O.C.

Male 11/30/2020

Male 11/18/2019

6,211 0.00%

43,382 0.00%

0 0.00%8,277 0.00%

General Manager, Dynasty
0 0.00% Aerotech International
None
Corp.
Master's Degree, Cranfield
University.
Chief Representative, East Director, China Pacific
China, and Concurrently Laundry Services Ltd.
0 0.00% General Manager,
Director, Taoyuan
International Airport
Shanghai Office
Assistant Vice President, Services Co., Ltd.

Corporate Governance Report27TitleName

Nationality/
Country of Gender
OriginDate
Effective

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％Assistant Vice
President,
Ground Services
Div.

Huang,
Chin-Feng

R.O.C.

Male

10/16/2019 139,659 0.00%

Assistant Vice
President,
Ground Services
Div.

Hsu,
Hsueh-Wen

R.O.C.

Male

02/01/2020

Vice President,
Cargo Sales,
Marketing &Services Div.

Liu,
Der-Chuan

R.O.C.

Male

Assistant Vice
President, Cargo
Sales, Marketing& Services Div.

Sheu,
Yuh-Shy

Assistant Vice
President, Cargo
Sales, Marketing& Services Div.

％

Shares589 0.00%

013,149 0.00%

0 0.00%007/17/2010

172 0.00%

0 0.00%0

R.O.C.

Male 01/22/2019

24,648 0.00%

0 0.00%0

Mao,
Li-Chung

R.O.C.

Male

12/20/2019

0 0.00%0 0.00%0Assistant Vice
President, Cargo
Sales, Marketing& Services Div.

Hsueh,
Po-WenR.O.C.

Male

09/18/2020

328 0.00%

0 0.00%0Vice President,
Maintenance Div.

Sun,
Jia-Min

R.O.C.

Male

09/16/2017

62,602 0.00%

0 0.00%0Assistant Vice
President,
Maintenance Div.

Hsiao,
Jui-FuR.O.C.

Male

09/16/2017

0 0.00%0 0.00%0Vice President,
Engineering Div.

Lee,
Jung-Hui

R.O.C.

Male 09/16/2017

10,298 0.00%

0 0.00%0

28 Corporate Governance Report

Experience (Education)

Other Positions％
Flight Operations Div.
Bachelor’s Degree,
Chinese Culture University
President, Taoyuan
International Airport
Services Company Ltd.
0.00% Senior Auditor, General
None
Audit Office
Bachelor’s Degree,
Soochow University
Station Manager,
Customer Service,
Taoyuan International
Airport, Ground Services
Div.
Station Manager,
0.00%
None
Customer Service,
Songshan International
Airport, Ground Services
Div.
Bachelor’s Degree, Fengjia
University
Director, Taiwan Air Cargo
Terminal Ltd.
Vice President, Cargo
Director, Dynasty Aerotech
Sales & Marketing Div.
International Corp.
Vice President, Cargo
0.00%
Director, Global Sky
Services & Logistics Div.
Express Ltd.
Bachelor’s Degree, Fu Jen
Director, Eastern United
University
International Logistics(Holdings) Ltd.
General Manager, Cargo
Sales & Services, Mainland
China
General Manager, Cargo
0.00% Sales Management
None
Department, Cargo Sales,
Marketing & Services Div.
Bachelor’s Degree, Feng
Chia University
Chief Representative,
South China Concurrently,
General Manager,
Guangzhou Office.
0.00%
None
General Manager,
Nanking Office.
MBA, Chung Yuan
Christian University
Chief Representative, East
China Concurrently,
General Manager,
Shanghai Office.
0.00%
None
General Manager, Cargo
Sales & Services, Taiwan.
Bachelor’s Degree from
Chinese Culture University
Chairmanr, Dynasty
Vice President,
Aerotech International
Engineering Div.
Corp.
Vice President, Corporate Director, Taiwan Aircraft
0.00%
Safety Office
Maintenance And
Master’s Degree, National Engineering Co., Ltd.
Taiwan University
Director, China Aircraft
Services Ltd.
General Manager, Line
Maintenance Department,
Maintenance Div.
General Manager, Line
0.00%
None
Operation Department,
Maintenance Div.
Master’s Degree, Kainan
University
Director, Taiwan Aircraft
Maintenance And
Engineering Co., Ltd.
Vice President Quality,
Director, Taikoo (Xiamen)
Assurance Div.
Landing Gear Services Co.,
Assistant Vice President,
Ltd.
0.00%
Maintenance Div.
Director, HAECO Composite
Master’s Degree, Tatung
Structures (Jinjiang) CO.
University
LTD.
Director, Dynasty Aerotech
International Corp.

Managers Who Are
Spouses or Within Two
Degrees of Kinship

RemarkTitle

Name Relation

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

TitleVice President,
TaiwanVice President,
EuropeVice President,
Mainland China

Vice President,
Oceania

Vice President,
Japan

Name

Chiu,
Wei-Tuan

Han,
Liang-Chung

Chang,
Chih-Chieh

Chen,
Chung-Ming

Chang,
Horng-Jong

Nationality/
Country of Gender
OriginR.O.C.

R.O.C.

R.O.C.

R.O.C.

R.O.C.

Male

Male

Male

Male

Male

Date
Effective

03/19/2020

06/12/2017

10/08/2018

05/10/2017

05/27/2020

Shareholding

Spouse &Shareholding
Minor
by Nominee
Shareholding Arrangement

SharesShares％4,901 0.00%

11,498 0.00%

96,553 0.00%

32,779 0.00%

11,820 0.00%％

SharesExperience (Education)

Other Positions％

Managers Who Are
Spouses or Within Two
Degrees of Kinship

RemarkTitle

Name Relation

None

None

None

None

0 0.00%Assistant Vice President,
Passenger Sales &Marketing Div.
General Manager, Osaka
0 0.00%BranchBachelor’s Degree,
National Chung Hsing
University

0 0.00%Senior Vice President
President, Mandarin
Airlines Co., Ltd.
0 0.00% Master’s Degree, Business Noneof Administration,
University of Pittsburgh,
U.S.A.

None

None

None

None

0 0.00%Senior Vice President,
President OfficeVice President, Passenger
0 0.00%
None
Sales Div.
Bachelor’s Degree,
Tunghai University

None

None

None

None

0 0.00%General Manager,
Fukuoka Branch
Assistant Vice President,
Passenger Sales Div.
0 0.00% Bachelor’s Degree,
None
Department ofTransportation & Logistics
Management of National
Chiao Tung University

None

None

None

None

0 0.00%Chairman, Tigerair Taiwan
Co., Ltd.
General Manager, Haikou
0 0.00% Office.
Washington University In
St. Louis, Doctor of
Science

None

None

None

None

Director, Sabre Travel
Network (Taiwan) Ltd.

Director, Dynasty Holidays,
Inc.
Director, Infini Travel
Information, Inc.

Note1: In order to prevent the concurrent appointment from influencing the objectivity and supervision of the Board of Directors, except for President Kao, Shing-Hwang and Director Wei, Yung-Yeh,
who are concurrently Directors and employees, none of the other members of the 21st Board of Directors is concurrently an employee of the Company.
Note2: Company presidents, senior vice presidents, vice presidents, data protection officer, assistant vice presidents, and department and branch general managers have not worked for theCompany's currently designated accounting firm or affiliated enterprises within the specified period and do not hold Company stock under the name of a different person.

Corporate Governance Report29

3.2.3 Remuneration of Directors, President, and Vice President
Remuneration of Directors

Remuneration

Title

Name
(Note 1)

Base Compensation (A)(Note 2)

CAL

Ratio of Total
Remuneration(A+B+C+D) to Net Loss(%) (Note 8)

Severance Pay (B)Bonus to Directors (C)(Note 3)

Allowances (D)(Note 4)

Consolidated
Consolidated
Subsidiaries of
Subsidiaries of
CAL
CAL
CAL
(Note 7)(Note 7)

CAL

Consolidated
Subsidiaries of
CAL(Note 7)

CAL

Consolidated
Subsidiaries of
CAL(Note 7)

CAL

Consolidated
Subsidiaries of
CAL(Note 7)Chairman

Hsieh, Su-Chien

5,729

5,729

0

0

0

0

513

2,041

4.46%

5.55%

Director

Chen, Charles C.Y.

40

40

0

0

0

0

480

720

0.37%

0.54%

Director

Ting, Kwang-Hung

40

40

0

0

0

0

495

495

0.38%

0.38%

Director

Chen, Han-Ming

40

2,182

0

0

0

0

480

902

0.37%

2.20%

Director

Ko, Sun-Ta

40

40

0

0

0

0

480

480

0.37%

0.37%

DirectorWei, Yung-Yeh

40

40

0

0

0

0

480

480

0.37%

0.37%

Director

Lin, Su-Ming

40

40

0

0

0

0

500

500

0.39%

0.39%

Director

Wang, Shih-Szu

40

40

0

0

0

0

276

276

0.23%

0.23%

Chung, Lo-Min

60

60

0

0

0

0

760

760

0.59%

0.59%

60

60

0

0

0

0

770

770

0.59%

0.59%

60

60

0

0

0

0

760

760

0.59%

0.59%

Independent
Director
Independent
Director
Independent
Director

Chang, Hsieh
Gen-SenShen, Hui-Ya

1.State the policy, system, standard and structure of independent directors’ remuneration, and the association between the remuneration amount andfactors, such as responsibilities, risks, and contributed time: The remuneration of the independent directors of the Company shall be handled inaccordance with the Articles of Association and shall be determined by the Board of Directors with reference to the standards among related industries
and listed companies, and shall be paid as fixed remuneration, transportation fees, and attendance fees.
Note 1: Aside from independent directors, all other directors are representatives of the Company’s juridical person shareholders China Aviation Development
Foundation, National Development Fund (Executive Yuan).
Note 2: Refers to director remuneration over the past year (includes director salary, additional compensation, various bonuses, incentive pay).
Note 3: As stipulated in the Company’s Articles of Incorporation, directors are not awarded bonuses.
Note 4: Refers to relevant business expenses incurred by directors (including travel expenses, various allowances, company car). If provided with a car or othertransportation, or exclusive personal expenses, the type and cost, rent (actual or fair market calculation), fuel cost, and other costs of the assets
provided must be disclosed. The above figures do not include remuneration paid to drivers, which totaled NT$912,000.
Note 5: Refers to salary, bonuses, and allowances received by directors who are also employed by the Company (including as president, vice president, othermanagement, or regular employee) over the past year and includes salary, additional compensation, various bonuses, incentive pay, travel expenses,
various allowances, and company car. If provided with a car or other transportation, or exclusive personal expenses, the type and cost, rent (actual orfair market calculation), fuel cost, and other costs of the assets provided must be disclosed. The Company didn't carry out employee stock options,employee restricted stock awards and participation in a cash capital increase.
* The content is provided for information disclosure, not tax purposes.

30 Corporate Governance ReportUnit: NT$ thousands
Remuneration Received by Directors Who are Also Employees
Salary, Bonuses, andSeverance Pay (F)Allowances (E)(Note 5)
Consolidated

Ratio of Total Compensation

Compensation Paid to

Employees’ Compensation (G)(A + B + C + D + E + F + G) to Net

Directors from an(Note 6)

Loss (%) (Note 8)

Consolidated

Consolidated

Subsidiaries of

CAL

CAL

CAL

Subsidiaries of

CAL

Subsidiaries of CAL(Note 7)

CAL

(Note 7)(Note 7)

Dec 31, 2020

Cash

Stock

Cash

CAL

Stock

Invested Company or

Consolidated

Parent Company Other

Subsidiaries ofthan the Company’s

CAL

Subsidiary(Note 7)(Note 9)

0

0

0

0

0

0

0

0

4.46%

5.55%

None

0

0

0

0

0

0

0

0

0.37%

0.54%

None

0

0

0

0

0

0

0

0

0.38%

0.38%

None

0

0

0

0

0

0

0

0

0.37%

2.20%

None

0

0

0

0

0

0

0

0

0.37%

0.37%

None

1,457

1,457

0

0

0

0

0

0

1.41%

1.41%

None

0

0

0

0

0

0

0

0

0.39%

0.39%

None

0

0

0

0

0

0

0

0

0.23%

0.23%

None

0

0

0

0

0

0

0

0

0.59%

0.59%

None

0

0

0

0

0

0

0

0

0.59%

0.59%

None

0

0

0

0

0

0

0

0

0.59%

0.59%

None

2.Except as disclosed in the above table, the remuneration received by the Directors of the Company for the services provided for all companies in thefinancial report (such as serving as a consultant who is not an employee) in the most recent year: None

Note 6: Refers to employee compensation (including stock or cash) received by directors who are also employed by the Company (including as president, vicepresident, other management, or regular employee) over the past year, and the amount of employee compensation approved for distribution by the
Board for the most recent year must be disclosed. The Company has no distributable earnings in 2020, so it does not plan to distribute employeecompensation.
Note 7: The total remuneration provided by the Company and subsidiaries to directors is disclosed per the consolidated financial statement.
Note 8: Net income refers to net income (after tax) for the most recent year. For those already using IFRS, net income refers to net income (after tax) reported on
the individual financial statement for the most recent year. The Company’s 2020 individual financial statement net profit (after tax) totaled
NT$140,000,000.
Note 9: (1) The directors of the Company do not receive any remuneration related to the reinvestment of enterprises other than subsidiaries.
(2) Compensation refers to pay, bonuses (including bonuses to employees, directors, or supervisors), or expenses paid in the execution of business toCompany directors who serve as director, supervisor, or manager of an invested company other than a Company subsidiary.
Note 10: (1) Aside from Chairman Hsieh, Su-Chien, all other directors received a travel allowance.
(2) Transportation subsidies for Director Ting, Kwang-Hung, and Director Wei, Yung-Yeh were partially donated to the China Airlines Employee Union.
(3) Director who also serves as an employee of the Company is Director Wei, Yung-Yeh.

Corporate Governance Report

31President and Senior Vice President Remuneration
Salary (A)
Title

Name
CAL

Bonuses and Allowances (C)Severance Pay (B)(Note 2)

(Note 3)

Consolidated

Consolidated

Consolidated

Subsidiaries of

Subsidiaries of

Subsidiaries of

CAL

CAL

CAL

CAL

(Note 5)CAL

(Note 5)(Note 5)President

Hsieh, Su-Chien(Note 1)

0

0

0

0

0

0

Senior Vice President

Kao, Shing-Hwang

2,914

2,914

0

0

5,009

5,369

Senior Vice President

Wang, Chen-Min

2,975

2,975

0

0

623

1,867

Senior Vice President

Wang, Houng

3,122

3,122

0

0

666

1,266

Senior Vice President

Chang, Young

3,169

3,169

0

0

655

2,117

Note 1: Director Hsieh, Su-Chien also served as president and did not accept president remuneration.
Note 2: Refers to president and senior vice president salaries, additional compensation, and severance pay over the past year.
Note 3: Refers to various bonuses, incentive pay, travel expenses, various allowances, and company car distributed to presidents and senior vicepresidents over the past year. If provided with a car or other transportation, or exclusive personal expenses, the type and cost, rent (actual orfair market calculation), fuel cost, and other costs of the assets provided must be disclosed. The above figures do not include remuneration
paid to drivers, which totaled NT$3,943,000. As stipulated in IFRS 2, Share Based Payments including obtaining employee stock options andemployee restricted stock awards and participation in a cash capital increase shall be calculated as remuneration.
* The content is provided for information disclosure, not tax purposes.

32 Corporate Governance ReportUnit: NT$ thousands
Ratio of Total Compensation(A + B + C + D) to Net Loss (%)(Note 6)

Employees’ Compensation (D)(Note 4)
Consolidated
Subsidiaries of CAL(Note 5)

CAL
Cash

Stock

Cash

Consolidated
Subsidiaries of
CAL (Note 5)

CAL

Stock

December 31, 2020

Compensation paid to the Presidents and Senior Vice
Presidents from an Invested Company or Parent
Company Other Than the Company’s Subsidiary(Note 7)

0

0

0

0

0%

0%

None

0

0

0

0

5.66%

5.92%

None

0

0

0

0

2.57%

3.46%

None

0

0

0

0

2.71%

3.13%

None

0

0

0

0

2.73%

3.78%

None

Note 4: Refers to employee compensation (including stock or cash) approved for distribution by president and senior vice presidents over the past
year. Net income refers to net income (after tax) for the most recent year. For those already using IFRS, net income refers to net income(after tax) reported on the individual financial statement for the most recent year. The Company has no distributable earnings in 2020, so it
does not plan to distribute employee compensation.
Note 5: The total remuneration provided by the Company and subsidiaries to Company presidents and senior vice presidents is disclosed per the
consolidated financial statement.
Note 6: Net income refers to net income (after tax) for the most recent year. For those already using IFRS, net income refers to net income (after tax)
reported on the individual financial statement for the most recent year. The Company’s 2020 individual financial statement net profit (aftertax) totaled NT$140,000,000.
Note 7: The President and Senior Vice President of the Company do not receive any remuneration related to the reinvestment of enterprises otherthan subsidiaries.

Corporate Governance Report33Top five managers with the highest remuneration
Salary (A)

Title

Bonuses and Allowances (C)Severance Pay (B)(Note 2)

(Note 3)Name

Consolidated

Consolidated

Consolidated(Note 1)

Subsidiaries of

Subsidiaries of

Subsidiaries of

CAL

CAL

CAL

CAL

(Note 5)CAL

(Note 5)CAL
(Note 5)

Senior Vice President

Kao, Shing-Hwang

2,914

2,914

0

0

5,009

5,369

Senior Vice President

Wang, Chen-Min(Note 11)

2,975

2,975

0

0

623

1,867

Senior Vice President

Wang, Houng

3,122

3,122

0

0

666

1,266

Senior Vice President

Chang, Young

3,169

3,169

0

0

655

2,117

Vice President, Flight
Operations Div.

Chen, I-Ko

2,553

2,553

0

0

5,130

5,130

Note 1: The "top five managers with the highest remuneration" refer to the Company's presidents, the definition of which is based on the Ministry of
Finance Official Letter No. Zheng-San 0920001301 regarding the scope of managerial officers issued by the former Securities and Futures
Commission, Ministry of Finance on March 27, 2003.
Note 2: Refers to the salaries, additional compensation, and severance pay to the top five managers with the highest remuneration over the past
year.
Note 3: Refers to various bonuses, incentive pay, travel expenses, various allowances, and company car distributed to the top five managers with thehighest remuneration over the past year. If provided with a car or other transportation, or exclusive personal expenses, the type and cost,
rent (actual or fair market calculation), fuel cost, and other costs of the assets provided must be disclosed. The above figures do not include
remuneration paid to drivers, which totaled NT$3,943,000. As stipulated in IFRS 2, Share Based Payments including obtaining employee stock
options and employee restricted stock awards and participation in a cash capital increase shall be treated as remuneration.
* The content is provided for information disclosure, not for tax purposes.

34 Corporate Governance ReportUnit: NT$ thousands
Ratio of Total Compensation(A + B + C + D) to Net Loss (%)(Note 6)

Employees’ Compensation (D)(Note 4)
Consolidated
Subsidiaries of CAL(Note 5)
Cash
Stock

CAL
Cash

Stock

CAL

Consolidated
Subsidiaries of
CAL (Note 5)

December 31, 2020

Compensation paid to the Presidents and Senior Vice
Presidents from an Invested Company or Parent
Company Other Than the Company’s Subsidiary(Note 7)

0

0

0

0

5.66%

5.92%

None

0

0

0

0

2.57%

3.46%

None

0

0

0

0

2.71%

3.13%

None

0

0

0

0

2.73%

3.78%

None

0

0

0

0

5.49%

5.49%

None

Note 4: Refers to employee compensation (including stock or cash) approved for distribution by the top five managers with the highest remuneration
over the past year. Net income refers to net income (after tax) for the most recent year. For those already using IFRS, net income refers to
net income (after tax) reported on the individual financial statement for the most recent year. The Company has no distributable earnings in
2020, so it does not plan to distribute employee compensation.
Note 5: The total remuneration provided by the Company and subsidiaries to the top five managers with the highest remuneration is disclosed per
the consolidated financial statement.
Note 6: Net income refers to net income (after tax) for the most recent year. For those already using IFRS, net income refers to net income (after tax)
reported on the individual financial statement for the most recent year. The Company’s 2020 individual financial statement net profit (aftertax) totaled NT$140,000,000.
Note 7: The top five managers with the highest remuneration do not receive any remuneration related to the reinvestment of enterprises other thansubsidiaries.

Corporate Governance Report35

3.2.4 Comparison of Remuneration for Directors, Presidents, and Vice
Presidents in the Most Recent Two Fiscal Years and Remuneration Policy
for Directors, Presidents, and Vice Presidents
A. The ratio of the total remuneration paid by the Company and by all companies included in the

consolidated financial statements for the two most recent fiscal years to directors, presidents, andvice presidents of the Company, to their net income (loss).
Title

CAL

2019
Consolidated Subsidiaries of
CAL

CAL

2020
Consolidated Subsidiaries of
CAL

Directors-1.62%-1.79%

9.74%

12.84%

Presidents and SeniorVice Presidents-2.06%-2.37%

13.67%

16.29%

B. The policies, standards, and portfolios for the payment of remuneration, the procedures fordetermining remuneration, and the correlation with business performance.

As stipulated in the Articles of Incorporation, the Board of Directors is authorized to set thechairman’s remuneration in accordance with the Company’s policies regarding manager
compensation and based on the extent of his or her participation in Company operations. The travel
allowances and remuneration of other directors are determined by the Board in reference to thecompensation levels provided by related-industries and public companies. In accordance with
Article 29 of the Company Act, president and senior vice president's remuneration is set by the
Board of Directors’ resolution based on Company employee salary-related regulations. Bonuses andemployee compensation are calculated based on the Company’s overall operating performance andthe employee’s individual performance achievement rate.

C. Procedure for establishing remuneration

In the case of remuneration for board members and managers, as per regulation, the Company's
Salary and Remuneration Committee meets regularly to assess and set salaries and remuneration,
which are implemented after submission to the Board of Directors.

D. Linkage to business outcomes(1) The remuneration of the president has already been determined based on his professional capability
and the Company's operations and financial situation; the Senior Vice Presidents are evaluatedbased on the work performance evaluation regulation of the Company, which include 40% of
personal performance management and 60% of two times of annual work evaluation. The criteria
include financial aspect, customer aspect, internal process aspect, safety aspect, growth and learning
aspect, etc.
(2) Pursuant to Chapter 5, Article 25 of the Articles of Incorporation, if the Company makes profits inthe year, no less than 3% of the profit shall be distributed as employee remuneration in either stockor cash. According to the internal regulations, work performance bonus is distributed based on thecompany's management goals in different stage. 60% accounts for personal performance and 40%
account for the job title.

E. Linkage to future risk
Major decision making at operational levels of the company always takes into consideration andbalances various risk factors; major decision-making performance will be reflected in the Company's
profits, thereby relating salaries and remuneration to management levels; specifically, the salaries
and remuneration of the chairman of the board, the president, and senior vice presidents are linked
to results and managing future risk.

36 Corporate Governance Report3.3 Implementation of Corporate Governance3.3.1 Board of Directors

A. From January 1, 2020, through March 27, 2021, a total of seven meetings of the Board of
Directors were held. The average attendance rate was 98%. Director attendance is detailed
below:
Name(Note 1)

Attendancein Person

By ProxyAttendance Rate (%)(Note 2)Chairman

Hsieh, Su-Chien

7

0

100%

Director

Kao, Shing-Hwang

1

0

100%

Director

Chen, Charles C.Y.

7

0

100%

Director

Ting, Kwang-Hung

7

0

100%

Director

Chen, Han-Ming

7

0

100%

Director

Ko, Sun-Ta

7

0

100%

DirectorWei, Yung-Yeh

7

0

100%

Director

Lin, Su-Ming

7

0

100%

Director

Wang, Shih-Szu

7

0

100%

Independent Director Chung, Lo-Min

6

1

86% -

Title

Juridical Person Shareholder
Represented
China Aviation Development
Foundation
China Aviation Development
Foundation
China Aviation Development
Foundation
China Aviation Development
Foundation
China Aviation Development
Foundation
China Aviation Development
Foundation
China Aviation Development
Foundation
National Development Fund
(Executive Yuan)
National Development Fund
(Executive Yuan)

Remarks
None
None
None
None
None
None
None
None
None
On March 18, 2020, Chang, Hsieh
Gen-Sen attended as a proxy.
None
None

Independent Director Chang, Hsieh Gen-Sen70100% Independent Director Shen, Hui-Ya
70100% Other items deserving mention:
1. In the operation of the company by the Board of Directors, should any one of the following situations arise, the Board Meeting date, session, content of the resolution,
opinions of all independent directors, and the Company’s response to these comments shall be properly recorded:(1) Matters listed under Article 14-3 of the Securities and Exchange Act: The Company has set up an Audit Committee, hence, this does not apply.
(2) Other matters up for decision making by the Board not listed in Article 14-3 of the Securities and Exchange Act but were opposed by independent directors or about
which the said directors have reservations and their opinion has been recorded or submitted in a written statement: None.
2. Should a director recuse him or herself from a decision about which he or she has a conflict of interest, the name of the director, contents of the resolution, reasons forrecusal, and the results of the vote should be noted:
Directors recused for
Meeting Dates
Agenda content
Reason for recusal
Participation in voteconflicting interest
Chairman Hsieh, Su-Chien, who recused according to law
January 13, 2020:
due to interests involved, did not participate in the
Chairman and Managers' 2020 Lunar
Personal interest in
9th meeting of the 21st
Chairman Hsieh, Su-Chien
discussion or voting. The rest of the 10 attending Directors
New Year Incentive
this matter
Board of Directors
approved the resolution.
Director Chen, Han-Ming, who recused according to law
May 7th, 2020:
Release Director Chen, Han-Ming
due to interests involved, did not participate in the
Personal interest in
10th meeting of the
Director Chen, Han-Mingfrom non-competition restrictions
discussion or voting. The rest of the 10 attending Directors
this matter
21st Board of Directors
approved the resolution.
Director Chen, Han-Ming, who recused according to law
Capital increase for Tigerair
due to interests involved, did not participate in the
Personal interest in
Director Chen, Han-Ming
Taiwan Co., Ltd.
discussion or voting. The rest of the 10 attending Directors
this matter
August 6th, 2020:
approved the matter.
12th meeting of the
Chairman Hsieh, Su-Chien voluntarily gave up the
21st Board of Directors
Distribute flight safety bonus tobonus. The recusal was not necessary since no
Personal interest in
Chairman Hsieh, Su-Chien
Chairman and Managers
personal interest was involved. All attending
this matter
Directors approved the matter.
Chairman Hsieh, Su-Chien voluntarily gave up theJanuary 18th, 2021:
Personal interest in
2021 Lunar New Year incentive
bonus. The recusal was not necessary since no14th meeting of the
Chairman Hsieh, Su-Chien
this matterfor Chairman and Managers
personal interest was involved. All attending
21st Board of Directors
Directors approved the matter.
Director Kao, Shing-Hwang, who recused according to law
Personal interest in
due to interests involved, did not participate in the
The appointment of President
Director Kao, Shing-Hwang
this matterdiscussion or voting. The rest of the 11 attending Directors
March 18th, 2021:
approved the resolution.
15th meeting of the
Director Kao, Shing-Hwang, who recused according to law
21st Board of Directors
Distribute flight safety bonus to
due to interests involved, did not participate in the
Personal interest in
Director Kao, Shing-Hwang
managers
discussion or voting. The rest of the 11 attending Directors
this matterapproved the resolution.
3. Board of Directors’ functional improvement goals for the last year and the current year (such as forming an audit committee and improving information transparency) and
implementation assessment:(1) To strengthen the management mechanisms and oversight, three functional committees, namely, the Remuneration Committee, Audit Committee, and Risk
Committee, were set up under the Board of Directors. Each is convened based on its charter, and the charters were approved by the Board. The committees meetto review and discuss relevant issues and report their conclusions and suggestions to the Board for resolution. The committees have been a success. The regulations
governing functional committees passed by the Board specify the number of committee members, term of office, committee powers, rules of procedure, andresources to be provided by the Company when the committees exercise their powers.

Corporate Governance Report37(2) In order to implement corporate governance and improve the functioning of the Board of Directors of the Company and establish performance objectives toenhance the efficiency of the Board of Directors, the Company has formulated the "Regulations Governing the Board Performance Evaluation," which is
implemented once at the end of each year. The evaluation method is divided into performance evaluation of the entire Board of Directors, individual Board
members, and the functional committees. The evaluation shall be conducted every three years by an external professional independent organization or a team ofexperts and scholars. The Company has conducted a performance evaluation in 2020. The self-evaluation results by the entire Board of Directors, individual Board
members, and the functional committees are all excellent. Hang Seng S.D. Co., Ltd. conducted the 2020 external evaluation of the Board of Directors, and the result
was excellent.
(3) The Company regularly arranges advanced courses for directors every year, which cover corporate governance-related topics, such as finance, risk management, sales,business, legal affairs, accounting, internal control system, financial reporting responsibility, corporate social responsibility, etc., and encourages members of the Board
to continue to participate in courses related to corporate governance in their new or existing term of office to enable the members of the Board to have different
professional functions, and to implement the diversification policy of directors.
(4) For more information regarding China Airlines Corporate Governance, please refer to our website (http://www.china-airlines.com): Corporate Social Responsibility,“Stakeholders' Area” and “Investor Information”.
4. Independent director attendance record for 2020 through March 27, 2021:
Dates
01/13/2020
03/18/2020
05/07/2020
08/06/2020
11/05/2020
01/18/2021
03/18/2021
Name
Chung, Lo-Min



○











Chang, Hsieh Gen-Sen















Shen, Hui-Ya















Note:

Indicates attendance in person. ○ indicates attendance by proxy.  indicates the director did not attend.

Note 1: For directors that are juridical persons, the name of the juridical person shareholder and its representatives must be disclosed.
Note 2: (1) When a director resigns before the year’s end, the remark column shall have the date of resignation and actual attendance rate (%) calculated based on the numberof meetings held during the period prior to resignation and the actual number of meetings attended by him/her.
(2) If there is a change of directors prior to the end of the year, both the new and old directors shall be included in the table and the remark column shall note whether
the director has been reelected or newly elected and the date of the (re)election. Actual attendance rate (%) is calculated based on the number of meetings held
during the period of service and the actual number of meetings attended by him/her.

B. Evaluation of the Board of Directors
Evaluation
periodEngage in one January 1 tointernal
December 31,
evaluation per 2020year.

Evaluation cycle(1)

Scope ofevaluation
Covers theevaluation of theboard as a whole,
the individual
directors, andfunctional
committees

Evaluation method

Evaluation content

Evaluation by the business (1) Board of Directors’ performance evaluation:team of the Board of
11 metrics in total, including 5 measurement
Directors, self-evaluation
parameters, i.e., the degree of participation inby the Board members,
the Company's operations, the Board ofand performance
Directors’ decision-making quality, theevaluation by thecomposition and structure of the Board offunctional committee
Directors, the selection and continuing
members
education of Directors, and internal control.
(2) Individual Board members:
18 metrics in total, including 6 measurement
parameters, i.e., mastery of Company’s goals
and tasks, recognition of Directors'
responsibilities, participation in Company’s
operations, internal relationship management
and communication, Director's expertise andcontinuing education, and internal control.
(3) Evaluating Functional Committee
Performance: 10 metrics in total, including 5
measurement parameters, i.e., the degree ofparticipation in the Company's operations,functional committee responsibility awareness,decision-making quality of functional
committee, composition and member
selection of functional committee, and internal
control.

(2)An external
January 1 toevaluation shall
December 31,
be carried out
2020
every three years
by an external
professional
independent
organization or ateam of experts
and scholars.

38 Corporate Governance Report

Covers theevaluation of theboard as a whole,and functional
committees

External evaluation formof the Functional
Committees and theobservation of the Board
meeting

The evaluation aspects cover the engagement ofcompany operation, decision-making
improvement by the Board of Directors, thecomposition and structure of the Board of
Directors, the selection and appointment of theBoard of Directors, continuous learning, internal
control, corporate governance and operating
performance evaluation.

3.3.2 Audit Committee

The Audit Committee convened six meetings from January 1, 2020, through March 27, 2021. The attendance ofCommittee members is as follows:
Title

Name

Attendance in
PersonBy ProxyAttendance Rate (%)

Remarks

Independent Director(Chairman)

Chang, Hsieh Gen-Sen

6

0

100%

None

Independent Director

Chung, Lo-Min

6

0

100%

None

Independent Director

Shen, Hui-Ya

5

1

83%

None

Other mentionable items:
1. Key functions of the Audit Committee:
The Committee consists of three Independent Directors. The key functions of the year are to assist the Board of Directors in supervising the Company on
the fair presentation of the relevant financial statements, appointment (dismissal) of a CPA and its independence and performance, auditing of theCompany's internal control system, compliance with related laws, regulations and rules of the Company (such as, internal control system, acquisition or
disposal of assets, derivative commodity transactions, loaning funds to others, providing endorsements or guarantees for others), and other matters
included in its statutory functions (appointment and dismissal of financial supervisors or internal audit executive, mergers and acquisition-related
matters).
2. In the operation of the Audit Committee, should one of the below situations arise, the date of the Board Meeting, session, content of the resolution, resultof the Audit Committee resolution, and the Company’s response to these views be properly recorded:(1) Matters listed under Article 14-5 of the Securities and Exchange Act:
Outcome of the voteby the Board of
Outcome of the Board of Directors
Meeting Dates
Agenda content
Auditors anddecisioncompany's handlingof the Board's views
2019 Financial Report and Consolidated
Financial Report
Approved by all attending
March 18, 20202019 Deficit Compensation
Directors in the 10th meeting of
7th Meeting of the Audit
2020 CPA Appointment and Remuneration
the 21st Board of Directors on
Committee of the 21st Board of2019 Internal Control System EffectivenessMarch 18, 2020.
Directors
Audit and Statement
Amendment to 2020 Audit Plan
May 7, 2020
Approved by all attending
8th Meeting of the Audit
Disposal of 5 A330-300 aircraft throughDirectors in the 11th meeting ofCommittee of the 21st Board ofsale and leaseback transaction
the 21st Board of Directors on
Directors
May 7, 2020.
Second amendment to 2020 Audit Plan
Passed to the Board
Approved by all attending
August 6, 2020
Capital increase for Tigerair Taiwan Co.,of Directors on
Directors in the 12th
9th Meeting of the Audit
Ltd.
unanimous approval
Extraordinary meeting of the 21st
Committee of the 21st Board of
Issuing NT$6 billion in total face value ofby all members
Board of Directors on August 6,
Directors
domestic unsecured convertible corporate
attending.
2020.
bonds
November 5, 2020
Approved by all attending
10th Meeting of the Audit
Directors in the 13th meeting of2021 Audit Plan
Committee of the 21st Board of
the 21st Board of Directors on
Directors
November 5th, 2020.
2020 Financial Report and Consolidated
Financial Report
March 18, 2020
Approved by all attending
12th Meeting of the Audit
Directors in the 15th meeting of2020 Deficit Compensation
Committee of the 21st Board of
the 21st Board of Directors on
2021 CPA Appointment and Remuneration
Directors
March 18th, 2021.
2020 Internal Control System Effectiveness
Audit and Statement(2) Other matters up for decision by the Board not listed in Article 14-5 of the Securities and Exchange Act that were not passed by the Audit Committee
but approved by a two-thirds majority of the entire Board: None.
3. In situations where independent directors recuse themselves due to conflict of interest, the independent director's name, the content of the resolution,
the reason for recusal, and his or her voting participation should be properly recorded: None.
4. Communication between independent directors and internal audit managers and auditors (regarding issues such as Company financial and operational
status, procedures, and results):(1) In addition to the independent directors of the Company receiving the audit report monthly, the audit officer submits the annual audit plan and theimplementation of independent directors through the Audit Committee and the Board of Directors. The audit officer replies to the independent
director's questions, provides necessary information, strengthens the audit work in accordance with his instructions, and ensures the effectiveness ofinternal controls. In addition, in non-routine communication, the audit value shall be continuously improved. In case of any major violation, theindependent director shall be informed immediately.
(2) Before the audit committee meeting held in each quarter, the certified public accountant and the independent directors shall convene a
communication meeting to report to the independent director and explain the audit plan, implementation situation, or review results of the financial
statements; the certified public accountant shall provide the financial statements and relevant necessary information to the audit committee and theBoard of Directors in each quarter, and attend the meeting in a nonvoting capacity.
(3) Directors shall contact the audit supervisor or accountants when needed for full communication.
 Communication between independent directors and accountants:
Communication matters
Communication results
Means of
Proposal bycommunication
Primary matter
Results
Company’s processing statusindependent director
Before the meeting, theThe impact of theApproved by all
March 18, 2020
1. The managerial department provided theaccountant separately
COVID-19 pandemic on
attending
Audit Committee
explanation and response forthwith
reported and explained
the Company's
Independent

Corporate Governance Report

39the audit situation to the
independent director. At
the meeting, the financial
director of the company
explained the audit
results of the financial
report in 2019, anddiscussed andcommunicated the issues
raised by the participants.

passenger revenue wasaddressed, and theadjustment to items ofloss allocation was
discussed.

May 7, 2020
Audit Committee

Before the meeting, theaccountant shallseparately report andexplain the review
situation to the
independent director. At
the meeting, the financial
director of the Company
shall explain the review
results of the financial
report in the first quarterof 2020 and theamendment of laws andregulations, and discussand communicate theissues raised by theparticipants.

The details andexecution of thegovernment financial
assistance (NT$20
billion), including thecontracting,
distribution, andrepayment schedule,etc. The disclosed
matters impacted by
the COVID-19.

August 6, 2020
Audit Committee

Before the meeting, theaccountant shallseparately report andexplain the review
situation and theauditing/key audit
matters of the 2020
financial statements tothe independent
director. At themeeting, the financial
director of theCompany shall explain
the review results ofthe financial statementsin the second quarter of2020 and the impacts of
new IFRS on thefinancial statements,
and discuss andcommunicate the issues
raised by theparticipants.

An inquiry into theimpacts of COVID-19
disclosing on thefinancial statements.
Ask the Company toincrease revenue andsave costs, assisting
affiliates to improve
operation.

Directors.

during the meeting.
1. 2.Continued to submit for the Board of
Directors’ approval, and completed the2019 financial report announcement anddeclaration on March 31, 2020.

Noted by all
attendingIndependent
Directors.

1. The managerial department has provided
the explanation and response forthwith
during the meeting.
2. Continued to report to the Board of
Directors, and completed the Q1 2020
financial report was completed on May
15, 2020.

Noted by all
attendingIndependent
Directors.

1. The managerial department has provided
the explanation and response forthwith
during the meeting.
2. Continued to report to the Board of
Directors, and completed the Q2 2020
financial report announcement anddeclaration on August 14, 2020.

November 5, 2020
Audit Committee

Before the meeting, theaccountant shallseparately report andexplain the review
situation to the
independent directors.
At the meeting, thefinancial director of theCompany shall explain
the review results ofthe financial statementsin the third quarter of
2020, and discuss andcommunicate the issues
raised by theparticipants.

Profit difference inthe second and third
quarter. The impactof Mandarin Airlines
and Tigerair Taiwan
on the consolidated
financial statements;
the countermeasuresagainst US dollar
deflation andoff-season of cargo
shipment; thefollow-up to aircraft
replacement, thereasons of hedge
financial assets
increase and increaseof contract liability;
the impact of
decreased cash andcash equivalents; themeaning of decreased
cash and cash
equivalents caused byfluctuated currency
rate.

Noted by all
attendingIndependent
Directors.

1. The managerial department has provided
the explanation and response forthwith
during the meeting.
2. Continued to report to the Board of
Directors, and completed the Q3 2020
financial report announcement anddeclaration on November 16, 2020.

March 18, 2021
Audit Committee

Before the meeting, theaccountant separately
reported and explained
the audit situation to the

Asked about thecontent of thefinancial statements
regarding leased

Approved by all
attendingIndependent

1. The managerial department provided the
explanation and response forthwith
during the meeting. The CPA firm agreed

40 Corporate Governance Reportindependent director. At
the meeting, the financial
director of the company
explained the audit
results of the financial
report in 2020, anddiscussed andcommunicated the issues
raised by the participants.

aircraft andpurchased aircraft;the discussion on the
dropping revenue due
to COVID-19;
suggested to lower
the CPA
commissioned fee.

Directors.

to lower the fee.
2. Continued to submit for the Board of
Directors’ approval, and completed the2020 financial report announcement anddeclaration on March 31, 2021.

 Communication between independent directors and internal audit supervisor:
Communication matters
Communication results
Means of
Proposal bycommunication
Primary matter
independent
Results
Company’s processing status
director
Internal audit
Approved by all attending
Reported to the Board of Directors on
business reportNone
members and reported to the
March 18, 2020.
for Q4 2019
Board of Directors.
2019 Internal
Resolved by the Board of Directors on
March 18, 2020
Control System
Approved by all attending
March 18, 2020, and the 2019 Internal
Audit
EffectivenessNone
members and reported to theControl System was shared on March 23,
Committee
Audit and
Board of Directors.
and mentioned in the 2019 annual report.
Statement
Approved by all attending
Resolved by the Board of Directors on
Amendment toNonemembers and reported to the
March 18, 2020, and the 2020 internal
2020 Audit Plan
Board of Directors.
audit plan was unveiled on March 24.
May 7, 2020
Internal audit
Approved by all attending
Reported to the Board of Directors on
Audit
business reportNone
members and reported to the
May 7, 2020.
Committee
for Q1 2020
Board of Directors.
Internal audit
Approved by all attending
Reported to the Board of Directors on
business reportNone
members and reported to theAugust 6, 2020.
August 6, 2020
for Q2 2020
Board of Directors.
Audit
SecondApproved by all attending
Committee
Reported to the Board of Directors on
amendment ofNonemembers and reported to theAugust 6, 2020.
2020 audit plan
Board of Directors.
May 8, 2019
Internal audit
Approved by all attending
Reported to the Board of Directors on
business reportNone
members and reported to theAudit
May 8, 2019.
for
March
2019
Board
of
Directors.
Committee
August 7, 2019
Audit
Committee

November 5,2020 Audit
Committee

January 18,
2021 Audit
Committee

March 18, 2021
Audit
Committee

Internal audit
business reportfor Q2 2019

None

Approved by all attending
members and reported to theBoard of Directors.

Reported to the Board of Directors on
August 7, 2019.

Internal audit
business reportfor Q3 2020

None

Approved by all attending
members and reported to theBoard of Directors.

Reported to the Board of Directors on
November 5, 2020.

2021 Audit plan

Member Shen: The
liquidation of YesTrip
Co., Ltd. has not yet
been completed. It is
recommended toinclude themanagement team in
the audit plan.
Convener Chang: CAL
shall reinforce theaudit of the air cargobusiness. It is
recommended toaudit the cargobusiness and adjust
the audit in each unit.

Approved by all attending
members and reported to theBoard of Directors fordiscussion after theamendment.

Reported to the Board of Directors on
November 5, 2020.

Internal audit
business reportfor Q4 2020
Internal audit
business reportfor January 2021
2020 internal
controleffectivenessaudit andstatement

None
None

None

Approved by all attending
members and reported to theBoard of Directors.
Approved by all attending
members and reported to theBoard of Directors.
Approved by all attending
members and reported to theBoard of Directors.

Reported to the Board of Directors on
January 18, 2021.
Reported to the Board of Directors on
March 18, 2021.
Resolved by the Board of Directors on
March 18, 2021, and the 2020 Statementof Internal Control System was shared on
March 22 and disclosed in the 2020
annual report.

Corporate Governance Report413.3.3 Risk Committee

The Risk Committee convened five meetings from January 1, 2019, through April 25, 2020. Committee member
attendance is as follows:
Title

Name

Attendance in
PersonBy ProxyAttendance Rate (%)

Remarks

Independent
Director(Chairman)

Chung, Lo-Min

5

0

100%

None

Independent
Director

Chang, Hsieh Gen-Sen

5

0

100%

None

Independent
Director

Shen, Hui-Ya

4

0

80%

Absence on May 8, 2020

Director

Lin, Su-Ming

4

1

80%

On March 18, 2021, Chung, Lo-Min
attended as a proxy.

Director

Ting, Kwang-Hung

4

1

80%

On August 5, 2020, Lin, Su-Ming attended
as a proxy;

Following are the other mentionable items:
1. Key functions of the Risk Committee:
The Committee reviews the establishment, implementation, and response measures of the Company's management strategies for overall finance,
economy, flight safety, and other risks, and submits its views and recommendations to the Board of Directors for implementation.
2. Professional competence of risk management committee members:
Independent director Shen, Hui-Ya is an able legal professional; Independent directors Chang, Hsieh Gen-Sen, Chung, Lo-Min, and director Lin, Su-Ming all
have the professional ability in financial accounting and practical practice and management experience; Director Ting, Kwang-Hung has the ability to makebusiness-related judgments, leadership and decision making, operation and management, crisis handling, and has an outlook on international markets.
2. The operation of the Risk Committee:
Meeting Dates

March 18, 2020
7th Meeting of the Risk
Management Committee of the
21st Board of Directors

May 8, 2020
8th Meeting of the Risk
Management Committee of the
21st Board of Directors

August 5, 2020
9th Meeting of the Risk
Management Committee of the
21st Board of Directors

Agenda content
Safety management report
2020Q1 Operations risk management analysis
Financial status report
Operations outlook and financing, crude oil market
analysis
Financial risk hedging strategy
Oil risk hedging strategy
Safety management report
2020Q2 Operations risk management analysis
Financial status report
Operations outlook and financing, crude oil market
analysis
Financial risk hedging strategy
Oil risk hedging strategy
Safety management report
2020Q3 Operations risk management analysis
Financial status report
Operations outlook and financing, crude oil market
analysis
Financial risk hedging strategy
Oil risk hedging strategy
Safety management report

November 5, 2020
10th Meeting of the Risk
Management Committee of the
21st Board of Directors

March 18, 2021
11th Meeting of the Risk
Management Committee of the
21st Board of Directors

Climate control report
2020Q4 Operations risk-management analysis
Financial status report
Operations outlook and financing, crude oil market
analysis
Financial risk hedging strategy
Oil risk hedging strategy
Safety management report
2021Q1 Operations risk-management analysis
Financial status report
Operations outlook and financing, crude oil market
analysis
Financial risk hedging strategy
Oil risk hedging strategy

42 Corporate Governance Report

Risk Committee resolution
results and company action
on Risk Committee’s views

Results of the Board of
Directors decision

Passed to the Board of
Directors on unanimous
approval by all members inattendance.

Unanimously passed by
all members of theBoard of Directors inattendance.

3.3.4 Corporate Governance Implementation Status and Deviations from the
Corporate Governance Best-Practice Principles for TWSE/TPEx-Listed
Companies
Status of Implementation

Evaluation Item

1. Did the Company
establish its
Corporate
GovernanceBest-PracticePrinciples inaccordance with
Corporate
GovernanceBest-PracticePrinciples for
TWSE/TPEx-Listed
Companies and did it
share those
Principles?

Yes NoBrief Explanation

Deviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons
No Difference

The Corporate Governance Principles of the Company have been formulated in compliance with the Corporate Governance Best-PracticePrinciples for TSEC/TPEx-Listed Companies; its amendment has been approved at the 6th meeting of the 21st Board of Directors on May 8,
2019, and shared under the “Important Company Regulations” on the Company’s website.

2. Company ownership 
structure andshareholder rights(1) Did the Company
establish internal
operational
procedures for
dealing withshareholder
suggestions,questions,disputes, andlawsuits and put
these procedures
into practice?

(1) The Company's website has a portal for shareholder services and a “Method for Handling Investor Relations” has been set so thatinvestor suggestions and concerns are dealt with by shareholder service personnel and shareholder service agents according torelevant procedures. This ensures a smooth channel of communication between the Company and its shareholders and the quality of
disclosed information.

No Difference(2) Does China

Airlines maintain alist of the major
Company
shareholders andthe ultimate
owners of theseshareholders?

(2) The China Aviation Development Foundation is China Airlines’ largest shareholder and the company is in communication and contact
with it.

No Difference(3) Did China
Airlines establish
and implement
risk control
mechanisms andfirewalls at theCompany andaffiliatedenterprises?

(3) The Company has established Operational Procedures for Endorsements/Guarantees, Operational Procedures for Lending Funds to
No Difference
Others, and Regulations Governing Management of Invested Enterprises. All capital loans and funding, endorsements/guarantees, andoperational supervision and management of Company subsidiaries are in accordance with these procedures and regulations. Audit
units perform quarterly audits of Company endorsements/guarantees and capital loans/funding, which are provided to management
and independent directors. The Finance Div. is responsible for overseeing implementation at invested enterprises and should any
errors be noticed, a rectification deadline is set and the progress is monitored.

(4) Did the Company establish internal
standards toprevent insider
trading on
undisclosed
information?
3. Structure and
responsibilities of theBoard of Directors(1) Has theCompany
establishedpolicies calling fordiversity among(4) The Company established the Director's Code of Conduct, Procedures for Handling Material Inside Information, and High-Level
Manager Code of Conduct to specify insider trading prevention and processing of secret stock trading and operating information as
required of employees by law. Those with access to undisclosed material inside information are prohibited from engaging in securities
trading.

No Difference(1) China Airlines advocates and respects the director's diversity policy, and is convinced that diversity can improve the overall
No Difference
performance of the Company. Members of the Board of Directors shall be based on personal capabilities and diversification fromdifferent aspects is also taken into consideration, including basic characteristics (e.g., age, gender and nationality, etc.), experience andskills (e.g., aviation, sea freight, transportation, finance and accounting, law and insurance, electricity, technology, and public utilities,etc.), operation and management, leadership and decision-making, and crisis management ability. In order to strengthen the Board'sfunctions to achieve the ideal goals of corporate governance, the Company has formulated the Corporate Governance Principles,
Article 20 of which specifies the overall abilities the Board of Directors is to be equipped with, which are as follows:
A. The ability to make operational judgment.

Corporate Governance Report43Status of Implementation

Evaluation Item

members of theBoard of Directors
and put said
policies into
practice?

Yes NoDeviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons

Brief Explanation

B. The ability to perform accounting and financial analysis.
C. The ability to conduct management administration.
D. The ability to manage crisis situations.
E. Industrial knowledge.
F. Perspective of the international market.
G. The ability to lead.
H. The ability to make decisions.
The diversification policies of the current executives of the Company and their progress are as follows:
2021

Business and supply

Information and technology

Metal and machinery

Law

Accounting

Risk management

Male

Banking, insurance and realestateFemaleR.O.C.

44 Corporate Governance Report

Construction and engineering

Male

R.O.C.

Chung,
Lo-Min-Financial and Finance

Male

R.O.C.

Wang,
Shih-Szu

-

-



-

-

 



○

-

-



○

-

-

○



-



-

-

-

 



○

-

-



○

○

-

○



-



-

-

-

-





○

-





○

-

-

-





-

-

-

-

-

-











-

-

-

○





-

-

-

-



-



○







-



-

-



-



-

-

-

-

-



○

-

-



-

-

-

-



-



-

-

-



-

-

-

-

-

-

-



-

-

○

-

-



-

-

-

-

-



-

○

-

-

-

○



○

-



-

-

-

-

-



-

-

-

-

-

-

○

-



-

-



-



-

-

○



-

-

○

○

○

-





Transport

Male

R.O.C.

Lin, Su-Ming-

Professional services andmarketing

Male

R.O.C.

Wei,
Yung-Yeh-

Length ofoffice ofindependent
director

Age

Airlines

Male

R.O.C.

Ko, Sun-Ta-

Six to nine
years

Male

R.O.C.

Chen,
Han-Ming-

Less than 3
years

Male

R.O.C.

Ting,
Kwang-Hung

-

61-70

Has employee status

Male

R.O.C.

Chen,
Charles C.Y.

-

51-60

GenderR.O.C.

Kao,
Shing-Hwang



Professional
competence

Industrial experience40-50

Nationality-

Name
Hsieh,
Su-Chien

Diversified Core

Basic composition

MAR 27,

Status of Implementation

Evaluation ItemYes NoBrief Explanation

Chang,
Hsieh
Gen-SenR.O.C.

Female-Shen, Hui-Ya

R.O.C.

Female(2) In addition to the establishment of
the Remuneration
Committee andAudit Committee as
required by law, did
the Company
establish
committees withother functions of
its own accord?
(3) Has theCompany
formulated
performance
evaluation
guidelines andevaluation
methods for the
Board of Directors
and does it
evaluate its
performance
regularly eachyear， and,furthermore, does
it report theevaluation
outcomes to theBoard of Directors
and use them as
references for
deciding on the
remuneration ofindividual
directors andnomination forcontinuing terms
as directors?

Deviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons

-

-

-





-

-

-

-



-

-

-

-

-

-



○

-



-



-

-

-

-

-

-

-

-

-

-



-

○

Note: Indicates the director has the capability; ○ indicates the director has some capability.
a. The 11 directors (including 3 independent directors) of the 21st Board of Directors of the Company have business judgment,
leadership decision-making, operation and management, international market outlook, crisis management, and other capabilities, aswell as industrial experience, and professional ability, among which, those with experience in transportation and tourism industry
are Chairman Hsieh, Su-Chien, director Chen, Charles C.Y., director Ko, Sun-ta, and Director Wei, Yung-Yeh. Those who are good atmarketing are Chairman Hsieh, Su-Chien, director Charles C.Y. Chen, director Ting, Kwang-Hung, director Chen, Han-Ming anddirector Ko, Sun-ta; Director Chen, Charles C.Y., who have made significant contributions to the public welfare; Independent director
Shen, Hui-Ya is competent in legal affairs; Director Wang, Shih-Szu, a previous politician (vice mayor of Tainan City); Independent
director Chang, Hsieh Gen-Sen, independent director Chung, Lo-Min, director Lin, Su-Ming and director Ting, Kwang-Hung have theprofessional ability of accountancy or finance and have practical practice, management, or teaching experience.
b. The average term of office of the company's directors is 6 years, among which two independent directors Chang, Hsieh Gen-Sen andShen, Hui-Ya have tenure of fewer than three years. The term of office of independent director Chung, Lo-Min is eight years, and theconsecutive term of office of all independent directors does not exceed three terms.
The directors are all local citizens, and three independent directors constitute 27% of the board; there is one director who is also an
employee (9%). The age distribution range of directors includes two directors aged 40-50, five directors aged 51-60, and four
directors aged 61-70.
In addition, the Company also pays attention to gender equality in the composition of the Board. The current board of directors
consists of three female members (two of whom are independent directors), and the proportion of female directors is high, at 27%.
In the future, the Company will remain committed to improving the proportion of female directors.
c. Diversity, complementarity, and implementation of directors comply with and exceed the standards specified in Article 20 of the
Corporate Governance Principles of China Airlines. In the future, the board of directors will continue to update its diversified policies
according to board operations, operation style, and development needs, including but not limited to the standards of basic
conditions and values, professional knowledge and skills, so as to ensure that board members generally have the necessary
knowledge, skills, and literacy to perform their duties.
(2) In addition to setting up the Audit Committee and the Remuneration Committee according to law, to improve the risk management of No Difference
the Company, the Company has voluntarily set up a Risk Management Committee, with five directors (including three Independent
Directors) as members. Meetings are held on a quarterly basis according to the organization regulations approved by the Board of
Directors. The Committee responds to the Board of Directors and assists it in reviewing the establishment, implementation outcomes,
and response measures of the Company's management strategies for overall finance, economy, flight safety, and other risks, andsubmits its conclusions and recommendations to be resolved by the Board of Directors. Good operational effectiveness has beenachieved.

(3) The Company approved the “Regulations Governing the Board Performance Evaluation” in the 8th meeting of the 21st Board of No Difference
Directors on November 7, 2019. An internal evaluation of the Board’s performance is made at the end of each year. The evaluation isdivided into the performance evaluation of the entire Board of Directors, individual Board members, and functional committees. The
evaluation shall be completed by the end of January of the following year, the outcomes of which shall be submitted by the Human
Resources Department to be reported at the Board meeting held by the end of March. The evaluation shall be conducted every three
years by an external professional independent organization or a team of experts and scholars. The results will be referred to in
deciding directors' remuneration and nomination while renewing their performance.
The Company completed the 2020 Board Performance Evaluation in accordance with the above regulations, which has been reported
at the 15th meeting of the 21st Board of Directors on March 18, 2021, and disclosed on the Company’s official website. The
self-evaluation results are as follows:
A. Entire Board of Directors
a. Evaluation items: Ten items in total, including five major aspects, i.e., the degree of participation in the Company's operations,improvement of Board of Directors’ decision-making quality, composition and structure of the Board of Directors, continuing
education of Directors, and internal control.
b. Results of self-evaluation: Above standards.
B. Individual Board members
a. Evaluation items: Eighteen items in total, including six major aspects, i.e., mastery of Company’s goals and tasks, recognition of
Directors' responsibilities, participation in Company’s operations, internal relationship management and communication,
Director's expertise and continuing education, and internal control.
b. Results of self-evaluation: Above standards.
C. Functional Committees
a. Evaluation items: Ten items in total, including the degree of participation in the Company’s operations, functional committee
responsibility awareness, improvement to functional committees’ decision-making quality, composition and member selection offunctional committee, and internal control.
b. Results of self-evaluation: Above standards.
In addition, the implementation of the performance evaluation of the Board of Directors of the Company will be performed by an
external professional independent institution or a team of external experts and scholars every three years.
External evaluation result:
1. Evaluation period: January 1 to December 31, 2020
2. Criteria: The engagement of company operation, decision-making improvement by the Board of Directors, theCorporate Governance Report45

Status of Implementation

Evaluation ItemYes NoBrief Explanation

Deviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasonscomposition and structure of the Board of Directors,
the selection and appointment of the Board of Directors, continuous learning, internal control, corporate governance(4) Does theCompany
periodically assess
the independenceof external CPAs?

4. Does the TWSE/TPEx- listed company havein place anappropriate numberof qualified corporate
governance officers,
and a designatedchief corporate
governance manager
to be responsible forcorporate
governance-related
matters (including
but not limited toproviding directors
and supervisors with
the information
required to conductbusiness, assist
directors andsupervisors in legal
compliance, handling
matters related toboard meetings andshareholders’meetings inaccordance with law,and preparing
minutes of the board
and shareholders’meetings)?

5. Has the Company
establishedcommunication
channels withstakeholders(including but notlimited toshareholders,
employees,
customers, andsuppliers) and set up
an area dedicated to
stakeholders on theand operating performance evaluation.
3. Result and suggestions: The evaluation result of the China Airlines 2020 Board of Directors and Functional Committee
was excellent; It is suggested to add one extra independent director to enhance the diversity of the Board.
(4) The Audit Committee and the Board of Directors of the Company regularly assess the independence and competence of the
No Difference
accountants each year in accordance with the Company's Corporate Governance Principles, completing the “Accountant Independence
Evaluation Form,” and acquiring the “Accountant Independence Declaration.” The evaluation results are as follows:
Assessment Results
Conforms to
Item Assessedindependence
YesNo
1. Issued an accountant independence declarationYes
2. Has not gone seven continuous years without changing accountantsYes
3. Not served as Company director or manager
Yes
4. Not a shareholder of the Company and has never been on the payroll
Yes
5. The accounting firm for which they work is not a Company-affiliated enterpriseYes
6. Has not provided any non-auditing services to the Company that could affectYescomplete independence
After assessment by the Company, accountants Huang, Jui-Chan and Cheng, Shiuh-Ran of Deloitte & Touche both conform to theabove assessment standards for independence, and are suitable to act as CPAs for this company. After the 12th meeting of the 21st
Audit Committee on March 18, 2021, a report will be made to the 15th meeting of the 21st Board of Directors on the appointment ofaccountants.
(1) The Company approved the establishment of the Chief Corporate Governance Officer at the 6th meeting of the 21st Board of Directors No Difference
on May 8, 2019, which is served by the Vice President Chien, Feng-Nien, who has professional qualifications and conducts legal-related
matters as head of the department for more than three years. The Chief Corporate Governance Officer’s main duties include handling
relevant meeting affairs of the Board of Directors and Shareholders Meetings in accordance with law, generating minutes of the Board
meetings and Shareholders’ Meetings, assisting Directors in assuming their positions and continuing education, providing Directors with
the information required to perform their duties, assisting Directors in complying with laws and regulations, and other matters provided
in laws, regulations, the Company’s Articles of Incorporation, or contracts.
(2) The Chief Corporate Governance Officer supervises concerned units implementing corporate governance matters:
A. The Chief Corporate Governance Officer concentrates on the following matters which are handled by the personnel of the Board of
Directors Business Task Force when handling matters related to the Board of Directors and Committees (including preparing themeeting minutes), assisting Directors in handling their positions, legal compliance and continuing education, and providing Directors
with the information required to conduct business:
a. Notifying respective members of meetings seven days prior to the convening of meetings of Board of Directors and Committees,
with cause(s) or subject(s) of the meeting and sufficient meeting materials attached; having the minutes of each meeting signed orsealed by the Chairman and recorder of each meeting, and be distributed to the members of the meeting within 20 days of themeeting.
b. Providing new Director training to first-time Directors, introducing the Company's business, organization and other matters needingattention, and providing newly elected Directors with regulatory guidance manuals regarding insiders and directors to assist
Directors in taking office and ensure legal compliance; also, assisting Directors in completing annual training courses in accordancewith the Company's business characteristics and Directors' requirements.
c. Providing necessary Company information to the Directors, maintaining cordial communication and exchange between the
Directors and supervisors, and assisting in arranging communication meetings between Independent Directors and chief audit
executive, CPAs, or other internal units to facilitate the conduct of business by Independent Directors.
d. Amending internal regulations related to corporate governance in cooperation with the latest laws and regulations relevant to theCompany's field of business and corporate governance, and submitting amendments to the Board of Directors for resolution.
B. In relation to the Company’s registration and change of registration, the Administration Division is responsible for completing therelevant registration with the competent authority in time limit for matters requiring registration or changes to registration matters of
the Company.
C. In addition, the Finance Division is responsible for the handling of matters related to shareholders' meetings (planning and conveningof shareholders' meetings, the preparation of meeting minutes and other stock affairs-related business). It also provides sufficient
information to the shareholders to ensure that the shareholders' rights and interests are well protected.
(3) From January 1, 2019 through April 25, 2020, the Chief Corporate Governance Officer has attended the following courses:
Sponsoring Organization
CourseDate(s)Training hours
Taiwan Corporate GovernanceTechnology and Information Safety Risk in the 5G and
2020/05/07 3hr
Association
IoT EraTaiwan Corporate Governance
Trends of Digital Technology and Artificial Intelligence
2020/08/06 3hr
Association
and Risk Management
The Company identifies stakeholders in accordance with the five principles of the AA1000 Stakeholder Engagement Standard (SES). To fully No Difference
and effectively communicate with stakeholders, a spokesperson and “Stakeholders Section” have been created on the Company’s official
website to provide contact information of the units associated with various issues, so as to facilitate stakeholders’ interaction withrespective personnel working on relevant issues (including contact personnel, e-mails, and telephone numbers); also, a webpage forcommunication with stakeholders has been created on the corporate social responsibility website, explaining stakeholders’ issues ofconcern, communication channels, response frequency and communication results. The communication situation with various
stakeholders is also reported to the Board of Directors every year. The outcomes from its implementation since 2020 have been reported
at the 14th meeting of the 21st Board of Directors on January 18, 2021.
Relevant content and frequency of the actual implementation show proper responses to various issues that include corporate social
responsibility. See the following for details:(1) Company website -- stakeholders section: https://www.china-airlines.com/tw/en/about-us/stakeholder(2) Company Corporate Social Responsibility (CSR) website -- stakeholder engagement:
http://calec.china-airlines.com/csr/en/management_interested.html

46 Corporate Governance ReportStatus of Implementation

Evaluation Item

Company website?
Does the Company
respondappropriately tocorporate social
responsibility issues
that stakeholders
consider important?

Yes NoDeviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons

Brief Explanation(3) Explanatory table:
Item
Focus ofCategory
Communication

Employees

Customers

Investors

Partners(Suppliers) Public healthand safety Flight safety
management
 Risk andhazards
management
 Labor/manag
ement
relations andengagement

 Public healthand safety Flight safety
management
 Passenger
servicemanagement• Privacy andInformation
Security Public healthand safety Flight safety
management
 Operating andfinancialperformance Risk andhazards
management

 Public healthand safety Flight safety
management
 Operating
and financial
performance Governanceand businessintegrity

Contact Person

Channel of Communication

Frequency
Four to six
times peryear
Real time

Labor-Management
Conference
Union
Human Resource Div.
Miss Chi
Tel:+886(0)-3-3998917

Passenger Service
Passenger dedicatedphone line:+886(0)-2-412-9000
Cargo Service
Mr. LinTel:+886(0)-3-3998262
Aircraft Maintenance
Mr. ChouTel:+886(0)-3-3987215
Vice President,
Corporate
Communications
Office andspeakwoman:
Lu, Shwu-Huoyemail:
tpeprci@china-airlin
es.comVice President,
Finance Div.:Wang, Wei
email:
tpeaf@china-airlines.
com

Employee concerns mailbox(Wecare listens mailbox,
Speak Out employee
communication mailbox,
Team+ real-time information
platform)

Real time

Website for retired employees
and those who have left
employment
Customer satisfaction surveys
Global business meetings
Taiwan district businessmeetings
Discussions with travel
agencies
Company website, industry
social responsibility network,
Facebook, e-mail, andmessage
Customer-service hotline

Real time
Real time
Annually
Twice peryear
Occasional
Real time
Real time

Corporate customer visits

Occasional

Shareholders’ meeting
Shareholder hotline/mailbox
Corporate customer hotline
Corporate customer hotline

Annually
Real time
Real time
Annually

Corporate information
meeting

Occasional

Telephone, e-mailConsultative conferences
Business visits

Occasional
Occasional
Occasional

Site inspections

At least
once every
6 months

Result ofCommunication
Employee satisfaction
surveys are conducted
once every two years;
the score in 2019 was
6.4(Note: the highest
score is 10)
Due to COVID-19,
the survey was
postponed to 2021
to avoided thesurvey result isdistorted.

2020:
1. Passenger
satisfaction rate was
88.60%
2. Cargo satisfaction
rate was 88.5%
3. Maintenancefactory satisfaction
score was 8.57
(Note: highest score is
10)

Continues toannounce and respondwith operation-related
results according tolaws, regulations, andinvestors’ demand

Finance Div.
Mr. Yang
Tel:+886(0)-3-3998331
Finance Div.
Mr. LinTel:+886(0)-3-3998361
General Products
Administration Div.
Miss Xiao
Tel:+886(0)-3-3999143
Aircraft Parts
Engineering Div.
Mr. TsaiTel:+886(0)-3-3834251
Ext.7507

A general suppliermeeting was held at
the end of 2020

e-Shopping/DutyFree
In-Flight Service
Supply Chain &Marketing Div.

Corporate Governance Report47

Status of Implementation

Evaluation ItemYes NoBrief Explanation

Society

6. Has the Company
appointed aprofessional
shareholder services
agent to handle
shareholders'meeting matters?
7. Information
disclosure(1) Has theCompany createda public website
to disclose
financial,
operational, andcorporate
governanceinformation?
(2) Has theCompany adopted
other methods ofinformation
disclosure (e.g.,setting up an
English website,
designating a
specialist
responsible forgathering anddisclosing
Company
information,
setting up a
spokesperson
system, uploading
recordings ofinvestor
conferences onto
the Company
website)?
(3) Does theCompany publicly
announce andregister the annual
financial report
within two monthsof the end of the
fiscal year, andpublicly announce
and register the
first, second, andthird quarter
financial reports
and the monthly
operating status
earlier than theprescribed time
limit?

Deviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons Public healthand safety
 Corporate
governanceand businessintegrity
 Flight safety
management• Brandmanagement

Miss TsengTel:+886(0)-3-3993913
Corporate
Development Office
Mr. ZhongTel:+886(0)-3-3998530
Corporate
Communications
OfficeMr. LeeTel:+886(0)-3-3998639

Hold activities for the public
good, participate in societal
activities

Occasional

Press releases and messages

Monthly
Occasional

Network mailbox

Occasional
Daily

A total of 355,459
individuals benefitedin 2020

The Company’s professional services organization is CTBC Bank, which has been assigned the task of handling shareholder meeting
matters.

No Difference(1) Dedicated units within the Company provide information to be disclosed on the China Airlines corporate website(http://www.china-airlines.com) regarding marketing, operations, finance, administration, aircraft operations, human resources,
training, shareholders’ meetings, and the annual report, prospectus, and any material information. Through this easily available
information, consumers, suppliers, and investors can better understand China Airlines’ operations.

No Difference(2) The Company has set up an English language website, the China Airlines Corporate Website (https://www.china-airlines.com/tw/en),with the Office of Public Relations as the spokesperson responsible for gathering and disclosing company information monthly and for
posting corporate information to the outside world, including press releases, new interviews, and press conferences.

No Difference (3) The Company publicly does not announce and register the annual financial report within two months of the end of the fiscal year, norpublicly announce and register the first, second, and third quarter financial reports and the monthly operating status earlier than theprescribed time limit.

Even though
the Company
didn't publicly
announce/reg
ister theannualfinancialreport andthe monthly
operatingstatus earlier
than theprescribedtime limit, yet
all the work
has been
done within
the time
regulated.

48 Corporate Governance ReportStatus of Implementation

Evaluation ItemYes No8. Does China Airlines
have other important
information tofacilitate better
understanding of theCompany's corporate
governance practices(including, but notlimited to employee
rights, employee
care, investor
relations, supplier
relations, stakeholder
rights, director andsupervisor training
regimes, risk
management
policies, and risk
measurement
standards as well as
the implementationof client policies andthe Company'spurchase of liability
insurance for its
directors andsupervisors)?

Brief Explanation

Deviations
from theCorporate
GovernanceBest-PracticePrinciples for
TWSE/TPExListed
Companies
and Reasons
No Difference(1) Employee rights: In addition to obeying the Labor Standards Act, in 2002 the Company signed a collective agreement that remains inforce today. Salaries and remuneration, benefits and insurance are adjusted annually based on the remuneration policy and revenue,
and there are also procedures for merit pay and higher pay for promotions to select and promote outstanding employees.
(2) Employee care: Primarily in three areas:
A. Information:
a. China Airlines has set up a China Airlines electronic bulletin board on the Company’s internal information webpage to announce
welfare information of the Company (such as childcare measures, various welfare subsidies, complimentary/discounted tickets andemployee stock ownership trust). We have also set up a retirement/resignation section to thoroughly explain various proceduresfor handling retirement/resignation. In addition, a mailbox for all employees and the Team+ real-time messaging platform has been
established to inform employees of important messages.
b. Wecare listens mailbox, Speak Out employee communication mailbox, Team+ real-time messaging platform, etc. have been
established to provide employees with two-way channels to fully express personal opinions and demands.
B. Organizational:
Based on the scale and dependencies of each unit in the Company, employee relations departments or dedicated personnel havebeen established to be responsible for good communication channels and overall management of relations, assisting in publicizing
various beneficial policies of the Company and eliminating misunderstandings by improving internal employee satisfaction,cohesiveness, feeling of identification with the Company, and work achievements at appropriate times.
C. Systematic:
Periodically hold labor-management conferences and supervisor-employee communication meetings and have employee benefits
committee members participate in meetings with various types of unions and employee representatives to tell employees about
related governance actions at appropriate moments; each resolution gives full respect to employee opinions and interests.
(3) Investor relations:
The Company has established Rules for Handling Investor Relations by which it handles all investor concerns or opinions. A total of 1
were handled in 2020, and the company will continue to announce and respond with operation-related results according to laws,
regulations, and investors’ demand.
(4) Supplier relations:
In accordance with the Company’s Regulations Governing the Procurement and Inspection of General Items, except for patents andemergency procurement, all procurement shall be processed through open tendering and the tender announcement shall be disclosed
on the Company’s website to establish a transparent, open, fair, and competitive trading environment. At the same time, the Company
requires suppliers to issue a “Tenderer Declaration” before bidding, which regulates that suppliers must comply with the integrity andethical requirements including the principle of conflict of interest avoidance, anti-bribery regulations, and supplier integrity, as well as
requiring suppliers to abide by relevant local laws and regulations.
(5) Stakeholder interests:
The Company website has a “Stakeholder Contact” and other diverse communications channels and platforms to address all manner ofstakeholder complaints and wishes appropriately and effectively.
(6) Continuing education for directors and supervisors: see P.67-69 for details.
(7) Status of implementation for risk management policy and risk balance standards:
The Company's operations are enormously impacted by both the domestic and international environment. So as to further improve therisk management system mechanism and reduce the effect created by interplay among risks, the Company has established a Risk
Committee answering directly to the Board of Directors. The committee meets once per quarter and issues periodic reports to the Boardof Directors, assisting the Board in oversight of the setting, and results and adaptive measures related to company risk management
strategies. See P.42 for operation details.
Moreover, to establish a solid internal governance system, the Company has additionally set up the China Airlines Procedures for
Handling Important Internal Information, Ethical Code of Conduct for Directors, Ethical Code of Conduct for Senior Supervisors and Rules
for Employee Conduct in the Course of Work.
(8) Implementation of customer policies:
The Company takes the initiative to send service satisfaction questionnaires to members’ mailboxes (non-members can also fill out thequestionnaire on the official website) to obtain passenger experience satisfaction with the Company’s passenger flights and theirsuggestions; A total of 53,801 effective customer satisfaction questionnaires were completed in 2020, with a satisfaction rate of 88.60%.
After compiling and analyzing statistics, the above data have been reviewed and the products and services will be improved, where
necessary, to comprehensively enhance customer satisfaction.
(9) Company purchases of liability insurance for directors and supervisors:
The Company purchased liability insurance for all Directors in 2021 to reduce and diversify the Directors' legal liability risks. Important
contents, such as Directors' liability insurance insured amount, coverage and premium rate, have been reported in the 15th meeting of
the 21st Board of Directors on March 18, 2021.
9. Please explain improvements that have been made in response to the results of the Corporate Governance Evaluation issued by the Taiwan Stock Exchange Corporate Governance Center:(1)The Company’s annual report and website have fully disclosed the specific management goals, current achievements, and other information of the Board members’ diversification
policy, providing detailed descriptions of the diversification policy and implementation situation; it has also been disclosed that the selection of Board members is based on the theirabilities while also considering diversity, including basic components (for example: age, gender and nationality, races, birth, or cultural background, etc.), experience and skills (forexample: aviation, sea freight, transportation, finance and accounting, law and insurance, academics, electricity, technology, and public utilities, etc.), as well as business judgment,
business management, leadership and decision-making, and crisis management capabilities-sufficient to fully demonstrate that the existing Directors have a high degree ofcross-industry, diversified, and complementary capabilities.
(2)The Company has set up a Chief Corporate Governance Manager to be responsible for corporate governance related matters, and has explained in the Company’s annual report its
functions and powers, and the operation and execution situation of its key businesses.
(3)The Company has, by the resolution of the Board of Directors in January 2019, approved the “Regulations Governing the Board Performance Evaluation,” and completed the 2018 to2020 performance self-evaluation of the Board of Directors and external evaluation of 2020 Board of Director and Functional Committee. The evaluation results have been
published in the annual report and on the website of the Company; in addition, on the Company’s website and the corporate social responsibility website, the communication
situation between the Independent Directors and the chief audit executive and accountants; the operation status of functional committees other than those required by laws; theimplementation status of ethical corporate management; and the information relevant to stakeholder communication, etc., have also been disclosed.

Corporate Governance Report493.3.5 Composition, Responsibilities, and Operations of the Remuneration
Committee

The objective of the Remuneration Committee is to assist the Board in implementing and assessing theCompany’s overall compensation and benefits policy and director and manager remuneration.

A. Professional Qualifications and Independence Analysis of Remuneration Committee
Members

Title(Note 1)

Independent
Director(Chairman)
Independent
Director
Other

Criteria Meets One of the Following Professional
Qualification Requirements, Together with atLeast Five Years’ Work Experience
An instructor
A judge, public
or higher
prosecutor,
Has work
position in a
attorney,
department of Certified Public experienc
in thecommerce,
Accountant, or eareasoflaw, finance,
anothercommerc
accounting, or professional or e, law,othertechnical
finance,academic
specialist whoordepartment
has passed a
accountin
related to the nationalg, orbusiness
examination
otherwiseneeds of theand beennecessaryCompany in a awarded afor thepublic or
certificate in abusiness
private junior professionof thecollege,necessary forcollege or
the business of Company
Name
university
the Company

Independence Criteria (Note 1)

1

2

3

4

5

6

7

8

9

Number of
Other PublicCompanies inWhich theIndividual is
Concurrently
10 Serving as a
Remuneration
Committee
MemberRemarks

Shen, Hui-Ya



























1

-

Chang, Hsieh
Gen-Sen



























1

-

He, Jyun-Huei



-























0

-

Note 1: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during their term(s) in office.
1. Not an employee of the Company or any of its affiliates.
2. Not a director or supervisor of the Company or its affiliated enterprise (except for independent directors appointed in accordance with
the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent company,
its subsidiary or a subsidiary of the same parent).
3. Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underagechildren, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the manager
listed in (1) or the personnel listed in (2) and (3).
5. Not a director, supervisor or employee of a corporate shareholder who directly hold more than 5% of the total issued shares of thecompany, is within the top five shareholders, or appointed a representative to be a director or supervisor of the company inaccordance with Article 27, Paragraph 1 or 2 of the Company Act (except for independent directors appointed in accordance with the
Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent company, its
subsidiary or a subsidiary of the same parent).
6. Not a director, supervisor or employee of another company controlled by the same person who holds more than half of theCompany's director seats or voting shares (except for independent directors appointed in accordance with the Act or the laws andregulations of the local country by, and concurrently serving as such at, the Company or its parent company, its subsidiary or asubsidiary of the same parent).
7. Not a director, supervisor or employee of another company or institution with the same person or spouse as the chairman, generalmanager or equivalent of the Company (except for independent directors appointed in accordance with the Act or the laws andregulations of the local country by, and concurrently serving as such at, the Company and its parent company, its subsidiary or asubsidiary of the same parent).
8. Not a director, supervisor, manager or shareholder holding more than 5% of shares of a specific company or institution that has
financial or business dealings with the Company (except for independent directors appointed in accordance with the Act or the laws
and regulations of the local country by, and concurrently serving as such at, the Company and its parent company, its subsidiary or asubsidiary of the same parent and if the specific company or institution holds more than 20% but less than 50% of the total issued
shares of the Company).
9. Not a professional who provides auditing related services to the Company or its affiliates and did not provide commercial, legal,financial or accounting related services to the Company or its affiliates with the cumulative amount of remuneration obtained in thelast two years exceeding NT$500,000; and is not an owner, partner, director, supervisor, or manager, or the spouse of any of theabove, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates.
However, this does not apply to the members of the Remuneration Committee, the Public Takeover Review Committee or the Special
Merger and Acquisition Committee who perform their functions and powers in accordance with the relevant laws and regulations of
the Securities and Exchange Act or the Business Mergers and Acquisitions Act.
10. Not a person of any of the conditions defined in Article 30 of the Company Act.
Note 2: The Remuneration Committee is composed of four members. For the Remuneration Committee Charter, please refer to the Company
website: https://www.china-airlines.com/tw/en/investor-relations/important-company-regulations

50 Corporate Governance Report

B. Attendance of Members at Remuneration Committee Meetings

The Company's Remuneration Committee has a total of 3 members, and the term of the current
Committee members: June 27, 2018, to June 26, 2021.
The Remuneration Committee convened four meetings over the past year (from January 1, 2020,
through March 27, 2021). Committee member attendance is detailed below:
Title

Name

Attendance in
PersonBy ProxyAttendance Rate (%)

Remarks

Independent Director(Chairman)

Shen, Hui-Ya

4

0

100%

None

Independent Director

Chang, Hsieh Gen-Sen

4

0

100%

None

Other

He, Jyun-Huei

4

0

100%

None

Other mentionable items:
1. The members of the Committee shall exercise the due care of a good administrator, perform the following functions and duties faithfully, and shallbe responsible to the Board of Directors and submit their recommendations to the Board of Directors for discussion:(1) Establishment and regular review of policies, systems, standards, and structures for performance evaluation and salary and compensation for
Directors and managers.
(2) Regular evaluation and setting up of salary and compensation for Directors and managers.
(3) Regular review of matters related to the organization regulations for the Board of Directors’ revision.
(4) Other matters handed over for discussion by the Board of Directors.
2. If the Board of Directors declines to adopt or modifies a recommendation of the Remuneration Committee, the date of the meeting, session, thecontent of the motion, resolution by the Board of Directors, and the Company’s response to the Remuneration Committee’s opinion (e.g., theremuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for thedifference shall be recorded): None.
3. Resolutions of the Remuneration Committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the dateof the meeting, session, the content of the motion, all members’ opinions and the response to members’ opinion should be specified:Handling of members’Meeting Dates
Agenda content
Resolution
opinions by the Company
January 13, 2020
7th Meeting of theRemuneration Committee ofthe 21st Board of Directors

Chairman and Managers' 2020
Lunar New Year Incentive

Approved by all attending members
to be reported to the Board of
Directors for discussion.

No further business

July 21, 2020
8th Meeting of theRemuneration Committee ofthe 21st Board of Directors

1. Amendment to the Charter ofRemuneration Committee
2. Flight safety bonus to Chairman
and managers

Approved by all attending
members to be reported to theBoard of Directors for discussion.

No further business

January 18, 2020
9th Meeting of theRemuneration Committeeof the 21st Board of
Directors

Chairman and Managers' 2021
Lunar New Year Incentive

Approved by all attending
members to be reported to theBoard of Directors for discussion.

No further businessApproved by all attending
members to be reported to theBoard of Directors for discussion.

No further business

March 18, 2021
10th Meeting of theRemuneration Committee ofthe 21st Board of Directors

1. Resignation pay for the former
Senior Vice President Chang, Young
2. Flight safety bonus to managers

Corporate Governance Report51

3.3.6 Corporate Social Responsibility and Deviations from the Corporate Social
Responsibility Best-Practice Principles for TWSE/GTSM Listed Companies
Implementation Status

Evaluation Item

Yes

1. Does the Company, based on the materiality
principle, conduct risk assessments onenvironmental, social and corporate
governance issues related to the Company’s
operations and formulate relevant risk
management policies or strategies?



2.Has the Company designated full- (or part-)
time personnel to implement corporatesocial responsibility policy with senior
management authorized by the Board of
Directors to manage them, and do they give
status reports to the Board of Directors?



3.Environmental issues(1)Has China Airlines established anenvironmental management system that is
specifically designed with the Company's
operations in mind?



52 Corporate Governance Report

Deviations
from theCorporate
SocialResponsibility
Best-PracticeNo
Brief Explanation
Principles for
TWSE/TPEx
ListedCompanies
and Reasons
Our risk management framework is based on the materiality principle to identify both No Difference
traditional risks and medium-term/long-term strategic risks. All impacts andcountermeasures are analyzed and proposed through Risk Identification, Risk
Analysis, Risk Assessment, and Risk Control, then followed up on and reviewed by the
Risk Management Committee under the Board of Directors. The Committee assists
the Board of Directors to inspect the strategies, execution results andcountermeasures of each risk management strategy. A responsible unit will be
required to control the risks. Among which, safety and operation risks are cross-unit
operational risks and shall be handled by the Company's management level. The"Corporate Safety Committee" and the "Corporate Sustainability Committee" havebeen established under the President of the Company to be responsible for such risks
and report the environmental and energy management performance to the top
management on a quarterly basis. In addition, through the routine "Sustainability
Committee" and "Board of Directors and Risk Management Committee" meetings,
reports have been made to the Directors on environmental and climate risks,
opportunity issues, and various responding control operations and development
plans.
The Company has set up a Corporate Sustainability Committee in 2014, which is solely No Difference
responsible for the promotion of sustainability and is the highest governanceorganization for sustainability governance promotion, with the President sitting as its
Chairman. There are six major task forces in the Committee, based on different
aspects of sustainability, which are “Trust Value Team, Manpower Value Team, Joint
Creation Value Team, Environmental Value Team, Social Value Team, and Sustainable
Development Foundation Team.” Their main responsibilities are strategy formulation,business planning, and promotion of different aspects of sustainability; the teams
report the implementation status to the Board of Directors on a regular basis every
year in accordance with the Corporate Social Responsibility and Sustainable
Development Best-Practice Principles. The results of the 2020 CSR operation and the2021 CSR operation plan were reported in the 14th meeting of the 21st Board of
Directors on January 18, 2021.
(1)Environmental management organization and system
No Difference
A. In 2012, the Company was the first in Taiwan’s industry to establish a “Corporate
Environmental Committee,” in which the President serves as the representativeof the top management, and the Corporate Safety Office serves as the executive
secretary. According to the business attributes, five major environment
management committees were established to respectively control and carry out
aviation, maintenance and cargo transport service, headquarters and branchadministration, environmental, energy, climate change and other risk andopportunity management related affairs of the operational activities, fully
covering the corporate business scope. The Corporate Environmental Committee
coordinates and integrates various environmental, energy, and climate change
risk and opportunity response strategies and management resources throughquarterly management meetings. Related important resolutions are also
reported to the Directors through routine Board meetings and Risk Management
Committee meetings.
B. In order to integrate environmental protection operations into the daily
operational risk management operations of the enterprise, China Airlines has
introduced a number of international standard management systems since 2009,and has established and improved the environmental management operation
mechanism of the enterprise, covering risk issues such as greenhouse gases,
environmental management, and energy management. The Company has
formulated management strategies and action measures for relevant risks andopportunities identified in various aspects of the environment. Beginning in 2017,
the Company has introduced life cycle thinking and completed control over every
link of the organization's operations; also, considering the issues of interest to
stakeholders, the Company has further improved the level and perspective ofenvironmental and energy risk management, and become comprehensively inline with the standard thinking of international enterprises’ sustainable
development governance. System standards covered by China Airlines’
environmental management mechanism:
ISO 14064-1
ISO 14001
ISO 50001
Greenhouse gas
Environmental
EnergyStandard
inventory andmanagement
management
management
systemsystemsystemTime of
2012
2013
2009
introduction(Note1)(Note2)

Implementation Status

Evaluation Item

Yes

No

Brief Explanation

ISO 14064-1
ISO 14001
ISO 50001
Greenhouse gas
Environmental
EnergyStandard
inventory andmanagement
management
management
systemsystemsystem(1)Global aviation(1)Aircraft/engi(1)Aircraft/engine
fuel
nemaintenancemaintenance
operation(2)Ground
operation(2)Flight operation
operations inand management
Taiwan,(2)Flight
including CAL
operation
Park,
and
Scope
maintenancemanagement
facility, Taipei(3)Cargobranch (floors
transport
B1, 1, 2, and 9),
service
Songshan Park,(4)Passenger
and Kaohsiungtransport
branch.
service
Note 1: The ISO 14001: 2015 version transferring operation was completed in2017, and the certificate is valid through March 28, 2022.
Note 2: The ISO 50001:2018 version transferring operation was completed in
2019, and the certificate is valid through April 11, 2022.
(2)Has the Company endeavored to makemore efficient use of resources and use
renewable materials that have a lower
impact on the environment?

(2)The Company’s implementation of environmental and energy performance
management mainly promotes various resource conservation and reuse strategies
and practices based on the “Environmental and Energy Management Policies,” asfollows:
Promotion
strategies
˙ Understanding
Complying with Performing
environmental
environmental compliance
protection trends
laws andobligations andin Taiwan andregulations
fulfillingabroad, andenvironmental
improving theprotection andnegotiationenergy conservation
channel andresponsibilities.
platform forstakeholders.
˙ Actively
participating ininternational
cooperation andunderstanding
mainstream
issues.
˙ Perfecting
management/sup
ervision andevaluation
mechanism
Concepts

Conserving the
Earth's
resources

Policies

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

No Difference

Plans of action

˙ Regular regulatory
requirements
checks andself-commitment
reviews
˙Actively
participating indomestic andforeign industry
and government
meetings to grasp
the trends ofregulations.
˙Implementation ofcheckingmechanism for
management
system complianceobligation
˙Participation in
DJSI, CDP, andother leadinginternational
evaluations
˙ Understanding
˙ Continuously
Establishing
updates to ISO
improving theenvironmental andstandards,
operationalenergy management
implementing andquality of thesystems, andperfecting thecorporate
management
improvement ofenvironmental
performanceenterpriseand energy
indicators.
Environmental
management
Management
systemSystem, EMS.
˙ Developing and˙Improving theimplementing
checking, oversightenvironmental
and evaluation
performance andmechanism forcarbon reduction
environmental,
targets
energy, andcarbon emission
risks

Corporate Governance Report53Implementation Status

Evaluation Item

Yes

No

Brief Explanation

Improving eco‐efficiency

Implementing
˙ Creating
environmental anddiversified
energy conservation
guidance andeducation to foster
communication
employees’
channels
environmental
˙ Establishingawareness.
incentive
programs tomotivatecolleagues topractice anddevelopenvironmental
protection ideas.

Implementing green ˙ Establishing a
supply chain
supply chain risk
management toassessment andenhance overallmanagement
eco-efficiency.
system˙Establishingenvironment andenergymanagement
capacity forcompanies of theGroup

54 Corporate Governance Report

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons
˙Establishing andimplementing
various energy
conservation,
carbon reductionand environmental
performancetargets
˙Implementing
internal audit andmanagement
reviewmechanisms andconducting third
party verification.
˙Establishing a Task
Force onClimate-Related
Financial
Disclosures (TCFD)
system˙Establishing a
corporate“Environmental
Management
Information
System” tounderstand anddocument
historicalenvironmental
performance.
˙ Implementing
environmental
and energy-saving
education for all
employees
˙Organizing anannual“environmental
protection
education
seminar” and“environmental
protection
competition”
˙Establishing aplatform topromote newknowledge ofenvironmental
protection andenergyconservation fromtime to time
˙Establishing a
reward system for
proposals
˙ Cultivating theGroup’s and key
suppliers’
environmental
talent˙Holding value
chain
environmental
protection andenergy saving
education andtraining
˙Performing supply
chain risk
assessment
operation

Implementation Status

Evaluation Item

Yes

No

Brief Explanation

Fulfilling social
responsibility(3) Does the Company assess the potential
corporate risks and opportunities createdby climate change now and in the futureand does it take measures to deal withclimate related issues?



Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

Creating a low‐
carbon operating
environment toestablish continual
improvement ofenergy andenvironmental
performance.

˙ Optimizing
devices
performance
˙ Promoting
energy-saving
education andestablishingcorporateenergy-saving
culture.
˙ Introducing
low-carbon andrenewableenergy facilities

Supporting green
design andprocurement topromoteenvironmental
sustainability.

˙ Deepening theawareness ofplanners inenvironmental
protection andenergyconservation
˙Promoting green
procurement andgreen consumer
culture˙Organizing
conferences andregular meetings
for suppliers tocommunicate
China Airlines'
sustainability andenvironmental
protection
requirements.
˙ Checking andoptimizing energy
equipment andmanagement
measures˙Establishing andimplementing
energyconservation
management andeducational
programs
˙Mastering
technology andregulatory trends,
and introducing
renewable energy
equipment in atimely manner.
˙ Incorporating
service process
into the operation
scope of theEnvironmental
Management
System (EMS) andstrengthening
personnel
training.
˙Including
environmental
protection andenergy saving
effects as the key
considerations for
procurement
˙Establishing andpromoting “Green
Fares - Carbon
Exchange Service”
˙Usingenvironment-frien
dly certified
on-board spare
products andsellingenvironment-frien
dly duty-free
products
˙Diversifying thepromotion ofgreen consumerawareness(3)The Company's climate change risk and opportunity management is as follows:
No Difference
A. Climate risk and opportunity management mechanism
With respect to specific issues, the Company has established functional task
forces under the corporation's Environmental Committee, including thefollowing task forces: Carbon management task force, aircraft alternative fuelresearch task force, TCFD work task force, among others, to facilitate
cooperation among units and flexible allocation of required resources.
B. Climate risk and opportunity response measures
Through the carbon management and the TCFD work task forces, the Company

Corporate Governance Report55Implementation Status

Evaluation Item

Yes

No

Brief Explanation

identifies its environmental risk opportunity matrix, considers theidentification and adjustment of changes in external specifications andtechnological development environmental conditions, brings the top nine
topics into the scope of corporate environmental risk management andactively controls the response. Other issues have also been continuously
improved through the operation of the corporate Environmental Management
System (EMS).
Potential risks
Potential opportunities
Response measures
˙ Poor weather
˙ Continue to strengthen
˙ Enhance emergency
conditions lead toresponsibility, properly
operational
flight delays,
handle customer
procedures andcancellations, etc., andneeds, improve service
emergency response
increase businessquality and reputation.
mechanisms,
˙ Properly handle andoperational costs.
strengthen personnel
meet customer needs,
˙ The maintenancetraining, and improveand improve thefrequency and quality
the inter-unit
corporate tenacity andassurance
coordination andreputation.
requirements arebusiness operational
increased, meaning
efficiency within theincreased costs.
organization.
˙ Bring in a professional
˙ The operational
meteorological team,efficiency of related
improve the accuracy
equipment is reduced,of meteorologicaland operational costs
forecasts, and activate
are increased.
the aircraft dispatching˙ The demand for
operation as early as
passenger and cargopossible.
transport is reduced,
˙ Enhance theand revenue iscoordination of supply
reduced.
chain management
and partnership,
ensure the safe andeasy transportation of
goods and personnel
at all stages.
˙ Higher oil prices
˙ Effectively adjust the
˙ Diversified financing
increase businessrisk of rising fossil fuelchannels
˙ Continuous evaluation
operation costs.
pricesand introduction of˙ The use of aviation
˙ Improve the
new technology (newsustainable fuelconsumption andenergy-saving aircraft,increased, the ratio ofefficiency offuel-saving technology,
fuel added increased,
low-carbon energy andetc.)
and the operational
reduce energy
˙ Continue to promote
cost increased.
expenditure.
the measures of˙ Use aviation
aviation fuel saving
sustainable fuel to˙ Energy consumption
improve brandinventory andbenefits and revenue.
improved efficiency inflight and ground
operations
˙ Promote thedevelopment ofalternative fuels in
Taiwan˙ With the growth of
˙ Continue to reduce
˙ Proactively participate
business, carbon
greenhouse gas (GHG)
in negotiation andemissions continue toemissions and reduce
communication
grow, increasing
our sensitivity to
between publiccarbon exchange andchanges in carbon
departments andregulatory costs.
transaction prices.
international
˙ Install/purchase˙ Derivative income fromorganizations
˙ Establish a carbon
renewable energy
carbon rights sales
discharge monitoring
facilities or adjust work ˙ Improve the energy
and management
details, increasing
efficiency of flight andsystembusiness operation
ground operations and˙ Understandcost.
reduce energy
fluctuations in the
expenditure.
carbon market andmanage carbon rights
appropriately.
˙ Planning andimplementation ofeach item in carbon
reduction measures
˙ Unstable supply of raw ˙ Open up new markets ˙ Carry out supply chainmaterials
and increase revenue.
management guidanceand strengthen supply
˙ Increase in
˙ Use raw materials of
chain fitness.
procurement costs
the current season toadjust meals and˙ Coordinate with the
reduce costs.
season to flexibly

56 Corporate Governance Report

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and ReasonsImplementation Status

Evaluation Item

Yes

No

Brief Explanation

˙ Sign long-term
contracts with relevant
supply partners tomaintain stable
services.

˙ Investors reduce their
willingness to invest
˙ Capital investment isrequired to promote
the consideration ofhighly efficient
aircraft/sustainable
fuel investment.

˙ Work with stakeholders
to adapt to the climate
and capture business
opportunities by using
innovative solutions.

˙ The risk of infectious
˙ Plan to promotediseases has increased,
low-carbon services
reducing the demand
and thereby enhancefor tourism andconsumer support forchanging the demand
our brand.
for cargo transport.
˙ Master the market
˙ The consumer market
model of low-carbon
attaches great
economy/transportati
importance toon issues and create
low-carbon andbusiness opportunities
environmental
and increase
protection ofcompetitiveness.
corporations, both ofwhich affect brandtrust and reducerevenue.
˙ Improvements in theawareness of carbon
reduction changed thedemand for airtransport (such aschanging to cruiselines, high-speed rail,etc.).

˙ Does not meet the
expectations ofstakeholders, affects
brand reputation.
˙ Failure to properly
manage supply chain
issues, affecting
operations.

˙ Strengthen theprediction systemmechanism, maintainthe rights and interestsof customers, andstabilize revenue.
˙ We deal withemergency situations
properly, increasing
the public's confidence
in us.
˙ Promote supply chain
cooperation andenhance corporate
sustainable
competitiveness.
˙ Cooperate with andsupport the
government's
environmental
protection policies,
enhance industrial
cooperation
opportunities, andpromote industrial
competitiveness.

adjust raw materials
used in meals to adapt
to climate change
trends, understand thecompliance of goods
carried, and strive fornew market
opportunities.
˙ Discuss acrossdepartments, develop
new routes andservices.
˙ Develop a travel mode
to save fuel and time
˙ Continue to research
and analyze newtechnologies, facilities,
and services, andintroduce feasibility
evaluation.
˙ Cooperate with thegovernments of all
countries to manage
the disease properly,
strengthen
self-protection andresponse, and reducethe degree of impact.
˙ Develop all kinds of
new products/services,
improve service
efficiency, and meetmarket demand.
˙ Launchenvironmentallyfriendly travel service
ECO TRAVEL, invite
passengers toparticipate in carbon
reduction and enhancegreen/low-carbon
business
opportunities.
˙ Continuous researchand development of
new market channels
or customer groups
˙ Develop diversified
green and low-carbon
activities andstrengthen customer
communication.
˙ We continue tostrengthencommunication
between external
stakeholders, supportscientific research,
participate ininternational
environmental
sustainability
comparison
assessments, andenhance the corporate
sustainable image.
˙ Strengthen employee
education and training,
hold environmental
protection and energy
conservation activities,
and improve employee
awareness.
˙ Strengthen
cooperation withdomestic and overseas
suppliers of
low-carbon products
to enhance thesustainable value ofthe supply chain.

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

Corporate Governance Report57Implementation Status

Evaluation Item

(4) Has the Company compiled statistics on
the past two years of GHG emissions,water usage, and waste amounts, and has
it devised policies for energy conservationand carbon emissions reduction, GHG
emissions reduction, water conservation,and other waste management?

Yes



No

Brief Explanation(4)The Company's environmental/carbon/energy performance management is asfollows:
A. Greenhouse gas inventory and verification
Since 2009, the Company has actively implemented ISO14064-1 greenhousegas management, conducted and organized inventory of greenhouse gas
emissions generated by operations, and carried out third-party verification.
Greenhouse gas emissions
GHG
EmissionsCategory

Type

2019

2020

Aviation operations
7,059,083
5,787,751
Ground operations
4,981
3,051
Category 2
Ground operations
18,16917,572
Total (Tons of CO2e)
7,082,233
5,808,374
B. Greenhouse gas management and reduction strategy
The Company’s greenhouse gas management and reduction strategy consider
the international industrial carbon reduction targets, strategy implementation
and benchmarking technology of the same and different industries. It
combines its corporate financial operation plan and technical feasibility toformulate air and ground carbon-reduction targets. In the future, it willcontinue to incorporate the Science-Based Target (SBT) concept to carry out
rolling inspection of corporate carbon reduction objectives and management
paths through the corporate risk management mechanism and platform.
Carbon reduction
Target description
2020 Achievement rategoals
To increase aviation fuelFailed to achieve due to2020
efficiency by 1.5% every year
the impact of COVID-19
on the global market
on average
Improving annual aviation
2025
fuel efficiency by 1.5% andAviationachieving carbon-neutral
growth (CORSIA CNG2020)(the carbon emission in 2050
2030
will be reduced to 50% of
those in 2005)
38% reduction in carbon
Achieved the target
2020
emissions40.43% reduction in carbon
Ground2025
emissions42.34% reduction in carbon
2030
emissions
Aviation operations were the first phase carbon reduction target to be achieved
for the airlines industry: "By 2020, fuel consumption efficiency will be increasedby 1.5% every year." The Company will continue to strengthen fuel consumption
efficiency countermeasures, and has formulated four major fuel saving strategies,
including "promoting green energy flights," "improving ground service controls,""continuous regular maintenance" and "fuselage weight reduction,” as well as
several specific implementation measures. However, due to the COVID-19, thetotal fuel consumption decreased by 2.4% compared to the last year. The total
flight reduced by 38%, and RTK reduced by 22%. Thus the total fuel consumption
efficiency was 0.2583 ton/thousand RTK, unable to reach the 2020 goal (0.2349
ton/thousand RTK).
Category 1

For ground operations, 61 environmental management KPIs and 13 fuel saving
measures were promoted in 2020, which resulted in a total annual carbon
reduction of 115 tons of CO2e; among which, carbon reduction in ground
operations amounted to 466.48 metric tons of CO2e. Various data are as follows:
Item

58 Corporate Governance Report

Savings

Unit

Carbon reduction (Tons of
CO2e)

Aircraft fuel savings

19,131Kiloliter

48,421

Ground fuelconservation

119

Kiloliter

307

Energy conservation

2,691

1,000 kilowatt
hours

143

Water conservation3

1,000 kilowatt
hours

0.48

Paper conservation

3.78

Tons

16

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons
No DifferenceImplementation Status

Evaluation Item

Yes

No

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

Brief Explanation

2020 total carbon reduction

48,887.48

Aviation

Considering the trend of energy saving around the world and rolling wave
management, the Company made the amendment to the short-, mid-, andlong-term carbon reduction goal for 2021:
Goals
Description
2023
Improving annual aviation fuel efficiency by 1.5%
and achieving carbon-neutral growth (CORSIA
2025
CNG2020)(the carbon emission in 2050 will be reduced to2030
50% of those in 2005)
2023
41% reduction in carbon emissions
2025
44% reduction in carbon emissions
2030
50% reduction in carbon emissions
C.Targets and achievements in energy resource reduction
The Company sets various environmental protection and energy conservation
objectives in accordance with sustainable development goals (SDGs):
GroundItem

Achiev
ements2020 targets

Did notmeettarget2021 expected targets

Aviation fuelefficiency

Improvement of 1.5%
over 2019

Improvement of 1.5%
over 2020

Ground carbon
emissions

Reduction of 38%
over 2009100%

Reduction of 39% over2009

Water resources

Reduction of 1.5%
over 2018

100%

Reduction of 2.2% over2018

Domestic waste

Reduction of 2% over
2018

100%

Reduction of 3% over2018

Hazardous
industrial waste

Recycling ratio
reached 40%

100%

Recycling ratio reached41%

Photocopy
paper

Reduction of 5% over
2018

100%

Reduction of 5% over2018

(Note)

Note: Failed to achieve due to the impact of COVID-19 on the global market.
D.Increased energy efficiency
After obtaining "Diamond Green Building Label" certification in 2017, theheadquarters for China Airlines continued to promote equipment renewal,
optimize operational processes, and improve the overall energy efficiency ofbuildings; in 2019, the Company further responded to Taiwan's green energy
policy. It completed the installation of 99kW solar photovoltaic facilities on theroof of the simulator training building for parallel power generation to support
Taiwan's renewable energy through practical actions. In 2019, the Company
received National Renewable Energy Certificate (T-REC) and was awarded the
Bureau of Energy's (MOEA) Conservation Benchmark - Silver Award, Taipei
Energy Conservation Leadership Award, supporting renewable energy with realactions. As of December 31, 2020, the Company received 117 certificates, andthe total power generated was 215 thousand kW. 115 tonnes of CO2e werereduced.
E.Water resource utilization increase
The total water consumption of the Company in 2020 was 126,774 kWh, which
is about 13.46% less than that in 2019. Among which, the China Airlines
headquarters park is in a specific area of the airport. The airport management
unit collectively applies for and obtains tap water from the water supply unit
and pays the sewage treatment fee. The domestic sewage is collected and sent
to the domestic sewage treatment plant for treatment. The maintenancefacility, Songshan Park, and Taipei branch apply directly for water supply fromthe water company.
In order to reduce the risk associated with water resources, the Company has
successively set up water meters at important water line nodes, and it tracks
and analyzes the direction of water resource flow and water consumption hot
spots, and promotes water reduction and recycling measures, including:
Purchasing water conservation label products, promoting water conservation
advocacy, setting up a rainwater recovery system, recycling cooling water andintroducing Eco-shine, etc.
2019

2020

Tap water use volume

Item

Kilotons

Unit

146.49126.77

Recycled water use volume

Kilotons

17.41

8.64

Corporate Governance Report59Implementation Status

Evaluation Item

Yes

No

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

Brief Explanation

Recycling percentage % (recycled%
11.88%
6.8%
volume/water use total volume)
F.Waste Management
The Company processes waste management in accordance with the five
following principles: Refuse, Reduce, Reuse, Recycle, Repair. We have set a
goal for 100% resource reclamation of waste and have annually increased thewaste reuse rate.
Waste
Management
Strategies and goals
Actions
Principles
Support suppliers to develop andpurchase non-disposable plastic
Refuseproducts (such as: wooden cocktail stir
Through green designrods); Increase green procurement.
and procurement,
Accurately plan business and service
reduce resource
supplies to reduce consumption;
consumption andimprove maintenance processes andwaste disposal
reduce end waste; Implement
Reducedemand at the source.
electronic teaching materials andoperations, conserve paper arisingfrom training and communication.
Improve the reuse ratio (e.g., plastic
waste bucket) of hazardous industrial
Reuse
Through improvement
waste.
of operation
Working with the environmental
processes, improve
protection agency's plastic film
the reuse rate of
Recyclerecycling platform, improving thewaste and reduce therecycling ratio of packaging plastics.
opportunities wherewaste would be
Continue to use passenger and freight
generated.
equipment (such as pallets orRepaircontainers/netting) after repair.
In 2020, the production of ground operation and domestic waste was 454,279
kg, which is about 35.4% less than that of 702,966 kg in 2019. In 2020, theamount of business waste also decreased by 21.7% compared with that in 2019.
2019
2020
Item
Handling method
Domestic
waste
GroundOperational

In the air
Service

Hazardous
industrial
waste

Generalindustrial/
domestic
waste

Non-recyclable
Incineration
Recyclable:
Resources recycled
Non-toxic:
Entrust qualified
organization toremove/dispose
Toxic: solidification
and burial/chemicaltreatment
Non-recyclable
Incineration
Recyclable:
Resources recycled

Total waste (kg)4. Social issues(1) Has the Company establishedmanagement policies and procedures inaccordance with relevant laws andregulations and international human rights
conventions?

60 Corporate Governance Report381,626

327,728

321,340

126,552

233,018

184,420

18,815

12,657

3,052,461

943,952

1,116,396

341,366

5,123,656

1,936,675

11.88%(1)In the area of comprehensive management systems and organizational capacity, No Difference
the Company not only abides by the Employee Code of Conduct and Employee
Work Standards set forth in various labor laws, but also refers to the Universal
Declaration of Human Rights, the United Nations Global Compact, theInternational Labor Organization's basic compact on core labor standards, the UN
Guiding Principles on Business and Human Rights, and local laws and regulations.
The company has established a Human Rights Policy based on the aforementioned
norms as guiding principles for the Company's management.

Implementation Status

Evaluation Item

Yes

No

Brief Explanation(2) Does the company establish andimplement reasonable employee welfare
measures (including compensation,
vacation, and other benefits) thatappropriately reflect the operating
performance or results through employeecompensation?

(2) Employees are the most important assets of a company. In addition to improved
planning and setting standards for the implementation of salary, work bonuses,
flight-safety bonuses, vacation, preferential air tickets, and several welfare
measures, the Company offers performance bonuses, annual bonuses, year-end
bonuses, promotions, and employee compensation with reference to theperformance of employees at the end of each fiscal year and based on the
Company's annual profit status. The Company takes this opportunity to care for its
employees and treat them as the core of its sustainable operations. The averagesalary for all employees of the Company increased by about 1.67% in 2020.

(3) Does the Company provide employeeswith a safe and healthy work environmentand regularly implement health and safety
education programs for employees?

(3)In order to protect the rights of employees, provide a healthy and safe working
environment, and create a friendly workplace, the Company has establishedinternal rules and regulations related to "employee complaint measures" and"employee safety report reward operation measures," and provides multiple
communications channels, such as a speaking area, regularly scheduledlabor-management consultation meetings, and special e-mails for complaints invarious cases (including WeCare, workplace sexual harassment, professional
ethics). Such channels are made accessible to all employees, and complaints are
accepted in accordance with the operational procedures.

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons
No Difference

No Difference

A. Keep pace with international double certification in this new era of workplacesafetyTo adapt to trends of global international labor development, improve theefficiency of safety and health management, and promote systematicmanagement measures, the Company established an independent safety andhealth management system and obtained ISO45001:2018 and TOSHMS
certification on April 20, 2019, which serve as the management basis ofoccupational safety and health management system certification.
Self-management and preventive measures based on the PDCA cycle mode areused to effectively control occupational disaster risk, improve occupational
disease preventive management, improve occupational safety and healthmanagement performance, and actively implement occupational safety
policies; Provide a safe, healthy, and comfortable working environment for
employees, and promote industry competitiveness.
B. Occupational safety and health committee for two-way effective
communication
The Company has established an Occupational Safety and Health Committee inaccordance with law. The committee is tasked with the objective of preventing
occupational hazards and protecting the safety and health of all employees byreviewing, coordinating, and making recommendations pertaining to safety
and health related matters. The position of chairman is served by thepresident. There is one vice chairman and one executive secretary under thechairman. The committee consists of the first-level management of designatedunits, occupational safety and health personnel, engineering and technicalpersonnel, medical personnel, and labor representatives appointed by thelabor union as members. A meeting is held once every three months to gather
statistics and analyze the Company’s occupational accidents and report andfollow up on subsequent safety and health management plans. A total of 14
safety and health proposals were reviewed, coordinated, and provided withsuggestions in the meetings in 2019, and all proposals have been concluded;
relevant meeting minutes have been announced on the Company’s internal
website.
C. Full AQD for comprehensive risk assessment
Using China Airlines' Aviation Quality Database (AQD) of all personnel to reflect
hidden hazards of the operating environment and implement risk assessment
to reduce occupational accidents; the improvement rate of the safety andhealth related cases was 100%, indicating a safe, healthy, and comfortableworking environment for China Airlines employees.
D. Strengthen occupational safety and pandemic prevention
To cope with the pandemic, China Airlines actively equips itself with the ability todeal with infectious diseases. Cross-unit control mechanisms and procedures
were built to consolidate the efforts from each unit. The Company constantly
reminds employees to keep full alert and quickly makes responses based on
the condition of the epidemic. For employees who are exposed to high risks

Corporate Governance Report61Implementation Status

Evaluation Item

Yes

No

Brief Explanation

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons(cabin crews), a health report system was built to track any abnormality.
Ground service staff were asked to work remotely and business travels wererestricted. Relevant health management policies have been strictly adopted.
Cross-function collaboration system was built to provide various
communication channels. The Company also strengthened employees'
knowledge on the prevention of biological pathogen hazards through healthpromotion lectures and education training. The Company also makes goodmanagement, utilization and storage of the pandemic prevention resources toprovide a safe, healthy and comfortable working environment for employees.
E. The Company values employees' health, and has been dedicated to creating ahealthy workplace. Regular health checkup has been conducted with moreinspecting items as prescribed by law and with higher frequency. Employees
who are listed in the high-risk group are followed up and guided by doctors torealize the early inspection and precaution. Meanwhile, every year theCompany makes clear direction for health promotion and approves a sufficientbudget. The occupational health promotion plan is made by combining theresources from the health authority and community. Health promotion courses
are held to create a positive and healthy workplace. Topics cover cancer
screening, prevention of infectious disease, and vaccination, etc. In 2020,
cardiovascular disease and coronavirus prevention were included in the
training content. The Company also provides employees in Taiwan with a freevaccination. 2,108 people were vaccinated in 2020. To allow female employees
to be able to do breastfeeding, breastfeeding rooms are established incompliance with the breastfeeding policy of the Health Promotion
Administration, Ministry of Health and Welfare as well as the Act of Gender
Equality in Employment.
(4) Has the Company established an effective
career skill development training programfor employees?

(4) In order to nurture the Company's human resources, it has a Training Advisory
Committee, which is responsible for the planning of annual education and training
for all colleagues, including strategic occupational training, management
occupational training, and job training. Simultaneously, in accordance with theCompany's operational development strategy, and to deepen the Company's
various levels of management professionals and broaden the horizon of potential
talents, strategic and management occupational training was held on a regularbasis to sharpen employees’ necessary knowledge and skills. In addition, since2009, the Company has established a Management Talent Training andDevelopment System to nurture talents with international vision and management
capabilities, and to strengthen the management knowledge of management
professionals through job experience, management course training, and rigorous
assessment systems. As of today, more than 100 outstanding management
professionals have been trained and are now serving in key units in Taiwan andforeign branches. In 2019, a total of NT$253 million was invested in the training
and development. The total number of training hours exceeded 52,865 hours.

No Difference(5) Regarding customer health and safety,
customer privacy, marketing and labelingof the products and services, does theCompany follow relevant regulations andinternational standards, and formulate
relevant policies and complaint
procedures for consumer rights
protection?

(5) In addition to stipulating service commitments, transportation terms andconditions, and disclaimer clauses in accordance with the law, regarding theconsumer rights policies, the Company has also posted and shared on the
Company’s website the information security policy with its “privacy protection
policy” and “privacy protection statement.” It is committed to protecting theprivacy of all customers’ personal information. Also, to protect the rights andinterests of the passengers, reservation and ticket-related rules for flight changes
have been clearly mentioned in the FAQs on the official website. Furthermore, theCompany has in place consumer complaint procedures to provide consumers withcomplaint channels for products and services, including company website(including stakeholders section, customer feedback, and service satisfaction
survey), Facebook fan page, customer service e-mail, and global branches’
addresses and phone numbers; consumers may also send letters to the Company
directly. All complaints will be replied to after processing.

No Difference(6) Has the Company formulated suppliermanagement policies that require
suppliers to follow relevant regulations on
issues such as environmental protection,
occupational safety and health or laborhuman rights, and their implementation
status?

(6)The Company has formulated the “Supplier Code of Conduct” which specifies that
suppliers shall provide a healthy and safe working environment and shall ensurethat workers respect each other, enjoy dignity and fairness, and abide byprofessional ethical standards; in any case, when providing products and services,suppliers shall strictly comply with the legal, ethical requirements and theircommitment to be responsible to the society and environment; if the Code isviolated, the Company may terminate the business relationship between the two

No Difference

62 Corporate Governance ReportImplementation Status

Evaluation Item

Yes

No

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasons

Brief Explanation

parties.
Moreover, the Company evaluates the supplier’s past credit history, and reviews
the supplier’s quality, delivery date, and whether there are any negative reports
before dealing with the supplier. In 2020, a total of 48 suppliers were reviewed.
In accordance with the "Sustainable Supply Chain Management Policy Statement"of the Company, we have requested that every supplier sign the "Supplier Code of
Conduct" when making a tender, jointly undertaking to create a sustainableindustrial environment since 2016. We have also continued to promote theprocurement of Green Mark certified products. By the end of 2020, we havecompleted green procurement of approximately NT$1.47 million in total.
Therefore, the Company has been promoting sustainable supply chain
management since the beginning of 2014. Subsequently, we established a Joint
Value Creation Team for important procurement categories, including "aviationmaterials, aviation fuel, in-flight meals, service procurement, and general businessaffairs," and formulated long-term sustainability goals based on the United
Nations' Sustainable Development Goals (SDGs), establishing China Airlines'
Sustainable Supply Chain Management Policy Statement and Supplier Code of
Conduct with reference to the Global Reporting Initiative (GRI), ISO 26000, United
Nations Global Compact (UNGC), International Labour Organization (ILO), andother international standards. In addition, the Company has also established a risk
investigation mechanism, performed audit operations, organized suppliermeetings to enhance the effectiveness of engagement, and set up othermanagement measures, and has regularly reported the management results to the
Corporate Sustainability Committee for follow-up inspection on a quarterly basis.
No Difference
5. Does the Company refer to internationally
The Company follows the GRI Standards - Core option issued by the Global
accepted report preparation standards or
Sustainability Standards Board and refers to the UN Global Compact when preparing
guidelines to prepare its Corporate Social
its CSR Report. In May 2021, the Company’s limited level report verification will becompleted by KPMG based on the GRI Standards and ISAE3000 Assurance Standard,
Responsibility (CSR) Report and other reports
and a third-party verification statement was issued, which has been disclosed on thethat disclose the Company’s non-financial
Company’s “Corporate Social Responsibility” section on its website.
information? Has the aforementioned reportbeen assured, verified, or certified by athird-party verification unit?
6. If the Company has drawn up a code for CSR based on the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies, please
describe any differences between said code and the Best-Practice Principles:
In order to fully implement the scope of corporate social responsibility, comply with the government's direction of CSR promotion, and accord withinternational practice, the Company has added to and amended the Company's Corporate Social Responsibility and Sustainable Development Best-PracticePrinciples on November 5th, 2020 based on the revised Corporate Social Responsibility Best-Practice Principles for TWSE/GTSM Listed Companies; through this
CSR's highest guiding principle, we have comprehensively reviewed the Company's operational constitution, reflected the management and execution
aspects, and striven to fulfill corporate social responsibility in three major aspects: environmental, social, and governance (economic) (ESG); there was nooperational difference this year. For related information, please refer to the Company's corporate social responsibility website. No deviations were found thisyear.
7. Other important information for facilitating the understanding of CSR and its implementation:
As the global aviation industry was fundamentally impacted by the coronavirus, China Airlines continued to fulfill its commitment to corporate sustainable
development. Based on "promoting the local education internationalization," "enhancing international visibility of local brands in Taiwan" and "helping
disadvantaged groups to obtain equal opportunities in society, "China Airlines looks forward to enhancing the education quality in Taiwan, strengthening
Taiwan's visibility on the world stage, helping the vulnerable group to overcome difficulties, and giving back to society for sustainable development.
(1) Promoting the internationalization of local education:
Strengthening education: 46,017 persons benefited in 2020
Corporate visit: Every year, China Airlines invites colleges and universities to visit the company, and provides designated personnel to introduce corporate
culture and training facilities for cabin crew, emergency training, and aviation training. Through real practices, it is hoped to cultivate students' knowledge ofthe aviation industry. In 2020, nine sessions of visits were paid by colleges and universities, benefiting 320 students.
Lecture by volunteers: China Airlines Volunteering Club was established in 2001. Every year, the volunteers offer lectures to nearby schools. Throughdemonstration, the volunteers teach students relevant knowledge in the aviation industry, and enhance students' global perspective and growth. In 2020, 8
lectures in schools such as Xihai Elementary School, Zhuwei Elementary School, Shanfeng Elementary School, and Kuolin Elementary School in Dayuan District
were held. In total, there were 50 participating volunteers and 24 hours of service, benefiting 604 students. Upholding the spirit of mutual support andspreading love, the China Airlines Volunteers Club gives back to the society and community with actions.
Knowledge platform for elementary school students: Since 2014, China Airlines has been working with the Global Views Educational Foundation to collaborateon the "Common Knowledge Platform Public Welfare Project" sponsorship plan and to donate subscriptions to the "Global Kids Junior Monthly" to students invarious elementary schools in Taoyuan City, Taitung County, Nantou County, and Hualien County to help students develop reading habits and to contribute to
the cultural education of children. In 2020, 102 schools and about 44,472 students benefited.
Little cabin crew dream project: China Airlines organizes the "Little Cabin Crew Dream Project" by utilizing the aviation resources to let people have anotherkind of travel experience. The activity attracted more than one hundred participants. With the professional guidance by a professional cabin crew mentor,
participants got to learn basic knowledge of aviation; Flying simulation activity was provided to let participants to observe the in-flight operation. In 2020, 2

Corporate Governance Report63Implementation Status

Evaluation Item

Yes

No

Brief Explanation

Deviations
from theCorporate
SocialResponsibility
Best-PracticePrinciples for
TWSE/TPEx
ListedCompanies
and Reasonssessions were held with 239 participants.
Co-exist with the environment: 350 people participated.
Beach cleanup activity: The activity is one of the key projects for China Airlines. This year, in response to the Taoyuan Government's promotion of beachcleanup, 350 employees including their family members and friends cleaned up Guanyin beach to eliminate the hazards in the ocean. 2,082 kg of garbage werecollected, among which 318 kg were discarded fishnets. Fishnets being recycled can be further reused to realize a circular economy.
Enhancing international visibility of local brands in Taiwan:International rescue: 2,278 items were sent in 2020, with 1,224 people benefited.
2020 was heavily impacted by COVID-19. China Airlines integrated the resources to carry out the international rescue. In response to the policy of the central
government, medical resources were delivered by charter flights to countries around the world including Europe, Northeast Asia, and Southeast Asia. 10 flights
were operated that sent 2,278 items, equivalent to 73,343 kg. Moreover, China Airlines took on the great mission to send Taiwanese travelers abroad homefrom areas with serious infections via charter flights. 9 flights were made, including Wuhan charter flight, the Japanese Diamond Princess cruise ship charter
flight, and Shanghai charter flight. 1,223 people benefited. China Airlines stood in the front line and fought against the disease, improving Taiwan's visibility on
the international stage.
Sports sponsor: In 2020, 29,589 people benefited
China Airlines has been supporting local sports teams to cultivate more athletes to win pride for Taiwan. In 2020, a charity basketball camp and baseball campwere held that invited players from Formosa Dreamers, Chen, Wei-Yin and Wang, Wei-Chung, both well-known professional baseball pitchers to teach young
players. The campaigns have prepared these young dreamers to realize their dreams.
Sports event sponsored in 2020: 2020 Standard Chartered Taipei Charity Marathon
Sports teams and athletes sponsored in 2020: Formosa Dreamers, professional baseball players Chen, Wei-Yin and Wang, Wei-Chung, Rising Star Gymnastic
Association
Equal opportunity for the disadvantaged: In 2020 241,679 people benefited.
Disadvantaged Students and Communities:
CAL's Love All Around team consists of CAL employees who volunteer to provide care for schoolchildren in remote areas, and teach children aviation
knowledge during employees' days off. Since 2014, it has covered 15 counties and cities in Taiwan, including 27 townships, 53 junior high and elementary
schools and social welfare groups, and cared for 3,207 students. Another volunteering group headed to schools in remote area in Taitung. In 2020, the group
was invited to join the event called "Foresee the Future" held by Shan-Shuei Primary and Junior School, the first school incorporating alternative education
based in Taichung. Aviation knowledge was designed into fun games to let students learn and explore. 382 students participated. In 2020, the cabin crews
organized four donation events, offering spare items on flights to the disadvantaged group. A total of 240,158 people benefited.
Disadvantaged Seniors:
China Airlines has long cooperated with Huashan Social Welfare Foundation, visiting the local seniors in Taoyuan regularly on three main festivals. In 2020,
three charity events were held: Dragon Boat Event, Mid-Autumn Event, and Have Fun with Grandchild. By gathering the social effort, China Airlines helped theelderly who are disabled, demented and live alone. China Airlines also cooperated with Taoyuan Fishermen's Association to hold the 2020 Lunar New Year
Gathering. Mushiang Orphanage, White Orphanage and senior fishermen were invited to join the gathering. 550 seniors were benefited.Happiness Bus 2.0 in
Pingtung: Due to COVID-19, the Ministry of Transportation and Communications initiated relief program for the aviation industry. In compliance with theregulations of trust fund relief operation, China Airlines sponsored the Happiness Bus 2.0 in Pingtung to improve the traffic quality in Manzhou township,
Pingtung and enhance the local residents' living quality. A total of 7,500 people benefited from this project.

64 Corporate Governance Report3.3.7 Ethical Corporate Management and Deviations from “the Ethical Corporate
Management Best-Practice Principles for TWSE/GTSM Listed Companies”
Implementation Status

Evaluation ItemYes NoDeviations fromthe EthicalCorporate
Management
Best-PracticePrinciples for
TWSE/TPEx Listed
Companies andReasonBrief Explanation

(1) CAL has established Ethical Corporate Management Best-Practice Principles andProcedures for Ethical Management and Guidelines for Conduct, which were passed
in 2016 at the 5th meeting of the 20th Board session. These guidelines and principles
clearly spell out the Company’s ethical operating policies, methods, andcommitments. They are published on the CAL website and the Taiwan Stock Exchange
Market Observation Post System.

No Difference(2) Has the Company established anassessment mechanism for the risk ofunethical behaviors, regularly analyzed
and evaluated business activities with ahigher risk of being unethical within
the business scope, and formulated aplan accordingly to prevent unethicalbehaviors, which covers at least thepreventive measures provided in
Article 7, Paragraph 2 of the EthicalCorporate Management Best PracticePrinciples for TWSE/GTSM Listed
Companies?
(3) Has the Company specified theoperating procedures, behavioral
guidelines, disciplinary penalties, andgrievance system in its plan for
unethical conduct prevention, and has
it implemented the said program while
also periodically reviewing and revisingit?

2. Implementing ethical corporate
management(2) The Company’s Ethical Corporate Management Best Practice Principles sets out
various business activities with a higher risk of being unethical to be prevented
within the business scope to strengthens relevant preventive measures, which
include behaviors provided in the subparagraphs under Article 7, Paragraph 2 of the
Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed
Companies.

No Difference(3) The Company's Procedures and Guidelines of Conduct for Ethical Management clearly
set out all unethical and prohibited conduct, the whistleblowing system, and thedisciplinary system. These procedures and guidelines are implemented in theoperations of all units.

No Difference(1) In the process of business dealings with other companies, CAL employees explain our
ethical management policy and related regulations to counterparties and expressly
refuse to provide directly or indirectly, promise, demand, or accept any form ofgratification. When signing contracts with others, CAL fully reviews the counterparty’s
ethical corporate behavior and includes complying with our ethical corporate
management policies as a provision in contracts.

No Difference(2)A. The Company’s Human Resources Management Division, which is the dedicated unit
for ethical management, is responsible for consolidating the ethical management
implementation status in relevant units of the Company and reporting periodicallyto the Board of Directors once per year. The 2020 implementation status has beenreported at the 13th meeting of the 21st Board of Directors on November 5, 2020.
In addition, the Company encourages the reporting of unethical conduct andmisconduct. An independent reporting mailbox has been set up and announced. The
General Audit Office reports the received cases, handling methods, and follow-up
review and rectification to the Board of Directors.
B. Relevant status of the Company’s implementation of ethical management policies
in 2020:
a. An E-learning training course was held to raise awareness of service principles
and code of conduct.
b. Whistleblowing channels such as the following have been notified: chairman’s
mailbox, General Audit Office’s confidential mailbox, the Speak Out area, and
the WeCare listens mailbox. These facilitate employees’ immediate reporting tomanagement and the Human Resources Management Division.
c. "Employee Workplace Code of Conduct", "Employee Job Specifications", andrelevant reward and disciplinary procedures have been established; clear
standards and an effective disciplinary system have been set out.
d. Ethical management principles are followed through scheduled andunscheduled annual inspection mechanisms to prevent fraud and corruption.

No Difference

1. Establishment of ethical operation
policies and programs(1) Has the Company formulated an
ethical management policy approvedby the Board of Directors, andexpressly stated in the regulations andexternal documents the policies andpractices of ethical management, as
well as the Board of Directors andsenior management’s commitment toactively implement the management
policy?

(1)Does the Company evaluate the ethicalrecords of the businesses with which it
has dealings and include clear ethicalcorporate behavior provisions incontracts with such counterparties?
(2) Has the Company set up a special unit
affiliated to the Board of Directors topromote corporate ethicalmanagement that periodically (at least
once per year) reports to the Board of
Directors on the status of theimplementation of ethicalmanagement policies, the plan for
unethical conduct prevention, and its
supervision?



Corporate Governance Report65Implementation Status

Evaluation ItemYes NoBrief Explanation

Deviations fromthe EthicalCorporate
Management
Best-PracticePrinciples for
TWSE/TPEx Listed
Companies andReason(3)CAL Procedures for Ethical Management and Guidelines for Conduct expressly statethat should a conflict of interest arise in the execution of Company duties,
employees shall report the situation to their direct supervisor, who should provide
appropriate guidance.

No Difference(4) Has the Company established aneffective accounting system and aninternal control system in efforts toimplement ethical management? Has
the Company’s internal audit unit used
the results of ethical management risk
assessments to draw up relevant audit
plans and examined compliance withthe plan for unethical conduct
prevention or entrusted an accountant
to perform such an audit?

(4)The Company has established effective systems, including an accounting system andinternal control system. Annual audit plans are formulated every year based on risk
assessments to examine the Company’s accounting and internal control systems.
The systems are continuously inspected to implement ethical management.

No Difference(5) Does the Company periodically holdinternal and external ethical corporate
behavior training?

(5)The Company promotes ethical behavior and corporate ethics when new employees
assume office, and conducts E-Learning online courses for supervisors posted in
Taiwan and abroad. The Ethical Corporate Management Best-Practice Principles, theProcedures and Guidelines of Conduct for Ethical Management, and otherdocuments have been disclosed on the Company's internal and official website forthe reference of internal and external personnel.
In order to strengthen employees' understanding of the Company's corporate
culture of ethical management, employees have been receiving training since 2017
through the E-learning system. The training situation for the last two years is asfollows:
A. 2019:
Trainee(s): Taiwanese and foreign cabin crew members (excluding personnel onleave of absence during training).
Number of trainees: 1,293 persons.
Number of completions: 1,293 persons.
Completion rate: 100%
B. 2020:
Trainee(s): [Retraining] Domestic and overseas personnel who didn't complete thetraining in 2017/2018.
Number of trainees: 212 persons.
Number of completions: 212 persons.
Completion rate: 100%(1) Article 20 of the Company's Procedures and Guidelines of Conduct for EthicalManagement expressly provides and discloses the rules of reporting, the reporting
channel, and the processing procedures; the reporting mailbox
auditor@china-airlines.com is notified on the Company's website and internal
website for the use of Company’s internal and external personnel. The reported
cases will be handled by the General Audit Office of the Company and thecircumstances of the report, its handling methods, follow-up review, andimprovements made will be reported to the Board of Directors.

No Difference(2) According to CAL Procedures for Ethical Management and Guidelines for Conduct,
all reports of violations and related follow-up investigations are kept strictly
confidential and CAL has clear and effective awards and punishments, an appeals
system, violation reporting confidentiality mechanism, and investigation SOP. In
addition, the Company also incorporates ethical management into employee
performance evaluation and human resources policies. A clear and effective rewardand disciplinary system, grievance system, and the standard operating proceduresfor the investigation of reports have also been established.
(3) Employees who process violation reports must sign a written statement pledging tomaintain confidentiality of the reporters and details of the case. CAL also promises
to protect the whistleblower from improper punishment due to reporting.

No Difference(3) Has the Company formulated andimplemented policies to prevent
conflicts of interest and provide
appropriate ways to record any
potential conflicts found?

3. Operation of the Company's Violation
Reporting System(1) Has the Company established aconcrete violation reporting andrewards system, set up convenientreporting channels, and appointed
suitable personnel to handle thesecases?

(2) Has the Company established thestandard operating procedures for theinvestigation of received reports, thefollow-up measures to be taken after
the investigation is completed, and therelevant confidentiality mechanism?
(3) Does the Company have any measuresin place to protect individuals frompossible mistreatment arising from
reporting violations?



No Difference

No Difference
4. Strengthening information disclosure
No Difference
CAL’s Ethical Corporate Management Best-Practice Principles and Procedures for
Ethical Management and Guidelines for Conduct are shown on the China Airlines
Does the Company disclose the content of
website and the Taiwan Stock Exchange Market Observation Post System, along with
our Ethical Corporate Management
Best-Practice Principles and their
the effectiveness of ethical operations and fair trade principles.
effectiveness on our website and the
TWSE Market Observation Post System?
5. If the Company has established a code of ethical corporate management based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx
Listed Companies, please describe any differences between said code and the Best-Practice Principles: No Differences.
6. Other information that will assist in the understanding of Company ethical corporate management practices: None.

66 Corporate Governance Report3.3.8 Corporate Governance Guidelines and Regulations

The Company has established a Corporate Charter, Rules for Discussions of Official Business at Shareholder
Meetings, Rules for Discussions of Official Business by the Board of Directors, Ethical Code of Conduct for Directors,
Election of Directors, Rules for Corporate Governance, Guiding Principles for Operational Integrity, Guide toIntegrity in Management and Business Procedures and Conduct, Practical Guidelines for Corporate Social
Responsibility and Sustainable Development, Ethical Code of Conduct for Directors, Ethical Code of Conduct for
Senior Supervisors, Employee Workplace Rules of Conduct, China Airlines Group Rules of Conduct, Supplier Code of
Conduct, and Human Rights Policy; it has formed three committees under the Board of Directors for audit,
remuneration, and risk, and has formulated various organizational rules. The relevant rules listed above are all
made public on the Company's website (http://www.china-airlines.com) and the Company's social responsibility
network (https://calec.china-airlines.com/csr/en/index.html).

3.3.9 Summary table of the resignation and dismissal of relevant persons of the Company：
None

3.3.10 Other Important Information Regarding Corporate Governance
A. The organization and operations of the Company’s internal auditing

The Company’s internal audit operations are handled by the General Audit Office. In compliancewith Article 11 of the "Regulations Governing Establishment of Internal Control Systems by PublicCompanies," the General Audit Office is under the jurisdiction of the Board of Directors. The maininternal audit operation methods are announced via the quality document management system in
the Company's corporate internal information network. Information announced includes the
manual of "Detailed Rules for Internal Audit Implementation" and relevant operational methods. A
summary is provided as follows:(1)Day-to-day audit (pre-incident audit and post-incident audit).
(2)Annual audit (on-site inspection of the head office, branch units, and subsidiaries).
(3)Project audit.
(4)Supervision of construction, maintenance, and procurement.
(5)Financial inventory.
(6)Self-assessment of the internal control system.
(7)Periodical audit required by the Financial Supervisory Commission.
(8)Other units that need unscheduled audits.

B. Certifications of the personnel related to the Company's internal audits
R.O.C. Certified Public Accountant License: 1 person, R.O.C. Futures Specialist: 1 person.

C. Company financial staff certifications and licenses: Institute of Internal
Auditors-Chinese Taiwan Internal Auditor Certificate
Institute of Internal Auditors-Chinese Taiwan Internal Auditor Certificate: 4 people, International
Internal Auditor Certificate: 3 people, R.O.C. Certified Public Accountant License: 2 people, R.O.C.
Securities (Senior) Specialist: 5 people, R.O.C. Securities Investment Trust and Consulting
Professional: 4 people, R.O.C. Futures Specialist: 4 people, R.O.C. Financial Planning Personnel
Proficiency Test Passing Certificate: 4 people, R.O.C. Stock Affairs Specialist Proficiency Test Passing
Certificate: 8 people, USA Certified Public Accountant License: 1 person, R.O.C. Basic EnterpriseInternal Audit Proficiency Test Passing Certificate: 5 people.

D. Company Director Continuing Education
Title

Chairman

Name

Traininghours

Date(s)3hr

05/07/2020

3hr

08/06/2020

Hsieh, Su-Chien

From January 1, 2020, through March 27, 2021
Sponsoring Organization

Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association

CourseTechnology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management

Corporate Governance Report67TitleDirector

Director

Director

Director

Director

Independent
Director

Independent
Director

Independent
Director

Director

Director

Name

Traininghours

Date(s)3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

05/07/2020

3hr

08/06/2020

3hr

08/06/2020

3hr

11/27/2020

3hr

11/27/2020

3hr

05/07/2020

3hr

09/18/2020

3hr

01/15/2020

3hr

03/13/2020

3hr

05/07/2020

Ting, Kwang-Hung

Ko, Sun-Ta

Wei, Yung-Yeh

Lin, Su-Ming

Wang, Shih-Szu

Chang, Hsieh
Gen-Sen

Chung, Lo-Min

Shen, Hui-Ya

Chen, Charles C.Y.

Chen, Han-Ming

68 Corporate Governance Report

Sponsoring Organization
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by: Securities andFutures Institute
Training by:
Taiwan Corporate Governance
Association
Training by: Taiwan Instituteof Directors
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association
Training by:
Taiwan Corporate Governance
Association

CourseTechnology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Technology and Information Safety
Risk in the 5G and IoT Era
Trends of Digital Technology andArtificial Intelligence and Risk
Management
Trends of Digital Technology andArtificial Intelligence and Risk
Management
The Role of Institutional Investors in
Improving Corporate Governance2021 Global Economic Prospect andIndustry Trends
Technology and Information Safety
Risk in the 5G and IoT Era
2020 Board of Directors Annual
Conference: Strategic Alteration for
Growth and Momentum
Compliance with Company
Regulations and Directors'
Monitoring Obligations
Practical Problems of IrregularTransaction that Directors andSupervisors Shall Pay Attention
Technology and Information Safety
Risk in the 5G and IoT Era

E. Corporate Governance Related Training Attended by Company Managers

From January 1, 2020 through March 27, 2021

Title

Name

Training
hours

Vice
President,
Finance Div.

Chen, I-Chieh

12hr

09/10/202009/11/2020

Accounting Research andDevelopment Foundation

Continued Education for Principal
Accounting Officers of Issuers, Securities
Firms, and Securities Exchanges

12hr

01/09/202001/10/2020

Accounting Research andDevelopment Foundation

Continued Education for Principal
Accounting Officers of Issuers, Securities
Firms, and Securities Exchanges

12hr

10/29/202010/30/2020

Accounting Research andDevelopment Foundation

Continued Education for Principal
Accounting Officers of Issuers, Securities
Firms, and Securities Exchanges

6hr

05/15/2020

Institute of Internal
Auditors-Chinese Taiwan

Internal Audit Professional CoursesAudit Practices and Discussion of Ethics

6hr

10/15/2020

Institute of Internal
Auditors-Chinese Taiwan

6hr

08/11/2020

Institute of Internal
Auditors-Chinese Taiwan

Internal Audit Professional CoursesFraud Prevention and Case Study

10/27/2020

Institute of Internal
Auditors-Chinese Taiwan

Internal Audit Professional CoursesCommon Contract Terms and
Implementations - Case Study ofDelegation of Authority

Assistant Vice
President,
Finance Div.
DeputyAuditor
General,General Audit
OfficeDeputyAuditor
General,General Audit
OfficeDate(s)Sponsoring Organization

Yen, Yang

Fang, Juo-Ling

Ho, Hui-Fen
6hr

CourseInternal Audit Professional CoursesLabor Incident Act Case Analysis

Note: Mr. Chen, I-Chieh was promoted as Senior Vice President on March 18, 2021.

F. Succession plan for the Board of Directors and key management of the Company
The selection and nomination of China Airlines’ directors are carried out inaccordance with the Company Act, Securities and Exchange Act, China Airlines’
Rules Governing the Election of Directors, and Regulations Governing Appointment
of Independent Directors and Compliance Matters for Public Companies. All
elections of directors are conducted in accordance with the candidate nomination
system. Shareholders may nominate director candidates; through shareholders'voting in the annual general meeting, directors (including independent directors)
are elected from the list of candidates nominated by shareholders. The term ofoffice of a director is 3 years.
As for the selection of directors’ successors, the director representative successors
should generally have the required abilities stated in the chapter in China Airlines’"Corporate Governance Principles" describing competencies required by the Boardof Directors. As required by law, independent directors must have certain
professional qualifications and work experience. Professionals who are experienced
in the industry, including government and academic fields, are the main direction of
selection that forms the basis of succession planning (please refer to P.44-45 fordiversification). In addition, the independence of all Board members is ensured inaccordance with law, and the results of its annual evaluation are an importantreference for whether continued nomination is needed.
To improve the directors' ability to exercise powers empowered in them by virtueof their posts and ensure that the Board's effectiveness is up to date, scheduledadvanced courses are arranged every year to help elevate their professional
competencies. The courses cover corporate governance-related topics, including
finance, accounting, business, commerce, legal affairs, information, risk

Corporate Governance Report69management, internal control systems, and corporate social responsibility. To
ensure that the succession plan is comprehensive, the contents are aligned with thelatest regulations and conditions of internal and external environments, as well as
topics applicable to future development needs. Furthermore, in relation to
succession planning for important management personnel, in addition to having
excellent professional management ability, one’s behavior, ethics, and instructions
will be based on the resolutions of the Board of Directors, and handled inaccordance with the “China Airlines Executives Code of Ethical Conduct” and related
laws and regulations in the best interests of the Company, employees, andshareholders.
In the training plan for the Company's senior management, regular senior
management lectures are held every year, where experts from the fields of industry,
public sector, and academia are invited to deliver special lectures on the state of
the global market and the development of the aviation industry to enable theCompany's supervisors better understand the state of the market and their breadthof professional competence development may be improved. Periodic inter-agency
transfers are made according to the Company's rules to create diversified
management capabilities among important management personnel. In addition, todeepen the knowledge of the Company's management professionals at various
levels and broaden the horizon of potential talent, strategic and management
occupational training sessions are held on a regular basis and talent training
programs conducted to refine knowledge and skills of mid-level supervisors,cultivate talent with international vision and management capabilities, andstrengthen the management knowledge of management professionals through job
experience, management course training, and rigorous assessment systems. As oftoday, more than 100 outstanding management professionals have thus been
nurtured and are now serving in key units in Taiwan and foreign branches.
G. On December 6, 2012, after approval by the Board of Directors, the Company has
formulated the China Airlines Ltd. Procedures for Handling Material Insider
Information. In addition to notifying the new procedures to the Board, management,
and employees, they were also published under Important Company Regulations on
the Investor Relations section of the CAL website for reference at any time to avoid
violations and prevent the occurrence of insider trading.

70 Corporate Governance Report3.3.11 Internal Control Systems
A. Internal Control Statement

Corporate Governance Report71

B. If the Company has commissioned external auditors to review the Company’s
internal control system, the external auditor’s report should be disclosed: None.

72 Corporate Governance Report3.3.12 Any disciplinary measures taken against the Company or its internal staff
due to violations of legal requirements or taken by the Company against
its own staff due to violations of the internal control system. The detailsof the disciplinary measures, major faults, and improvement measures
should be noted
Date ofpenaltyFebruary25, 2020

Penalty official
letter number
2020 Labor
Inspection No.
1090032769

February22, 2021.

2021 Labor
Inspection No.
1100036610

Penalty

Deficiency

Improvement

A fine of
NT$20,000.

The Company was underinspection by the Ministry ofLabor on January 9, 2020. Due
to business need, the Company
rejected the annual leave
application by the cabin crew,which violated Article 38,
Paragraph 2 of the Labor
Standards Act.

A fine of
NT$1,000,000.

On August 28, 31, 2018, theCompany was inspected by the
Ministry of Labor and was fined
NT$1,000,000 due to cabincrew overworking. The case
was originally annulled, yet
identical events were found inother flights. Thus
NT$1,000,000 was fined.

(1) The communication with thecabin crew on the date of theannual leave was insufficient.
The internal communication
process shall be improved.
(2) The job of cabin crews
contains the work specialty.
The Company rejected theleave application due to thecompany operation. According
to law, the Company
negotiated with the employee
and the leave was granted, so
the labor's rights were notharmed.
(3) The Company has proposed
an administrative relief.
(1) The investigation authority
improperly identified thereasons for flight delay statedin the verdict. The fine was
directed given without further
investigation. The main reason
for the flight delay was
waiting for the aviation
personnel to give the apron
instruction, which was a force
majeure. Thus, theadministrative appeal has
been submitted.
(2) If the administrative appeal
was dismissed, administrative
relief will be taken.

In addition, from 2020 to the printing of the annual report, the Company was fined
NT$30,000 by the Ministry of Labor by the ruling in the case of an unfair labor
practice dispute with the Taoyuan Flight Attendants Union, and we continue to seek
administrative remedies. The relevant data of cases and content of the disputes are
as follows:
Date of penalty

Penalty official letter number

February 1, 2021

2021 Labor Imposition No.
41 court verdict for
inappropriate labor

Main dispute(1) Dispute regarding
granting of leave for union
related business of theunion's cadre.
(2) Dispute regarding
assigning representative onlabor/management meeting(3) Dispute regarding
employee performance
evaluation

Total amount of fines

NT$30,000

Corporate Governance Report733.3.13 Major Resolutions of Shareholders’ Meeting and Board Meetings
A. Major Resolutions of Shareholders’ Meeting in 2020
Item
Major resolutions
1. Business Report and Financial Statements This resolution was passed
for the year 2019as proposed upon voting.
This resolution was passed
2. 2019 Deficit Compensation
as proposed upon voting.
3. Amendment to the Articles ofIncorporation
4. Amendment to Rules of Procedurefor Shareholders' Meetings

5. Proposal to release the non-competition
restriction of holding concurrent
positions on Director Chen, Han-Ming

Execution
Announcement was made after resolution of
Shareholders’ Meeting on June 23, 2020.
Announcement was made after resolution of
Shareholders’ Meeting on June 23, 2020.
Announcement was made after resolution ofThis resolution was passed
Shareholders’ Meeting on June 23, 2020, and has beenas proposed upon voting.
complied with since that day.
Announcement was made after resolution ofThis resolution was passed
Shareholders’ Meeting on June 23, 2020, and has beenas proposed upon voting.
complied with since that day.
The non-competition restriction on Director Chen,
This resolution was passed Han-Ming was lifted based on the resolution ofas proposed upon voting.
Shareholders’ Meeting on June 23, 2020, which was
subsequently announced.

B. Major Resolutions of Board Meetings (January 1, 2020 to March 27, 2021)
Date

January 13, 2020
21st Board of
Directors
9th Meeting

March 18, 2020
21st Board of
Directors
10th Meeting

May 7, 2020
21st Board of
Directors
11th Meeting

Item
1.Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Four Financial Institutions,
Including DBS Bank (Taiwan)
2. 2019 Year-end Bonus and 2020 Lunar New Year Incentive
3. Matters Regarding the Signing of Agreement with the CAL
Employees Union on Issues of "13th Month Full Salary(Flight Safety Bonus)" and "Working Hours Rearrangement
and Female Employees' Nighttime Work" on December 31,
2019
4. 2020 Employee Salary Adjustment
5. Chairman and Managers' 2020 Lunar New Year Incentive
6. Lifting of Non-competition Restriction on Holding
Concurrent Posts for Senior Vice President
7. Report on the Company's Lease on Real Estate with a
Subsidiary
1. Amendment to 2020 Audit Plan
2. 2019 Internal Control System Effectiveness Audit andStatement
3. New Branch Unit in Response to Route Launch
4. Change in Personnel and Position
5. 2020 Annual Shareholders’ Meeting
6. 2019 Financial Report and Consolidated Financial Report
7. 2019 Business Report
8. 2019 Deficit Compensation
9. 2020 CPA Appointment and Remuneration
10. Offering of Unsecured Ordinary Bonds
11. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Three Financial
Institutions, Including First Commercial Bank
12. Amendments to the Company's Article of Incorporation
13. Rules and Procedures of the Shareholders' Meeting
14. Amendment to the Rules of Procedures for Board of
Directors' Meetings
15. Amendments to the Charter of Audit Committee
1. Disposal of 5 A330-300 aircraft through sale and leaseback
transaction
2. Venue alteration for 2020 Annual Shareholders' Meeting
3. Lifting of Non-competition Restriction on Holding
Concurrent Posts for Director Chen, Han-Ming
4. Pursuant to Measures for the Relief of Industries andBusinesses Affected by the Coronavirus Disease Issued by
the Ministry of Transportation and Communication, theBank of Taiwan offered NT$20 billion syndicated loan to74 Corporate Governance Report

Opinions of
independent directors

Handling ofIndependent
Directors’ opinions
by the Company

Approved by all
attending Independent
Directors

None

Approved by all
attending Independent
Directors

None

Approved by all
attending Independent
Directors

None

Date

Item

Opinions of
independent directors

Handling ofIndependent
Directors’ opinions
by the Company

Approved by all
attending Independent
Directors

None

Approved by all
attending Independent
Directors

None

Approved by all
attending Independent
Directors

None

Approved by all
attending Independent
Directors

None

China Airlines.
5. A350 passenger aircraft mortgage loan by First Commercial
Bank, Hua Nan Commercial Bank, Ltd., and Land Bank of
Taiwan6. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Five Financial
Institutions, Including First Commercial Bank

August 6, 2020
21st Board of
Directors
12th Meeting

November 5, 2020
21st Board of
Directors
13th Meeting

January 18, 2021
21st Board of
Directors
14th Meeting

March 18, 2021
21st Board of
Directors
15th Meeting

1. Second amendment to 2020 Audit Plan
2. Amendment to the Charter of Remuneration Committee
3. Distribute flight safety bonus to Chairman and Managers
4. Capital increase for Tigerair Taiwan Co., Ltd.
5. Issuing NT$6 billion in total face value of domestic
unsecured convertible corporate bonds
6. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Five Financial Institutions,
Including CTBC Bank
7. Liquidation of Yestrip Co., Ltd.
1. 2021 Audit Plan
2. 2021 Business Plan and Budget Plan
3. Assign a custodian for the Company's seal for signing
warranty/endorsement.
4. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Five Financial Institutions,
Including Taishin International Bank.
5. Amendment to the Corporate Social Responsibility andSustainable Development Best Practice Principles
1. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by Three Financial
Institutions, Including Crédit Agricole CIB
2. 2021 Employee Lunar New Year Incentive
3. 2021 Employee salary adjustment
4. Chairman and Managers' 2020 Lunar New Year Incentive
5. 2021 Annual Shareholders' Meeting
6. Election of 22nd term of Board of Directors
7. Report on the Company's Lease on Real Estate with a
Subsidiary
1. Appointment of President
2. Appointment of Senior Vice President (VF) and position
adjustment for Financial Vice President
3. Appointment of Senior Vice President (VO)
4. Distribute managers' flight safety bonus
5. Resignation fee for the former Senior Vice President (VF)
Chang, Young
6. Manager adjustment in Taichung Branch
7. 2020 Internal Control System Effectiveness Audit andStatement
8. 2020 Financial Report and Consolidated Financial Report
9. 2020 Business Report
10. 2020 Deficit Compensation
11. 2021 CPA appointment and remuneration
12. Provision of General Financing Limit and Financial
Commodity Trading Risk Limit by First Commercial Bankand Mega Bills

3.3.14 Major Issues of Record or Written Statements Made by Any Director orSupervisor Dissenting with Important Resolutions Passed by the Board of
Directors: None.

Corporate Governance Report75

3.4 Information Regarding the Company’s Audit Fee andIndependence
3.4.1 Audit Fee

Accounting Firm
Deloitte & Touche

Name of CPA
Huang, Jui-Chan

Period Covered by CPA’s Audit

Remarks

01/01/2020-12/31/2020

None

Cheng, Shiuh-Ran

Unit: NT$ thousands
Fee Items

Fee Range
1

Under 2,000

22,000 - 3,999

34,000 - 5,999

46,000 - 7,999

58,000 - 9,999

6Over 10,000

Audit Fee

Non-audit Fee

Total





3.4.2 Audit and Non-Audit Fees Paid to CPAs, the Certified Accounting Firm toWhich Said CPAs Belong and Any Affiliated Enterprises and Details
Regarding Non-Audit Fees. See Below:

Unit: NT$ thousands

Non-audit Fee
Accounting Name of
Firm
CPA

Touch

Huang, Jui-Chan
Cheng, Shiuh-Ran

Deloitte &Audit System
Feeof
Design7,350-

Company
Registration

-

Human
Resource-

Others Subtotal

4,044

4,044

Period Coveredby CPA’s Audit

01/01/202012/31/2020

Remarks
Others include thebusiness tax audit fee ofdual-status business
entities adopting direct
deduction, the transfer
pricing report service fee,
the related accountant
certification fee forissuance of corporatebond, the US airport
Passenger Facility Charge(PFC) tax collection andaudit fee, and theconsulting fee of General
Data Protection
Regulation (GDPR).

3.4.3 Changed audit firms and the audit fee paid was less than the audit fees
paid in the previous year prior to the change: Not Applicable.
3.4.4 Those with audit fees amounting to a reduction of 15% or more comparedto the previous year: None.

76 Corporate Governance Report3.5 Replacement of CPA:

3.5.1 On the previous accountant
Date of change
Reason and explanation forchangeExplanation was terminationof the person or accountant
appointed or refusal of
appointment
Newest check report within
two years other than one
signed and issued without
disclaimer and reason

March 20, 2019
Due to internal reorganization at the CPA firm, the resolution was passed at the
5th meeting of the 21st Board of Directors on March 20, 2019 that from thefinancial report for Q1 of 2019, the CPAs would be switched to Huang, Jui-Chanand Cheng, Shiuh-Ran.
Involved party
Accountant
Appointee
Situation
Proactive termination of
appointment
None.
Did not accept further(continuing) appointment
None.

Yes
Objection from issuer

Accounting principles or customary practiceFinancial report disclosure
Scope of check or steps
Other

None
Explanation
Other items disclosed (forwhich disclosure is required
under Article 10, Clause 6,
items 1d through 1g)



None.

3.5.2 On successor accountants
Name of firm

Deloitte & Touche

Accountant Name

Huang, Jui-Chan; Cheng, Shiuh-Ran

Date of appointment

March 20, 2019

Pre-appointment consultations for opinions on the method of
accounting or accounting principles for specific transactions
and consultation on the possibility of signing and results of the
same

None.

Written opinions of successor accountants at odds with thoseof previous accountantsNone.

3.5.3 Former Accountant’s Reply to Disclosures under Items 1 and 2-3,
Subparagraph 6, Article 10 of the Guidelines:
None.

Corporate Governance Report773.6 The Company's Chairman, Presidents, or Accounting Officers
hold any positions in the Company's independent auditing firmor its affiliates during 2019: None.
3.7 Changes in Shareholding of Directors, Managers, and Major
Shareholders
Title

Major
Shareholder
Chairman
Director
Director
Independent
Director
Independent
Director
Independent
Director
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Auditor General
Data Protection
Officer
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President

Name

Unit: Shares
The current year through2020
March 27, 2021
PledgedPledged
Holding
Holding
Holding
Holding
Increase
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)

China Aviation Development Foundation (Note)
China Aviation Development Foundation
Representative: Hsieh, Su-Chien
China Aviation Development Foundation
Representative: Chen, Charles C.Y.;
Ting, Kwang-Hung; Chen, Han-Ming;
Ko, Sun-Ta; Wei, Yung-Yeh, Kao, Shing-Hwang
National Development Fund, Executive Yuan
Representative: Lin, Su-Ming; Wang, Shih-Szu

0

0

0

0

0

0

0

0

Chung, Lo-Min

0

0

0

0

Chang, Hsieh Gen-Sen

0

0

0

0

Shen, Hui-Ya

0

0

0

0

Kao, Shing-Hwang

0

0

0

0

Wang, Chen-Min

0

0

0

0

Wang, Houng

0

0

0

0

Chen, I-Chieh

0

0

0

0

Lai, Ming-Hui

0

0

0

0

Fang, Juo-Ling

0

0

0

0

Huang, Ta-Fang (Assumed post on 07/31/2020)

0

0

0

0

Chien, Feng-Nien
Li, Chih-Wei
Chen, I-Ko
Peng, Pao-Chu
Liu, Der-Chuan
Lu, Shwu-Huoy (Assumed post on 10/11/2020)
Yeah, Shao-Ting
Chen, Wei-Tau

0

0

0

0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
4,000
(15,000)0000120,102

0
0
0
0
0
0
0
0
0

0
0
0
(10,000)
0
0
0
0
0

0
0
0
0
0
0
0
0
0

Vice President

Wang, Wei

Vice President
Vice President
Vice President
Vice President
Vice President

Hong, Tsu-Kuang
Chung, Wan-Chun
Chou, Jyh-Shyan
Chu, Te-Hsiu
Chang, Cheng-Hao

78 Corporate Governance Report

The current year throughMarch 27, 2021
PledgedPledged
Holding
Holding
Holding
Holding
Increase
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
0
0
0
0
0
0
0
0
0
0
0
0
2020

Title

Vice President
Vice President
Vice President
Deputy Auditor
GeneralAssistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Assistant Vice
President
Senior Vice
President
Data Protection
Officer

Name

Chung, Ming-Jyh
Sun, Jia-Min
Lee, Jung-Hui
Ho, Hui-Fen

0

0

0

0

Yu, Yueh-Han

0

0

0

0

Chen, Chwen-Der00(13,000)

0Tung, Hsing-Hua

0

0

0

0

Kang, Yi-Chuan (Assumed post on 11/01/2020)

0

0

0

0

Huang, Hsiang-Piao

0

0

0

0

He, Cheng

0

0

0

0

Chen, Pei-Ti

0

0

0

0

Pan, Yun-Hau (Assumed post on 05/09/2020)

0

0

0

0

Mao, Li-Chung

0

0

0

0

Sheu, Yuh-Shy

0

0

0

0

Hsueh, Po-Wen (Assumed post on 09/18/2020)

0

0

0

0

Lin, Herng-Shan

0

0

0

0

Lee, Pei-Chen

0

0

0

0

Yen, Yang

0

0

0

0

Huang, Hui-Na

0

0

0

0

Fang, Yuan-Hua

0

0

0

0

Chang, Hsu-Yu (Assumed post on 11/30/2020)

0

0

0

0

Huang, Chin-Feng

0

0

0

0

Hsu, Hsueh-Wen (Assumed post on 02/01/2020)

0

0

0

0

Liu, Shou-Shu

0

0

0

0

Yeh, Jin-Fu (Assumed post on 11/12/2020)

0

0

0

0

Liu, Duan-Shiuh

0

0

0

0

Hsiao, Jui-Fu

0

0

0

0

Chang, Young (Dismissed on 01/31/2020)

0

0

0

0

Wu, Hsiao-Sui (Dismissed on 07/31/2020)

0

0

0

0

Corporate Governance Report

79The current year throughMarch 27, 2021
PledgedPledged
Holding
Holding
Holding
Holding
Increase
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
0
0
0
0
2020

Title

Name

Vice President
Liu, Tsao-Yang (Dismissed on 08/17/2020)
Assistant Vice
Chen, Jo-Ching (Dismissed on 04/01/2020)
President
Assistant Vice
Kao, Shu-Chuan (Dismissed on 04/01/2020)
President
Assistant Vice
Shann, Da-Sin (Dismissed on 09/18/2020)
President
Assistant Vice
Chiu, Wei-Tuan (Dismissed on 03/19/2020)
President
Assistant Vice
An, Long-Chi (Assumed post on 04/01/2020)
President(Dismissed on 11/30/2020)
Note: Refers to major shareholders holding more than 10% of company shares.

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

3.7.1 Shares Trading with Related Parties: None.
3.7.2 Shares Pledge with Related Parties: None.

3.8 Relationships among the Top Ten Shareholders
Current Shareholding

Spouse’s/minor’s
Shareholding

Shareholding
by Nominee
Arrangement

Shares%SharesShares

1,867,341,935

34.45%

0

0%

0

0%

None

None

None

519,750,519

9.59%

0

0%

0

0%

None

None

None

76,934,000

1.42%

NA

NA

0

0%

None

None

None

63,331,761

1.17%

NA

NA

0

0%

None

None

None

35,905,146

0.66%

NA

NA

0

0%

None

None

None

35,231,442

0.65%

NA

NA

0

0%

None

None

None

28,888,821

0.53%

NA

NA

0

0%

None

None

None

26,889,000

0.50%

NA

NA

0

0%

None

None

None

24,325,000

0.45%

0

0%

0

0%

None

None

None

23,753,862

0.44%

NA

NA

0

0%

None

None

None

Name

China Aviation Development
Foundation(Representative:
Wang, Kwo-Tsai)National Development Fund of The
Executive Yuan
(Representative:
Dr. Kung, Ming-Hsin)

March 27, 2021
Name and Relationship
Between the Company’s
Top Ten Shareholders, orRemarks
Spouses or Relatives
Within Two Degrees
Name
Relationship

New Labor Pension Fund
China Airlines Ltd. Employee Stock
Ownership Trust Plan
Vanguard Emerging Markets Stock
Index Fund, a Series of VanguardInternational Equity Index Funds
Vanguard Total International Stock
Index Fund, a series of Vanguard Star
Funds
JPMorgan Chase Bank N.A. Taipei
Branch in custody for Norges Bank
Arrowstreet Capital Global All
Country Alpha Extension Fund
(Cayman) Limited
Reasonable Deal Co., Ltd.
(Representative:
Li, Chuan-Zhe)
Wan Hai Lines Ltd.
(Representative: Jiu Fu Garden Co.,Ltd.)

80 Corporate Governance Report%%3.9 Ownership of Shares in Affiliated Enterprises
Affiliated Enterprises

Ownership by the Company

Direct or Indirect Ownership by
Directors, Managers
Shares%5,000
100.00400,000
100.00-Dec 31, 2020
Unit: shares; %Total Ownership

Shares%Shares
1. CAL-Dynasty International, Inc.
2,614,500
100.002,614,500
1A Dynasty Properties Co., Ltd.
5,000
1B Dynasty Hotel of Hawaii, Inc.
400,000
2. CAL-Asia Investment Inc.
7,172,346
100.007,172,346
2A Eastern United International
1,050,000
35.00
1,050,000
Logistics (Holdings) Ltd.
2B Airport Air Terminal (Xiamen)
28.00(Note 1)
(Note 1)
Co., Ltd.
(Note 2)
2C Airport Air Cargo Service
28.00(Note 1)
(Note 1)
(Xiamen) Co., Ltd.
(Note 2)
2D Taikoo (Xiamen) Landing Gear
(Note 1)
2.59
(Note 1)Services Co., Ltd.
2E Haeco Composite Structures(Note 1)
5.45
(Note 1)
(Jinjiang) Co., Ltd.
3. Dynasty Aerotech International
77,270100.0077,270Corp.
4. Yestrip Co., Ltd.
1,600,000
100.001,600,000
5. CAL Park Co., Ltd.
150,000,000
100.00150,000,000
6. CAL Hotel Co., Ltd..
46,500,000
100.0046,500,000
7. Taiwan Aircraft Maintenance And
135,000,000
100.00135,000,000
Engineering Co., Ltd.
8. Mandarin Airlines, Ltd.
188,154,025
93.99
188,154,025
9. Sabre Travel Network (Taiwan)
13,021,042
93.93
13,021,042
Ltd.
10. Tigerair Taiwan Co., Ltd.
212,420,046
75.86
15,433,000
5.51
227,853,046
11. China Pacific Laundry Services
13,750,000
55.00
13,750,000
Ltd.
12. Taiwan Air Cargo Terminal Ltd.
135,000,000
54.00
12,500,000
5.00
147,500,000
13. Kaohsiung Airport Catering
21,494,637
53.67
21,494,637
Services
13A Delica International Co., Ltd.
1,020,000
51
1,020,000
14. Dynasty Holidays, Inc.
160
20.00
160
15. China Pacific Catering Services
43,911,000
51.00
43,911,000
Ltd.
16. Taoyuan International Airport
34,300,000
49.00
34,300,000
Services Co., Ltd.
17. Taiwan Airport Service Co., Ltd.
20,626,644
47.35
469,755
1.08
21,096,399
17A Taiwan Airport Service(Note 1)100.00(Note 1)(Samoa) Co., Ltd.
18. NORDAM Asia Ltd.
3,797,500
49.00
3,797,500
19. Global Sky Express Ltd.
250,000
25.00
250,000
20. China Aircraft Services Ltd.
28,400,000
20.00
28,400,000
21. Jardine Air Terminal Services
12,000,000
15.00
12,000,000
Ltd.
22. Everest Investment Holdings(Note 4)
13.59
(Note 4)
Ltd.
23. Chung-Hwa Express Co., Ltd.
1,100,000
11.00
1,100,000
Note 1: This company has not issued shares.
Note 2: CAL-Asia Investments Inc. directly holds 14% stake, Taiwan Airport Service (Samoa) Co., Ltd. directly holds 14% stake.
Note 3: Yestrip Co. Ltd. was dissolved on October 26, 2020 by Taipei City Government, and it is in the procedures for Liquidation.
Note 4: Includes 1,359,368 shares of common stock and 135,937 shares of preferred stock.

%100.00100.00100.00100.0035.00
28.00(Note 2)28.00
(Note 2)2.59
5.45
100.00100.00100.00100.00100.00
93.99
93.93
81.37
55.00
59.00
53.67
51
20.00
51.00
49.00
48.43
100.00

Corporate Governance Report

49.00
25.00
20.00
15.00
13.59
11.00

81

Capital Overview
4.1 Capital and Shares
4.2 Corporate Bonds
4.3 Other Depository Receipts
4.4 Financing Plans and Implementation

82 Capital Overview

IV. Capital Overview
4.1 Capital and Shares
4.1.1 Source of Capital
A. Issued Shares

Authorized Capital

MAR 27, 2021

Paid-in Capital

Unit: shares; NT$

RemarkMonth/
Year

Par
Value
(NT$)

SharesAmountSharesAmountSources of Capital

02/201210

5.2 billion

52 billion

5.2 billion

52 billion

Cash increase
NT$5,683,776,490

05/201510

6 billion

60 billion

5.24 billion

52.4 billion

05/201510

6 billion

60 billion

5.37 billion

53.7 billion

09/201510

6 billion

60 billion

5.47 billion

54.7 billion

12/201510

6 billion

60 billion

5.47 billion

54.7 billion

12/201710

6 billion

60 billion

5.47 billion

54.7 billion

12/2018

10

6 billion

60 billion

5.42 billion

54.2 billion

05/201910

7 billion

70 billion

5.42 billion

54.2 billion

Corporate debt for
equity swap
NT$491,665,650
Corporate debt for
equity swap
NT$1,208,413,350
Corporate debt for
equity swap
NT$1,000,652,560
Corporate debt for
equity swap
NT$8,169,930
Corporate debt for
equity swap,
NT$945,010

Approval Date andDocument No. by Ministryof Economic Affairs
Jing Shou Shang No.
10101028630, February 20,
2012
Jing Shou Shang No.
10401079310, May 7, 2015

Jing Shou Shang No.
10401096840, May 28, 2015

Jing Shou Shang No.
10401186200, September
17, 2015
Jing Shou Shang No.
10401250360, December 8,
2015
Jing Shou Shang No.
10601158980, December 4,
2017
Jing Shou Shang No.
Treasury Stock Retired
10701157330, December 18,
NT$500,000,000
2018
Adjustment ofauthorized capital in
Jing Shou Shang No.
accordance with the10801043180, May 8, 2019
Articles ofIncorporation

Note 1: The Company didn't use properties other than cash to return share prices, nor issued special shares.
Note 2: In March 2021, six shareholders applied to transfer shares with a total of 7,936 shares. The number of outstanding
shares became 5,420,992,586 shares (including common shares 5,420,984,650, and 7,936 shares which haven't
received the approval of MOE).

B. Type of Stock:

MAR 27, 2021

Share Type

Issued Shares

Authorized Capital
Un-issued Shares

Total Shares

5,420,993

1,579,007

7,000,000

Common Stock Inscribed

4.1.2 Status of Shareholders
Item
Number of
Shareholders
Shareholding%

Government
Agencies

Unit: Thousand shares
Remarks
Listed Stocks

MAR 27, 2021

Financial
Institutions

Other Juridical
Persons

Unit: shares

Foreign Institutions
Domestic
Treasury& Natural Persons Natural Persons Stock

Total

2

27

289

645

244,3360245,299

519,750,520
9.59%

73,454,329
1.35%

2,267,579,709
41.83%

479,258,277
8.84%

2,080,949,751
38.39%

00.00%

5,420,992,586
100.00%4.1.3 Shareholding Distribution Status
Class of Shareholding
1-999
1,000-5,000
5,001-10,000
10,001-15,000
15,001-20,000
20,001-30,000
30,001-40,000
40,001-50,000
50,001-100,000
100,001-200,000
200,001-400,000
400,001-600,000
600,001-800,000
800,001-1,000,000
1,000,001 or over
Total

Number of Shareholders
37,340144,869
30,913
8,665
7,359
5,641
2,645
2,144
3,324
1,328
565
163
85
64
194
245,299

MAR 27, 2021
Shareholding
11,235,728
329,812,301
259,243,177
111,957,123
139,757,464
148,602,474
96,169,114
102,238,728
248,517,333
194,566,873
159,259,857
81,546,904
59,726,844
58,918,295
3,419,440,371
5,420,992,586

Unit: shares
Percentage
0.21%
6.08%
4.78%
2.07%
2.58%
2.74%
1.77%
1.89%
4.58%
3.59%
2.94%
1.50%
1.10%
1.09%
63.08%
100.00%Capital Overview

834.1.4 List of Major Shareholders

MAR 27, 2021 Unit: shares
Shareholding

Shareholder's Name
China Aviation Development Foundation

SharesPercentage

1,867,341,935
519,750,519

34.45%
9.59%

New Labor Pension Fund

76,934,000

1.42%

China Airlines Ltd. Employee Stock Ownership Trust Plan

63,331,761

1.17%

Vanguard Emerging Markets Stock Index Fund, a Series of Vanguard International

35,905,146

0.66%

Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds

35,231,442

0.65%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank

28,888,821

0.53%

Arrowstreet Capital Global All Country Alpha Extension Fund (Cayman) Limited

26,889,000

0.50%

Reasonable Deal Co., Ltd.

24,325,000

0.45%

Wan Hai Lines Ltd.

23,753,862

0.44%

National Development Fund of The Executive Yuan

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: Thousand shares; NT$

Year

2019
(Distributed in 2020)(Note 10)

2020
(Distributed in 2021)(Note 11)

11.25

13.15

15.75

Lowest Market Price

Items

2021
(As of MAR 27)(Note 9)MarketPrice per
Share
(Note 1)Highest Market Price

9.00

5.50

10.10

Average Market Price

9.69

9.46

13.34

Net Worthper Share(Note 2)

Before Distribution

10.44

10.62

-

After Distribution

10.44

10.62

-

Earnings per Weighted Average Shares
Share
Diluted Earnings Per Share (Note 3)

5,418,096
5,418,776(0.22)
0.03
Cash Dividends
Dividends
Dividends from Related Earnings
Stock
per Share
Dividends
Dividends from Capital Surplus(Note 8)
Accumulated Undistributed Dividends (Note 4)
Price / Earnings Ratio (Note 5)NA
284.33Return on
Price / Dividend Ratio (Note 6)
NA
NA
Investment
Cash Dividend Yield Rate (Note 7)
NANA*If shares are distributed in connection with a capital increase out of earnings or capital reserve, further disclose information onmarket prices and cash dividends retroactively adjusted based on the number of shares after distribution.
Note 1: Annual Average Market Price=Annual Turnover Value/Trading Volume.
Note 2: Based both on the number of issued shares at the end of the year, and on the distribution decided on at the Shareholders’Meeting the following year.
Note 3: For those requiring retroactive adjustment due to stock grants, both the pre-and post-adjustment EPS should be listed.
Note 4: In issuing equity securities, provisions may be made to accumulate undistributed dividends for the year and postpone
distribution until a year when profit is made. The dividends accumulated over the period ending in the year of distribution
should be disclosed.
Note 5: P/E Ratio=Average market price of a share in the current year/EPS.
Note 6: P/D Ratio=Average market price of a share in the current year/cash dividend per share.
Note 7: Cash dividend yield=cash dividend per share/average market price of a share in the current year.
Note 8: In accordance with Taiwan Stock Exchange regulations, treasury share effects have already been considered.
Note 9: Net worth per share and EPS are calculated based on the financial statement for the most recent quarter that has beenverified by an accountant. All other fields are based on the current year data through the publication date of the annual
report.
Note 10: The Company’s EPS for 2019 was negative and thus it will not distribute earnings; it has been decided by the 10th meetingof the 21st Board of Directors on March 18, 2020, that the Company will not pay dividends for 2019, thus this does not
apply.
Note 11: The Company does not have distributable earnings for 2020. It has been decided by the 15th meeting of the 21st Board of
Directors on March 18, 2020, that the Company will not pay dividends for 2020.
Note 12: The Company's 2020 final daily closing price was NT$12.05.

84 Capital Overview

4.1.6 Dividend Policy and Implementation Status
A. Dividend Policy

The CAL Articles of Incorporation outlines the following dividend policy:
If the Company makes a profit over the year, an amount of no less than 3% of the profit must be
distributed as employee compensation. If the Company has accumulated losses, funds must be
retained to offset the deficit.
The aforementioned employee compensation is primarily disbursed as stock or cash and theresolution must be approved at a meeting of the Board of Directors with two-thirds of directors inattendance and must receive support from half of participating members.
Should the Company make a profit over the year, said profit must first be used to pay all taxes andoffset accumulated losses, then 10% of the remaining amount is to be set aside as a legal reserve.
After setting aside or reversing a special reserve, any remaining amount along with accumulated
undistributed earnings shall be distributed as shareholder dividends and bonuses according to a
resolution drawn up by the Board:(1)Not less than 50% of the amount shall be distributed as shareholder dividends and bonuses. Afterpretax profits are deducted as outlined above, should the amount left not be sufficient for
distribution, the difference will be made up by accumulated undistributed profit.
(2)In the event of a yearly loss, depending on the financial, operation, and management
considerations, all or part of the legal reserve may be distributed as new stock or cash asprescribed by law and competent authority regulations.
(3)Dividends and bonuses are distributed as stock or cash, with cash dividends making up no lessthan 30% of the total distributable dividends.

B. Proposed Distribution of Dividend

The Company does not have distributable earnings for 2020. It has been decided by the 15th
meeting of the 21st Board of Directors on March 18, 2020, that the Company will not pay dividends
for 2020.

C. No significant change in expected future dividend policy.

4.1.7 Impact of Stock Dividends Issuance on Company’s Business Performanceand Earnings per Share: Not Applicable.
4.1.8 Employees’ Compensation and Directors' Remuneration

A. Articles of Incorporation regulations: See 4.1.6 Dividend Policy and Implementation
Status.
B. The basis for estimating the amount of employee compensation and director
bonuses, for calculating the number of shares to be distributed as stock bonuses,
and the accounting treatment of the discrepancy, if any, between the actual
distributed amount and the estimated figure, for the current period
The Company has not allocated employee compensation for this period. In addition, in accordancewith the Articles of Incorporation, it will not pay remuneration to the directors.

C. Board approved employee compensation and director bonus proposal(1) Amount of employee bonuses (including stock and cash) and director bonuses distributed. If theactual amount distributed differs from the original estimated amount, the difference, reason, andhow this was handled is to be disclosed:
It has been decided by the 15th meeting of the 21st Board of Directors on March 18, 2021, that
the Company will not pay dividends for 2020.
(2) The amount of any proposed distribution of employee stock bonuses and the size of such an
amount as a percentage of the sum of the net income for the current period and total employee
bonuses: Not Applicable.

D. The actual employee compensation and director bonuses distributed for theprevious year (2018) (including the number of shares distributed, value, and stock
price). Should there be a discrepancy with the proposed amount of employeecompensation and director bonuses, the difference, reason, and how this washandled should be stated(1) Employee compensation: None.
(2) Director bonuses: Not Applicable.

4.1.9 Buyback of Treasury Stock: None.
Capital Overview

854.2 Bonds

4.2.1 Corporate Bonds

MAR 27, 2021
Domestic Unsecured
Domestic Unsecured
Domestic Unsecured
Straight Bond (2016-1) Straight Bond (2016-2) Straight Bond (2017-1)

Domestic Unsecured
Straight Bond (2017-2)

Issue date

05/26/2016

09/27/2016

05/19/2017

10/12/2017

Denomination

NT$1,000,000

NT$1,000,000

NT$1,000,000

NT$1,000,000

Republic of China

Republic of China

Republic of China

Corporate Bond Type

Issuing and transaction location Republic of China
Issue price

Par

Par

Par

Par

Total price

NT$5,000,000,000

NT$5,000,000,000

NT$2,350,000,000

NT$3,500,000,000

Coupon rate

1.19% per annum.

1.08% per annum

Tranche A: 1.20% perannum
Tranche B: 1.75% perannum

Tranche A: 1.14% perannum
Tranche B: 1.45% per
annum

Tenor

5 year(May 26, 2016 to May
26, 2021)

5 year(September 27, 2016
to September 27,
2021)

Tranche A: 3 years(May 19, 2017 to May
19, 2020);
Tranche B: 7 years(May 19, 2017 to May
19, 2024)

Tranche A: 3 years(October 12, 2017 to
October 12, 2020);
Tranche B: 5 years(October 12, 2017 to
October 12, 2022)

Guarantee agency

Not applicableNot applicableNot applicableNot applicable

Consignee

Huanan Commercial
Bank

Huanan Commercial
Bank

Huanan Commercial
Bank

Huanan Commercial
Bank

Underwriting institution

YuanTa Securities Ltd.

Masterlink Securities
Ltd.

Masterlink Securities
Ltd.

Fubon Integrated
Securities Ltd.

Certified lawyer

Ture Honesty
International Law
OfficeKuo, Hui‐Chi, Attorney
At Law

Ture Honesty
International Law
OfficeKuo, Hui‐Chi, Attorney
At Law

Ture Honesty
International Law
OfficeKuo, Hui‐Chi, Attorney
At Law

Ture Honesty
International Law
OfficeKuo, Hui‐Chi, Attorney
At Law

CPA

Huang, Jui-chan(Deloitte & Touche)

Yang, Chen-Hsiu(Deloitte & Touche)

Yang, Chen-Hsiu(Deloitte & Touche)

Yang, Chen-Hsiu(Deloitte & Touche)

Repayment method

Repayment of 50% of
the principal in the
fourth year and theremaining 50% in thefifth year

Repayment of 50% of
the principal in the
fourth year and theremaining 50% in thefifth year

Tranche A: one-time
payment upon maturity;
One-time repayment of Tranche B: return ofcapital upon maturity. 50% of capital 4 and 5
years from the startdate, respectively.

Outstanding principal

NT$2,500,000,000

NT$2,500,000,000

NT$1,000,000,000

NT$2,600,000,000

Terms of redemption oradvance repayment

None

None

None

None

Restrictive clause

None

None

None

None

None

None

None

Not applicableNot applicableNot applicableNot applicableNot applicableNot applicable

None

None

None

Name of the credit rating
Noneagency, rating date, rating ofcorporate bonds
As of the printing
date of this annual
report, converted
amount of(exchanged or
subscribed)
Other
ordinary shares,
Not applicablerights
GDRs, or otherattached securities
Issuance andconversion(exchange orsubscription)
methodIssuance and conversion,exchange or subscription
Not applicable
method, issuing condition
dilution, and impact on existing
shareholders’ equity
None
Transfer agent

86 Capital Overview

Corporate Bond Type

Domestic Unsecured 6th
Convertible Bond

MAR 27, 2021
Domestic Unsecured Ordinary
Corporate Bonds (2018-1)

Domestic Unsecured Ordinary
Corporate Bonds (2019-1)

Issue date

01/30/2018

10/30/2018

06/21/2019

Denomination

NT$100,000 per unit

NT$1,000,000 per unit

NT$1,000,000 per unit

Issuing and transaction location Republic of China

Republic of China

Republic of China

Issue price

Issued at 100.2% of par value Par

Par

Total price

NT$6,012,000,000

NT$4,500,000,000

NT$3,500,000,000

Coupon rate

0.00% per annum

Tranche A: 1.32% per annum
Tranche B: 1.45% per annum

Tranche A: 1.10% per annum
Tranche B: 1.32% per annum

5 years(January 30, 2018, toJanuary 30, 2023)

Tranche A: 5 years (November
30, 2018, to November 30,
2023)
Tranche B: 7 years (November
30, 2018, to November 30,
2025)

Tranche A: 5 years (June 21,
2019, to June 21, 2024)
Tranche B: 7 years (June 21,
2019, to June 21, 2026)

Guarantee agency

Not applicableNot applicableNot applicable

Consignee

Chinatrust Commercial Bank
Huanan Commercial Bank
Trust Department

Taishin International Bank

Underwriting institution

Taishin Integrated Securities
Fubon Integrated Securities Ltd.
Ltd.

Fubon Integrated Securities Ltd.

Certified lawyer

Handsome Attorney-at-Law
Chiu, Ya-Wen, Attorney At
Law

Ture Honesty International Law Ture Honesty International Law
OfficeOfficeKuo, Hui‐Chi, Attorney At Law
Kuo, Hui‐Chi, Attorney At Law

CPA

Not applicable

Yang, Cheng‐Hsiu(Deloitte & Touche)

Huang, Jui-chan(Deloitte & Touche)

Repayment method

According to the offering ofDomestic Unsecured 6thconvertible bond section 6

Tranche A: Repayment of 50% of
the principal at the end of the
fourth year and the remaining
50% at the end of the fifth year;
Tranche B: Repayment of 50% of
the principal at the end of thesixth year and the remaining
50% at the end of the seventh
year

Tranche A: Repayment of 50% of
the principal at the end of the
fourth year and the remaining
50% at the end of the fifth year;
Tranche B: Repayment of 50% of
the principal at the end of thesixth year and the remaining
50% at the end of the seventh
year

Outstanding principal

NT$5,999,900,000

NT$4,500,000,000

NT$3,500,000,000

Terms of redemption oradvance repayment

According to the offering ofDomestic Unsecured 6thconvertible bond section 18
and 19None

None

Restrictive clause

None

None

None

Tenor

Name of the credit rating
agency, rating date, rating of
None
None
corporate bonds
As of the printing
date of this annual
report, converted
amount of
NT$100 thousand converted(exchanged or
subscribed) ordinary
shares, GDRs, or
Other
other securities
Not applicablerightsattached Issuance andconversion (exchange
According to the offering ofor subscription)
Domestic Unsecured 6th
method as per theconvertible bond section 8
5th issue of domestic
and 9
unsecuredconvertible bonds
Issuance and conversion,exchange or subscription(Note)
Not applicable
method, issuing condition
dilution, and impact on existing
shareholders’ equity

None

Other rights attached

Not applicable

Transfer agent
None
None
None
Note: As of March 27, 2021, according to the conversion price NT$12.60 of the sixth unsecured convertible bonds, and assuming theconvertible bonds have been fully converted, the shareholdings percentage of the three major shareholders, namely China
Aviation Development Foundation, National Development Fund, and Chunghwa Telecom, will be reduced from 48.90% to44.95%, but there will be no significant change in the shareholding structure, thus it has little effect on shareholder equity.

Capital Overview

874.2.2 Corporate Bonds Undergoing Private Placement
A. At the 12th meeting of the 21st Board of Directors on August 6, 2020, theCompany’s seventh issuance of 60,000 domestic unsecured convertible corporate
bonds was approved, each with a face value of NT$100,000, to be issued at 100% 100.5% of the face value. The total issuance amount was capped at NT$6,030,000
thousand. It has been reported and put into effect by the approval of the Financial
Supervisory Commission letter Jin-Guan-Zheng-Fa-Zi No. 1090379546 dated
January 13, 2021.
B. Due to the recent changes in the domestic capital market conditions and the
COVID-19 pandemic’s continuing impact on the air transport industry, andconsidering that rash pricing and non-ideal issuance conditions might damage
shareholders’ rights, we applied for a three-month extension of the offering period
for the seventh issuance of domestic unsecured convertible corporate bonds. It wasapproved and filed for future reference in letter Jin-Guan-Zheng-Fa-Zi No.
1100336476 dated March 24, 2021, and the offering period was extended to July13, 2021. Once the market stabilizes, we will find the correct timing for pricing inorder to protect the Company’s interests and shareholders’ rights.

4.2.3 Convertible Bonds

Types of Corporate Bonds
Year
Item
HighestConvertible Bond
LowestMarket Price
Average
Conversion Priceth

Unit: NT$

Domestic Unsecured 6 convertible bond
2020

The current year through March 27, 2021

108.80127.4592.10
102.00102.39111.6312.60
12.60
The convertible bonds were listed on the Taipei Exchange on January 30, 2018; theconversion price upon issuance was NT$13.20. Due to the distribution of 2018 andIssuance date and conversion
2019 cash dividends, according to the provisions of the sixth unsecured convertible
price at the time of issue
bonds’ issuance and conversion regulations, the conversion price shall be adjusted.
The conversion price was thus reduced to NT$12.60.
Conversion method
Issue new shares.

4.2.4 Exchangeable Bond, Shelf Registration, Shelf Registration: None.

4.3 Other Securities-Related Issues
4.3.1 Preferred shares: None.
4.3.2 Global Depository Receipts: None.
4.3.3 Employee Stock Options: None.
4.3.4 Employee Restricted Stock: None.
4.3.5 Status of New Shares Issuance in Connection with Mergers andAcquisitions: None.

4.4 Financing Plans and Implementation

As of March 27, 2021, the use of funds earned through previously issued securities is
progressing as planned and is in accordance with expected results.

88 Capital Overview

Operational Highlights
5.1 Business Activities
5.2 Market and Sales Overview
5.3 Human Resources
5.4 Environmental Protection Expenditure
5.5 Labor Relations
5.6 Important Contracts

Operational Highlights

89

V. Operational Highlights
5.1 Business Activities
5.1.1 Business Scope

A. Main areas of business operations(1) Civil air transport business: Air passenger transport, regular and irregular contracting ofinternational charter flights business, and training of civil aviation personnel.
(2) General aviation business: In-flight commodity sales.
(3) Airport ground service business: Ground services for civil international airports and transit
aircraft.
(4) Air cargo terminal entrepot operation: Air cargo transport services.
(5) Aircraft and parts maintenance and manufacturing business: Aircraft body maintenance.
(6) Inflight catering service: Provision of in-flight catering or other related supplies.
(7) Laundry, dyeing, printing and finishing, and wholesale and retail of dyeing mills and dyestuff
cleaning supplies: Washing of cloth and clothing inside the aircraft and general washing businessin the hospitality industry.
(8) Warehouse and storage: Warehousing services for import, export, and entrepot air cargo.
(9) Other: All business items that are not prohibited or restricted by law, except for those that are
subject to special approval.

B. Revenue distribution
Item
Passenger Revenue
Cargo Revenue
Other
Total

Proportion of Overall Business

Unit: NT$ thousands
2020
Net Revenue
Proportion of Revenue
25,704,367
22%
81,917,976
71%
7,628,207
7%
115,250,550
100%

C. Main products(1) Passenger service: Air passenger transport and regularly scheduled and non-scheduled contract
international charter flight services.
(2) Cargo service: Transport services for cargo, courier, mail, and packages.
(3) Ground services: Handling of luggage and cargo, aircraft cleaning, and ground support
equipment.
(4) In-flight sales: Providing in-flight duty free sales services.
(5) Airline catering: Providing meal services to airlines.
(6) Warehousing and logistics services: Provide airfreight forwarding and logistics services.
(7) Aircraft maintenance services: Airframe, engine, and aircraft component maintenance.
(8) Tourism and leisure services: General hotel industry and travel services.
(9) Investment holding and leasing services: Engaged in real estate investment, building
management, and leasing.
(10) Civil aviation personnel training: Organize maintenance training courses, develop professional
maintenance personnel.

90 Operational Highlights

D. Product Development(1) Revenue Management System (RMS)
Revenue Management System (RMS) is the core system to manage the sales of flight seats, which enhanced aviation
network and competency. The new O&D (Original & Destination) RMS was implemented after evaluation and was officiallyoperated on July 30, 2020. O&D RMS calculates the value of each seat by considering the booking information in thehistory and price information. Through dynamic deployment, routes and areas that create high value are highlighted tomaximize the passenger flight revenue.
(2) Optimize booking system and user interface
In 2020, China Airlines has been improving various services, including ticket booking 80 minutes prior to departure, 3-D
secure protocol for credit card transactions, and WeChat Pay for the mainland China region. China Airlines established the
pandemic section in response to the spread of COVID-19. Entry restrictions in Taiwan and other countries have been
regularly updated, as well as schedule changes, ticket changes, ticket refunds, and other epidemic prevention measures.
This was to facilitate passengers to keep up to date with the travel information and offer a friendlier experience in ticket
purchases online.
(3) Customer Relationship Management (CRM)
Improve digital service and consumer experience from the perspective of passengers by reviewing each phase in travel,from ticket purchase, preparation, check-in at the airport, and arrival, China Airlines built comprehensive, digitized, andpassenger-oriented services. The services include accessing travel information on the mobile app, enjoying more friendly
airport and in-flight services, and receiving swift support in the event of a flight change.
(4) Approach potential customers using digital marketing
China Airlines leveraged the marketing funnel strategy and analyzed the browsing behaviors of CAL website visitors. By
maximizing digital advertisement, approaching more consumers, and selecting potential target audiences using data
analysis, China Airlines placed brand marketing advertisements on target consumers. Along with the promotion via eDM,
app, and text messages, China Airlines displayed discount offers to potential customers, boosting customer consumption. In
addition to newsletter marketing, content marketing, and social media exposure, China Airlines continuously held physicalcampaigns and realized the corporate brand visions.
(5) Developing potential destinations and optimizing the aviation network extension
China Airlines has stayed close to the market condition, and deployed new destinations by evaluating the potential market,
in order to strengthen the connectivity of the aviation network and enhance competency.

5.1.2 Industry Overview

A. State of the industry and future development(1) Economic growth

According to the report made by IHS Markit in February 2021, the 2020 global economic growth rate was -3.7%, the firstnegative growth in ten years. In 2021, the business will get back to normal as the vaccines are available that eases the
pandemic. IHS Markit estimated that the global economic growth rate will reach 5.1% in March 2021, while most major
markets will grow, such as the US (5.7%), Europe (3.9%), Japan (2.6%), and China (7.8%).
Taiwan has done exceptionally well in pandemic prevention. As the home economy and remote technology boosted
during the outbreak that shifted the global supply chains. This created numerous opportunities for Taiwan in export
business and manufacturing. According to the statistics made by the Directorate-General of Budget, Accounting andStatistics, Executive Yuan, Taiwan's annual growth rate in the economy was 3.11%, becoming one of the few countries
with economic growth in 2020. In 2021, as export, investment, and consumption are on the rise, Taiwan's economy has
grown stably. Domestic and foreign institutes estimated that the economic growth rate will reach 4.0%.

(2) Oil prices

2020 was severely impacted by the coronavirus pandemic. Lockdown and travel restrictions have been implemented inmost countries. This caused the oil demand to drop. In April 2020, the WTI crude oil price dropped below zero, breaking
the historical record. In the Short-Term Energy Outlook proposed by EIA (Energy Information Administration) in February
2021, as the demand for crude oil increases and the oil storage decreases, the WTI price is expected to be
US$50.21/barrel, and the Brent price is expected to be US$53.2/barrel. As the pandemic poses uncertainty to the future
economy, most financial institutes and energy institutes forecast that it's difficult for aviation fuel demand in 2021 to getback to the level in 2019.

(3) Air passenger market

COVID-19 forced countries to adopt strict border control and disease inspection measures, leading to an almost standstillin demand for passenger flights. According to the forecast of IATA, the global passenger flight demand will return to thelevel in 2019 by the time of 2024.
According to the statistics of IATA, 2020 RPKs dropped by 65.9%. The revenue from passenger flights dropped by NT$421
billion. The prospects in 2021 remain pessimistic as the new variant coronavirus appears, which prompted restrictedtravel by most countries in the first half of 2021. From the positive point of view, people in most developed countries are
getting vaccinated, thus the travel restriction may be loosened. Therefore, the travel peak season in the summer can be
expected. The passenger flight demand may be 38% of that of 2019. From the pessimistic point of view, border control inmost countries may remain in the summer. In that case, the demand may only be 31% of that of 2019. No matter what,
aviation companies will spend more than US$75 billion cash in 2021.

(4) Air cargo market

According to IATA, global cargo flights were reduced drastically due to the pandemic in 2020. The loadability of the belly
hold dropped by 53.1% in 2020. Even though the cargo flight capacity increased by 20.6%, the overall capacity still saw afall of 24.1%. For global air cargo volume in 2020, a slide of 11.8% was seen, which was the most severe slump in 20 years.
Thankfully, the drop in delivery supply was greater than the delivery capacity. In 2020, the delivery rate rose by 8.4%,

Operational Highlights

91

keeping the air cargo price at a high point. Despite the decline in delivery capacity, 2020 revenue was 15% higher than
2019. For most aviation companies, air cargo became the important income in 2020.
IATA expected that 2021 air cargo demand will return to 2019. But since the new variant coronavirus still threatens theworld in 2021, travel restriction remains. Thus, using belly hold of passenger flights to carry cargoes is still hard to achieve.
This may create a challenge to satisfy the air cargo demand.

B. Relationship between upstream, midstream, and downstream firms

The air transport service industry primarily provides transportation for passengers and cargo. These operations
rely on the support and assistance of upstream, midstream, and downstream industries that enable us toprovide comprehensive services and meet our customers’ needs.

(1)Upstream industries

Primarily aircraft, aircraft engine, and ground service equipment (such as towing vehicles, loading vehicles,
and equipment needed on the apron) manufacturers. Currently, in addition to purchasing aircraft,
Taiwanese airlines also utilize leasing to add to their fleets, so the aircraft leasing industry is also an
upstream industry for air transport providers.

(2)Midstream industries

Primarily airlines themselves and related support industries such as the oil industry that provides aviation
fuel, the aircraft maintenance industry that repairs and maintains airlines’ aircraft and components, and theairline catering industry that provides in-flight meals. In response to the changing needs of downstream
industries, the air transport industry’s strategic adjustments in their operating scale, fleets, or flight
networks will also affect the development of upstream industries.

(3)Downstream industries

In passenger transport, the air transport industry primarily serves the public and travel agencies, whilecargo transport services are provided to the courier and freight forwarding industries. As a member of the
air transport industry, the needs of downstream customers are at the core of the CAL’s product and services
planning. Our mission is to provide safe, convenient, and comprehensive services.

C. Product development trends(1)Aviation alliance cooperation

With the liberalization of the air-transport market, airports have become increasingly congested. Resources
being limited, airlines provide passenger transportation services as part of alliance teams, with suchmechanisms as code-sharing, extended route-agency systems, and combined mileage cumulation frequent
flyer programs. Aviation alliance collaboration also includes operating in the same terminal at major airports,
sharing maintenance facilities and operating equipment, mutual support of personnel, and cooperation in
ground handling and inflight catering to reduce costs. This also helps passengers purchase flight tickets at alower price. As long as they take alliance airlines, they can earn flight miles. Flight schedules provided by thealliance are more flexible with fewer transfers, making it easier for passengers to reach their destination
early. At present, there are three major alliances in the aviation industry, namely, SkyTeam, Star Alliance,
and One World. The Company is currently one of the 19-member airlines of the SkyTeam. Through extensive
global network collaboration, we provide transportation services in 175 countries and to 1,150 destinations.

(2)Joint Venture (JV)

For a closer strategic alliance relationship, airlines further share their route network with business partners
and share joint marketing and bear risks together to earn more revenue and route profit. Joint ventures
share revenue on cooperative routes, sometimes including cost sharing. The economies of scale, aviation
network revenue, cost reduction and management efficiency improvements generated through cooperation
can effectively improve operational efficiency, surpassing the benefits of alliance association. For example,
United Airlines (UA) and All Nippon Airways (ANA / NH) have launched joint ventures since 2012. Passengers
can take ANA from Taipei via Tokyo Narita or from Songshan via Tokyo Haneda to gateway cities in the
United States, or choose United Airlines’ daily Taipei - San Francisco direct flight and transfer to major cities
in the United States. Under the JV fare structure, due to the unified fare for the same cabin class and greater
flight interoperability, the sales process is simpler.

(3)Grasping logistics trends and expanding business territory

In response to the different transportation needs of special cargoes, such as semiconductor precision
machinery, aircraft engine materials and the demand for equipment driven by the emerging 5G technology
products, the Company provides professional large cargo loading services with its Boeing 747-400
cargo-only aircraft. For the vaccine delivery during the COVID-19 outbreak, China Airlines is well-versed incold chain logistics and special goods delivery such as biotech medicines. Meanwhile, the Company is also
the only Taiwanese carrier that received IATA CEIV pharma certification, meeting the needs of delivering
vaccines. At the same time, the Company also cooperates with other airline alliances to assist othercountries in delivering vaccines. Additionally, the home economy and the swift development of e-commerce
have a higher demand for e-commerce goods delivery, pushing the Company to work with other airline

92 Operational Highlights

alliances and logistic vendors. The Company will stay close to the development of the logistic market andother potential opportunities to expand its air cargo business.
(4) Taoyuan International Airport expansion to become the transit hub in East Asia
The government has been transforming the Taoyuan Airport as the transit hub in East Asia. The effort has been made not
only in software upgrade and air right expansion, but also in hardware. In 2010 and 2011, Taiwan Taoyuan International
Airport Park Overview Plan and Taiwan Taoyuan International Airport Park Implementation Plan were made to implement
the reconstruction of Terminal 1, airside service roads, Terminal 3 satellite pier, and the third airway, etc. The Company
also responded to the government policy by expanding its fleet capacity and building a transit hub in East Asia.
(5) Digital transformation in the aviation industry to rebuild traveler confidence
COVID-19 escalated the digital transformation in the aviation industry, changing the airport and traveler's experience in
2020. Self-services in the airport, biometric technology, and Wi-Fi connectivity service not only shorten the check-in
process but also maintain good social distances. China Airlines actively encourages passengers to utilize the internet tocheck in. In Hong Kong, New York, and San Francisco, the biometric-enabled check-in process was launched. At the end of
2020, IATA designed an application called "Travel Pass." The application provides passengers with disease control
measures and travel restriction information. Users can upload their COVID-19 testing results and proof of COVID-19
vaccination, allowing the competent authority and aviation companies to identify passengers' health conditions before
boarding. So far, multiple major aviation companies have undertaken the trial. The app will be officially launched in thefirst quarter of 2021. The aviation industry regards the Travel Pass developed by IATA as a milestone to resume the air
travel.

D. Product competition

China Airlines mainly provides regular/irregular flights that carry cargoes and passengers, as well as charter flight service. The
Company will continue to optimize the aviation network and fleet scale to enhance the overall service quality, maintaining its
solid role as a leading carrier in Taiwan. According to the IATA’s 2019 international passenger and cargo transportvolume rankings published in 2020, the Company ranked 34th in the world, with a passenger transport volumeof 42,142 million Revenue Passenger Kilometers (RPK）；In cargo transport, the Company ranked 12th in theworld, with a cargo transport volume of 5,334 million Freight Revenue Ton Kilometers (FRTK).

Taiwan National Airlines International and Cross-Strait Market Share for Passengers and Cargo in 2020
AirlinePassenger
Cargo
China Airlines
25.01%
42.86%EVA Air
26.31%
26.56%
Mandarin Airlines
1.44%
0.26%
UNI Air
1.10%
0.21%
Tigerair Taiwan
3.94%
0.01%
STARLUX Airlines
0.40%
0.07%
Other-Foreign Carriers
41.80%
30.03%
Source: Civil Aeronautics Administration Monthly Statistics from January to December 2020-Taiwan National Airlines
International and Cross-Strait Market Share for Passengers and Cargo

IATA Global International Route Passenger and Cargo Rankings 2019

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Passenger (Passenger-Kilometers) Ranking
Unit: million
EmiratesRyanair
Qatar Airways
United Airlines
Lufthansa
British Airways
Air France
Delta Air Lines
Turkish Airlines
American Airlines
Cathay Pacific Airways
KLM
Singapore Airlines
easyJetAir Canada
Etihad Airways
Norwegian
Korean Air
Air China
China Southern Airlines
China Eastern Airlines
Aeroflot Russian Airlines
LATAM

299,496
185,405
172,591
162,962
160,731
151,935
143,347
141,353
131,106
126,533
119,328
109,476
109,462
99,85487,701
81,856
81,23480,29879,29371,78869,426
68,911
67,108

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Cargo (Ton-Kilometer) Ranking
Unit: million
Qatar Airways
Emirates
Cathay Pacific Airways
Federal Express
Korean Air
Lufthansa
Cargolux
Turkish Airlines
United Parcel Service
Singapore Airlines
Air China
China Southern Airlines
China Airlines
AirBridgeCargo Airlines
United Airlines
British Airways
All Nippon Airways
Air France
Polar Air Cargo
KLM
Atlas Air
KLM(4)EVA Air

13,024
12,052
10,930
8,851
7,390
7,223
7,180
7,000
6,228
6,146
5,651
5,482
5,334
5,168
4,231
4,200
3,922
3,774
3,765
3,609
3,598
3,604
3,580

Operational Highlights

93

Passenger (Passenger-Kilometers) Ranking
Unit: million
24 Thai Airways International
25 Qantas Airways
26 Saudi Arabian Airlines
27 Wizzair
28 Iberia
29 All Nippon Airways
30 EVA Air
31 Japan Airlines
32 Asiana Airlines
33 Ethiopian Airlines
34 China Airlines
Source: IATA WATS 2020

65,38059,721
55,77855,09054,24352,981
48,62744,65044,44944,43642,142

24
25
26
27
28
29
30
31
32
33
34

Cargo (Ton-Kilometer) Ranking
Unit: million
American Airlines
Etihad Airways
Kalitta Air(2)(3)
LATAM Group(3)AeroLogic(1)China Cargo Airlines
Saudi Arabian Airlines
Thai Airways International
Delta Air Lines
Japan Airlines
Silk Way West Airlines

3,550
3,471
3,121
3,044
2,803
2,702
2,487
2,438
2,417
2,410
2,354

E. Intellectual Property

The Company has internal regulations governing corporate identity system management and has a brandmanagement platform for control and management. The scope includes the Company’s office buildings andairport terminals (indoor and external signboards, marks and signs, etc.), transportation, advertisements,
printed matter, inflight and ground service supplies, logos, products, and other installations, publishing, or
broadcasting with the application of corporate identity covered by the Corporate Identity System Guideline(hereinafter referred to as the “CIS Guideline”). By managing the Company’s corporate identity, application,
and authorization of corporate logos (i.e., trademarks), and through reviewing the plan, we maintain theconsistency of corporate identity exposure, unify the Company’s visual identity, and strengthen the Company’s
corporate image. According to application situation of corporate identity in units in Taiwan and abroad, theCompany will discuss and report the implementation method every two years, and notify the units to beaudited by e-mail or memo. The units to be audited have to upload the audit samples on the brandmanagement platform to the concerned unit for review (or for an on-site audit) to protect the Company’s
trademark rights under the protection of law.

5.1.3 Research and Development

A. Costs of R&D investment and successfully developed technologies or products

From January 1, 2020, as on the publication date of this report, the Company has invested
approximately NT$61 million in research and development. The following table summarizes thetechnologies and products developed:
Project

Chatbot

R&D Project Description
Provide an innovative channel that reaches passengers and provides flight status in real time. During
peak seasons or when significant changes are made to flights due to force majeure, provide
passengers with an online instant chatbot conversational service to minimize the time passengers
spend waiting on the customer service hotline. AI technology and AI semantic module have beenutilized to enhance the service quality. Chatbot was officially completed and launched in March 2020.

Online Customer
Service System

The China Airlines Customer Service Center was established in October 2003. The customer service
system was introduced in 2004 and has been in use for more than 16 years. The system equipment
must keep up with the times to cope with today's multifaceted business environment. In response to
the customer service center's heavy workload, changing times, and technological advancements,
China Airlines plans to establish a next-generation multimedia customer service system. It involves
several functions, including telephone services, fax, automated voice answering systems, voiceoutbound dialing, e-mail, Facebook, and online customer service on the official website. The system
will not only increase passenger access channels, but also help managers obtain workload
information and staff status in real time, promptly allocate human resources, and improve service
effectiveness and quality. The OnlineCC was officially launched in April 2020.

Healthself-management
systemIn response to COVID-19 and the rules of the Taiwan Center for Disease Control and Civil Aeronautics
Administration, a body temp reporting system was built for staff to self-report their health condition.
This allowed the Company to monitor the disease condition in real-time, and save the labor cost forfollow-up. The system was completed and officially launched in April 2020.

Aircraft inspection
training systemusing VR/AR

The Company used VR/AR technology in aircraft inspection and new employee training. New
employees can have real-time practices in the training to familiarize the inspection procedure andoperations. This can improve employees' ability in identifying abnormalities and enhance themaintenance training result. The system was completed and officially launched in July 2020.

Fuel-saving
effectivenessmanagement
systemThrough the information process, consistent and complete oil-saving analysis data are generated.
Various fuel-saving analysis data and monthly oil-saving results are presented in graphs. By doing so,
the Company can formulate a precise fuel-saving policy and cut down on operating costs. The system
was completed and officially launched in December 2020.

Robotic Process
Automation, RPA

Promoting the relevant application of robotic process automation to all business units in China
Airlines, reducing the manpower requirements for indirect manual operations, so to avoid theoversights caused by repetitive data input and manual input errors, improve work efficiency, and

94 Operational Highlightsimprove operating performance. The RPA is implemented in audit tools optimization: the automatic
measurement function, the IATA automatic settlement and payment system, and the automatic
download of the ticket price. The application was completed and officially launched in December
2020.
Establish therelevant mechanismof Cyber Security
Management Act

In 2020, China Airlines put Cyber Security Management Act as its core in the cyber security operation
by implementing international standards such as ISO 27001:2013 and ISO 27701:2019. At the end of
the year, PCI DSS was completed that ensures the safety of credit card transactions. China Airlines
enhanced the cyber security in all aspects according to the standards of the Cyber Security
Management Act, which includes the introduction of audit and accountability tools and protection
platforms from malware. This is to enhance the Company's security level and reduce the cyber risks.
The system was completed and officially launched in December 2020.

CI Mobile APP

In order to enhance user experience on mobile devices, the Company continues to optimize CI
Mobile App functionality. The planned improvement projects cover car rental, accommodation
booking/ticket refund application/chatbot customer services, pre-stored travel documents, passportscanning (OCR), China Airlines eMall home delivery, push notification of system records, Google
Pay-supported electronic boarding pass service, seat preselection, collaboration with credit cardcompanies, proof of purchase application, function upgrade for the membership app/theestablishment of an app for co-branded cards.

B. Future R&D Projects

To meet the future development needs, China Airlines will continue to invest in R&D. In, we plan toinvest a total of NT$114.38 million into R&D. The following table summarizes the future projects:
Future R&D Project Description

Estimated
Completion Datee-ShoppingPhase I

The "e-Shopping Duty-free Website" has been in use since the first project revisionin 2013. After observing the functions and web designs of other airlines' websites
and online shopping platforms, improvements will continue to be made to thewebsite. In order to uphold the Company's service spirit through continuous
innovation and optimization while keeping up with today's trend of smart
technology, plans to revise and optimize the website will be implemented. This will
provide a more novel shopping experience that will in turn increase sales.

March 2021
(Implementation
progress was
100% as of theannual reportprinting date)iCabin Service
2.0, iCS 2.0

The cabin team leader, manager, the head attendant can obtain information aboutpassengers, flights, team members right away through mobile devices. They canwrite up cabin reports with flexibility. In addition, the digitized cabin manual
provides the latest version for team members to read at any time to improve
passenger service quality.

April 2021
(Implementation
progress was
100% as of theannual reportprinting date)

Project

CRM- Phase I

To establish the Company's consistent customer relationship service system and to June 2021
expand business opportunities through data analysis in integrated systems. The(Implementation
primary goal is to serve passengers. We plan to consolidate data platforms such as progress was 92%
membership, ticket files, reservations, in-flight duty-free products, and customer
as of the annual
feedback. Through one single platform, data visualization and other operations, wereport printing
can effectively accelerate customer service processing and improving service quality.
date)
November 2021

Customer
service system
improvement

To optimize the customer service process, existing interface, and data security
mechanism, China Airlines strengthens the automatic and digital process. Financial
and human resource systems are interlinked to get a full picture of customers'
consumption patterns, enhancing service efficiency.

Mail system
integration

In order to keep the Company’s email system up to date, China Airlines strengthens
the system information security mechanism, enhances the compatibility of mobile
devices, integrates the existing e-mail system, upgrades the platform by taking into
account subsequent maintenance costs and technical support, so as to provide asafer and more stable email service and a high quality office environment.

Major
broadband
construction forenhanced online
service

According to the infrastructure plan for communication, China Airlines replaced
10Gb internet routers in park control room, floor control rooms, terminals, andcargo stations (60 routers in total. Speeds came to 10/40/100Gb) to enhance theonline service.

(Implementation
progress was 2%
as of the annual
report printing
date)
December 2021
(Implementation
progress was 8%
as of the annual
report printing
date)June 2022(Implementation
progress was
16% as of theannual reportprinting date)

Operational Highlights

95

December, 2022
Replacement ofcore optical fiber
storage network
switchesThrough analysis, China Airlines adopted high-speed (32GB) Storage Area Network(SAN) and All Flash Storage devices to build a high-performance, high-reliability
storage network. This reduced the downtime risks and improved the information
efficiency of SAN.

(Implementation
progress was
50% as of theannual reportprinting date)In order to solve the problems of system expansion, difficulties in development andrisks of information security, China Airlines made a new plan for business process,technical and regulatory aspects. By leveraging new technology and structure,adjusting SOP, and redefining the personal information processing principle, a newgeneration of human resources management system has been developed to achieve
overall system synergy.

June 2023

Human Resource
Management(HRM) system

New cargo
operation andmanagement
systemThe system aims to improve the management of cargo revenue. By introducing an
external cargo operation and management system, China Airlines replaced current
systems, CCNet and CIRAS. It is expected that the implementation can support thecargo business in the next ten to twenty years to achieve an efficient revenue
forecast and price management.

(Implementation
progress was 5%
as of the annual
report printing
date)
December 2023
(Implementation
progress was 8%
as of the annual
report printing
date)

5.1.4 Long-term and Short-term Development

To promote sustainable operations and strengthen international competitiveness, CAL has planned thefollowing short- and long-term passenger and cargo transport developments:

A. Short-term Development(1) Passenger

 Make short-term adjustments to ASK in response to the impact of the COVID-19 pandemic
Since the outbreak of the COVID-19 in late January 2020, border control in each country has become increasingly
stringent and the overall aviation and tourism industries have been disrupted. The Company not only flexibly adjusts
its delivery capacity in each route, but stays up to date on the border policy changes and travel bubbles development,
as the vaccines are gradually available in each country. China Airlines hopes to minimize the loss and resume
passenger flights as soon as possible.
 Strive for providing Charter flight services to increase revenue
Charter flight service is one of the main incomes for China Airlines during the pandemic. In 2020, China Airlines sent
Taiwanese passengers back to Taiwan with charter flights, which include charter flights for the Japanese Diamond
Princess cruise ship and charter flights departing from Wuhan, Shanghai, India, and Bali. Charter flights to Vietnam and
Palau are also arranged to provide transportation for Taiwanese businessperson and foreign patients. In the
post-COVID-19 era, China Airlines will provide different kinds of charter flights for students, corporates, and Taiwanesebusinessperson to enhance its revenue.
 Open up new routes and explore market potential
In 2020, China Airlines started successively opening up the Taoyuan-Cebu route and resuming the Taoyuan-Chiang Mai
route to seize business opportunities in the market. At the same time, the schedules of these flights are arranged
alongside the existing North America aviation network, so they can be connected to flights going to Los Angeles,
Ontario, San Francisco, Vancouver, New York, and vice versa. This way, more convenient and comfortable services areprovided to passengers traveling between Southeast Asia and North America.

(2) Cargo Improve revenue management and promote customized services
We will continue to improve revenue management. Regarding the different transportation needs of special cargo,such as time limit, volume, and special loading procedures, we will continue to enhance price differentiation andincrease the added value of transportation services by utilizing the advantages of large cargo loading and professional
services of our Boeing 747-400 all-cargo aircraft. The Company also highlights its charter flight service. By providing
customized charter flight service, revenue can enhance profoundly. After the introduction of 777F new aircraft in 2021,
the fleet scale increased. In response to the global aviation market changes caused by COVID-19, China Airlines will
deploy the aviation network and adjust the flight schedule more flexibly. The Company will also explore the North
America and Southeast Asia markets, stabilize the overall aviation network and promote charter flight service,realizing the freighters' performance.

B. Long-term Development(1) Passenger
 Roll out fleet plans.

In order to improve operational efficiency, in 2019, the Company finished its plans to replace the oldcargo fleet and the old narrow-body fleet. Between 2021 and 2023, we will introduce 25 A321neo aircraft,

96 Operational Highlightswhich will gradually replace the narrow-body aircraft currently in operation. The new cabin design will
enhance passenger service quality and strengthen product competitiveness.

 Efficiently establish aviation networks and deepen inter-airline cooperation to increase
revenue.

Utilize the new-generation, long-haul aircrafts 777 and A350 to proactively maximize the benefits of China
Airlines' aviation network in California (North America) and expand the customer base for long-haul flights;
provide a more interconnected, and convenient aviation network in Europe to secure China Airlines'
leading position in the market of flights flying from Taiwan to Europe; continue to expand the aviation
network covering bi-directional transfers in routes between New Zealand/Australia, Europe, andNortheast Asia to strengthen China Airlines' travel services. Furthermore, increase flight destinations andexpand into major cities and tourist destinations around the world through inter-airline cooperation;
increase the overall earnings generated by the aviation network by increasing flight frequencies andinterconnectivity.

 Optimize cabin products and strengthen brand marketing to enhance passenger experience andincrease loyalty.
Continue to improve personnel service and cabin hardware; provide passengers with the best flight
quality and pleasant in-flight services. Establish brand positioning and a marketing direction that is in linewith the brand improvement plan and based on the corporate philosophy; enhance the brand recognitionof China Airlines; further ensure the consistency of passenger experience and strengthen the brand loyalty
passengers have for China Airlines' products.

(2) Cargo Enhance project-based revenue and e-commerce goods delivery
Under the development of the Southbound policy and the economic growth in Southeast Asia, there has
been tremendous growth in electrical devices, textile items, e-commerce goods. In addition to thedelivery of north-south goods in regions like Japan, Singapore, Malaysia, Indonesia, Vietnam, thePhilippines, and Thailand, the Company also emphasized the Southeast Asia routes. According to thedemand, the chain flight is changed to a direct flight to increase the transportation capacity, in order tofully cooperate with the development of Southeast Asia, and improve the overall revenue and economic
efficiency. Other than that, China Airlines will keep navigating the potential markets in special goods
delivery, such as semiconductor machines, aviation materials, temperature-control cold chain, andbiotech items.
 Airline alliance for cargo information exchange
Since its launch in Shenzhen in 2015, the Company has been working closely with UPS, DHL, Fedex, and SF
Express on the fixed seats of American chartered flights. In addition, the cooperation with NCA and NH
continued. China Airlines currently works with 165 cargo service companies by creating a win-win
situation in airline alliance and aviation network. In addition, China Airlines also promoted thedigitalization of freight forwarding and the upgrade of the information system of freight
operation/services, which are also the key points of the Company’s strategic development. Through the
integration of various systems and the provision of real-time information of mobile devices, the Company
not only improved the efficiency of internal operations, but also enhanced the quality and satisfaction ofcustomer services.
 Leverage the advantages of our cargo fleet to capture potential business opportunities Starting from the end of 2020, new models of 777 F have been introduced. In addition to effectively
improving fuel efficiency and enhancing the capacity of long-haul routes, the existing aircraft fleet of 747F
has been flexibly deployed to meet customers’ needs by carrying semiconductor machines, e-commerce
goods, consumer electronic products and equipment. The Company also provides medium and short-term
chartered flights, flexible adjustment on the capacity of the aircraft fleet, adding flights to create goodrevenue.

Operational Highlights

975.2 Market and Sales Overview
5.2.1 Market Analysis

A. Main Sales (Service) Region

Overview of Company passengers/cargo (RPK/FRTK, REV) by region and passenger and cargotransport market share over the past two years:(1)Passenger routes:
Item

No. of
Passengers
1,017,031
623,3893,890,748
1,467,638

2019
No. of
Passengers
1,017,031
623,3893,890,748
1,467,638

No. of
Passengers
1,017,031
623,3893,890,748
1,467,638

No. of
Passengers
235,264
122,553
725,449
1,729,624

2020
RPK(Million)
2,499
1,157
1,836
397

Revenue
Area(NT$ Million)
Trans-Pacific
4,601
Europe2,615South-East Asia
4,713
Domestic
2,688
Hong Kong/
2,532,308
2,532,308
2,532,308
243,329
194
944
Macau
North-East Asia
7,023,173
7,023,173
7,023,173
1,039,218
1,900
6,303
Oceania
651,793651,793651,793
149,571906
1,948
Mainland China
2,624,929
2,624,929
2,624,929
247,045
208
1,892
Total
19,831,009
19,831,009
19,831,009
4,492,053
9,097
25,704Note 1: Revenue passenger kilometers (RPK) equal the total number of revenue passengers multiplied by the flight distancetravelled (kilometers).
Note 2: The above data includes scheduled flights, charter flights, and extra flights.
Note 3: The above data includes Mandarin Airlines and Tigerair Taiwan.

(2) Cargo routes:

Item
2019
2020
Area
FRTK (Million)
FRTK (Million)
FRTK (Million)
Revenue (NT$ Million)
Trans-Pacific
3,358
3,358
4,182
47,940Europe
717
717
603
7,085
South-East Asia
756
756
952
15,380
North-East Asia
229
229
221
4,121
Oceania
161
161
234
2,420
Mainland China
149
149
176
4,972
Total
5,370
5,370
6,368
81,918Note 1: Freight revenue ton-kilometer (FRTK) equals the revenue cargo load (tons) multiplied by the flight distance travelled(kilometers).
Note 2: The above data includes scheduled flights, charter flights, and extra flights.
Note 3: The above data includes Mandarin Airlines and Tigerair Taiwan.

B. Market Share (%) of Major Product Categories in the Last Two Years

Passengers
Cargo
Year
Airline
2019
2019
2019
2019
China Airlines
23.45%
25.01%
37.37%
42.86%EVA Air
21.70%
26.31%
24.12%
26.56%
Mandarin Airlines
2.17%
1.44%
0.64%
0.26%
UNI Air
1.43%
1.10%
0.56%
0.21%
Far Eastern Air Transport
0.46%
Tigerair Taiwan
4.70%
3.94%
0.04%
0.01%
Other-Foreign Carriers
46.09%
0.4%
37.27%
0.07%
Source: Civil Aeronautics Administration Monthly Statistics from January to December 2019 and 2020-Taiwan National Airlines
International and Cross-Strait Market Share for Passengers and Cargo

C. Market Analysis of Major Product Categories(1) Passenger

According to IATA, travel restrictions remained tight in 2021 due to the new variant coronavirus. Although it
is optimistic that developed countries will gradually ease tourism restrictions after the completion of
vaccination for the disadvantaged group, the full year’s passenger demand remains at only 38% of 2019.
Airlines may not be able to realize positive cash flow, and the loss can be turned into profit in 2022.

(2) Cargo

In 2021, the COVID-19 pandemic continued to be severe, and the passenger flight market is expected torecover slowly, limiting the growth of belly hold capacity. However, as the economic recovery brought up
the shipment market, many shipping ports in Europe and North America are experiencing traffic congestion
and a lack of containers. Many businesses turned to air transport. Coupled with the heavy demand fromaviation cargo-driven semiconductors, 5G, electric vehicles and epidemic prevention supplies, the air cargomarket is expected to remain buoyant in 2021. In early 2021, the governments of major automotive
manufacturers seek helps from Taiwan due to a global shortage of automotive chips. The dry freight rate
after the mass production of vaccines is expected to increase in visibility for air cargo demand.

98 Operational Highlights

D. Competitive Niche(1) The new-generation fleet can help to enhance service quality.
In line with the development of the aviation network, the Company continues to optimize the fleet
team. 744 passenger aircraft was replaced to lower operating costs and improve the fleet team. The
next-gen Airbus A321neo is about to be introduced in 2021 to replace Boeing 738 aircraft. It will be
used in flights for regional routes to enhance competency.
China Airlines will introduce new narrow-body aircraft by elevating the passenger services with
comfortable seat design, in-flight entertainment, and meal design. By integrating software andhardware, the passengers can have more diverse, consistent, and high-quality in-flight services.
Customer loyalty will also be enhanced.
(2) Highly-efficient cargo aircraft to be introduced.
Three Boeing 777F were about to be introduced from December 2020 to January 2021. The remaining threeaircraft will be delivered before 2023. 777F new cargo freights come with two engines and fuel-savingfeature, which are the main aircraft model in the fleet. With the existing 18 747-400 cargo-only aircraft, thefleet team will come to 21 aircraft in 2021. This will create more cargo revenue for China Airlines as thedemands for vaccine delivery and air cargo delivery are on the rise.
The 777F features twin engines that translate into 20% lower fuel consumption and a range longer than the
747F. It can therefore be flown on trans-Pacific routes with fewer payload restrictions and better holdutilization. The aircraft are equipped with fully temperature-controlled cargo holds and the main cargo holdcan be fitted with cargo pallet restraint systems used for carrying semiconductor machinery and engines.
High-value cargo such as precision instruments and temperature-controlled goods can all be carried in the
future.

(3) CEIV Pharma Certification

In April 2019, China Airlines officially obtained IATA's CEIV Pharma Certification, becoming the first aviationcompany in Taiwan to earn such honor. The certification shows that China Airlines has reached international
standards in the field of medicinal air transport, which is sensitive to time and temperature. This enhances
the Company's competitiveness and benefits generated in the highly valued freight market. As one of theleading cargo carriers in the world, China Airlines has made all the necessary preparations and has received
a number of inquiries on transportation plans for different types of vaccines. China Airlines’ CEIV Pharma
certification, many years of experience in professional transportation, and an extensive network coveringmajor European and American cities such as Frankfurt, London, New York and Chicago, mean that it stands
ready to meet the demand for vaccine transportation. Talks are underway with partner airlines onopportunities offered by the transshipment of vaccines by other countries.

(4) The Group’s integrated resources increase the overall efficacy.

China Airlines Group's overall combined fleet ASK provides differentiated aviation services and products to target
markets with differentiated market positioning. Tigerair Taiwan operates with a low-cost airline business modeland mainly flies regional routes. In the civil aviation market, Tigerair Taiwan, China Airlines, and Mandarin Airlines
have each established their own positioning in different segments, providing consumers with a diversity of
product options.

(5) Taken a leading position in the inter-airline collaboration market

In addition to self-owned routes, China Airlines is the first airline in Taiwan to join the global aviation
alliance. We are also the first Taiwanese airlines to conduct code-sharing cooperation. Currently, we havecooperated with 23 airlines in code-sharing, ranking first among all Taiwanese airlines. We actively
penetrate the market through the aviation alliance, allowing passengers to travel between Taiwan andmajor cities around the world with a network of airlines and providing them with more convenient andcomplete services.

E. Corporate Policies(1) Corporate Human Rights Policy

To enforce the concept of human rights, CAL has established our human rights policies and management
mechanisms in accordance with the UN Guiding Principles on Business and Human Rights, international
trends, and local human rights-related laws & regulations. The scope of application covers the members of
the China Airlines Group and their suppliers, and the Talent Value Task Force under the Company's
Corporate Sustainability Committee is responsible for human rights management. China Airlines sees its
employees as its family and aspires to communicate and reach a mutual understanding with the union
through equal and respectful negotiation procedures, to create a more harmonious and friendly working
environment, based on a mutually beneficial situation for both labor and management. The Company andthe union shall maintain an equal, cooperative, and respectful relationship. It is our core attitude topromote rational communication through open and transparent negotiations, so that labor andmanagement can reach consensus and achieve the common good, and can conduct two-way friendly
communication on collective agreement issues. China Airlines believes that employees are the Company's
most important assets. The Company gradually strengthens and optimizes the working conditions andenvironments of colleagues to ensure they have employment safety and room for growth. The Company willtreat each union with empathy and communicate and negotiate with them on their individual needs, andwill give priority to fair protection of the labor rights of every employee with the obligation to stay neutral
according to the law, showing the unions consistent respect and providing them with equal resources.

Operational Highlights

99

(2) Sustainable Supply Chain Management

Based on the corporate vision of “becoming the top airline in Taiwan,” the Company, based in Taiwan andflying around the world, is committed to pursuing the business goal of corporate sustainable development.
We strongly feel that only by cooperating with business partners can we truly implement corporate
sustainable development and create sustainable value. Therefore, the Company has been promoting
sustainable supply-chain management since the beginning of 2014. Subsequently, we established a Joint
Creation Value Team for important procurement categories, including “aviation materials, aviation fuel,in-flight meals, service procurement, and general business affairs”; formulated long-term sustainability goals
based on the United Nations’ Sustainable Development Goals (SDGs); and formulated China Airlines’
Sustainable Supply Chain Management Policy Statement and Supplier Code of Conduct with reference to
the Global Reporting Initiative (GRI), ISO 26000, United Nations Global Compact (UNGC), International
Labour Organization (ILO), and other international standards. In addition, the Company has also created arisk investigation mechanism, performed audit operations, organized supplier meetings to enhance theeffectiveness of engagement, and set up other management measures, and has regularly reported the
management outcomes to the Corporate Sustainability Committee for follow-up inspection on a quarterly
basis.

(3) Environmental Sustainability Management

The Company believes in environmental sustainable management and regards “environment” as one of the
key elements in the implementation of sustainable management. Since 2007, we have established theconcept of environmental and energy management. In 2011, a dedicated environmental department andEnvironmental Committee were set up; every quarter, the president reviews the Company’s environmental
and energy-management performance and has also set incentive measures. In 2013, an environmental andenergy policy statement was issued; the Company became the first domestic airline to establish a dedicatedenvironmental organization and formulate policies. While pursuing business development, China Airlines
recognizes the value and irreversibility of the global environment, and understands the corporation’s
responsibility and obligation for protecting natural resources and environment. Based on this understanding,
the Company established the four environmental and energy-management concepts and six environmental
and energy policies according to the codes of practice for “Sustainable Environment Development” in the
China Airlines Corporate Social Responsibility and Sustainable Development Best Practice Principles of theBoard of Directors. The Company also referred to the UN’s SDGs while devising instructional strategies toensure that the business operation direction is toward sustainable development, namely, environmental
friendliness, low-carbon emissions, and energy conservation.

(4) Corporate Social Responsibility

CAL's success today stands based on social support. Upholding our core philosophy of "giving back to society
what we take from society," we at CAL continue to make social contributions aimed at creating love, while
fulfilling our corporate responsibility in Taiwan. As a leader in Taiwan's aviation industry and a corporate
citizen of Taiwan, the Company takes "continuous social value creation" as an important commitment forsustainable development. In 2020, the global aviation industry was severely impacted by COVID-19. China
Airlines followed the pandemic prevention measures set out by the central government by reducing
corporate interaction, educational sharing, and charity events. As the leading carrier in Taiwan, China
Airlines is committed to social sustainable development and utilizes available resources. China Airlines sticks
to the three main social strategies: Internationalize the local education, enhance Taiwan visibility on the
global stage, and promote equal opportunity for the disadvantaged, and implements SDG3, SDG4, and SDG8of the United Nations. China Airlines hopes to enhance the education quality in Taiwan, strengthen Taiwan's
visibility in the world, assist the disadvantaged group in overcoming the difficulties, and create a sustainable
society.

(5) Enterprise Risk Management Architecture and Process

China Airlines realizes the importance of risk management, and puts emphasis on the impacts it may bring.
CAL's risk management framework complies with the Enterprise Risk Management (ERM) model, where amulti-level organizational approach is adopted to manage and control overall risks to CAL. The modelemphasizes possible correlations between different risks, to reduce their overall impacts and achieve
corporate sustainability. China Airlines' risk management is based on the materiality principle, which
identifies traditional risks and mid-to-long-term strategic risks. By following the four main steps:
identification, analysis, assessment, and control, China Airlines analyzes and assesses the impact of risk
events on the Company. The Risk Committee and the Corporate Sustainability Committee were established
to conduct regular follow-up and review. For risk identification, the aviation industry has its industrial
specialty. Considering the operating environment and daily operation, the impacts, severity, and areas of
the risk events are different. If a single mechanism is used for monitoring, the risk control result may be
impacted. Therefore, China Airlines categorizes the risks into two levels: mid-to-long-term strategic risks andtraditional short-term risks, which are monitored under two different systems: operating strategy
management and annual sales plan/operational risk management. China Airlines also built up the new risk
identification process. New risks have been identified through risk metrics. Regular risk review is conducted
to formulate countermeasures in order to lower the impacts of new risks on the aviation industry.

100 Operational Highlights

F. Favorable and Unfavorable Factors in the Long Term
(1) Favorable Factors

 The international air cargo industry continued to boom: Almost 90% of the world’s passenger flights weregrounded by the pandemic, while almost half of the air cargo delivery relied on belly hold of passenger
aircraft, resulting in a crowded air cargo space and soaring freight rates due to the growing delivery
demand of medical supplies, components, e-commerce goods, information and communications, andhome economy. In 2020, revenue from cargo operations increased due to the launch of new electronic
products and the surge in Q4 shopping. In 2021, the Company will continue to rely on air cargo deliveries
to generate stable income as vaccine delivery and air cargo delivery are boosting.
 Global economy rebound: Many countries have received the vaccination, and the pandemic started toease in some of the countries. According to a poll conducted by Kekst CNC, an international consulting firm,
people from six countries, including the United Kingdom, the United States, France, Sweden and Germany,are on a growing trend towards vaccination compared to December 2020. Along with the financial
incentive policy in many countries, it is expected that the global market will rebound in 2021, which may
benefit the aviation industry.
 Rapid development in Southeast Asia: since 2016, the Taiwanese government has promoted the New
Southbound Policy to strengthen its strategic partnership with 18 countries, including 10 ASEAN countries,
6 countries in South Asia and New Zealand and Australia, so as to increase the attractiveness of Taiwan foreconomic trade and tourism in the southern countries. This triggered higher growth of tourists comingfrom Southeast Asia before the pandemic. In addition, because of the global supply chain shift driven by
the US-China trade and the COVID-19 that pushed the demands for passenger and cargo delivery inSoutheast Asia, the Company planned to open a new Taoyuan-Philippines Cebu flight andTaoyuan-Thailand Chiang Mai flight in 2020, mainly focusing on the markets in Southeast Asia and thetransit opportunity between North America and Southeast Asia. The flights will resume after the
pandemic.

(2) Unfavorable Factors

 COVID-19 endless impact: The spread of the pandemic worsened in autumn and winter 2020. Bordercontrol and epidemic prevention measures were more stringent in some countries. Even though thevaccines are available, their security and protection ability still need scientific proof and time. With the
new variant coronavirus appearing, the travel restriction remains strict in most countries. IATA said thatthe number of passengers decreased by 5.4% in January compared to December, implying that theaviation industry did not secede from the COVID-19. Before the COVID-19 can be controlled, the aviationindustry still needs to bear the financial burden.
 Unequal distribution of COVID-19 vaccines: While vaccines have been developed successfully, massvaccination on a global scale is an uphill task. In many wealthy developed countries, including the UK and
the United States, large quantities of vaccines have been purchased, some exceeding the needs of thedomestic population. The number of vaccines sourced in Canada is even more than 5 times sufficient forthe population nationwide. However, several health experts have warned that this will cause a shortage ofthe vaccine in the COVAX mechanism, unable to assist front-line healthcare personnel and vulnerable
groups in low- and middle-income countries to receive the protection required, leading to a global healthemergency. The prolonged pandemic situation and predicted delay before herd immunity occurs are likely
to have a significant impact on the timing of the recovery of the tourism and aviation industries.
 Unstable global economy: The global economy is affected by the outbreak of COVID-19, and the increasein the unemployment rate, widening poverty and wealth due to different economies and industries. This
causes social instability and drags down the recovery momentum of economic activities. Apart from theoutbreak, geopolitical tensions, the continuance of protectionism, and the ongoing trade disruption
between the United States and China have added to the uncertainties on the aviation industry's recovery.

(3) Response MeasuresFlexible adjustment of passenger and cargo routes: Ad hoc adjustments of passenger aircraft to carry
cargo to support cargo demand for greater revenue. China Airlines continues to stay focus on thedevelopment of COVID-19 and border policy in each country. It adds flights according to the risingdemand and strengthens the aviation network to remain good competency. At the same time, theCompany will keep abreast of the operating trend of the airline alliance and consolidate its leading
position in the market with its strengths. China Airlines also adjusts its business strategies in different
seasons (Christmas, Easter, New Year, etc.) to create revenue.
Increase air cargo flight revenue: As the border control loosened and the economy recovered, thelong-haul cargo route has gradually gone back to normal. China Airlines has not only utilized the belly
hold of passenger flights to carry cargo to achieve higher revenue in cargo delivery, but flights are also
expected to resume and increase for the European routes. The transit point will be adjusted to increase
revenue. 777F aircraft is planned to enter service in LAX route to improve and enlarge the cargo capacity
for the US routes; As for routes in Asia, China Airlines will capture the opportunities in high-price charter
service and new route demand. Capacity will be maximized for freighters to increase the cargoes carried

Operational Highlights101to enhance cargo delivery revenue.
Optimize the fleet scale: China Airlines has optimized its fleet by replacing aging 744 passenger aircraft to
reduce operating cost; Airbus A321neo narrow-body passenger aircraft is introduced in 2021 to replace
Boeing 738 aircraft. The replacements have reduced carbon emission, saved more fuels, and become
more environmentally friendly. The decline in unit cost will enhance the Company’s operating
performance and competency. Three Boeing 777F are expected to be introduced from December 2020 toJanuary 2021. The remaining three aircraft will be delivered before 2023. The fleet team will come to 21
aircraft by 2021, expecting to generate more freight revenue as the air cargo delivery demand andvaccine delivery remain strong.
Safety measures for air traveling: To regain trust from passengers, China Airlines strictly follows the publichealth regulations promulgated by ICAO, IATA, ACI, and EASA. Various travel sanitation and safety tasks
have been done on passenger service, aircraft, employee management and facilities. Other than the basic
disease prevention measures such as temperature testing and wearing face masks, China Airlines actively
elevated its disease prevention control by providing individual lunchbox, frequently sanitizing the luggage,
reinforcing the aircraft cleaning, and improving the sanitization of the air-con system. China Airlines
wants to guarantee tourists’ safety, improve the travel experience, and rebuild trust from the passengers.
 Maintain robustness in finance: At the beginning of the COIVID-19 outbreak, China Airlines immediately
adjusted its annual budget plan and canceled unnecessary spending. The capital was strictly controlled,
and flexible labor deployment and personal leave projects were implemented to cut down on labor costs.
In response to the large number of cancellations caused by COVID-19, credit facilities have been
progressively raised since February 2020 to ensure a healthy capital turnover. To continuously utilize
aircraft assets to generate working capital, in addition to the rental of an originally decommissioned
Boeing 744F in 2019 to generate cash flow, China Airlines also continued to process the sale of the aging
Boeing 738 aircraft and brought forward the decommission of the Boeing 744 passenger aircraft. In
respect of the various relief measures provided by the government in the aviation industry, such as
expenses reduction, subsidies, loan credit guarantees and interest subsidies, the Company continues toapply for these relief measures to alleviate operational pressures.

5.2.2 Procedures followed in the Production of Main Products
A. Major Products and Their Main Uses
Major ProductsPassenger services
Cargo services
In-flight sales

Main Uses
International passenger air transport and scheduled, non-scheduled, and charter flights.
International cargo, courier, mail, and package transport.
Providing passengers with in-flight duty free sales services.

B. Major Products and Their Production Processes

The Company is a member of the airline industry and not a manufacturer, so there is no production
process in its operations.

5.2.3 Supply Status of Main Materials

CAL is a member of the airline industry, not a manufacturer. Therefore, there is no need to produce
raw materials. Aviation fuel makes up the largest proportion of operating costs. In addition to aviationfuel supplied at Taiwan Taoyuan Airport by CPC Corporation and Formosa Petrochemical Corporation,
the Company also purchases fuel from large oil companies around the world at the various destinations
served, so fuel supplies are very fragmented.

5.2.4 Major Suppliers and Clients

A. Major Clients in the Last Two Calendar Years

CAL is a member of the airline industry and clients are members of the public.

102 Operational Highlights

B. Major Suppliers in the Last Two Calendar Years

CPC Corporation, Chevron Corporation, and Formosa Petrochemical Corporation, etc.
Unit: NT$ thousands
2019

2020

%

Relation with
IssuerRelation with
IssuerItem

Amount

CPC Corporation

7,927,738

7.55%

None

3,315,153

3.16%

None

2,466,270

2.35%

None

91,322,188
105,031,349

86.94%
100.00%

Amount1

CPC Corporation

17,197,546

11.33

None

2

Chevron Corporation
Formosa
Petrochemical
Corporation
Other
Net Total

5,126,545

3.38

4,939,381

3.25

124,493,760
151,757,232

82.04
100.00None Chevron Corporation
Formosa
None
Petrochemical
Corporation
Other
Net Total

3%

Company Name

Company Name

Reasons for changes:
Fuel is the Company’s primary operating expense. Overall, purchases have remained stable.

5.2.5 Production in the Last Two Years

Unit: thousand kilometers

Year

2019
Capacity and Traffic
58,590,098
Available Seat Kilometers (ASK)
47,462,113
Revenue Passenger Kilometers (RPK)81.01%
Load Factor (%)
8,012,739
Freight Available Ton Kilometers (FATK)
5,370,078
Freight Revenue Ton Kilometers (FRTK)
67.02%
Load Factor (%)
13,269,365
Available Ton Kilometers (ATK)
9,627,913
Revenue Ton Kilometers (RTK)
72.56%
Load Factor (%)
Note 1: The above data includes scheduled flights, charter flights, and extra flights.
Note 2: The above data includes Mandarin Airlines and Tigerair Taiwan.

2020
16,116,497
9,097,129
56.45%
8,830,722
6,367,751
72.11%
10,278,085
7,184,503
69.90%

Rate of Increase(Decrease)-72.49%-80.83%-24.56 ppt
10.21%
18.58%
5.09 ppt-22.54%-25.38%-2.66 ppt

Reasons for Changes:

In 2020, to prevent the spread of COVID-19, countries adopted border control, which decreased the commercial
and travel demand. Available Seat Kilometer (thousand km) and Revenue Passenger Kilometer (thousand km) in2019 dropped sharply. Due to the cancellation of passenger flights in each airline, the supply of cargo delivery
plummeted. China Airlines utilized the belly hold of passenger flights to support the cargo delivery instead. Thus,
the Freight Tonne-Kilometer (thousand km) and Freight Revenue Tonne Kilometer (thousand km) increased
compared to 2019.

5.2.6 Shipments and Sales in the Last Two Years
Item

RPK/FRTK

2019

Unit: thousand kilometers; NT$ thousands

Amount

RPK/FRTK

2020

AmountPassenger Revenue

47,462,113

111,413,435

9,097,129

25,704,367

Cargo Revenue

5,370,078

43,793,256

6,367,751

81,917,976-

13,237,469-

7,628,207

168,444,160
Note 1: The above data includes scheduled flights, charter flights, and extra flights.
Note 2: The above data includes Mandarin Airlines and Tigerair Taiwan.

-

115,250,550

Other Operating Revenue
Total

Reasons for Changes:

Due to the impact of COVID-19 in 2020, the passenger flights were supported by inelastic demand, leading to afundamental decline in passenger flight revenue; cargo delivery supply dropped as well due to the limited supply
from the belly hold of passenger aircraft, causing the imbalance of supply and demand in the freight market. The
fare rose accordingly. China Airlines has been pursuing the best combination of profit, utilizing cargo-only aircraft
and belly hold of passenger aircraft to support the cargo delivery. Therefore, the revenue in air cargo rose by 87% in2020 compared to 2019.

Operational Highlights

1035.3 Human Resources
Year

Male
Number of
FemaleEmployees
Total
Average Age
Average Years of Service
PhDs
Master’s Degrees
Education
Bachelor’s Degrees
Senior High School
Below Senior High School

2019

6,302
5,937
12,239
41.40
14.00
0.09%
11.10%
82.63%
5.89%
0.29%

2020

5,885
5,505
11,390
42.72
15.35
0.11%
12.02%
82.81%
4.83%
0.24%

MAR 27, 2021

5,834
5,425
11,259
42.97
15.58
0.11%
12.13%
82.75%
4.78%
0.23%

5.4 Environmental Protection Expenditure

5.4.1 Total Losses and Penalties: None.
5.4.2 Company Countermeasures to Future Environmental Protection Issues

A. ISO 14001 Environmental Management System and ISO 50001 Energy Management
SystemIn order to integrate environmental protection operations into the daily operational risk
management operations of the enterprise, China Airlines has introduced several international
standard management systems (ISO 14064-1, ISO 14001, ISO 50001) since 2009, and has establishedand improved the environmental management operation mechanism of the enterprise, covering risk
issues such as greenhouse gases, environmental management and energy management. The
Company has formulated management strategies and action measures for relevant risks andopportunities identified in various aspects of the environment.
(1)Management system operations
In 2017, we completed the revision of the ISO 14001: 2015 standard, incorporating the “life cycle
thinking,” “stakeholder engagement,” “risk and opportunity management” and other aspects into
the operation of the Corporate Environmental Management System (EMS). Following that, in
2019, we further developed ISO 50001:2018 version transferring operation, strengthening theidentification and operation control of energy use, comprehensively reviewing and optimizing
energy performance indicators, to fit into the international enterprise benchmark mode of
thinking on sustainable development and governance.
(2)Value chain and outstation environment management
In order to fully understand the global operational risks, the Company has initiated outstation
risk/opportunity investigation and evaluation operation since 2018, strengthening theappreciation of international environmental-protection control trends, and ensuring theidentification and handling of environmental energy-related risks and opportunities in operation.
In 2019, we further focused on the current operational status of various issues of concern, andused best-case sharing to assist each station in seeking room for continuous improvement andimplementing related operations.
In addition to strengthening its own environmental sustainability management capacity, theCompany also actively strengthens the sustainability value of the overall industrial chain. In 2018,
it started the value chain environmental management operation and asked Group partners to set
up environmental protection seeds, and by holding environmental/energy/carbon management
workshop to promote Group partners’ understanding of the meaning and benefits ofenvironmental/energy/carbon management. In 2019, it further improved the Group’s corporate
environmental energy risk management capacity through environmental risk/opportunity
investigation and communication meetings. In 2020, China Airlines further asked its value chain
partners to promulgate appropriate policy on environment and energy. Management measuresand monitoring tasks have been undertaken on key environmental impacts. More operating
information was added (e.g., power/oil consumption) to reinforce the control and survey of theemissions. The Environmental Risk Analysis Result Briefing was held that invited therepresentative of partner companies and managers to demonstrate the result of the analysis andsurvey and share good practices.

104 Operational Highlights

(3) Green maintenance operation and pollution prevention
In order to reduce the environmental impact of the Company’s maintenance operations, inaddition to implementing and continuously improving the aforementioned risk management
operations, the EMO (park maintenance) Environmental Management Committee under theCompany’s Corporate Environmental Committee also tracks and inspects on a quarterly basis theresults of the environmental management of the maintenance plant area, in order to comply withenvironmental regulations, international trends, headquarters policies, and corporate
environmental sustainability obligations. For example, for heating boilers and spray-painting
operations at maintenance facilities, air pollutant emission tests are carried out annually inaccordance with relevant regulations, while air pollution prevention fees are reported quarterly.
Meanwhile, its operating unit performs declaration and arranges fee payment in accordance withthe regulations every year, and operates in accordance with the water pollution prevention
measures plan, waste disposal plan and related permit documents, and actively follows theprinciples of source reduction, poison reduction, and end-of-pipe recycling, continuously
improving and enhancing environmental performance and ecological benefits.
The Company performs a third-party audit of ISO 14001 and ISO 50001 annually. The audit for 2020
was completed on December 25, 2020. The Company is the second airline in the world and the first
Taiwanese airline to obtain certification for ISO14001 and ISO50001 at the same time. The scope of
certification is also the most complete in the domestic service industry.

B. Environmental KPI Controls

The Company has followed the United Nations’ SDGs and set several short-, medium-, and long-term
environmental protection and energy conservation objectives, including those for aviation fuelefficiency, ground carbon emissions, water consumption, domestic waste, business waste, andphotocopy paper consumption. The five major environmental management committees and thecarbon management task force develop and implement annual environmental protection KPI, andthe Corporate Environmental Committee chaired by the President conducts the annual audit andreview. The Company completed a total of 73 KPIs in 2020 and reduced carbon emissions by 48,888
tons CO2e. 69 KPIs are further planned in 2021, and it is expected to reduce the emissions by 48,756
tons of CO2e. Please refer to the Corporate Social Responsibility Report for more information:
https://calec.china-airlines.com/csr/report.html

C. Strengthening adaptability to climate risks and opportunities

In order to strengthen our understanding of climate-related risks and opportunities, in 2018, theCompany signed an initiative to supporting the international Task Force on Climate-Related Financial
Disclosures, TCFD, and launched project operations, through interviews, questionnaires, workshops,
high-level forums, and other engagement processes, exploring the current or future climate risks
and opportunities faced by business operations in different climate scenarios, and their potential
impacts and corresponding costs, to gradually establish the Company’s climate risk and opportunity
management mechanism. In 2020, the Climate-Related Financial Disclosure Report, the first-ever in
the aviation industry, was made and reported to the Board of Directors. For other relevant activities,
please refer to China Airline's CSR website/focus on climate change: https://ppt.cc/fTsUJx

D. Solidifying environmental management supervision mechanism

The Company promotes environmental management supervision mechanisms. Each unit
independently implements the first-level audit of environmental management; second-level audit ofenvironmental management is implemented by the headquarters. The double-audit mechanism
ensures that environmental management is implemented at basic level operations at all units.
The Company has completed the second-level audit in 2020 Q2 and Q4. In addition to the checklist
items, the audit components also included improvement over the previous audit findings, the extent
of redressal of external stakeholders’ concerns and annual KPI implementation review.

E. Environmental education and training for all employees

To implement the corporate environmental and energy philosophy of “implementing
environmental and energy conservation education to foster employees’ environmental awareness,”
as well as to achieve the goal of “environmental protection by all employees,” the Company has set

Operational Highlights

105

up an annual “environmental protection education campaign” for online or in-class environmental
management education and training in Taiwan. The performance is as follows:(1)New employee and outstation supervisor environmental education and training implementation
rate is 100%.
(2)The implementation rate of professional knowledge training on environmental/energy/carbon
management systems is 100%.
(3)A total of 165 participants in the environmental protection forum for all employees on thetheme of climate change.
(4)A total of 2,250 participants in interactive employee activities.
(5)Published 24 promotional articles on the internal communication platform; set up “green
footprint” stickers on the ground and posters in the headquarters and maintenance park toconvey information on 21 environmental protection measures, and set up plant identification
placards.

F. Carbon Inventory and Reduction Project(1)Annual organization level greenhouse gas emission inventory operations
According to the ISO/CNS 14064-1 standard, the Company has conducted a greenhouse gas
inventory each year since 2009, covering aviation, ground service and office administration
operations, and also third-party verification operations in accordance with the requirements of“Reasonable Assurance”.
The greenhouse gas emissions (Scope 1-2) in 2019 were 7,082,233 tons CO2e. In 2020, according
to ISO14064-1:2018 standard, the Category 1-2 GHG emissions (ORIG Scope 1-2) were 5,808,374
tons CO2e, decreased by about 17.9%. In addition, according to the aforementioned standards,
Category 3-6 were expanded and the emissions were 3,109,822 tons CO2e.
(2)EU ETS (European Emission Trading Scheme) operations
According to the EU regulations, China Airlines' intra-EU flights emitted 62 tonnes of CO2 in 2020.
After considering the operating condition and compliance, the financial unit sold its EU Emission
Aviation Allowances (EUAA) in the account in 2019 and 2020 respectively. There are still 928
tonnes of CER (Certified Emission Reductions) available to partially offset the EUAA emission
right. Further trading will be based on market demand and carbon pricing trends.
(3) CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) operation
The Company follows the regulations of the Civil Aeronautics Administration and ICAO CORSIASARPs, and has carried out monitoring, reporting, and verification (MRV) of carbon emission oninternational flights since 2019. The Company had completed the reporting and verification by
the third party. On November 18, 2020, the Company received the verification approval noticefrom the Civil Aeronautics Administration. 77,293 international flights were verified in 2020, andthe total emission was 6,339,661 tonnes.

G. Improving business eco‐efficiency

After obtaining the “Diamond Green Buildings Label” certification in 2017 for the headquarters ofChina Airlines, CAL Park, we continued to promote equipment renewal, optimize the operation
process, and improve the overall energy efficiency of the buildings. In 2019, responding to thegovernment’s green-energy policy, installed 99kW of solar photovoltaic facilities withgrid-connected power generation on the rooftop of the simulator training building. As of December
31, 2020, these facilities had generated 215,000 kWh of electricity and reduced CO2e emissions byapproximately 115 tons, and received National Renewable Energy Certificate(T-REC). These acts
have fetched it the Energy Conservation Benchmark -- Silver Award of the Ministry of Economic
Affairs, Bureau of Energy; Energy Conservation Leadership Award of Taipei City; No. 1 in Carbon
Reduction and Electricity Conservation Reward Competition of Taoyuan Airport.
Moreover, to reduce the risk of shortage of water resources, the Company has successively set up
water meters at important water route nodes to track and analyze the flow direction of water

106 Operational Highlights

resources and water-consumption hot spots, and has promoted water-reduction and recycling
measures, including: purchasing water-conservation label products, water-conservation advocacy,setting up a rainwater-recovery system, promoting cooling-water recycling and introducing
Eco-Shine environment-friendly cleaning solution. The quantum of tap water used dropped from
146.49 kilotons in 2019 to 126.77 kilotons in 2020, a decrease of about 13.46%. Data relevant to thishas been disclosed in the Company’s 2020 CSR report and authenticated by third parties.
In waste management, the Company manages waste based on five main principles: refuse, reduce,reuse, recycle, and repair. And with the goal of 100% waste-resource recovery, the Company isincreasing its waste reuse rate year by year. In addition, considering that waste management inaviation services involves a wide range of businesses, the Company has constituted a wastemanagement team in 2019. Service and supply, planning and quality assurance units, as well as
aviation catering, cabin cleaning, and other suppliers and partners are invited to form a periodical
communication platform, where all parties come together to analyze the trends in international
aviation service waste management to discuss response strategies. Domestic waste output from
employees in 2019 and 2020 were 702,966 kg and 462,897 kg, respectively, showing a decrease of
approximately 34.1%. Data relevant to this has been presented in the Company’s 2020 CSR reportand authenticated by a third party.

H. Promote Green Consumption

The Company actively shares its environmentalism philosophy and implementation performanceirregularly through different platforms, such as social networks and inflight magazines, to establish
and promote the awareness of green consumption. In 2017, in a further effort to follow
international trends, the Company started promoting voluntary carbon-offsetting program forpassengers: the "ECO TRAVEL - Carbon Offsetting" service. Diversified electronic-friendly service
platforms, including the official website, ticket-purchasing system, and travel reminders, are used
to invite passengers to practice "zero-carbon" flying. In 2020, a total of 180 people took part in the
carbon-offsetting program, in which a total of 293.93 metric tons of carbon was offset. Suchperformance exceeded all other Taiwanese companies in the same industry during the same period.
Other actions to elevate and promote green consumption include:(1) Selecting six environmental films to play on airplanes.
(2) Presenting three posts about environmental topics and reports on social media.
(3) Interactive educational work, such as promoting closing of windows in summer.
(4) Adding environmental products in the catalogue of home-delivery duty-free goods, and include
China Airlines' sustainability logo.
(5) Collaborated with Zenzhou Social Enterprise Co., Ltd., to develop China Airlines Foldable Silicone
Cups, clinching the Special Award in the Environmental Sustainability category in the Buying
Power competition organized by the Ministry of Economic Affairs.

I. Continue to Support International Environmental Protection Research Projects

The Company is working with several environmental-protection organizations, including
Environmental Protection Administration, National Central University, and the European Union’s
IAGOS-ERI in the implementation of the Pacific Greenhouse Gases Measurement (PGGM) project. In
June 2012, July 2016, and July 2017, IAGOS instruments were installed on the Company’s B-18806,
B-18317 and B-18316 aircraft, respectively. Since then, atmospheric gas data has been automaticallycollected during flights. The data is observed by important Taiwanese and foreign researchorganizations to gain an understanding of the changes in high-altitude gasses. This facilitates theunderstanding of environmental quality changes and provides reference material for important
decision-making platforms, such as the UNFCCC. During July 1, 2012 to December 31, 2020,
atmospheric data collected from a total of 12,810 flights was collected, contributing to theecosystems on Earth and enhancing Taiwan's image in the environmentalism field.

Operational Highlights

107

J. Transparent Disclosure of Environmental Protection Response and Performance

Since 2012, the Company has been publishing its Corporate Social Responsibility (CSR) Report every
year (former titles include Environmental Sustainability Report and Corporate Sustainability Report).
The Company has also been establishing and updating the CSR network. It publicly and transparently
discloses its sustainability governance strategies, as well as the results and performances inenvironmental, social, and financial aspects of its operations. The reports are an important tool andchannel that facilitate discussion with stakeholders.

5.4.3 Countermeasures

Unit: NT$ thousands
Item

Year
Environmental protection equipment and maintenancecosts (does not include depreciation)
Fees for wastewater equipment regular samplinginspections by inspection agencies and permitting
Waste disposal costs
Air pollution management costs
Aviation noise control fees (paid to the terminal basedon airplane model and number of flights)
Fees for establishment of an environmental control
system and strategic research projectGreen procurement

2020

2021

13,9682022

14,0002023

14,00014,000

155

100

100

100

3,854
819

4,000
1,200

4,000
1,200

4,000
1,200

133,605

193,318

193,318

193,318

1,616

4,000

4,000

4,000

10,19920,00020,00020,0005.4.4 Effect of Environmental Expenditure on Earnings
Energy-saving equipment and improved management expenditure reduce both Company energy use
and its operating costs.

5.4.5 Effect of Environmental Expenditure on Competitiveness
Environmental performance has already become an important benchmark in achieving corporate social
responsibility. With the rise in green consumers, actively investing in environmental improvements canpositively improve our competitive position and improve brand image.

108 Operational Highlights

5.5 Labor Relations

5.5.1 Employee benefits, training, retirement program, and status of
implementation, and labor-management agreements and protection of
employee rights and interests
A. Good Labor-Management Relations
On May 4, 1988, the China Airlines Union was established. On July 29, 2011, in accordance withrevisions to the Labor Union Act, it was renamed the “China Airlines Employee Union.” In 2002, acollective agreement was signed between labor and management, which is regularly negotiated andrenewed.

B. Retirement Program and Pension Preparations(1) Labor Standards Act Old-Age Pension System
The Labor Pension Reserve Supervisory Committee of the Company was established in June 1987
in compliance with letter Bei-Shi-She-II-Zi No. 43791 from the Taipei City Government. In the past
years, the appropriation and payment of pensions in the old system of Labor Standards Act werehandled according to Labor Standards Act. In 2020, employees who may claim from the oldsystem pension account constitute approximately 42.3% of the employees of the Company(42.9% of Company employees are subject to both new and old systems). The monthly
appropriation rate of old system of pensions has been increasing year by year since 2014 and has
risen to 15% since January 2016, reaching the statutory limit. For employees who meet theretirement qualifications of the Labor Standards Act and whose retirement has taken effect, theconcerned unit will take the initiative to get the pension, and apply to the local government for
expenditure approval and reference or submit to the Taiwan Bank for payment applicationaccording to relevant regulations of the government; it will notify the employees to receive thepayment once the check is prepared. The deposit of pension reserve funds is supervised by the
Labor Pension Reserve Supervisory Committee of the Company. The business unit regularly holds
a pension supervision committee meeting once every three months to report on the use of thepension reserve funds to the members, including the estimated result of the next year’s
appropriation, number of retirements each quarter, and designated pension reserve funds
account balance, and exchange of retirement-related issues.
(2) Labor Pension Act New Pension System
According to the Labor Pension Statutes promulgated by the government on June 30, 2004, inthe order Zong-Tong-Hua-Zong-(I)-Yi-Zi No. 09300121821, for employees who are subject tostatutes, new system pensions shall be appropriated monthly to the Bureau of Labor Insurance
according to statutes starting from July 2005. In 2020, employees who can claim from the new
system pension account constitute approximately 57.7% of the employees of the Company(31.6% of Company employees can avail benefits from both new and old systems). The new
system pension appropriation rate is 6% per month, and is deposited into the employee's
designated personal pension account at the Bureau of Labor Insurance. After the retirement
conditions are met, the employee has to apply to the Bureau of Labor Insurance for payment.

C. Labor-Management Communications(1) Units in the Company with a relatively large number of employees, such as the maintenancefacility, Ground Services Division, Cabin Crew Division, Flight Operations Division, and Taipei and
Kaohsiung branches hold regular communication meetings.
In addition, elected union representatives attend regular company-wide labor-management
conferences to improve understanding and communication.

Operational Highlights

109

(2) Establish an employee complaint mechanism and channels to ensure proper response:
When employee rights have been violated or a situation is improperly handled, as mentioned in
the Regulations Governing Employee Complaints, a complaint can be lodged with the
responsible operating unit or the Human Resources Division. If the employee is not satisfied withthe response, he or she can appeal to the Human Resources Division. Eight written complaints
from employees were handled in 2020.

D. Benefits(1) Employee care
Pension appropriation, labor and health insurance, employer liability insurance, group insurance,
employee physical examination, and providing a nursing room.
(2) Employee stock ownership trust
In August 1998, the Company set up an employee stock ownership trust, in which employees arefree to participate. The amount, depending on the employee position, is deducted directly fromtheir monthly salary. Through the end of 2020, a total of 2,112 employees participated.
(3) Profit sharing
As per the Company charter, if the Company records a profit in a given year, it must set aside noless than three percent as employee bonuses. However, if the Company still has accumulated
losses, it shall first retain a sum of money to make up for the shortage.
(4) Welfare system
The Company’s Employee Welfare Committee was set up in December 1967. As stipulated by law,
the Committee distributes benefits; handles the disbursement of wedding allowances, funeralallowances, disaster allowances, employee children excellence scholarships, birthday bonuses,and birth allowances; arranges visits to nursing homes, holds recreational sports activities,
distributes meals and holiday gift certificates, and offers distress or purchase loans.
(5) Employee leisure
Employee group activity subsidies, employee group travel subsidies, discounted tickets for
current and former employees.
(6) Working environment
Workplace compliance with occupational safety standards, gender equality.

E. Signing of Collective Agreement
In 2019, the Company and the Pilots Union Taoyuan signed a collective agreement for the first time,effective for 3½ years. Since signing of the agreement with the China Airlines Corporate Union in
2002, it has been extended every 3 years. The two parties are currently negotiating the extension of
the agreement, and the relevant negotiation records have been published on the Company’s
internal enterprise information network.

F. CounselingTo take care of our colleagues’ needs and participate in employees’ personal growth, the Company
has employed professional counselors and psychiatrists to provide counseling services to employees.
In 2020, there were a total of 75 counseling visits totaling 75 hours.

G. In addition to promoting employee education and training to enhance staff
knowledge and skills, we also continue to accumulate knowledge and encourage
exchange within the Company to build an organization for learning. Through the
management personnel training program and the “China Airlines Lecture Hall”
training system, the Company holds courses to improve employees’ strategic,
management, professional, and general workplace skills.

110 Operational Highlights

(1) To encourage employees participate in various classes and self-study opportunities provided by
the ROC Workforce Development Agency under the Ministry of Labor, the self-pay portions of
the costs for such courses will be subsidized by the Company if work-related courses arecompleted by an employee.
(2)The Company participated in the “Enterprise Human Resource Enhancement Program” of the
Workforce Development Agency, Ministry of Labor and received training subsidy of NT$312.375
million.
(3) Popularize and hold strategic work, management, professional and general skills courses.
 Marketing training:
including marketing strategies, customer operations, freight business and related OJT training,with a total of 216 in-person classes and 76 e-classes; a total of 9,477 people were trained.
 Professional technical classes:
including enterprise safety/inspection work, flight services, joint management and EMO, with a
total of 2,202 in-person classes and 624 e-classes; a total of 104,887 people were trained.
 Service:including service quality assurance, introduction to public relations, service business, groundservice operations, and inflight products, with a total of 307 in-person classes and 163
e-classes; a total of 21,737 people were trained.
 Other:
including investment management unit business, law and insurance, financial, information
technology, and human-resources management, with a total of 87 in-person classes and 41
e-classes; a total of 32,803 people were trained.

5.5.2 CAL has formulated an employee code of conduct or ethical code andarranges pre-employment Employee Rights and Responsibilities classes
for new hires. The main content of the Company’s Employee Code of
Conduct is as follows:
The Company’s Employee Code of Conduct primarily consists of workplace ethics, privacy, occupationalsafety, discrimination and harassment, moral integrity, media and public image, conflict of interest
avoidance, anti-trust and fair competition, exchanging gifts and anti-corruption, CAL asset andintellectual property protections, reporting responsibilities, respect for human rights, and commitment
to environmental protection. The Company includes an assessment and consideration of these items ofworkplace behavior in its annual evaluation; employees unable to respect or who violate theseregulations governing workplace behavior are penalized as per the Company's regulations governing
rewards and penalties, based on the severity of the offense.

5.5.3 Implementation of work environment and employee personal safety
protection measures

The Company has formed an Occupational Safety and Health Committee in accordance with law. The
committee’s roles are preventing occupational hazards and protecting the safety and health of all
employees by reviewing, coordinating, and making recommendations pertaining to safety andhealth-related matters. The Chairman is served by the President. There is one vice chairman and one
executive secretary under the Chairman. The Committee consists of the head of designated units,
occupational safety and health personnel, engineering and technical personnel, medical personnel, andlabor representatives appointed by the labor union as members. Meetings are held once every threemonths to collate and analyze occupational hazards of the Company and to report and track thefollow-up safety and health management plans. The relevant minutes are published on the Company’s
internal corporate information website. Formulate and follow the Occupational Safety and HealthManagement Manual; to adapt to trends of global international labor development, improve the

Operational Highlights

111efficiency of safety and health management, and promote systematic management measures, theCompany established an independent safety and health management system and obtained
ISO45001:2018 and TOSHMS certification on April 20, 2019, which serve as the management basis ofoccupational safety and health management system certification. Self-management and preventive
measures based on the PDCA cycle mode are used to effectively control occupational disaster risk,
improve occupational disease preventive management, improve occupational safety and healthmanagement performance, and actively implement occupational safety policies. The Company's
Aviation Quality Database (AQD) is used to reflect potential hazards in the operating environment andimplement risk assessment to reduce the occurrence of occupational disasters. The improvement rateof safety and health cases reached 100%, thereby providing employees with a safe, healthy andcomfortable working environment and enhancing the Company's industry competitiveness.
In response to the emerging epidemic, the Company actively strengthened the response to emerging
infectious diseases, established cross-unit tiered mobilization mechanism, command system andoperating procedures, integrated the related units’ common response, reminded employees to be alert,
and activated the Company’s response mechanism according to the scale of the outbreak at the time.
The Company has established a health management reporting system for employees with higher
exposure risk levels (cabin crew), and handling mechanisms for abnormal reporting, remote working or
adjusted schedules for ground service staff, strengthened various disease prevention advocacy,
established cooperation mechanisms with relevant departments, established a cross-departmentcommunication platform, initiated multiple channels to provide real-time information, enhanced
biohazard prevention awareness, conducted employee health education and training,
preparation/management/use of epidemic prevention material, implemented risk management andcontrol objectives to provide employees with a safe, healthy and comfortable working environment.

5.5.4 Over the most recent year through the date of the publication of thisreport, the estimated value of any losses or potential future losses due tolabor disputes
From 2020 to March 27, 2021, the Company was fined a total of NT$1.02 million by the government
labor authorities for labor disputes or imperfections after labor inspections (please refer to P.73 fordiversification). The Company will continue to maintain a genial interaction mechanism throughdiversified communication channels to achieve the goal of caring for employees’ welfare and to
improving the quality of the work environment. Through comprehensive improvement to thesatisfaction of employees of all categories, avoid issues that may arise from unnecessary labor disputes.

5.6 Major Contracts
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease

SASOFIV Aviation Ireland DAC
SASOFIV Aviation Ireland DAC
AerCap Ireland Ltd.
Bluesky Magical 1001 Leasing Co.
MSN 1272&1278 Aircraft Leasing(Cayman) Ltd.
MSN 1272&1278 Aircraft Leasing(Cayman) Ltd.
AS Air Lease 83 Ireland Ltd.
AS Air Lease 83 Ireland Ltd.
Dianbao Aviation Leasing Ltd.
Wilmington Trust SP Services (Dublin)
Ltd.
Wilmington Trust SP Services (Dublin)
Ltd.
Wilmington Trust SP Services (Dublin)
Ltd.
Avolon Aerospace AOE 73 Ltd.

112 Operational Highlights

02/2006-02/2022
02/2007-02/2023
05/2008-05/2024
11/2010-11/2022

Aircraft Type:A330-300/No.:B-18351
Aircraft Type:A330-300/No.:B-18352
Aircraft Type:A330-300/No.:B-18353
Aircraft Type:A330-300/No.:B-18355-

12/2011-12/2023

Aircraft Type:A330-300/No.:B-18356-

01/2012-01/2024

Aircraft Type:A330-300/No.:B-18357-

10/2012-10/2024
12/2012-12/2024
12/2013-12/2025

Aircraft Type:A330-300/No.:B-18358
Aircraft Type:A330-300/No.:B-18359
Aircraft Type:A330-300/No.:B-18360-

04/2013-04/2021

Aircraft Type:737-800/No.:B-18651-

05/2013-05/2021

Aircraft Type:737-800/No.:B-18652-

06/2013-06/2021

Aircraft Type:737-800/No.:B-18653-

03/2014-03/2022

Aircraft Type:737-800/No.:B-18655-

Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Loan
Bills
Bills
Bills
Bills
Bills
Bills
Bills
Bills

Avolon Aerospace AOE 78 Ltd.
SMBC Aviation Capital (UK) Ltd.
Jade Aviation (Ireland) AOE 5 Ltd.
FPG Amentum
Oriental Leasing 4 Company Ltd.
Zeus Aircraft Owner 1 Ltd.
Korea Investment & Securities (KIS)Sky High XXXVII Leasing Company Ltd.
Sky High XXXVII Leasing Company Ltd.
Sky High XXXVII Leasing Company Ltd.
Wilmington Trust SP Services (Dublin)
Ltd.
ALC Blarney Aircraft Ltd.
Sky High XXXVII Leasing Company Ltd.
Zeus Aircraft Owner 2 Ltd.
UMB Bank N.A.
Zeus Aircraft Owner 3 Ltd.
Chilli Leasing LLC
Pacific Triangle Leasing Ltd.
BOC Aviation Ltd.
BOC Aviation Ltd.
BOC Aviation Ltd.
BOC Aviation Ltd.
Altitude Aircraft CAL I Ltd.
Altitude Aircraft CAL I Ltd.
Altitude Aircraft CAL I Ltd.
Altitude Aircraft CAL I Ltd.
Altitude Aircraft CAL I Ltd.
Taiwan Cooperative Bank
Taipei Fubon Commercial Bank
Bank of Taiwan
Hua Nan Commercial Bank
Mega International Commercial Bank
Hua Nan Commercial Bank
E.SUN Commercial BankKGI Bank
Taishin International Bank
Bank SinoPac
Bank of Taiwan
Bank of Taiwan
Bank of Communications
Bank of Communications
Agricultural Bank of Taiwan
Taiwan Business Bank
Hua Nan Commercial Bank
China Construction Bank Corporation
Bank of Taiwan
Hua Nan Commercial Bank
Land Bank of Taiwan
China Bills Finance Corporation
Mega Bills
International Bills Finance Corp.
China Bills Finance Corporation
International Bills Finance Corp.
China Bills Finance Corporation
China Bills Finance Corporation andsyndicate
China Bills Finance Corporation andsyndicate

05/2014-05/2022
06/2014-06/2022
06/2014-06/2026
10/2014-09/2026
10/2014-10/2026
11/2014-11/2026
01/2015-01/2027
05/2015-05/2027
06/2015-06/2027
08/2015-08/2027

Aircraft Type:737-800/No.:B-18656
Aircraft Type:737-800/No.:B-18657
Aircraft Type:A330-300/No.:B-18361
Aircraft Type:777-300ER/No.:B-18051
Aircraft Type:777-300ER/No.:B-18052
Aircraft Type:777-300ER/No.:B-18053
Aircraft Type:777-300ER/No.:B-18055
Aircraft Type:777-300ER/No.:B-18001
Aircraft Type:777-300ER/No.:B-18002
Aircraft Type:777-300ER/No.:B-18003-

09/2015-09/2023

Aircraft Type:737-800/No.:B-18658-

10/2015-10/2023
10/2015-10/2027
01/2016-01/2028
03/2016-03/2024
05/2016-05/2028
09/2016-09/2024
09/2016-09/2024
10/2016-10/2024
11/2016-11/2024
01/2017-01/2025
02/2017-12/2025
09/2019-113/09
09/2019-113/09
09/2019-113/09
09/2019-113/09
09/2019-113/09
02/2008-02/2020
10/2012-10/2019
12/2014-12/2019
03/2015-03/2020
07/2015-07/2020
06/2016-06/2021
02/2020-02/2022
02/2020-02/2022
02/2020-02/2021
02/2020-02/2023
07/2020-06/2022
10/2016-10/2028
11/2016-11/2019
01/2017-01/2029
04/2017-04/2029
04/2017-04/2029
06/2017-06/2029
11/2017-11/2029
04/2018-04/2030
06/2020-06/2032
06/2020-06/2032
04/2016-04/2020
07/2016-07/2020
09/2016-09/2020
04/2020-04/2023
03/2020-03/2025
05/2020-05/2023

Aircraft Type:737-800/No.:B-18659
Aircraft Type:777-300ER/No.:B-18005
Aircraft Type:777-300ER/No.:B-18006
Aircraft Type:737-800/No.:B-18660
Aircraft Type:777-300ER/No.:B-18007
Aircraft Type:737-800/No.:B-18661
Aircraft Type:737-800/No.:B-18662
Aircraft Type:737-800/No.:B-18663
Aircraft Type:737-800/No.:B-18665
Aircraft Type:737-800/No.:B-18666
Aircraft Type:737-800/No.:B-18667
Aircraft Type:A330-300/No.:B-18301
Aircraft Type:A330-300/No.:B-18302
Aircraft Type:A330-300/No.:B-18303
Aircraft Type:A330-300/No.:B-18305
Aircraft Type:A330-300/No.:B-18306
Aircraft Type:A330-300/No.:B-18317
Aircraft Type:737-800/No.:B-18610&B18617
Aircraft Type:747-400F/No.:B-18701
Unsecured Loan
Aircraft Type:747-400F/No.:B-18711
Unsecured Loan
Unsecured Loan
Unsecured Loan
Unsecured Loan
Unsecured Loan
Unsecured Loan
Aircraft Type:A350-900/No.:B-18901
Unsecured Loan
Aircraft Type:A350-900/No.:B-18902
Aircraft Type:A350-900/No.:B-18905
Aircraft Type:A350-900/No.:B-18905
Aircraft Type:A350-900/No.:B-18906
Aircraft Type:A350-900/No.:B-18903
Aircraft Type:A350-900/No.:B-18907
Aircraft Type:A350-900/No.:B-18917
Aircraft Type:A350-900/No.:B-18918
FRCP
FRCP
FRCP
FRCP
FRCP
FRCP

-

12/2016-12/2020

FRCP Joint Underwriting,-

10/2017-04/2022

FRCP Joint Underwriting,-Operational Highlights

113

BillsBills

Mega Bills and syndicate
International Bills Finance Corp. andsyndicate

11/2017-05/2021

FRCP Joint Underwriting,-

07/2019-08/2024

FRCP Joint Underwriting,-Renew lease period for 10 years according
to the original contract.
Rental price adjustments are based on theassessment of the Announced Land
Current Value and publicly announced land
value.
Rental subject:
Located at No.131, Sec. 3, Nanjing E. Rd.,
Songshan Dist., Taipei City, CAL Building.
Part of B1F 560.7 ㎡,1F 365.3 ㎡,10-13F
7,091 ㎡.Total 8,016.9 ㎡.
9 parking space at B1F
Rental subject:
Located at No.131, Sec. 3, Nanjing E. Rd.,
Songshan Dist., Taipei City, CAL Building.
7F 1,796.8 ㎡, part of B1F 50.4 ㎡
1 parking space at B1F, 12 parking spaces
at B2F.

Surface Rights
Registration
Northern Region Branch of National
Contract ofProperty Administration of the Ministry
Taipei CAL
of Finance
Building

12/31/2016-12/30/2026

Taipei CAL
Building Lease FX Hotels Taiwan
Contract

09/01/99-12/30/2026

Taipei CAL
OEC Freight Worldwide Co., Ltd. of the
Building Lease
OEC Group
Contract

03/01/2016-12/31/2026

Nankan CAL
Park Land
Lease
Contract

Inception of the lease:
08/30/2012
Period of leasing:
20 years from the start oflease

Rental subject:Land located at No.705 and No.705-1
Jinzhong part, Lujhu Dist., Taoyuan City.
Total 27,709.21 ㎡

12/31/2012-12/30/2032

Rental subject:
Located at No.81, Zhonghua 3rd Rd., Qianjin
Dist., Kaohsiung City.
B1F 383.2 ㎡, 1F 336.8 ㎡, mezzanine 79.4㎡, 2F-12F 3,583.3 ㎡, Roof protrusion 117.2㎡.
Total 4,499.9 ㎡

Kaohsiung
CAL Building
Lease
Contract

Costco President Taiwan Inc.

FX Hotels Taiwan

CAL Park
Building Lease CAL Park Co., Ltd.
Contract

01/01/2019-12/31/2021
Rental subject:
The contract will be
Administration Center Building, Crew
automatically renewed forCenter Building, Flight Training Center
one year on the expiration of
Building, Basement Parking Lot. Total
this period and contract
83107.4 ㎡.
renewed every two years.

Engineering
Renew lease period for 10 years according
consulting
to the original contract.
company
Rental price adjustments are based on thecommissioned T.Y.Lin Taiwan Consulting Engineers. inc.
03/01/2019-11/30/2020
assessment of the Announced Land
technical
Current Value and publicly announced land
servicevalue.
category
Technical
Became a member of GTF Engine Repair
Effective from 12/18/2020,
Cooperation Pratt & Whitney
Alliance and undertook the GTF-1100G
with no expiry date.
Contractengine maintenance business.

114 Operational Highlights

-

-

-

In
accordancewithnotarized
text

-

-

-

-

Financial Information
6.1 Five-Year Financial Summary
6.2 Five-Year Financial Analysis
6.3 Consolidated Financial Statements for the YearsEnding December 31, 2020 and 2019, andIndependent Auditors’ Report
6.4 Parent Company Only Financial Statements for theYears Ending December 31, 2020 and 2019 andIndependent Auditors’ Report
6.5 Audit Committee’s Review Report

Financial Information

115VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Consolidated Condensed Balance Sheet – Based on IFRS
Year

Item

Unit: NT$ thousands

Financial Summary for the Last Five Years (Note 1)
2016 (Note 2)
47,338,201

2017 (Note 3)
47,411,834

2018 (Note 4)
52,827,560

2019 (Note 5)
51,822,342

2020 (Note 6)
61,872,468

Property, plant and equipment
Intangible assets

140,136,737
1,137,115

153,617,531
1,019,345

163,107,718
1,210,796

145,886,971
1,182,692

141,481,694
1,076,351

Other assets
Total assets

35,888,706
224,500,759

23,850,922
225,899,632

12,990,508
230,136,582

94,155,974
293,047,979

79,763,571
284,194,084

Before distribution
After distribution

68,605,724
68,605,724

60,289,113
61,482,783

60,949,892
62,086,170

76,351,527
76,351,527

62,649,715-

Non-current liabilities
Before distribution
Total
liabilities
After distribution

98,027,837
166,633,561

106,453,000
166,742,113

109,139,606
170,089,498

156,564,335
232,915,862

160,832,796
223,482,511

166,633,561

167,935,783

171,225,776

232,915,862-

55,783,817

57,023,237

57,081,572

56,553,772

57,559,483

Current assets

Current
liabilities

Equity attributable toshareholders of the parent
Capital stock

54,708,901

54,709,846

54,209,846

54,209,846

54,209,846

Capitalsurplus

Before distribution

799,932

799,999

1,241,214

2,488,907

1,187,327

After distribution

799,932

799,999

1,241,214

1,191,065-

Retainedearnings

Before distribution

206,092

1,664,405

1,615,661(1,297,842)(350,581)

After distribution

206,092

470,735

479,383--

112,264(43,372)(107,641)(43,372)

58,223(43,372)

1,196,233(43,372)

2,543,766(30,875)

2,083,381
57,867,198

2,134,282
59,157,519

2,965,512
60,047,084

3,578,345
60,132,117

3,152,090
60,711,573

Other equity interest
Treasury shares
Non-controlling interest
Before distribution
Total
equityAfter distribution

57,867,198
57,963,849
58,910,806
60,132,117
Note 1: 2016-2020 annual financial information was verified by Deloitte & Touche.
Note 2: The 2016 Deficit Compensation Proposal was passed at the shareholder meeting held on June 22, 2017, with legal reserve bonds of NT$81,132,000 andreversal of special reserve of 76,486,000 making up the shortfall.
Note 3: In relation to 2017 surplus earnings distribution, after approval by the general meeting on June 27, 2018, the legal reserve appropriated was
NT$145,831,000, the special reserve appropriated was NT$118,810,000 and the cash dividend distributed was NT$1,193,670,000.
Note 4: In relation to 2018 surplus earnings distribution, after approval by the general meeting on June 25, 2019, the legal reserve appropriated was NT$
114,493,000, the cash dividend distributed was NT$1,136,278,000, and reversal of special reserve of NT$105,843,000.
Note 5: The 2019 Deficit Compensation Proposal was passed at the shareholder meeting held on June 23, 2020, with legal reserve bonds of NT$466,416,000,
special reserve of NT$12,967,000 and capital reserve of NT$1,297,843,000 to make up the losses.
Note 6: The 2020 deficit make-up plan was approved by the 15th meeting of the 21st Board of Directors on March 18, 2021, but has yet to be approved at theshareholders’ general meeting.

116 Financial Information

6.1.2 Consolidated Condensed Statement of Comprehensive Income – Based on
IFRS
Item

Unit: NT$ thousands; EPS (net) = NT$Year

Financial Summary for the Last Five Years (Note 1)
2016

2017

2018

2019

2020

Revenue

141,079,107

156,121,785

170,711,607

168,444,160

115,250,550

Gross profit

18,005,906

21,972,411

17,207,531

16,686,928

10,219,201

Operating profit

4,564,687

8,826,160

4,022,383

2,665,821

2,184,416

Non-operating income and expenses(2,684,836)(5,302,197)(941,134)(2,762,638)(2,838,213)

Pretax profit (loss)

1,879,851

3,523,963

3,081,249(96,817)(653,797)

710,940

2,490,792

2,272,684(675,002)(279,814)

Income from operations of continued segments- after tax
Income from discontinued operations
Net income (loss)
Other comprehensive income(income/loss after taxes)
Total comprehensive gain (loss) for the year

-

-

-

-

-

710,940

2,490,792

2,272,684(675,002)(279,814)(681,669)(1,113,176)(578,363)

462,758

864,072

29,271

1,377,616

1,694,321(212,244)

584,258

Net income attributable to shareholders of the parent
Net income attributable to non-controlling interest

571,540
139,400

2,208,066
282,726

1,790,361
482,323(1,199,798)
524,796140,000(419,814)

Comprehensive income attributable to Shareholders of theparent26,103

1,240,677

1,258,035(647,085)

966,968

Comprehensive income attributable to non-controllinginterest

3,168

136,939436,286

434,841(382,710)

Earnings (Loss) per share
0.10
Note 1: 2016-2020 annual financial information was verified by Deloitte & Touche.

0.40

0.33

(0.22)

0.03

Financial Information

1176.1.3 Condensed Balance Sheet – Based on IFRS (Parent Company Only)

Unit: NT$ thousands

Year

Item

2016 (Note 2)

Financial Summary for the Last Five Years (Note 1)2017 (Note 3)2018 (Note 4)2019 (Note 5)2020 (Note 6)

Current assets
Property, plant and equipment

39,908,492
129,121,632

37,933,696
142,265,548

42,932,859
149,029,054

40,989,612
131,029,886

51,858,785
126,414,462

Intangible assets
Other assets

1,115,101
41,394,218

989,327
30,729,421

979,708
21,972,600

971,298
95,885,709

867,453
81,769,065

Total assets

211,539,443

211,917,992

214,914,221

268,876,505

260,909,765

Beforedistribution

64,339,805

54,925,364

55,179,834

68,000,173

56,740,010

After
distribution

64,339,805

56,119,034

56,316,112

68,000,173-

91,415,821

99,969,391

102,652,815

144,322,560

146,610,272

155,755,626

154,894,755

157,832,649

212,322,733

203,350,282

155,755,626

156,088,425

158,968,927

212,322,733-

Equity attributable toshareholders of the parent

55,783,817

57,023,237

57,081,572

56,553,772

57,559,483

Capital stock

54,708,901

54,709,846

54,209,846

54,209,846

54,209,846

799,932

799,999

1,241,214

2,488,907

1,187,327

799,932

799,999

1,241,214

1,191,065-

206,092

1,664,405

1,615,661(1,297,842)(350,581)

206,092

470,735

479,383--

112,264(107,641)

58,223

1,196,233

2,543,766(43,372)-(43,372)-(43,372)-(43,372)-(30,875)-

Current
liabilities

Non-current liabilities
Total
liabilities

Capitalsurplus

Beforedistribution
After
distribution

Beforedistribution

After
distribution
Beforedistribution
Retainedearnings
After
distribution
Other equity interest
Treasury shares
Non-controlling interest

Before55,783,817
57,023,237
57,081,572
56,553,772
57,559,483
distribution
Total equity
After
55,783,817
55,829,567
55,945,294
56,553,772
distribution
Note 1: 2016-2020 annual financial information was verified by Deloitte & Touche.
Note 2: The 2016 Deficit Compensation Proposal was passed at the shareholder meeting held on June 22, 2017, with legal reserve bonds of NT$81,132,000 andreversal of special reserve of 76,486,000 making up the shortfall.
Note 3: In relation to 2017 surplus earnings distribution, after approval by the general meeting on June 27, 2018, the legal reserve appropriated was
NT$145,831,000, the special reserve appropriated was NT$118,810,000 and the cash dividend distributed was NT$1,193,670,000.
Note 4: In relation to 2018 surplus earnings distribution, after approval by the resolution of the general meeting on June 25, 2019, the legal reserve
appropriated was NT$ 114,493,000, the cash dividend distributed was NT$1,136,278,000, and reversal of special reserve of NT$105,843,000.
Note 5: The 2019 Deficit Compensation Proposal was passed at the shareholder meeting held on June 23, 2020, with legal reserve bonds of NT$466,416,000,
special reserve of NT$12,967,000 and capital reserve of NT$1,297,843,000 to make up the losses.
Note 6: The 2020 deficit make-up plan was approved by the resolution of the 15th meeting of the 21st Board of Directors on March 18, 2021, but has yet to beapproved at the shareholders’ general meeting.

118 Financial Information

6.1.4 Condensed Statement of Comprehensive Income – Based on IFRS (Parent
Company Only)
Unit: NT$ thousands; EPS (net) = NT$

Year

Item

Financial Summary for the Last Five Years (Note 1)
2017

2018

2019

Revenue

2016
127,524,864

139,815,211

150,264,792

146,372,401

2020
106,327,123

Gross profit

15,275,980

17,966,397

12,649,836

11,364,235

11,136,944

Operating profit

4,475,707

7,358,114

1,847,567

80,235

4,884,855(2,938,456)(4,269,911)

468,064(1,267,561)(4,713,760)

Non-operating income andexpenses
Pretax profit (loss)

1,537,251

3,088,203

2,315,631(1,187,326)

171,095

Income from operations ofcontinued segments- after tax

571,540

2,208,066

1,790,361(1,199,798)

140,000

Income from discontinued
operations

-

-

-

-

－

571,540

2,208,066

1,790,361(1,199,798)

140,000(545,437)(967,389)(532,326)

552,713826,968

26,103

1,240,677

1,258,035(647,085)

966,968

0.10

0.40

0.33

(0.22)

0.03

Net income (loss)
Other comprehensive income(income/loss after tax)
Total comprehensive gain (loss)
for the tear
Net income attributable toshareholders of the parent

Note 1: 2016-2020 annual financial information was verified by Deloitte & Touche.

6.1.5 Condensed Balance Sheet – Based on ROC GAAP (Parent Company Only):
Not Applicable.
6.1.6 Condensed Statement of Comprehensive Income – Based on ROC GAAP
(Parent Company Only): Not Applicable.
6.1.7 Auditors’ Opinions from 2015 to 2020
Year

Accounting Firm

Audit Opinion

Name of CPA

2016

Deloitte & Touche

Yang, Chen-Hsiu; Chen, Li-Chi

Unqualified Opinion

2017

Deloitte & Touche

Yang, Chen-Hsiu; Chen, Li-Chi

Unqualified Opinion

2018

Deloitte & Touche

Yang, Chen-Hsiu; Huang, Jui-chan

Unqualified opinions and other matters (Note 1)

2019

Deloitte & Touche

Huang, Jui-chan; Cheng, Shiuh-Ran

Unqualified opinions and other matters (Note 1)

2020

Deloitte & Touche

Huang, Jui-chan; Cheng, Shiuh-Ran

Unqualified opinions and other matters (Note 1)

Note 1: The financial statements and related information of some subsidiaries have not been audited by Deloitte & Touche since 2018; they
have been audited by other accountants. The information on how the Company’s equity-accounted investments and overall gains
are affected is explained in the paragraphs on "other matters".

Financial Information

1196.2 Five-Year Financial Analysis

6.2.1 Consolidated Financial Analysis – Based on IFRSYear

Item (Note 2)
Financial
structure (%)
Solvency (%)

Operatingperformance

Profitability

Cash flow
Leverage

Financial Summary for the Last Five Years (Note 1)

2016

2017

2018

2019

2020

Debt ratio

74.22

73.81

73.91

79.48

78.64

Ratio of long-term capital toproperty, plant, and equipment111.24107.81103.73148.54156.59Current ratio
Quick ratio

69.00
53.16

78.64
59.46

86.67
67.50

67.87
54.57

98.76
84.18

Interest earned ratio (times)
Accounts receivable turnover (times)

265.4017.67

369.0218.40

338.0518.30

103.79
18.13

74.92
12.64

Average collection period
Inventory turnover (times)

20.66
-

19.84
-

19.95
-

20.13
-

28.87
-

-

-

-

-

-

Property, plant, and equipment
turnover (times)

1.05

1.06

1.08

1.09

0.80

Total assets turnover (times)
Return on total assets (%)

0.63
0.80

0.69
1.60

0.75
1.48

0.64
0.76

0.40
0.75

Return on stockholders' equity (%)
Pre-tax income to paid-in capital (%)

1.20
3.44

4.26
6.44

3.81
5.68

(1.12)(0.18)(0.46)(1.21)

Profit ratio (%)
Earnings per share (NT$)

0.50
0.10

1.60
0.40

1.33
0.33

(0.40)(0.22)(0.24)
0.03

Cash flow ratio (%)
Cash flow adequacy ratio (%)

25.71
303.1747.35
351.5844.34
366.9449.15
518.35

15.52
579.32

Cash reinvestment ratio (%)
Operating leverage

4.83
4.99

8.82
3.16

8.17
6.00

12.24
14.20

2.98
16.28

1.52

(3.95)(2.50)

Accounts payable turnover (times)
Average days in sales

Financial leverage
1.40
1.18
Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

1. Solvency ratios: Mainly due to the decrease in receipts in advance as compared to the previous period due to the impact of COVID-19 in 2020, resulting in adecrease in current liabilities.
2. Operating and profitability ratios: Mainly due to the significant decrease in passenger revenue as compared to the previous period due to the impact of
COVID-19 in 2020, resulting in a decrease in sales revenue and operating profit.
3. Cash flow ratios: Cash flow from operating activities decreased as compared to the previous period due to the impact of COVID-19 on passenger
transportation in 2020.
4. Financial leverage: Mainly due to the impact of COVID-19 in 2020, operating profit decreased as compared to the previous period.

120 Financial Information

6.2.2 Financial Analysis – Based on IFRS (Parent Company Only)
Item (Note 2)

Year

Financial Summary for the Last Five Years (Note 1)

2016

2017

2018

2019

2020

77.94
Debt ratio
73.63
73.09
73.44
78.97
Financial structure
Ratio of long-term capital to fixed(%)
161.51114.00110.35107.18153.31
assets
91.40
Current ratio
62.03
69.06
77.81
60.28
76.90
Solvency (%)
Quick ratio
45.82
49.03
57.87
45.87
99.48
Interest earned ratio (times)
246.03350.56292.02
60.78
Accounts receivable turnover
12.34
15.92
16.62
16.57
16.72
(times)
29.57
Average collection period
22.92
21.96
22.46
21.83
Inventory turnover (times)
Operatingperformance
Accounts payable turnover (times)
Average days in sales
0.83
Fixed assets turnover (times)
1.03
1.03
1.03
1.05
0.40
Total assets turnover (times)
0.61
0.66
0.70
0.61
0.89
Return on total assets (%)
0.75
1.54
1.33
0.51
0.25
Return on stockholders' equity (%)
1.00
3.91
3.14
(2.11)
0.32
Profitability
Pre-tax income to paid-in capital (%)
2.81
5.64
4.27
(2.19)
0.13
Profit ratio (%)
0.45
1.58
1.19
(0.82)
0.03
Earnings per share (NT$)
0.10
0.40
0.33
(0.22)
24.19
Cash flow ratio (%)
26.71
47.41
43.61
48.16
610.31
Cash flow
Cash flow adequacy ratio (%)
309.01357.86
381.09557.30
4.50
Cash reinvestment ratio (%)
4.94
8.48
7.68
11.34
7.15
Operating leverage
4.85
3.46
11.25
372.72
Leverage
2.32
Financial leverage
1.38
1.21
3.45
(0.03)
Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)
1. Solvency ratios: Mainly due to the decrease in receipts in advance as compared to the previous period due to the impact of COVID-19 in 2020, resulting in adecrease in current liabilities.
2. Operating ratios: Mainly due to a significant decrease in passenger revenue as compared to the previous period due to the impact of COVID-19 in 2020,
resulting in a decrease in sales revenue.
3. Profitability ratios: Mainly due to the increase in global demand for cargo transportation in 2020, resulting in an increase in operating profit as compared tothe previous period.
4. Cash flow ratios: Cash flow from operating activities decreased as compared to the previous period due to the impact of COVID-19 on passenger
transportation in 2020.
5. Leverage ratios: Mainly due to the impact of COVID-19 in 2020, the passenger income decreased as compared to the previous period and the operating profit
increased as compared to the previous period.
Note 1: 2016-2020 annual financial information was verified by Deloitte & Touche.
Note 2: The calculations of the above financial ratios are based on the following formulas:
1. Financial structure(1) Debt ratio = total liabilities / total assets(2) Ratio of long-term capital to property, plant, and equipment = (total shareholders' equity + non-current liabilities) / net property, plant, andequipment
2. Solvency(1) Current ratio = current assets / current liabilities(2) Quick ratio = (current assets – inventory – prepaid expenses) / current liabilities(3) Interest earned ratio (times) = earnings before interest and taxes / interest expenses
3. Operating performance(1) Accounts receivable turnover (including accounts receivable and notes receivable arising from business activities) = net sales / average accounts
receivable (including accounts receivable and notes receivable arising from business activities)(2) Average collection period = 365 / average accounts receivable turnover(3) Inventory turnover = cost of goods sold / average inventory(4) Accounts payable turnover (including accounts payable and notes payable arising from business activities) = cost of goods sold / average
accounts payable (including accounts payable and notes payable arising from business activities)(5) Average inventory turnover days = 365 / inventory turnover ratio(6) Property, plant, and equipment turnover = net sales / net property, plant, and equipment(7) Total asset turnover = net sales / average total assets
4. Profitability(1) Return on total assets = [net income + interest expense x (1 - effective tax rate)] / average total assets(2) Return on stockholders’ equity = net income / average stockholders’ equity(3) Net margin = net income / net sales(4) Earnings per share = (net income attributable to owners of the parent – preferred stock dividends) / weighted average number of shares
outstanding
5. Cash flow
(1) Cash flow ratio = net cash flows from operating activities / current liabilities(2) Cash flow adequacy ratio = five-year sum of net cash flows from operating activities / five-year sum of (capital expenditures + increase ininventory + cash dividends)(3) Cash flow cash reinvestment ratio = (net cash flows from operating activities – cash dividends) / (gross property, plant, and equipment +long-term investments + other non-current assets + working capital)
6. Leverage(1) Operating leverage = (net sales – variable operating costs and expenses) / operating profit(2) Financial leverage = operating profit / (operating profit – interest expenses)

Financial Information

1216.2.3 Consolidated Financial Analysis – Based on ROC GAAP: Not Applicable.
6.2.4 Financial Analysis – Based on ROC GAAP (Parent Company Only): Not
Applicable.

6.3 Consolidated Financial Statements for the Years Ended
December 31, 2020 and 2019, and Independent Auditors’ Report:
Please refer to Appendix 1.
6.4 Parent Company Only Financial Statements for the Years Ended
December 31, 2020 and 2019, and Independent Auditors’ Report:
Please refer to Appendix 2.

122 Financial Information

6.5 Audit Committee’s Report
Audit Committee’s Report
The Board of Directors shall prepare and send (1) the 2020 consolidated financial statement andindividual financial statement that have been jointly audited by Deloitte CPAs Huang, Jui-Chan andCheng, Shiuh-Ran, who released an official unqualified opinion by March 18, 2021, and (2) the 2020
business report and Earnings Distribution Statement after having found to have no discrepancies by
this audit committee and, thereupon, issue a report in accordance with the items stipulated in Article
14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

China Airlines

Convener of the audit committee: Chang, Hsieh Gen-Sen

March 18, 2021

Financial Information

123

Review of Financial
Conditions, Financial
Performance, and Risk
Management
7.1 Analysis of Financial Status
7.2 Analysis of Operation Results
7.3 Analysis of Cash Flow
7.4 Major Capital Expenditure Items
7.5 Investment Policy Last Year, Main reasons for Profits/
Losses, Improvement Plans and Investment Plans for
the Coming Year
7.6 Analysis of Risk Management

124 Review of Financial Conditions, Financial Performance, and Risk Management

VII. Review of Financial Conditions, Financial
Performance, and Risk Management
7.1 Analysis of Financial Status (Consolidated)

Analysis of changes in assets, liabilities, and equity over the past two years:
Year

Item

2020

Unit: NT$ thousands
Difference

2019

Amount%Current assets

61,872,468

51,822,342

10,050,126

19.39

Property, plant and equipment

141,481,694

145,886,971(4,405,277)(3.02)

Intangible assets

1,076,351

1,182,692(106,341)(8.99)

Other assets

79,763,571

94,155,974(14,392,403)(15.29)Total assets

284,194,084

293,047,979(8,853,895)(3.02)(17.95)Current liabilities

62,649,715

76,351,527(13,701,812)

Non-current liabilities

160,832,796

156,564,335

4,268,461

2.73

Total liabilities

223,482,511

232,915,862(9,433,351)(4.05)

Capital stock

54,209,846

54,209,846--

Capital surplus

1,187,327

2,488,907(1,301,580)(52.30)Retained earnings(350,581)(1,297,842)

947,261

72.99

Other equity

2,543,766

1,196,233

1,347,533

112.65

Treasury shares(30,875)(43,372)

12,49728.81

3,152,090(426,255)(11.91)
3,578,345
60,711,573
579,456
0.96
Total equity
60,132,117
Analysis of changes in financial ratios:
1. Assets: Mainly due to the impact of COVID-19 in 2020, to ensure the availability of funds, credit facilities and issuance of commercial
papers were gradually increased, resulting in an increase in current assets. Also, the annual amortization of the right-of-use assets
reduces other assets once IFRS 16 is applied.
2. Liabilities: Mainly due to a significant decrease in receipts in advance due to the impact of COVID-19 in 2020, resulting in a decrease incontract liabilities of NT$15,841 million as compared to the previous period.
3. Capital surplus: Mainly to make up the accumulated losses of NT$1,298 million in 2019.
4. Other equity: Mainly due to the changes in the fair value of financial assets and hedging instruments measured by fair value throughother comprehensive income.
Future response actions: The above changes do not significantly affect the Company.
Non-controlling interests

7.2 Analysis of Financial Performance (Consolidated)
Financial Performance Analysis Table
Revenue

115,250,550.00

168,444,160.00

Unit: NT$ thousands
Difference
Amount%(53,193,610.00)(31.58)Cost

105,031,349.00

151,757,232.00(46,725,883.00)

Gross profit

10,219,201.00

16,686,928.00(6,467,727.00)(38.76)

Operating expenses

8,034,785.00

14,021,107.00(5,986,322.00)(42.70)Operating income (loss)

2,184,416.00

2,665,821.00(481,405.00)(18.06)

Non-operating income and expenses(2,838,213.00)(2,762,638.00)(75,575.00)(2.74)

Pretax profit (loss)(653,797.00)(96,817.00)(556,980.00)(575.29)

Income tax expense(373,983.00)

578,185.00(952,168.00)(164.68)

Net income (loss)(279,814.00)(675,002.00)

395,188.00

58.55

Other comprehensive income

864,072.00

462,758.00

401,314.00

86.72

Year

Item

2020

2019

(30.79)584,258.00
796,502.00
375.28
Total comprehensive gain (loss) for the year
(212,244.00)
Analysis of changes in financial ratios:
1. Operating revenue, gross profit, costs, expenses and profit or loss before tax: Due to the impact of COVID-19 in 2020, passenger revenue
and related costs decreased significantly as compared to the previous period.
2. Income tax and post-tax profit or loss: The impact of COVID-19 in 2020 resulted in a loss for most of the subsidiaries and income tax
benefit recognized.
3. Other comprehensive income (net): Mainly due to changes in the fair value of financial assets and hedging instruments assessed by fairvalue of other comprehensive profit and loss cases.
4. Total comprehensive income for the period: The combined effects of the descriptions of 1, 2, and 3.

Review of Financial Conditions, Financial Performance, and Risk Management1257.3 Analysis of Cash Flow (Consolidated)
7.3.1 Cash Flow Analysis for the Current Year
Item
Cash and Cash Equivalents, Beginning of Year

28,459,528.00

Net Cash Flow from Operating Activities

24,937,537

Unit: NT$ thousands
Difference
Amount%3,521,991.00
14.12

9,723,475.00

37,526,612(27,803,137.00)(74.09)Net Cash Flow from Investing Activities(25,048,173.00)(8,995,051.00)(56.03)

Net Cash Flow from Financing Activities(16,053,122)

13,869,177.00(17,614,558)

31,483,735.00

178.74

121,930.00(336,941)

458,871.00

136.1927,125,937.00

28,459,528

Year

Exchange Rate Adjustment
Cash and Cash Equivalents, End of Year

2020

2019

(1,333,591.00)(4.69)
Analysis of change in cash flow in the current year:
1. The difference in cash flow from operating activities was mainly due to the impact of the COVID in 2020, resulting in a significant decrease
in receipts in advance as compared to the previous period.
2. The difference in cash flow from investment activities was mainly due to the settlement of 777F aircraft and designated USD deposits ashedging instruments to reduce the USD exchange rate risk.
3. The difference in cash flow from financing activities was mainly due to financing to borrow funds for disease-related projects from thegovernment to ensure the availability of funds.

7.3.2 Remedy for Cash Deficit and Liquidity Analysis: None.
7.3.3 Cash Flow Analysis for the Coming YearThe cash balance at the beginning of the period was approximately NT$20.0 billion, the expected net cash inflow
from operating activities for the year was approximately NT$18.7 billion. Cash outflow from investing activities was
NT$18.0 billion, and cash outflow from financing activities was NT$20.6 billion. The cash shortage is expected to befinanced by the issuance of domestic unsecured convertible corporate bonds, medium-term commercial paper andmedium-term credit loans of approximately NT$21.0 billion, with a balance of NT$21.1 billion at the end of theperiod.

7.4 Major Capital Expenditure Items (Parent Company Only)
Major capital expenditures primarily include purchases of new airplanes as part of the operational
expansion, which does not have a significant impact on the Company’s financial operations.

7.5 Investment Policy during the Last Year, Main reasons for Profits/
Losses, Improvement Plans and Investment Plans for the ComingYear

To support our primary airline operations and enhance competitiveness of the CAL Group, investments
are made primarily in airline industry-related companies. Currently, these include air transport, groundservices, logistics and warehousing, air cargo terminals, airline catering, laundry, information networks,
aeronautics, tourism services, and investing and leasing industries to create a comprehensive air service
network and wide-ranging services. Due to the year-long impact of the COVID-19 epidemic in 2020, theCompany’s loss on investments accounted for using the equity method amounted to approximately
NT$1.85 billion.
In the coming year, the Company will continue to evaluate potential investments in passenger, cargo,
aircraft maintenance and aviation training.

7.6 Analysis of Risk Management
7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation
on Corporate Finance, and Future Response Measures
A. Impact of changes in interest rates, foreign exchange rates, and inflation on Company income
Although changes in interest and foreign exchange rates have an impact on Company income,effective control on the impact is limited.

126 Review of Financial Conditions, Financial Performance, and Risk Management

B. Response measures to changes in interest rates, foreign exchange rates, and inflation
To prevent changes in interest rates, foreign exchange rates, and inflation from creating risks to theCompany’s overall finances, we hold regular meetings of the Board of Directors Risk Committee, andremain alert to economic and financial developments both in Taiwan and overseas to develop a
hedging strategy, evaluate performance of derivatives, and set an appropriate hedge ratio. These
controls help prevent changes by utilizing financial hedging instruments in the financial environmentand oil prices from creating systemic financial risks and enable CAL to properly manage risk.

7.6.2 Policies, Main reasons for Gain/Loss and Future Response Measures with
Respect to High-risk, High-leveraged Investments, Lending orEndorsement Guarantees, and Derivatives Transactions
A. The Company does not involve in high-risk, highly-leveraged investments.
B. The Company has developed the Operational Procedures for Lending Funds to Others andOperational Procedures for Endorsements/Guarantees, and risks of such operations are controlled
through strict assessment. Therefore, loans and endorsements/guarantees do not bring profits or
cause losses to the Company.

C. Company’s derivative products include forward foreign exchange and foreign exchange options
contracts and oil options contracts, which are primarily to hedge against the risk of fluctuations in oil
prices, interest rates, and foreign exchange rates. Transactions are performed in accordance with theCompany’s Operational Procedures for Derivatives Trading and are regularly evaluated to ensure
effective risk controls.

7.6.3 Future Research & Development Projects and Corresponding Budget:
Please refer to page 95-96.
7.6.4 Effects of and Response to Changes in Policies and Regulations Relating toCorporate Finance and Sales: None.

Review of Financial Conditions, Financial Performance, and Risk Management1277.6.5 Effects of and Response to Changes in Technology and the Industry
Relating to Corporate Finance and Sales:
1. Information Security Management Structure
China Airlines' information operations are in compliance with international information security
standards and domestic information security regulations and are implemented in its daily generalbusiness; to this end, the “Information and Communication Security Promotion Team” of China
Airlines was set up, in which the Vice President of the Information Management Division acts as theconvener and reports the information and communication security business to the Board annually.
Chairman Hsieh, Su-Chien is well qualified and has wide experience in management and cybersecurity.
He has earlier served as the chairman of Sabre (Taiwan) Ltd., and is quite conversant withcybersecurity governance and monitors information operations in a timely manner.

2. Information Security Management Practices
In response to external attack methods, China Airlines has deployed relevant defense mechanisms andcommissioned external information security experts to conduct penetration tests and information
security health checks (including network structure inspection, network malicious activity inspection,etc.) on an annual basis. China Airlines also conducted internal information and communication
security incident notification and response drills to review the effectiveness of the defense
mechanisms. In each stage of system development and maintenance, weakness identification andrepair are performed with various testing technologies to ensure the safety of our service.
3. Information Security Maintenance(1)Regular Evaluations and Exercises
In accordance with the Cyber Security Management Act, CAL conducts risk assessment of
information and information and communication systems every year, and evaluates thecybersecurity responsibility levels of the core information and communication systems in aspects ofconfidentiality, integrity, availability, and compliance. CAL also develops a business continuity planfor the core information and communication systems and conducts a business continuity drill at
least once every six months. This ensures timely and effective recovery of operational conditions tominimize possible losses in the event of disruptions. In addition, operational continuity plans are
re-examined and evaluated periodically to ensure availability and integrity.

128 Review of Financial Conditions, Financial Performance, and Risk Management

(2)Transportation Safety Training
Every year, at least 4 cybersecurity and information personnel receive at least 12 hours ofprofessional training or functional training on cybersecurity; other employees receive at least 3
hours of general cybersecurity education and training. Additionally, social engineering exercises arecarried out at least once every six months to enhance information security awareness. Through thepromotion of information security in multiple pays, the Company also incorporates ethicalcorporate management into staff performance appraisal and human resources policies, establishes
a clear and effective reward and punishment system, and abides the practices of workplace conduct.
The Information Management Division conducts self-inspection and legal compliance evaluations
on a semi-annual basis and independent audits are carried out by the audit department to ensure
the overall operation of the system is running smoothly.
(3)Notification of Cyber Security Incidents
The cybersecurity incident notification and response mechanism are initiated based on the level ofcybersecurity incidents, and emergency preparedness; notification and response procedures are inplace to control their impact and post-incident recovery. CAL develops the security incident
notification & contingency drill plan at the beginning of each year and completes internalcybersecurity exercise by the end of each year.

4. Information Security Verification and Audit
In order to maintain the effectiveness of the certification and establish a more complete management
system, the Company implemented the ISO/IEC 27001: 2013 validation of the core information
communication system, the Information Security Management System in 2020. Also, the Company
attempted, for the first time, to introduce the ISO/IEC 27701: 2019 standard of the privacy information
management system introduced by the International Standard Organization in August 2019. Based on
the existing Information Security Management System (ISMS), we expanded the requirements andimplementation of the privacy information management system and obtained the certificate of
approval in November 2020. Per examination by the Information Management Division in 2020,
neither the monitoring nor warning information from the defense system, which detects threats to
information security, was confirmed to be a security incident caused by hacker intrusion or virus
infection.

Review of Financial Conditions, Financial Performance, and Risk Management1295. Responses to the COVID-19 epidemic
In response to the COVID-19 epidemic, the Information Management Division of the Company
formulated the “Response Measures and Information for Social Distancing in Office and Remote
Working For Employees” and the “Information Management Division's Response Measures for
Response to Major Epidemics” and the “Operation Procedures for Maintenance and Operation ofApplications System during Major Epidemics” in February 2020, enabling domestic and foreign
employees to work at home. If there are network outages caused by cybersecurity threats or otherdisasters, notification and response can be implemented immediately. According to the Company’s
regulations, firewall records are reviewed regularly to monitor the network usage via VPN. Accounts
with no usage records or have expired, as well as accounts of transferred or terminated employees aredeleted to reduce the cybersecurity risks.
6. Personal Information Protection Management System
The Company places great importance on customer privacy and regards it as a basic service principle.
In addition to complying with international and foreign laws related to personal information, theCompany established the Personal Information Management Committee in 2014. Through theestablishment of the Personal Information Protection Management System, the Company implements
personal data protection and complies with the relevant regulations to protect our customers' rights
and minimize the impact of personal data breach risks. In 2018, in order to comply with the General
Data Protection Regulation (GDPR) put into effect by the European Union, the role of Data Protection
Officer (DPO) has been established in the Company to oversee the management of personal data. The
Company has publicly disclosed the relevant privacy policies and statements on privacy protection on
the official website of China Airlines. Internally, it implemented the personal information management
system, set up channels for the exercise of personal information rights, held annual personal
information incident drills, confirmed the implementation of personal information inventory and risk
assessment, comprehensively strengthened the concept of privacy protection and code of conduct of
employees through education and training, and completed the personal information audit system. In
response to various technological changes in the post-epidemic era, the Company continues tomonitor the correlation between emerging technologies and privacy protection, and assess its risks
through the implementation of the Data Protection Impact Assessment (DPIA) as a reference for future
response measures. China Airlines is dedicated to protecting customers' personal information. In the
future, CAL will continuously protect customers' personal information to increase its competitive
advantage and customer trust.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk
Management, and the Company’s Response Measures
The Company has established a long-term safety management system, complied with standard
operating procedures, continued to improve aviation and aircraft maintenance, and implemented thehighest standard of flight safety. In the spirit of SOP+, various services were implemented, which wererecognized by major domestic and overseas awards. The Company also actively invested in social
welfare, fulfilled corporate responsibilities and incorporated environmental management into its
operational focus. If there is any untrue or negative news, message, or incident that affects theCompany's image, we will respond immediately, explaining and clarifying to the public, and post
explanations on our website or social media platform if necessary, to reduce the negative effects.
At the time of the spread of COVID-19, the global aviation industry was hit and epidemic safety
became another focus of operation management. The Company constantly pays attention to market
trends, adjusts passenger and cargo flights in response to demand and focuses on cargotransportation, and actively plans to capture opportunities for passenger and cargo passengers suchas seasonal travel, themed flights or business charter flights to increase revenue through multi-sales
strategies. In addition, correct information on epidemic prevention management is disseminated in atimely manner to ensure the safety of passengers and crew.

7.6.7 Expected Benefits from, Risks Relating to, and Response to Merger andAcquisition Plans: None.

130 Review of Financial Conditions, Financial Performance, and Risk Management7.6.8 Expected Benefits from, Risks Relating to, and Response to Factory
Expansion Plans: None.
7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing
Sources and Excessive Customer Concentration: None.
7.6.10 Effects of, Risks Relating to, and Response to Large Share Transfers or
Changes in Shareholdings by Directors or Shareholders with
Shareholdings of over 10%: None.
7.6.11 Effects of, Risks Relating to, and Response to the Changes inManagement Rights: None.
7.6.12 Litigation or Non-litigation Matters
Any major litigation, non-litigation, or administrative disputes involving the Company that are alreadyfinalized or still pending.
No.
1

Disputed
Amount(NT$)
Litigation for
1. In 2002, the Civil Aeronautics
More than
refunding
Administration (CAA) unilaterally 1.2 billion
overpayment onterminated an aircraft rental
aircraft rental
contract with the Company forsix aircraft, resulting in earlytermination of the contract,which changed the nature of thelease and the rent calculationbasis and resulted in rent
overpayment by the Company.
2. In 2010, the CAA resolved that
the Civil Aeronautics
Administration should pay theCompany more than NT$1.5
billion and in 2015 the Supreme
Court revoked the arbitration
judgment, which resulted in the
Company filing a civil lawsuit
against the CAA to recoup theaforementioned rent
overpayment.
3. This case has gone through theFirst and Second Instance trials.
The court agreed that there wasan overpayment of rent.
However, due to incorrect logic
used in the calculation, it
mistakenly recognized that theCompany had offset the final
rent payment, so it was judgedthat the Company had no reason
to request the CAAC to return
the overpayment of rent.
Case Name

Summary

Litigants

Current Status

Plaintiff: China
Airlines
Defendant: Civil
Aeronautics
Administration

The Third Instance trial of the casehas commenced on November 27,
2019, and is under hearing by theSupreme Court.

7.6.13 Other Major Risks:
1. CAL fully understands the importance of risk management and the potential for interaction among
different types of risk. We formed a Risk Committee directly under the supervision of the Board of
Directors to improve risk management and require subordinate units to control for each major risk
category.

Review of Financial Conditions, Financial Performance, and Risk Management

131

The CAL risk management organization and units responsible for implementation:
Type of Risk

Operating Risk

Safety Risk

Financial Risk

Responsible
Department

Risk Management Measures

The operating environment for the aviation industry is ever changing. Major political andeconomic events as well as unexpected internal or external events can have a huge impact
Corporateon the company’s operations. The Corporate Development Office analyzes potential
Development
political, economic, aviation industry, and internal Company situations that could affect the
OfficeCompany and proposes concrete response plans to reduce their impact on China Airlines’
strategic direction and annual business plan.
Safety is the most basic principle and core value of China Airlines' business operation, as
well as our responsibility and commitment to each customer. According to the Safety
Management System (SMS), the Company constructs safety risk management. In relation
Corporate
to internal and external operation risks, such as navigation, maintenance, air service, andSafety Office ground operation, the Company maintains operational risk within an acceptable range
through continuous hazard identification and risk management, and proposes
improvement measures to effectively enhance the overall safety performance of theCompany.
Both domestic and global economy affect the operating results of the Company. Primary
operating costs for airlines include interest rate, exchange rate, and fuel, and outside
factors that can result in significant volatility. Therefore, the Finance Division utilizes
Finance Div.
financial hedging instruments to fix the above factors within a certain range, regularly
monitors financial risk, and develops relevant strategies and measures to effectively
manage financial risk.

2. Business strategy improvement measures in response to the impact of COVID-19 in 2020 are as
follows:(1) A rolling schedule review and increase/decrease program of passenger flights will be carried out inaccordance with national quarantine regulations and changes in market supply and demand, while a
flexible deployment of passenger aircraft to support loading mails will reduce the impact of theepidemic on passenger transportation business.
(2) Strive to capture all kinds of business opportunities (students, enterprises, Taiwanese businesses,
themed and chartered flights) during the epidemic period to increase revenue.
(3) Comprehensive review and timely revision of various fares, keeping abreast of developments in theairline alliance, strengthening membership and e-commerce relationships, and visiting anddeveloping potential enterprise customers.
(4) For flights with rigid demand, China Airlines no longer follows the previous forward control methodwith reference to the sales price and location arrangement to increase the revenue of passenger
operations.
(5) Strengthen passenger reservation and ticketing refresher courses to enhance the professional
education of transport-related personnel globally.

7.7 Other Important Matters: None.

132 Review of Financial Conditions, Financial Performance, and Risk Management

Special Disclosure
8.1 Summary of Affiliated Companies
8.2 Private Placement Securities in the Most Recent
Years
8.3 Shares in the Company Held or Disposed of by
Subsidiaries in the Most Recent Years
8.4 Special Notes
8.5 Situations with Major Impacts on Shareholder
Equity or Share Prices

Special Disclosure

133

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

8.1.1 Basic information of Affiliated Companies
A. Affiliated Companies Chart

Dec 31, 2020

Note 1: The affiliates listed above are companies in which the company has invested and has a 50% or higher voting share, or the means tocontrol, either directly or through a subsidiary company. China Pacific Laundry Services, China Pacific Catering Services, and Nordam
Asia are joint ventures.
Note 2: Yestrip Co., Ltd. was liquidated on October 26, 2020 after the approval of the Taipei City Government. The liquidation procedure isunderway.

134 Special Disclosure

B. Basic information of Affiliated Company
Company

Date
Founded

1. CAL-Dynasty International, Inc.

07/01/1991

1A Dynasty Properties Co., Ltd.

08/15/1973

1B Dynasty Hotel of Hawaii, Inc.

12/10/1973

2. CAL-Asia Investment Inc.

06/29/1995

3. Dynasty Aerotech InternationalCorp.

05/11/1989

4. Yestrip Co., Ltd.

01/18/2001

5. CAL Park Co., Ltd.

09/06/2006

6. CAL Hotel Co., Ltd.

01/03/2007

7. Taiwan Aircraft Maintenance andEngineering Co., Ltd.

01/16/2015

8. Mandarin Airlines, Ltd.

04/29/1991

9. Sabre Travel Network (Taiwan) Ltd.

10/09/1990

10. Tigerair Taiwan Co., Ltd.

04/21/2014

11. China Pacific Laundry Services Ltd.

09/08/1997

12. Taiwan Air Cargo Terminal Ltd.

12/22/1999

13. Kaohsiung Airport Catering
Services Ltd.
13A Delica International Co., Ltd.
14. China Pacific Catering Services
Ltd.
15. NORDAM Asia Ltd.
16. Taoyuan International Airport
Services Co., Ltd.
17. Taiwan Airport Service Co., Ltd.
17A Taiwan Airport Service (Samoa)
Co., Ltd.

Address
200 Continental Blvd. Suite #101 El Segundo,
CA90245, U.S.A.
200 Continental Blvd. Suite #101 El Segundo,
CA90245, U.S.A.
1830 Ala Moana Blvd. Honolulu, Hawaii 96815,
U.S.A.
Mandar House, 3rd Floor, P.O. Box 2196, Johnson’sGhut, Tortola, VG1110, Virgin Islands, British
No.6, Hangqin S. Rd., Dayuan District, Taoyuan City

Dec 31, 2020/Unit: NT$ thousands
CapitalPrincipal Activities(Note)
775,241 Holding & investing
14,826

Real estate investing, property
leasing118,606 Hotel service
212,671 Holding & investing
77,270Aviation ground handlingservice, cleaning service

1,2F, No.131, Section 3, Nanjing E Rd., Zhongshan
District, Taipei City
No.1, Hangzhan S. Rd., Dayuan District, Taoyuan
City
No.1-1, Hangzhan S. Rd., Dayuan District, Taoyuan
City1,500,000

No.15, Hangqin S. Rd., Dayuan District, Taoyuan
City1,350,000 Aircraft maintenance and repair

No.3, Alley 123, Lane 405, Dunhua N. Rd.,
Songshan District, Taipei City
15F, No.57, Fuxing N. Rd., Songshan District, Taipei
City
No.3, Alley 123, Lane 405, Dunhua N. Rd.,
Songshan District, Taipei City
No.7, Lane 54, Sande Street, Luzhu District,Taoyuan City
No.10-1, Hangqin N. Rd., Dayuan District, Taoyuan
City

16,000 Travel service
Real estate leasing, parking lot
management

465,000 Hotel business

2,001,825 Civil air transport
138,618 IT service & GDS
2,800,000 Civil air transport
250,000 Laundry service
2,500,000 Air cargo and storage service

09/27/1999

No.2-10, Zhongshan 4th Rd., Xiaogang District,Kaohsiung City

400,500 Catering service

05/24/2016

No.2-10, Zhongshan 4th Rd., Xiaogang District,Kaohsiung City

20,000 Catering service

08/19/1994

No.22, Lane 156, Section 2, Haishan Rd., Luzhu
District, Taoyuan City

861,000 Catering service

12/07/2017

No.15, Hangqin S. Rd., Dayuan Dist., Taoyuan City

77,500 Aircraft maintenance and repair

11/08/1978

No.15, Hangqin N. Rd., Dayuan District, Taoyuan
City

700,000

Aviation ground handlingservice

07/19/1966

3F, No.340, Dunhua N. Rd., Songshan District,Taipei City435,600

Aviation ground handlingservice

03/22/2004

TrustNet Chambers, Lotemau Centre, P. O. Box1225, Apia, Samoa

174,262

Holding & investing

8F-3, No.186, Section 4, Nanjing East Rd., Songshan
10,000 Air freight forwarder
District, Taipei City
Note 1: Capital was calculated using the exchange rate at the end of 2020: 1TWD=0.0337 USD.
Note 2: Yestrip Co., Ltd. was liquidated on October 26, 2020 after the approval of the Taipei City Government. The liquidation procedure isunderway.

18. Global Sky Express Ltd.

09/29/1994

Special Disclosure

135

C. Overall Description of the Industries in which Affiliated Companies (Including
Subsidiaries and Other Invested Companies) Operate
China Airlines’ affiliated companies can be divided into seven categories, each of which is highly
dependent on the Company’s operations, and include airlines, ground services, air transport support,
aerospace technology, logistics and warehousing, tourism and leisure, and investment holdings andleasing. The categories are described below:
Classification

Description

Airlines

Mandarin Airlines provides domestic and international passenger and cargo air transport services to further
capitalize on our competitive advantage in the cross-strait market. Tigerair Taiwan is tasked with operating in the
Asian low-cost carrier market to develop new business opportunities.

Ground Handling
Services

Ground services at Taiwan Taoyuan and Taitung Airports are provided by Taoyuan International Airport Services Co.,
Ltd., while those for Kaohsiung Airport and all other domestic airports are serviced by Taiwan Airport Service Co.,
Ltd. Overseas, the Company has invested in Jardine Aviation Services in Hong Kong, which serves as China Airlines’
ground handling agent in Hong Kong. Cleaning and repair ground services are provided by Dynasty Aerotech
International Corp.

Air Transport Support

The Company has invested in domestic airline reservation system operations and maintenance provider Sabre Travel
Network (Taiwan) Ltd. Overseas, the Company has invested in Singapore’s Everest Company.
In-flight catering services are provided for northern Taiwan by China Pacific Catering Services Ltd. and by Kaohsiung
Airport Catering Services in the South. Delica International Co., Ltd. is the subsidiary of Kaohsiung Airport Catering
Services.
China Pacific Laundry Services Ltd. provides laundry services for textiles and clothing used aboard aircraft andgeneral laundry services for the hospitality industry.

Logistics andWarehousing

Domestically, Taiwan Air Cargo Terminal Ltd. is responsible for providing warehousing services at Taiwan Taoyuan
Airport and Kaohsiung International Airport. In Mainland China, the Company made indirect investments in Airport
Air Cargo Terminal (Xiamen) Co., Ltd. and Airport Air Cargo Service (Xiamen) Co., Ltd.
Logistics services are provided domestically by invested companies Global Sky Express Ltd. and Chung Hwa Express
Corp. Overseas, the Company has indirectly invested in Hong Kong’s Eastern United International Logistics.

Aerospace
Technology

In the aerospace technology industry in Taiwan, the Company has invested in Taiwan Aircraft Maintenance andEngineering Ltd., which is responsible for all aspects of maintenance and repair services for Boeing 777 and 737 andAirbus A320 and A350 models; NORDAM Asia provides thrust reverser and composite material maintenance services
in the Asian region; overseas, the Company invests in Xiamen Taiko Landing Gear Co. in Mainland China, which
provides and maintains landing gear, and HAECO Composite Structures (Jinjiang) Co. Ltd., which provides composite
material maintenance. In Hong Kong, the Company invests in China Aircraft Services Ltd., which provides aircraft
maintenance capacity.

Tourism and Leisure

Domestic investments include Yestrip and CAL Hotel Co., Ltd. Overseas investments include an indirect investment
in Dynasty Hotel of Hawaii, Inc. in the USA and investment in Japan’s Dynasty Holidays.

Investment Holdings
and Leasing BusinessGroup

Established CAL-Dynasty International, Inc., which makes indirect investments in Chinese and American companies
engaged in real estate investments and leasing management. CAL-Asia Investment Inc. and Taiwan Airport Service(Samoa) Co., Ltd. are engaged in general investment holdings.

136 Special Disclosure

D. Directors, Supervisors, and Presidents of Affiliated Companies
Company

Title

Dec 31, 2019
Units: Shares; %Name

1. CAL-Dynasty International, Inc. Chairman
Hsieh, Su-Chien (Note 1)
Director
Wang, Chen-Min (Note 1)
Director (President) Hsu, Pao-Chieh (Note 1)
1A Dynasty Properties Co., Ltd. Chairman (President) Hsu, Pao-Chieh (Note 2)
Director
Hsieh, Su-Chien; Yen,Yang (Note 2)
1B Dynasty Hotel of Hawaii,
ChairmanHsu, Pao-Chieh (Note 2)
Inc.
Director
Yen, Yang (Note 2)
Director (President) Pan, Wen-Tsung (Note 1)
2. CAL-Asia Investment Inc.
Chairman
Hsieh, Su-Chien (Note 1)
Director
Chang, Young (Note 1)
Director (President) Wang, Chen-Min (Note 1)
3. Dynasty Aerotech International
ChairmanSun, Jia-Min (Note 1)
Corp. (Note 3)
DirectorLiu, Der-Chuan; Lee, Jung-Hui; Chen, Wei-Tau (Note 1)
Supervisor
Chen, I-Chieh (Note 1)
President
Shih, Hui Huang (Note 1) (Nominated by China Airlines)
4. Yestrip Co., Ltd. (Note 3)
Supervisor
Huang, Hui-Na (Note 1)
5. CAL Park Co., Ltd.
Chairman
Hsieh, Su-Chien; (Note 1)
Director
Chen, Wei-Tau (Note 1)
Supervisor
Fang, Juo-Ling (Note 1)
Director (President) Chang, Young (Note 1)
6. CAL Hotel Co., Ltd.
Chairman
Hsieh, Su-Chien; (Note 1)
Wang, Chen-Min; Kao, Shing-Hwang; Wang, Houng; Hong,Director
Tsu-Kuang (Note 1)
Supervisor
Fang, Juo-Ling; Chen, I-Chieh (Note 1)
President
Eric Rimbeuf
7. Taiwan Aircraft Maintenance
ChairmanWang, Houng (Note 1)
and Engineering Co., Ltd.
Chang, Young; Sun, Jia-Min; Lee, Jung-Hu; Wang, Chen-Min
Director(Note 1)Supervisor
Fang, Juo-Ling; Yen, Yang (Note 1)
President
Tsai, Chih Hung (Nominated by China Airlines)
8. Mandarin Airlines, Ltd.
Chairman
Hsieh, Su-Chien (Note 1)
Chang, Young; Kao, Shing-Hwang; Wang, Houng; Wang,
Director
Chen-Min; Peng, Pao-Chu (Note 1)
Independent
Hsieh, Yung-Ming (Independent Directors Undertaking Public
Director
Welfare)Supervisor
Chen, I-Chieh
Director (President) Tsao, Jyh-Fen (Note 1)
9. Sabre Travel Network (Taiwan)
ChairmanWu, Wen-Kuo (Note 1)
Ltd.
Director
Chung, Ming-Jyh; Chiu,Wei-Tuan; Peng, Pao-Chu (Note 1)
Director
Alan Chen (Represent Sabre Travel Network Asia Pacific)
Supervisor
Ho, Hui-Fen
President
Lee, Hsien-Kuang (Nominated by China Airlines)
10. Tigerair Taiwan Co., Ltd.
ChairmanChen, Han-Ming (Note 1)
Chang, Young; Wang, Chen-Min; Chang, Cheng-Hao; Chen,
Director
I-Chieh; Tsao, Jyh-Fen (Note 1)
Director
Hsiao, Po Jen; Hsu, Yang Che; Jao, Shihchen; Yen, Sin-Hui
Independent
Chen, I-Heng (Independent director undertaking public
Director
welfare); Fan, Hung-Shu; Yang, David
President
Chang, Ming-Wei
11. China Pacific Laundry Services Chairman
Chung, Wan-Chun (Note 1)
Ltd.
Director
Hong, Tsu-Kuang; Chu, Te-Hsiu; (Note 1)
Director
Chan, Derrick (Represent Hendriz Holding)
Director
Yeung, Maggie (Represent Heathlee Int’l)Supervisor
Caho, Wen-Kan (Represent Merton Lake)
Supervisor
Chen, I-Chieh
President
Lin, Chun-Nan (Nominated by China Airlines)
12. Taiwan Air Cargo Terminal
ChairmanWang, Chen-Min (Note 1)
Ltd.
Deputy Chairman
Charles C. Y. Chen (Represent Eyon Industrial Co.)
Director
Chang, Cheng-Hao; Liu, Der-Chuan (Note 1)
Director
UPS
Director
Michael Shea (Represent Hsin Feng Corp.)
Supervisor
Ho, Hui-Fen
Supervisor
Chen, Jyi-Fu (Represent Express Container Terminal Corp.)

Shareholding
Shares2,614,500(USD10, share)

%
100

5,000
(USD100, share)100

400,000

100(USD10, share)
7,172,346(USD1, share)

100

77,270100

1,600,000
150,000,000

100
100

46,500,000

100

135,000,000

100

188,154,025

93.99

13,021,042

93.93

609,000

4.39

212,420,046

75.86

13,750,000

55

3,750,000
3,750,000
3,750,000

15
15
15

135,000,000

54

6,000,000

2.4

20,000,000
7,000,000

8
2.8

15,000,000

6Special Disclosure137

Shareholding
Shares%21,494,637

53.67

16,178,945

40.4

10,0000.02

1,020,000

51

980,000

49

43,911,000

51

21,045,500

24.5

21,045,500

24.5

3,952,500
3,797,500

51
49

Lee, Chih-Chiang (Represent Motc)

31,500,000

45

34,300,000

49

Director
Supervisor

Hsu, Cheng-Chang; Chang, Chang-Chi; Li, Hung-Sheng; Lee,
Chun-Hsiung (Represent Motc)
Hsieh, Su-Chien; Chang, Young; Wang, Houng; Chu, Te-Hsiu;
Yeah, Shao-Ting (Note 1)
Hung, Ngai (Represent UPS)
Li, Mi; Li, Shen-Yi

4,200,000

6

Chairman

Chang, Young (Note 1)

20,626,644

47.35

Director (President)
DirectorPeng, Long-Min (Note 1)
Chang, Cheng-Hao (Note 1)
Li, Li-Yu (Representing juridical person shareholder Rih Hsin
Asset Management Company)
Chang, Chieh-Tang (Represent Goldsun Building Materials)
Fang, Juo-Ling
Chen, Yao-Ming

7,085,300

16.27

7,405,200

17

Company
13. Kaohsiung Airport Catering
Services Ltd.

Title
Chairman

Chang, Young (Note 1)

Director

Supervisor
President

Chung, Wan-Chun; Wang, Wei (Note 1)
Lin, Jyh-Jong; Tsai, Ta-Wei (Nominated by Uni Airways
Corporation)Han, Lan-Ping (Nominated by Evergreen International
Corporation)
Yen, Yang
Lee, Ho-Yuan
Lee, Ho-Yuan (Nominated by Kaohsiung Airport Catering
Services)
Lin, Jyh-Jong (Nominated by Kaohsiung Airport Catering
Services)
Tokuyama, Keiichi; Tokuyama, Keisuke (Nominated by F. TEC
Co., Ltd)
Lai, Li Chao; Araki, Osamu
Eguchi, Kenichi

Chairman

Yeh, Chu-Lan (Note 1)

Director
Director
Supervisor
Supervisor
President
Chairman
Deputy Chairman
Director

Hong, Tsu-Kuang; Chung, Wan-Chun (Note 1)
Wu, Hsiu-Lan; Mao, Chi-Chiung (Represent Aldeburgh Limited)
Fang, Juo-Ling
Caho, Wen-Kan (Represent Deli Holdings Limited)
Chen, Jo-Ching (Nominated By China Airlines)
T. Hastings Siegfried (Nominated by The NORDAM Group)
Wang, Houng (Note 1)
Li, Chih-Wei (Note 1)
J.Terrell Siegfried、Jamie Lane (Nominated By The NORDAM
Group)
Ralph McDavidWang, Wei

Director
Supervisor
Supervisor
President

13A. Delica International Co.,
ChairmanLtd
Director
Director

14. China Pacific Catering
Services Ltd.

15. NORDAM Asia Ltd.

Director
Supervisor
Supervisor
16. Taoyuan International Airport Chairman
Services Co., Ltd.
(President)
Director
Director

17. Taiwan Airport Service
Co., Ltd.

Director

17A Taiwan Airport Service(Samoa) Co., Ltd.
18. Global Sky Express Ltd.

Name

Director
Supervisor
Supervisor

Authorized Signatory Chang, Young (Represent Taiwan Airport Service Co.)5,876,976(1 USD, per share)
50,000250,000
40,00050,00020,00020,00020,000Chairman
Li, Chung-Hui
DirectorLiu, Der-Chuan; Shann, Da-Sin; Chang, Cheng-Hao (Note 1)
Director
Pao, Hsueh-Chao
Director
Huang, Nan-Sheng
DirectorWei, Ching-Li
Director
Hsiao, Yu-Hsin
Director
Chung, Mei-Chih (Represent Leader Mutual Freight System)
Supervisor
Huang, Hui-Na
Supervisor
Yeh, Chien-Tien
10,000Supervisor
Chiang, Ming-Fang (Represent Morrison Express)
50,000President
Hwang, Chun-Chyuan (Nominated by China Airlines)
Note 1: Representative of juridical person shareholder China Airlines.
Note 2: Representative of juridical person shareholder CAL-Dynasty International, Inc.
Note 3: Yestrip Co., Ltd. was liquidated on October 26, 2020 after the approval of the Taipei City Government. Its Board of Directors no longer
exists.

138 Special Disclosure

100
5
25
4
5
2
2
2
1
5

E. Affiliated Company Business Overview

Dec 31, 2019
Unit: NT$ thousands; EPS=NT$

Total
Assets

1. CAL-Dynasty International, Inc.

775,241

1,349,213

110,620

1,238,593

154,223(32,649)(21,960)(8.40)

1A Dynasty Properties Co., Ltd.

14826

696181

176822519359

93269

26052

19263

3852.62

1B Dynasty Hotel of Hawaii, Inc.

118,606

413,70237,437376,265

61,316(61,265)(46,577)(116.44)

212,671

462,453

6,567

462,4460(1,157)45,068

6.28

77,270344,123

207,492

136,630

382,834

43,27933,986439.84(9.42)

2. CAL-Asia Investment Inc.
3. Dynasty Aerotech International
Corp.

Total
Liabilities

Total
EquityOperating
Income(Loss)

CapitalCompany

Operating
Revenue

Profit(Loss)EPS (Dollars)

4. Yestrip Co., Ltd.

16,000

10,392286

10,106

4,326(16,567)(15,067)

5. CAL Park Co., Ltd.

1,500,000

5,180,342

3,666,260

1,514,082

309,284

55,456

9,350

0.06

6. CAL Hotel Co., Ltd..

465,000

533,457

129,017404,440

339,310(101,805)(73,586)(1.58)

1,350,000

3,360,075

2,660,312

699,763

46,559(222,643)(222,223)(1.65)

2,001,825

8,256,878

6,930,337

1,326,541

3,823,365(297,996)(376,255)(1.88)

138,618

319,008

71,076247,932

18,546(74,188)(49,995)(3.61)

2,800,000

11,694,612

8,657,483

3,037,129

1,880,636(1,808,558)(1,371,056)(4.90)

250,000

361,629

90,077

271,552

125,081(48,609)(28,137)(1.13)

2,500,000

5,216,303

2,334,637

2,881,666

2,121,992

422,645

318,4941.27

400,500

1,059,589

367,878

691,7121,317,060

1,246

9,129

0.23

20,00015,653220

15,434

0

0

7

0.00

861,000

3,631,885

2,244,852

1,387,032

701,120(598,856)(306,623)(3.56)

77,50077,15680

77,076

0

(121)

(93)

(0.01)

700,000

2,345,219

1,115,243

1,229,975

2,060,716(393,726)(258,894)(3.70)

435,600

1,367,067

943,003

424,064

343,106(224,397)(156,739)(3.60)

174,262

367,4560367,4560022,3283.80

10,00045,66415,092

30,572

166,040

9,732

7,796

7.80

7. Taiwan Aircraft Maintenance andEngineering Co., Ltd.
8. Mandarin Airlines, Ltd.
9. Sabre Travel Network (Taiwan)Ltd.
10. Tigerair Taiwan Co., Ltd.
11. China Pacific Laundry Services
Ltd.
12. Taiwan Air Cargo Terminal Ltd.
13. Kaohsiung Airport Catering
Services Ltd.
13A Delica International Co., Ltd.
15. China Pacific Catering Services
Ltd.
16. NORDAM Asia Ltd.
17. Taoyuan International Airport
Services Co., Ltd.
18. Taiwan Airport Service Co., Ltd.
18A Taiwan Airport Service(Samoa) Co., Ltd.
19. Global Sky Express Ltd.

Note 1: Capital, total assets, total liabilities, total equity were calculated using the exchange rate at the end of 2020.
Note 2: Operating revenue, operating profit, and income for the period were calculated using the 2020 quarterly average exchange rates.
Note 3: Exchange rates at the end of 2020 were 1TWD=0.0337 USD, 0.2340 CNY.
Note 4: Quarterly average exchange rates in 2020 were as follows:

Q1：1TWD=0.0331USD0.2310CNY.
Q2：1TWD=0.0333 USD0.2365CNY.
Q3：1TWD=0.0338 USD0.2359CNY.
Q4：1TWD=0.0347USD0.2324CNY.

(2) Affiliated Company Consolidated Financial Statements: Information required
to be disclosed regarding affiliated company’s consolidated financial
statements is included in Appendix 1 Consolidated Financial Statements. The
Company will no longer prepare a separate consolidated financial statement
for affiliated companies.
(3) Relationship Report: China Airlines is not the subsidiary of any company, so a
relationship report is not required.

Special Disclosure1398.2 Private Placement Securities in the Most Recent Years: None.
8.3 Shares in the Company Held or Disposed of by Subsidiaries in the
Most Recent Years:
Company

Dynasty
AerotechInternational
Corp.
Mandarin
Airlines, Ltd.

Number of Number of
Stake in
Date of
Shares and Shares andSourceCapitalSubsidiary Acquisition or Value ofValue ofof Funds(%)
Disposal
StocksStocksAcquired Disposed
109/02/20
152
109/02/21
300,000
Equity77,270,000
100%
Fund
109/02/25
300,000
109/02/26
214,000
Equity2,001,825,000
93.99%
Fund

Investment
Gain/Loss
220
485,539
398,925
270,365-

MAR 27, 2021
Units: NT$; shares; %Number of Shares
Amount ofand Value of Stock
Company
Held as of theEndorsement
Printing Date of this /Guarantee ofReportSubsidiary
0 sharesNT$0-

2,074,628 shares
NT$31,223,000-

Note: No subsidiary has a Company stock pledge nor has the Company lent money to any subsidiary.

8.4 Special Notes: None.
8.5 Situations with Major Impact on Shareholder Equity or Share
Prices:8.5.1 Change in the chairman of the board, general manager, or one-third or
more of the directors of the Company.
The Board has resolved to remove Mr. Hsieh, Su-Chien from the position of President on 18
March 2021 and to appoint Mr. Kao, Shing-Hwang to succeed as President.

8.5.2 Signing of major memoranda, strategic alliances or other plans forbusiness cooperation or major contracts
A. In order to strengthen the capital structure of the Company’s subsidiary, Tigerair Taiwan Co.,
Ltd., the Board of Directors resolved to participate in its cash capital increase on 6 August
2020.
B. On December 31, 2020, the Company renewed its land lease contract with Taiwan Air Cargo
Terminal Ltd.

8.5.3 Others
A. In response to the COVID-19 pandemic, the Company and its group members have improved
their pandemic prevention measures and adjusted the service content of catering andsupplies for mainland-Taiwan air routes and Hong Kong-Macau-Taiwan air routes startingfrom January 28, 2020; the main consideration is to reduce personnel contact and reduce
the unnecessary use of re-used products and use disposable products instead. At the sametime, we also encourage passengers to bring their own products, such as environmental
protection cups, to reduce the risk of infection. In addition to the normal disinfection
procedures for all cross-strait, Hong Kong and Macao flights arrival to Taiwan, thedisinfection of the dining trays, handrails and overhead luggage cabinets in the cabin are
carried out to maintain the health of passengers and crew members.
B. The Company received an Italian aviation notice informing that, at the request of thecountry’s health bureau, the CI75 Taipei-Rome flight on February 2 and the CI76
Rome-Taipei flight on February 3 were canceled; In order to assist with the evacuation of thepassengers, China Airlines obtained an agreement from the Italian Civil Aviation Authority toallow CI75 Taipei-Rome flight on February 2 and to reinstate CI76 Rome-Taipei flight on
February 3.

140 Special Disclosure141

OpinionWe have audited the accompanying consolidated financial statements of China Airlines, Ltd. andits subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance
sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive
income, changes in equity and cash flows for the years then ended, and the notes to theconsolidated financial statements, including a summary of significant accounting policies.
(collectively referred to as the “consolidated financial statements”)
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, andits consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, and International Financial Reporting Standards (IFRS), International AccountingStandards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued
into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestationof Financial Statements by Certified Public Accountants and auditing standards generally acceptedin the Republic of China. Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of ourreport. We are independent of the Group in accordance with The Norm of Professional Ethics for
Certified Public Accountant of the Republic of China, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports andall the same as the companies required to be included in the consolidated financial statements of parent

subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements ofBy

Hsieh, Su-Chien

March 18, 2021

CHINA AIRLINES, LTD.

Very truly yours,

affiliates.

-1-

statements of affiliates has all been disclosed in the consolidated financial statements of parent and

Financial Statements.” Relevant information that should be disclosed in the consolidated financial

and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated-2-

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements for the year ended December 31, 2020. These
matters were addressed in the context of our audit of the consolidated financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.

Key Audit Matters

The Board of Directors and Shareholders
China Airlines, Ltd.

The companies required to be included in the consolidated financial statements of affiliates in accordanceConsolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2020 are

INDEPENDENT AUDITORS’ REPORTDECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES(Appendix 1)

142

We understood and tested the effectiveness of information system related to the recognition ofcargo revenue.

We sampled the air waybills, confirmed that cargo rates were consistent with those stated in air
waybills, and verified the accuracy of cargo revenue.

2.

3.

-3-

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the Regulations Governing the Preparation of Financial Reports by
Securities Issuers, and International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China,
and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements

We have also audited the parent company only financial statements of China Airlines, Ltd. as ofand for the years ended December 31, 2020 and 2019 on which we have issued an unmodified
opinion.

As of December 31, 2020, total assets of these subsidiaries amounted to NT$11,694,612 thousand,representing 4.12% of the consolidated total assets. For the year ended December 31, 2020,
revenue from these subsidiaries amounted to NT$1,880,636 thousand, representing 1.63% of theconsolidated total revenue.

We did not audit the financial statements of some subsidiaries which were included in the
consolidated financial statements. Such financial statements were audited by other independent
auditors, and our audit opinion is based solely on the reports of other auditors.

Other Matter

We understood the internal controls related to the recognition of cargo revenue, including
manual and automatic control.

1.

Our main audit procedures performed included the following:

Cargo rates are highly affected by the supply and demand of the market and sales can only berecognized after relevant transportation services are provided. The input, processing andmaintenance of freight information on the air waybills involve manual operations. Therefore, we
identified the recognition of cargo revenue as a key audit matter.

In accordance with IFRS 15 “Revenue from Contracts with Customers”, cargo sales are accounted
for as cargo revenue after relevant transportation services have been provided. For the year ended
December 31, 2020, cargo revenue amounted to NT$81,692,574 thousand. Refer to Notes 4 and 27
to the accompanying consolidated financial statements for detailed information.

Recognition of Cargo Revenue

Key audit matter in the audit of the Group’s consolidated financial statements is stated below:

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

2.

3.
4.

6.

-4-

Obtain sufficient and appropriate audit evidence regarding the financial information of entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision, and performance of the groupaudit. We remain solely responsible for our audit opinion.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

1.

As part of an audit in accordance with the auditing standards generally accepted in the Republic ofChina, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditors’ report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with the auditing standards
generally accepted in the Republic of China will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Those charged with governance, including the audit committee and supervisors, are responsible foroverseeing the Group’s financial reporting process.

In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends toliquidate the Group or to cease operations, or has no realistic alternative but to do so.

143

Notice to Readers-5-

For the convenience of readers, the independent auditors’ report and the accompanying
consolidated financial statements have been translated into English from the original Chineseversion prepared and used in the Republic of China. If there is any conflict between the English
version and the original Chinese version or any difference in the interpretation of the two versions,the Chinese-language independent auditors’ report and consolidated financial statements shallprevail.

The accompanying consolidated financial statements are intended only to present the consolidated
financial position, financial performance and cash flows in accordance with accounting principles
and practices generally accepted in the Republic of China and not those of any other jurisdictions.
The standards, procedures and practices to audit such consolidated financial statements are thosegenerally applied in the Republic of China.

March 18, 2021

Deloitte & Touche
Taipei, Taiwan
Republic of China

The engagement partners on the audits resulting in this independent auditors’ report are Jui-Chan
Huang and Shiuh-Ran Cheng.

From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the consolidated financial statements for the year
ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our
auditors’ report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.

We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

Total equity attributable to owners of the Company

The accompanying notes are an integral part of the consolidated financial statements.

TOTAL

Total equity

NON-CONTROLLING INTERESTS (Note 26)

19
1
20
1
21
100

54,209,846
1,187,327(350,581)(350,581)
2,543,766(30,875)
57,559,483
3,152,090
60,711,573$ 284,194,084

79

223,482,511
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 20 and 26)
Share capital
Capital surplus
Retained earnings (accumulated deficit)
Legal reserve
Special reserve
Unappropriated retained earnings (accumulated deficit)
Total retained earnings (accumulated deficit)
Other equity
Treasury shares

57

160,832,796

22

62,649,715

Total liabilities

1
3
3
1
3
1
1
4
5
-

1,932,000
8,088,882
8,129,752
1,354,237
128,567
8,306,257
216,6022,525,957
3,569,360
164,800
11,982,859
15,234,374
1,016,068

Total non-current liabilities

$

78
100

11
4
27
1
5
5
4
-

-6-

222,321,616$ 284,194,084

1
50
21
1
2
3

22

61,872,468
163,746
311,596
1,970,802
141,481,694
59,861,537
2,074,798
1,076,351
6,028,200
9,352,892

10
2
3
4
3
-

%

$ 27,125,937
274,761
6,551,693
7,613,636
9,697,511
1,667
801,134
67,5498,788,105
89,296
861,179

2020
Amount32,455,333
10,300,000
77,288,330
1,761,104
14,369,486
87,181
1,023,084
13,279,792
9,737,741
530,745

NON-CURRENT LIABILITIES
Derivative financial liabilities for hedging - non-current (Notes 3, 4, 21 and 32)
Bonds payable - non-current (Notes 4, 20, 27 and 32)
Loans and debts - non-current (Notes 19, 32 and 35)
Contract liabilities - non-current (Notes 4 and 23)
Provisions - non-current (Notes 4 and 24)
Current tax liabilities - non-current (Notes 4 and 28)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 3, 4, and 21)
Accrued pension costs (Notes 4, 5 and 25)
Other non-current liabilities (Note 32)

Total current liabilities

CURRENT LIABILITIESShort-term debts (Note 19)
Short-term bills payable (Note 19)
Financial liabilities at fair value through profit or loss - current (Notes 4, 5, 7 and 32)
Financial liabilities for hedging - current (Notes 4, 21 and 32)
Notes and accounts payable (Note 32)
Accounts payable - related parties (Notes 32 and 33)
Other payables (Notes 22 and 32)
Current tax liabilities (Notes 4 and 28)
Lease liabilities - current (Notes 3, 4 and 21)
Contract liabilities - current (Note 23)
Provisions - current (Notes 4 and 24)
Bonds payable and put option of convertible bonds - current portion (Notes 4, 20, 27 and 32)
Loans and debts - current portion (Notes 19, 32 and 34)
Other current liabilities (Note 32)

LIABILITIES AND EQUITY

TOTAL

Total non-current assets

NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 8 and 32)
Financial assets at amortized cost (Notes 4 and 9)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 34)
Right-of-use assets (Notes 4, 21 and 34)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred income tax asset (Notes 4, 5 and 28)
Other assets - non-current (Notes 18, 21, 32 and 34)

Total current assets

CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 32)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 32)
Financial assets at amortized cost (Notes 9 and 32)
Financial assets for hedging - current (Notes 4 and 32)
Notes and accounts receivable, net (Notes 4, 10 and 32)
Notes and accounts receivable - related parties (Notes 32 and 33)
Other receivables (Notes 4 and 32)
Current tax assets (Notes 4 and 28)
Inventories, net (Notes 4 and 11)
Non-current assets held for sale (Notes 4, 5 and 12)
Other assets - current (Note 18)

ASSETSCONSOLIDATED BALANCE SHEETSDECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

60,132,117

3,578,345

56,553,772

466,416
12,967(1,777,225)(1,297,842)
1,196,233(43,372)

54,209,846
2,488,907

232,915,862

156,564,335

42,420,205
22,052,625
53,514,891
2,236,311
10,011,464
557,142
15,801,724
9,435,035
534,938

76,351,527

380,000
11,7498,618,506
1,495,606
542,015
13,187,972
374,178
2,340,873
21,060,773
360,393
10,000,000
14,148,892
3,830,570$ 293,047,979$$ 293,047,979

241,225,637

209,221
105,586
2,223,793
145,886,971
71,033,617
2,075,068
1,182,692
5,337,626
13,171,063

51,822,342$ 28,459,528
512,192
2,355,095
9,626
8,520,834
10,348774,206
54,6898,470,113
2,655,711

2019
Amount

100

21

1

20

-

19
1

79

53

15
8
18
1
3
5
3
-

26

3
1
5
1
7
3
5
1

100

82

1
50
24
1
2
4

18

10
1
3
3
1

%

144
%

2019
Amount%686,574(265,990)(3,057,963)(200,834)

NON-OPERATING INCOME AND LOSS
Other income (Notes 4, 8 and 27)
Other gains and losses (Notes 12, 14, 15, 27 and 31)
Finance costs (Notes 27 and 32)
Share of the profit of associates and joint ventures(Note 14)

-7-

(1)

(45,588)(399,150)
34,271
144,158(740,511)-(1)(279,814)

NET (LOSS) INCOME

-

-

(2)

2

7

(474,202)

373,983

INCOME TAX (BENEFIT) EXPENSE (Notes 4, 5
and 28)Other comprehensive gain for the year, net of income
tax
Items that will not be reclassified subsequently to
profit or loss:(Loss) gain on hedging instruments subject tobasis adjustment (Notes 4, 26 and 32)
Unrealized gain on investments in equity
instruments designated as at fair value throughother comprehensive income (Note 8)
Remeasurement of defined benefit plans (Notes 4
and 25)
Share of other comprehensive loss of associates
and joint ventures accounted for using theequity method (Notes 4 and 14)
Income tax relating to items that will not bereclassified subsequently to profit or loss
(Note 28)

(653,797)

PRETAX LOSS

(2,838,213)-

2,184,416

OPERATING PROFIT

Total non-operating income and loss

1
(3)

8,034,785

OPERATING EXPENSES (Notes 4, 25 and 27)

910,219,201

GROSS PROFIT

91

100

105,031,349$ 115,250,550

COSTS (Notes 4, 9, 11, 17, 24, 25, 27 and 34)

REVENUE (Notes 4, 27 and 34)

-

-

-

-

-

-

-

(2)

-

(2)

2

8

10

90

100

145,166(607,042)(Continued)(32,102)(781,793)

79,392(17,705)(675,002)(578,185)(96,817)(2,762,638)

332,305

718,988(473,812)(3,340,119)

2,665,821

14,021,107

16,686,928

151,757,232$ 168,444,160

0.03
0.03

584,258$$$

966,968(382,710)$(279,814)

140,000(419,814)

584,258

864,072(400,801)
1,604,583

2,103,332(97,948)

-

1

1
-

-

-

1

1

2

2

%

-8-

The accompanying notes are an integral part of the consolidated financial statements.

EARNINGS PER SHARE (NEW TAIWANDOLLARS; Note 29)
Basic
DilutedTOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owner of the Company
Non-controlling interests$

NET INCOME (LOSS) ATTRIBUTABLE TO:
Owner of the Company
Non-controlling interests

$

$

$

TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR

Other comprehensive gain (loss) for the year,
net of income tax

Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of thefinancial statements of foreign operations(Notes 4 and 26)
Gain on hedging instruments not subject to basis
adjustment (Notes 4, 26 and 32)
Income tax relating to items that may bereclassified subsequently to profit or loss
(Note 28)

2020
AmountCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2020
AmountCHINA AIRLINES, LTD. AND SUBSIDIARIESCHINA AIRLINES, LTD. AND SUBSIDIARIES

$

$

$

$

$

$

$
$

-

-

-

-

-

-

-

-

(1)
1

%

(Concluded)(0.22)(0.22)(212,244)(647,085)
434,841(675,002)(1,199,798)
524,796(212,244)

462,758(268,871)
1,069,800

1,411,623(72,952)

2019
Amount-Changes in capital surplus from dividends distributed to subsidiaries

Actual disposal of interests in subsidiaries

Net profit (loss) for the year ended December 31, 2019

Other comprehensive income (loss) for the year ended December 31, 2019
net of income tax

Total comprehensive income (loss) for the year ended December 31, 2019

Cash dividends from subsidiaries paid to non-controlling interests

Non-controlling interests arising from acquisition of subsidiaries

Loss of control of subsidiaries-

Basis adjustments to gain on hedging instruments

Appropriation of 2019 earnings
Legal reserve
Special reserve
Capital surplus used to cover accumulated deficit

Net profit (loss) for the year ended December 31, 2020

Other comprehensive income (loss) for the year ended December 31, 2020,
net of income tax

Total comprehensive income (loss) for the year ended December 31, 2020

Disposal of treasury shares

Cash dividends from subsidiaries paid to non-controlling interests

The accompanying notes are an integral part of the consolidated financial statements.

$ 54,209,846-

Changes in percentage of ownership interests in subsidiaries

BALANCE AT DECEMBER 31, 2020-

Issuance of employee share options by subsidiaries

54,209,846-

BALANCE AT DECEMBER 31, 2019-

Appropriation of 2018 earnings
Legal reserve
Special reserve
Cash dividends - $0.20960737 per share$ 54,209,846

Share Capital

Basis adjustment to loss on hedging instruments

BALANCE AT JANUARY 1, 2019

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

145

$

$

1,187,327-(3,909)---(1,297,843)

-

-

172

2,488,907

-

-

-

-

-

-

1,247,087

606

-

-

1,241,214

Capital Surplus

$

$

-

-

-

-

-

-

(466,416)
-

-

-

-

466,416

-

-

-

-

-

-

-

-

114,493--351,923

Legal Reserve

$

$

-

-

-

-

-

-

(12,967)
-

-

-

-

12,967

-

-

-

-

-

-

-

-

(105,843)--

118,810Special Reserve

Retained Earnings$$(350,581)-(1,734)(179,576)(319,576)

140,000

466,416
12,967
1,297,843-(169,272)-(1,777,225)

-

-

-

(1,777,225)(577,427)(1,199,798)--(114,493)
105,843(1,136,278)-

1,144,928

UnappropriatedEarnings(Accumulated
Deficit)$$(134,252)--(79,545)(79,545)

-

-

-

-

-

(54,707)

8,368

-

-

(53,411)(53,411)

-

-

-

-

-

(9,664)

Exchange
Differences on
Translation of the
Financial
Statements ofForeign$$

71,359--(35,903)(35,903)

-

-

-

-

-

107,262105--

64,53864,538

-

-

-

-

-

42,619Other Equity
Unrealized Gainon Financial
Asset at Fair
Value Through
Other
Comprehensive
IncomeEquity Attributable to Owners of the Company$$

2,606,659--

1,261,992

1,261,992--

200,989--

1,143,678---

1,119,013

1,119,013

-

-

-

-

(603)

25,268Gain (Loss) on
Hedging
Instruments$$(30,875)-

12,497

-

-

-

-

-

-

-

(43,372)

-

-

-

-

-

-

-

-

-

-

(43,372)

Treasury Shares
Held by
Subsidiaries$ 57,559,483

-

6,854

966,968

826,968

140,000-

200,989(169,272)

172

56,553,772

8,473

-

-

(647,085)

552,713(1,199,798)

1,247,087

606(1,136,278)(603)$ 57,081,572

Total

$

$

3,152,090(375,024)-(382,710)

37,104(419,814)--

331,42752

3,578,345(24,957)(416,438)

611,841

434,841(89,955)

524,796

7,546

-

-

-

2,965,512

Non-Controlling
Interests

Total Equity$ 60,711,573(375,024)

6,854

584,258

864,072(279,814)-

200,989

162,155

224

60,132,117(16,484)(416,438)

611,841(212,244)

462,758(675,002)

1,254,633

606(1,136,278)(603)$ 60,047,084

146
$

$

2019

- 10 -

CASH FLOWS FROM OPERATING ACTIVITIESLoss before income tax
Adjustments for operating activities:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities held
for trading
Interest income
Dividend income
Share of loss (profit) of associates and joint ventures
Gain on disposal of property, plant and equipment
Gain on disposal of investments accounted for using the equity
methodLoss on disposal of non-current assets held for saleImpairment loss recognized on property, plant, equipment
Loss on inventories and property, plant and equipment
Net gain on foreign currency exchange
Compensation costs of employee share options
Finance costs
Impairment loss of investments accounted for using the equity
methodRecognition of provisions
Amortization of unrealized sale-leasebacks
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
Financial liabilities mandatorily classified as at fair value throughprofit or loss
Notes and accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Notes and accounts payable
Accounts payable - related parties
Other payables
Contract liabilities
Provisions
Other current liabilities
Accrued pension liabilities
Other liabilities
Cash generated from operations
Interest received
32,601,400
198,237
24,096(27,580)(417,446)(21,422)(332,305)(32,460)(7,656)
10,462572,026(59,987)
3,340,119
4,608,924
103,775(1,484)(278,741)
11,5281,564,298
66,538(49,138)(118,317)
548,156(14,326)(224,931)(832,288)
1,847,286(2,799,314)
202,815(149,678)(5,155)40,230,615
401,190(Continued)(2,287)(282,506)(23,043)
200,834(13,347)
424,573471,507(1,338,716)
224
3,057,963
46,757
6,075,077(2,435)
241,592(11,749)(1,073,959)
593,365(85,263)(83,341)
1,830,887(628,780)(1,043,501)(4,295,509)(17,966,621)(1,308,170)(2,620,022)(97,570)(17,082)
12,774,159
304,642(96,817)

31,167,247
206,936
4,895(653,797)- 11 -Net cash generated from (used in) financing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term debts
Increase in short-term bill payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term debts
Repayments of long-term debts
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refunds of guarantee deposits received
Proceeds from sale - leasebacks
Dividends paid to owners of the Company
Issuance of ordinary shares of subsidiaries
Cash dividends paid to non-controlling interests
Proceeds from disposal of treasury shares

Net cash used in investing activities

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of financial assets at amortized cost
Disposal of financial assets at amortized cost
Payments to acquire financial assets for hedging
Disposal of financial assets for hedging
Proceeds from disposal of non-current assets held for sale
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in prepayments for equipment(Increase) decrease in computer software costs
Decrease in restricted assets
Proceeds from disposal of associates accounted for using the equity
methodProceeds from acquisition of joint ventures accounted for using theequity method
Net cash outflow on disposal of subsidiaries (Note 31)

Net cash generated from operating activities

Dividends received
Interest paid
Income tax paid

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)
2020

CHINA AIRLINES, LTD. AND SUBSIDIARIESCHINA AIRLINES, LTD. AND SUBSIDIARIES$

13,869,177

1,552,000
8,088,882(9,850,000)
45,605,919(20,746,998)(10,583,872)
165,404(156,143)
162,155(375,024)6,854(17,614,558)(Continued)

380,000
3,500,000(4,445,900)
9,078,690(17,819,750)(11,692,310)
180,360(149,198)
4,905,660(1,135,672)(416,438)-(16,053,122)(35,525)(17,413)(25,048,173)

1,866,474-

37,526,612

355,311(3,124,960)(335,544)(2,089,871)
3,447,202
35,692(3,316,078)
71,194(440,443)
218,547(15,658,898)(172,639)
38,636$2019(6,235,773)
1,934,516(10,269,055)
2,363,897(1,237,515)
45,620(63,005)
122,324(11,407,502)(130,461)(171,219)

9,723,475

32,433(3,209,074)(178,685)

2020

147

$ 27,125,937- 12 -

The accompanying notes are an integral part of the consolidated financial statements.

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

28,459,528

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

121,930(1,333,591)$

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

24,937,537

3,521,991(336,941)(Concluded)$ 28,459,528

$

2019

- 13 -The Company applied the amendment from January 1, 2020. Because the abovementioned rent
concessions affect only in 2020, retrospective application of the amendment has no impact on theretained earnings as of January 1, 2020.

The Company elected to apply the practical expedient provided in the amendment to IFRS 16 withrespect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The
related accounting policies are stated in Note 4. Prior to the application of the amendment, theCompany shall determine whether or not the abovementioned rent concessions need to be accounted for
as lease modifications.

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC
did not have material impact on the Group’s accounting policies:a. Initial application of the amendments to the International Financial Reporting Standards (IFRS),International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)(collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission(FSC)

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

The consolidated financial statements of the Company and its subsidiaries (collectively referred to as the“Group”) were approved by the Company’s board of directors on March 18, 2021.

2. APPROVAL OF FINANCIAL STATEMENTS

The major shareholders of the Company are China Aviation Development Foundation (CADF) andNational Development Fund (NDF), Executive Yuan. As of December 31, 2020 and 2019, CADF and NDF
jointly held 44.03% of the Company’s shares.

China Airlines, Ltd. (the “Company”) was founded in 1959 and its shares have been listed on the Taiwan
Stock Exchange since February 26, 1993. The Company primarily provides air transport services forpassengers and cargo. Its other operations include (a) mail services; (b) ground services and routine aircraft
maintenance; (c) major maintenance of flight equipment; (d) communications and data processing services
to other airlines; (e) the sale of aircraft parts, equipment and the entire aircraft; and (f) leasing of aircraft.

1. GENERAL INFORMATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)
2020

CHINA AIRLINES, LTD. AND SUBSIDIARIESCHINA AIRLINES, LTD. AND SUBSIDIARIES

148
Effective Date
Announced by IASB

January 1, 2022 (Note 5)

January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)

January 1, 2023
January 1, 2023
January 1, 2023

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB

- 14 -

Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its
obligations on January 1, 2022.

Note 4: The amendments are applicable to property, plant and equipment that are brought to thelocation and condition necessary for them to be capable of operating in the manner intended
by management on or after January 1, 2021.

Note 3: The amendments are applicable to business combinations for which the acquisition date is on
or after the beginning of the annual reporting period beginning on or after January 1, 2022.

Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges offinancial liabilities that occur on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively tothe fair value measurements on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied
retrospectively for annual reporting periods beginning on or after January 1, 2022.

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods
beginning on or after their respective effective dates.

“Annual Improvements to IFRS Standards 2018-2020”
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling aContract”

New IFRSs

Effective Date
Announced by IASB (Note 1)

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact that the application of other standards and interpretations
will have on the Group’s financial position and financial performance and will disclose the relevant
impact when the assessment is completed.

Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon
Applying IFRS 9”
promulgation by the IASB
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
January 1, 2021
“Interest Rate Benchmark Reform - Phase 2”

New IFRSs

b. The IFRSs endorsed by the FSC for application starting from 2021

- 15 -

b. Liabilities due to be settled within 12 months after the reporting period, even if an agreement torefinance, or to reschedule payments, on a long-term basis is completed after the reporting period andbefore the consolidated financial statements are authorized for issue; anda. Liabilities held primarily for the purpose of trading;Current liabilities include:c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period.

b. Assets expected to be realized within 12 months after the reporting period; anda. Assets held primarily for the purpose of trading;Current assets include:

Current and Non-current Assets and Liabilitiesc. Level 3 inputs are unobservable inputs for an asset or liability.

b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); anda. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:

The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments which are measured at fair value.

Basis of Preparation

The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by
the FSC.

Statement of Compliance

4. SIGNIFICANT ACCOUNTING POLICIESThe application of new IFRSs in issue but not yet endorsed and issued into effect by the FSC would nothave any material impact on the Group’s accounting policies. As of the date the consolidated financial
statements were authorized for issue, the Group is continuously assessing the possible impact that theapplication of other standards and interpretations will have on the Group’s financial position andfinancial performance and will disclose the relevant impact when the assessment is completed.

Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting
policies that occur on or after the beginning of the annual reporting period beginning on orafter January 1, 2023.

Note 6: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.

149- 16 -

b. Exchange differences on transactions entered into in order to hedge certain foreign currency risks.

a. Exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an adjustment
to interest costs on those foreign currency borrowings;

Exchange differences on monetary items arising from settlement or translation are recognized in profit orloss in the period in which they arise except for:In preparing the consolidated financial statements of the Group, transactions in currencies other than the
Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at
the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured athistorical cost in a foreign currency are not retranslated. Non-monetary items measured at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value wasdetermined.

Foreign Currencies

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and any
investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the
assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary attheir carrying amounts at the date when control is lost. The Group accounts for all amounts recognized inother comprehensive income in relation to that subsidiary on the same basis as would be required had theGroup directly disposed of the related assets or liabilities.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of theGroup and the non-controlling interests are adjusted to reflect the changes in their relative interests in thesubsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and thefair value of the consideration paid or received is recognized directly in equity and attributed to the ownersof the Company.

The consolidated financial statements incorporate the financial statements of the Company and the entities
controlled by the Company. Income and expenses of subsidiaries acquired or disposed of during the period
are included in the consolidated statements of profit or loss and other comprehensive income from theeffective dates of acquisitions up to the effective dates of disposals, as appropriate. When necessary,adjustments are made to the financial statements of subsidiaries to bring their accounting policies into linewith those used by the Company. All intra-group transactions, balances, income and expenses are
eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to theowners of the Company and to the non-controlling interests even if this results in the non-controllinginterests having a deficit balance.

Basis of Consolidation

Assets and liabilities that are not classified as current are classified as non-current.

c. Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12
months after the reporting period. Terms of a liability that could, at the option of the counterparty, resultin its settlement by the issue of equity instruments do not affect its classification.

- 17 -

Non-current assets classified as held-for-sale are measured at the lower of their previous carrying amountand fair value less costs to sell. Recognition of depreciation of those assets would cease.

Non-current assets are classified as held-for-sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the non-current asset is available for immediate sale in its present condition.
To meet the criteria for the sale being highly probable, the appropriate level of management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one
year from the date of classification.

Non-current Assets Held for Sale

Inventories are primarily expendable and nonexpendable parts and materials, supplies used in operations
and items for in-flight sales and are stated at the lower of cost or net realizable value. The costs ofinventories sold or consumed are determined using the weighted-average method.

Inventories

If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the combination occurs, the Group reports provisional amounts for the items for which theaccounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement
period, or additional assets or liabilities are recognized, to reflect new information obtained about facts andcircumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognized as of that date.

When a business combination is achieved in stages, the Group’s previously held equity interest in an
acquiree is remeasured to fair value at the acquisition date, and the resulting is recognized in profit or lossor other comprehensive income. Amounts arising from interests in the acquiree prior to the acquisition datethat have previously been recognized in other comprehensive income are recognized on the same basis as
would be required if those interests were directly disposed of by the Group

Where the consideration the Group transfers in a business combination includes assets or liabilities
resulting from a contingent consideration arrangement, the contingent consideration is measured at its
acquisition-date fair value and considered as part of the consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gains on
bargain purchases. Measurement period adjustments are adjustments that arise from additional information
obtained during the measurement period about facts and circumstances that existed as of the acquisition
date.

Business Combinations

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect ofthat operation attributable to the owners of the Company are reclassified to profit or loss.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of eachreporting period. Income and expense items are translated at the average exchange rates for the period.
Exchange differences are recognized in other comprehensive income (attributed to the owners of theCompany and non-controlling interests as appropriate).

Exchange differences arising on the retranslation of non-monetary items are included in profit or loss forthe period except for exchange differences arising from the retranslation of non-monetary items in respectof which gains and losses are recognized directly in other comprehensive income, in which case, theexchange differences are also recognized directly in other comprehensive income.

150- 18 -The Group discontinues the use of the equity method from the date on which its investment ceases to be an
associate and a joint venture. Any retained investment is measured at fair value at that date and the fairvalue is regarded as its fair value on initial recognition as a financial asset. The difference between theprevious carrying amount of the associate and the joint venture attributable to the retained interest and its
fair value is included in the determination of the gain or loss on disposal of the associate and the joint
venture. The Group accounts for all amounts previously recognized in other comprehensive income inrelation to that associate and the joint venture on the same basis as would be required had that associate
directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment
in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group
continues to apply the equity method and does not remeasure the retained interest.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset
by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deductedfrom the carrying amount of the investment. Any reversal of that impairment loss is recognized to theextent that the recoverable amount of the investment subsequently increases.

When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in thatassociate and joint venture (which includes any carrying amount of the investment accounted for using theequity method and long-term interests that, in substance, form part of the Group’s net investment in theassociate and joint venture), the Group discontinues recognizing its share of further losses. Additional
losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, orconstructive obligations, or made payments on behalf of that associate and joint venture.

When the Group subscribes for additional new shares of an associate and joint venture at a percentage
different from its existing ownership percentage, the resulting carrying amount of the investment differsfrom the amount of the Group’s proportionate interest in the associate and joint venture. The Group records
such a difference as an adjustment to investments with the corresponding amount charged or credited tocapital surplus - changes in the Group’s share of equity of associates and joint ventures. If the Group’s
ownership interest is reduced due to the subscription of additional new shares of the associate and joint
venture, the proportionate amount of the gains or losses previously recognized in other comprehensive
income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as
would be required had the investee directly disposed of the related assets or liabilities. When the adjustment
should be debited to capital surplus, but the capital surplus recognized from investments accounted forusing the equity method is insufficient, the shortage is debited to retained earnings.

Any excess of the cost of acquisition over the Group’s share of net fair value of the identifiable assets andliabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included
within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of net
fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, isrecognized immediately in profit or loss.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost andadjusted thereafter to recognize the Group’s share of profit or loss and other comprehensive income of theassociate and joint venture. The Group also recognizes the changes in the Group’s share of equity of
associates and joint venture attributable to the Group.

- 19 -

Intangible assets with finite useful lives that are acquired separately are initially measured at cost andsubsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, andamortization methods are reviewed at the end of each reporting period, with the effects of any changes inthe estimates being accounted for on a prospective basis. The residual value of an intangible asset with afinite useful life shall be assumed zero unless the Group expects to dispose of the intangible asset before theend of its economic life.

Intangible Assets

Any gain or loss arising on the derecognition of investment properties is calculated as the difference
between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss inthe period in which the property is derecognized.

Depreciation is recognized using the straight-line method. The estimated useful lives and residual values arereviewed at the end of each reporting period.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initialrecognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss.

Investment properties are properties held to earn rentals or for capital appreciation. Investment properties
also include land held for a currently undetermined future use.

Investment Properties

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and isrecognized in profit or loss.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets. Assets are depreciated over the shorter of the lease term and their useful lives using the straight-line
method.

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately.
The estimated useful lives, residual values and depreciation methods are reviewed at the end of eachreporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

Freehold land is not depreciated.

Property, plant and equipment are tangible items that are held for use in the production or supply of goods
or services, for rental to others, or for administrative purposes and are expected to be used for more than
one period. The cost of an item of property, plant and equipment shall be recognized as an asset if, and only
if, it is probable that future economic benefits associated with the item will flow to the Group and the costof the item can be measured reliably. Property, plant and equipment are stated at cost less recognizedaccumulated depreciation and recognized accumulated impairment loss.

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor
an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties
that have joint control of the arrangement and the rights to the net assets of the arrangement.

The Group uses the equity method to account for its investments in associates and joint ventures.

Property, Plant and Equipment

Investments in Associates and Joint Ventures

151

The financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; and- 20 -- 21 -The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables and otherreceivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has
been a significant increase in credit risk since initial recognition. If, on the other hand, the credit
risk on a financial instrument has not increased significantly since initial recognition, the Groupmeasures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

a) Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified
or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include
investments in equity instruments which are not designated as at FVTOCI and debt instrumentsthat do not meet the amortized cost criteria or the FVTOCI criteria.

The Group recognizes a loss allowance for expected credit losses on financial assets at amortizedcost (including trade receivables), as well as contract assets.

2) Impairment of financial assets

Dividends on these investments in equity instruments are recognized in profit or loss when theGroup’s right to receive the dividends is established, unless the dividends clearly represent a
recovery of part of the cost of an investment.

Investments in equity instruments at FVTOCI are subsequently measured at fair value withgains and losses arising from changes in fair value recognized in other comprehensive income
and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit orloss on disposal of the equity investments; instead, they will be transferred to retained earnings.

On initial recognition, the Group may make an irrevocable election to designate investments inequity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if an equity
investment is held for trading or if it is contingent consideration recognized by an acquirer in abusiness combination.

c) Investments in equity instruments at FVTOCI

Cash equivalents include time deposits with original maturities within 3 months from the date ofacquisition, which are highly liquid, readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. These cash equivalents are held for the
purpose of meeting short-term cash commitments.

Interest income is calculated by applying the effective interest rate to the gross carrying amountof a financial asset.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash
equivalents, trade receivables, other receivables and other financial assets, are measured atamortized cost, which equals the gross carrying amount determined using the effective interest
method less any impairment loss. Exchange differences are recognized in profit or loss.

ii. The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

i.

Financial assets that meet the following conditions are subsequently measured at amortized
cost:b) Financial assets at amortized cost

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses
arising on remeasurement recognized in profit or loss. Fair value is determined in the manner
described in Note 33.

Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.

1) Measurement category

All regular purchases or sales of financial assets are recognized and derecognized on a trade date basis.
All regular purchases or sales of financial assets are buy or sell of financial assets in the period set byregulation or market convention.

a. Financial assets

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issuance of financial assets and financial liabilities (other thanfinancial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of thefinancial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instruments.

Financial Instruments

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amountthat would have been determined had no impairment loss been recognized for the asset or cash-generating
unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the Group uses the estimated cash flows discounted by the future pre-tax discount rate, and thediscount rate reflects the current market time value of money and the specific risks to the asset for estimatedfuture cash flows not yet adjusting to the market.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible
assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order todetermine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which theasset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable andconsistent basis; otherwise, corporate assets are allocated to the smallest group of cash-generating units on areasonable and consistent allocation basis.

Impairment of Tangible and Intangible Assets Other Than Goodwill

152- 22 -

The component parts of compound instruments (i.e. convertible bonds) issued by the Company areclassified separately as financial liabilities and equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equity instrument.

d. Convertible bonds

The difference between the carrying amount of a financial liability derecognized and theconsideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss.

2) Derecognition of financial liabilities

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized costusing the effective interest method.

1) Subsequent measurementc. Financial liabilities

Repurchase of the Group’s own equity instruments is recognized in and deducted directly from equity.
No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of theCompany’s own equity instruments.

Equity instruments issued by the entity in the Group are recognized at the proceeds received, net of
direct issue costs.

Debt and equity instruments issued by the entity in the Group are classified as either financial liabilities
or as equity in accordance with the substance of the contractual arrangements and the definitions of afinancial liability and an equity instrument.

b. Equity instruments

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognized in other comprehensive income is recognized in profit or loss.

The Group derecognizes a financial asset only when the contractual rights to the cash flows fromthe asset expire or when it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another party.

3) Derecognition of financial assets

The impairment loss of all financial assets is recognized in profit or loss by a reduction in theircarrying amounts through a loss allowance account, except for investments in debt instruments thatare measured at FVTOCI, for which the loss allowance is recognized in other comprehensive
income and the carrying amounts of such financial assets are not reduced.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a
default occurring as the weights. Lifetime ECL represents the expected credit losses that will result
from all possible default events over the expected life of a financial instrument. In contrast,
12-month ECL represents the portion of lifetime ECL that is expected to result from default eventson a financial instrument that are possible within 12 months after the reporting date.

- 23 -

The associated gains or losses that were recognized in other comprehensive income are reclassified fromequity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in thesame period as when the hedged item affects profit or loss. If a hedge of a forecasted transaction
subsequently results in the recognition of a non-financial asset or a non-financial liability, the associatedgains and losses that were recognized in other comprehensive income are removed from equity and areincluded in the initial cost of the non-financial asset or non-financial liability.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion isrecognized immediately in profit or loss.

The Group enters into some derivative transactions that aim to manage interest rates, foreign exchange
rates, fuel prices, and other factors affecting gains or losses on assets and liabilities. The hedging
transactions are defined as cash flow hedges. When entering into hedging transactions, the Group has
prepared official documents that describe the hedging relationship between hedging instruments and items
which have been hedged, the objective of risk management, the hedging strategy, and the way to evaluate
the effectiveness of the hedging instrument.

Hedge Accounting

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into andare subsequently remeasured to their fair value at the end of each reporting period. The resulting gain orloss is recognized in profit or loss immediately unless the derivative is designated and effective as ahedging instrument, in which event, the timing of the recognition in profit or loss depends on the natureof the hedging relationship. When the fair value of a derivative financial instrument is positive, thederivative is recognized as a financial asset; when the fair value of a derivative financial instrument isnegative, the derivative is recognized as a financial liability.

The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate, foreign exchange rate and fuel price risks, including foreign exchange forward contracts, interest
rate swaps, currency options swaps and fuel swaps.

e. Derivative financial instruments

Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to theequity component are recognized directly in equity. Transaction costs relating to the liability component
are included in the carrying amount of the liability component.

The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and includedin equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion
option classified as equity will remain in equity until the conversion option is exercised, in which case,the balance recognized in equity will be transferred to capital surplus - share premiums. When theconversion option remains unexercised at maturity, the balance recognized in equity will be transferred
to capital surplus - share premiums.

On initial recognition, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recorded as a liability on anamortized cost basis using the effective interest method until extinguished upon conversion or the
instrument’s maturity date. Any embedded derivative liability is measured at fair value.

153

Aircraft lease contracts

Identifying the contract with the customer;
Identifying the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; andRecognize revenue when the Group satisfies a performance obligation.

- 24 -

Right-of-use assets are initially measured at cost, which comprises the initial measurement of leaseliabilities adjusted for lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives
received. Right-of-use assets are subsequently measured at cost less accumulated depreciation andimpairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets arepresented on a separate line in the consolidated balance sheets.

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of alease, except for short-term leases and low-value asset leases accounted for applying a recognition
exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

The Group as lessee

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

Leasing

Passenger and cargo revenue are recognized as revenue when the passengers and goods are actually carried.
When the tickets are sold, due to the fact that the fulfillment obligations of the shipment have not been met,
the relevant amount of revenue is first recorded as contract liabilities until passengers actually board.

Shipping service revenue







When applying IFRS 15 during 2018, the Group recognizes revenue by applying the following steps:

Revenue Recognition

When an aircraft lease contracts expires and the leased item will be returned to the lessor, the Group willassess if there are existing obligations exist and if it is required to recognize a provision when signing thelease contract.

- 25 -Net defined benefit liabilities (assets) represent the actual deficit in the Group’s defined benefit plans.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined
contribution retirement benefit plan are determined using the projected unit credit method. Service cost(including current service cost and past service cost) and net interest on the net defined benefit
liabilities (assets) are recognized as employee benefits expense in the period in which they occur.
Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest),
is recognized in other comprehensive income in the period in which it occurs. Remeasurement
recognized in other comprehensive income is reflected immediately in retained earnings and will not bereclassified to profit or loss.

Payments to the defined contribution retirement benefit plan are recognized as expenses whenemployees have rendered services entitling them to the contributions.

b. Retirement benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related services.

a. Short-term employee benefits

Employee Benefits

For sale and leaseback transactions, if the transfer of an asset satisfies the requirements of IFRS 15 to beaccounted for as a sale, the Group recognizes only the amount of any gain or loss which relates to the rights
transferred to the buyer-lessor, and adjusts the off-market terms to measure the sale proceeds at fair value.
If the transfer does not satisfy the requirements of IFRS 15 to be accounted for as a sale, it is accounted for
as a financing transaction.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, withinterest expense recognized over the lease terms. When there is a change in a lease term, a change in theamounts expected to be payable under a residual value guarantee, a change in the assessment of an option topurchase an underlying asset, or a change in future lease payments resulting from a change in an index or arate used to determine those payments, the Group remeasures the lease liabilities with a corresponding
adjustment to the right-of-use-assets. Lease liabilities are presented on a separate line in the consolidatedbalance sheets.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present
obligation, taking into account the risks and uncertainties surrounding the obligation as of the balance sheet
date. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows.

Provisions

The Group recognizes provisions when the Group has a present obligation (legal or constructive) arisingfrom past events (legal or constructive obligation), payment for the obligation is probable, and theexpenditure for settling the obligation can be estimated reliably.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to theearlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if
leases transfer ownership of the underlying assets to the Group by the end of the lease terms or if the costsof right-of-use assets reflect that the Group will exercise a purchase option, the Group depreciates theright-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.
Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed
payments, in-substance fixed payments, variable lease payments which depend on an index or a rate,
residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to
exercise that option, and payments of penalties for terminating a lease if the lease term reflects suchtermination, less any lease incentives payable. The lease payments are discounted using the interest rate
implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, theGroup uses the lessee’s incremental borrowing rate.

Starting from 2018, the Group discontinues hedge accounting only when the hedging relationship ceases tomeet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or
exercised. The cumulative gain or loss on the hedging instrument that has been previously recognized inother comprehensive income from the period in which the hedge was effective remains separately in equity
until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, thegain or loss accumulated in equity is recognized immediately in profit or loss.

154- 26 -

The fair value determined at the grant date of the equity-settled share-based payments is expensed on astraight-line basis over the vesting period, based on the Group’s estimate of equity instrument that will
eventually vest, with a corresponding increase in capital surplus - employee share options. The fair value
determined at the grant date of the equity-settled share-based payments is recognized as an expense in fullat the grant date when the granted share options are vested immediately.

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments
at the grant date.

Share-based Payment Arrangements

The Company has a “Dynasty Flyer Program” through which program members can convert accumulated
mileage to a cabin upgrade, free tickets and other member rewards and operates a “Tigerclub Member
Privilege Program” to provide members with accumulated ticket reward bonuses, which can be used tooffset the payments for airfare, luggage fees, priority check-ins, and ordering of meals in flight cabins. A
portion of passenger revenue attributable to the rewards for the frequent flyer program is deferred. The
Company should recognizes this deferred revenue as revenue only when the Company has fulfilled its
obligations on the granting of rewards or when the period for converting the mileage to rewards has
expired.

Frequent Flyer Programs

The benefit of a government loan received at a below-market rate of interest is treated as a government
grant measured as the difference between the proceeds received and the fair value of the loan based onprevailing market interest rates.

Government grants that are receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Group with no future related costs are recognized in
profit or loss in the period in which they are received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which theGroup recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants are not recognized until there is reasonable assurance that the Group will comply withthe conditions attached to them and that the grants will be received.

Government Grants

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period
in which they are incurred.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.

Income tax expense represents the sum of the current tax and deferred tax.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets(assets which are substantially ready for their intended use or sale through a fairly long period) are added tothe cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

- 27 -

Current and deferred taxes are recognized in profit or loss, except when they relate to items that arerecognized in other comprehensive income or directly in equity, in which case, the current and deferredtaxes are also recognized in other comprehensive income or directly in equity, respectively.

c. Current and deferred taxes for the year

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period inwhich the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that havebeen enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which theGroup expects, at the end of the reporting period, to recover or settle the carrying amount of its assets
and liabilities.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all orpart of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at theend of each reporting period and recognized to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates and interests in joint ventures, except where the Group is able to control thereversal of the temporary difference and it is probable that the temporary difference will not reverse in
the foreseeable future. Deferred tax assets arising from deductible temporary differences associatedwith such investments and interests are only recognized to the extent that it is probable that there will be
sufficient taxable profit against which to utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.

Deferred tax is recognized on temporary differences between the carrying amounts of assets andliabilities in the consolidated financial statements and the corresponding tax bases used in thecomputation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary
differences. Deferred tax assets are generally recognized for all deductible temporary differences,
unused loss carryforwards and unused tax credits for purchases of machinery, equipment andtechnology, research and development expenditures, and personnel training expenditures to the extent
that it is probable that taxable profit will be available against which those deductible temporary
differences can be utilized.

b. Deferred tax

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided foras income tax in the year the shareholders approve the retention of these earnings.

The current tax liabilities are based on current taxable profit. Since part of the income and expenses aretaxable or deductible in other periods, or in accordance with the relevant tax laws are taxable ordeductible, current taxable profit differs from net profit reported in the consolidated statements ofcomprehensive income. The Group’s current tax liabilities are calculated by the tax rate was legislated
or substantially legislated at the balance sheet date.

a. Current tax

Taxation

Borrowing Costs

155- 28 -Cash on hand and revolving funds
Checking accounts and demand deposits
Cash equivalents
Time deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

6. CASH AND CASH EQUIVALENTS$ 28,459,528

483,951
7,206,938$ 27,125,937

$

2019

16,565,821
4,202,818

333,677
17,690,186

December 31

6,980,493
2,121,581$

2020

The present value of defined benefit obligations at the end of the reporting period is calculated using
actuarial assumptions. Those assumptions, which are based on management’s judgments and estimates,
comprise the discount rate and expected return on plan assets. Changes in actuarial assumptions may have amaterial impact on the amount of defined benefit obligations.

Defined Benefit Obligations

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of thereporting period that have a significant risk causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.

Key Sources of Estimation Uncertainty

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised if the revisions affect only that
period or in the period of the revisions and future periods if the revisions affect both current and future
periods.

In the application of the Group’s accounting policies as disclosed in Note 4, management is required tomake judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered relevant. Actual results may differ from these estimates.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY

The overhaul costs of an owned or leased aircraft that meet the criteria for fixed asset capitalization are
capitalized as replacements for aircraft and engines and are depreciated on a straight-line basis over the
expected annual overhaul cycle.

Routine maintenance costs are recognized in profit or loss in the period in which they are incurred.

Maintenance and Overhaul Costs

0%-1.9%0.24%-2.20%
0.22%-0.55%

2019

0%-1.9%0.59%-3.55%
0.47%-0.7%

December 31

2021.1.4-2021.11.1

Financial assets for hedging - current

Subject$ (372,632)

Recognized in
Other
Comprehensive
Income (Loss)$ 7,613,636

CarryingValue- 29 -

Derivative financial instruments (not under hedge accounting) Foreign exchange forward contracts

Financial liabilities - current

Financial assets mandatorily classified at FVTPL
Derivative financial instruments (not under hedge accounting)Foreign exchange forward contracts
Non-derivative financial assets
Beneficiary certificates

Financial assets - current

$

-

$

11,749$ 512,192

434$ 274,761$

2019

511,758-

December 31

274,761$2020

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)The amount of hedging instrument settlements recognized as prepayments for equipment in 2020 was$81,111 thousand.

For the year ended December 31, 2020

Impact on comprehensive income (loss)

December 31, 2020

Maturity Date

The Group designated some deposits denominated in USD and repurchase agreements collateralized bybonds as hedging instruments to avoid exchange rate fluctuations on final payments of aircraft orders andprepayments for equipment, and applied cash flow hedge accounting to hedge its foreign exchange
exposure. The contract information is as follows:

Bank balanceTime deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

2020

The market rate intervals of cash in banks and cash equivalents at the end of the reporting period were as
follows:

156

NTD/USD

2020.01.15-2020.07.31

Maturity Date

26,865$ 209,221

29,704$ 163,746

2019$ 182,356

December 31$ 134,042

2020

NTD570,571/USD19,000$

311,5962019$

105,586$ 2,355,095

December 31$ 6,551,693

2020- 30 -The interest rates for time deposits with original maturities of more than 3 months were 0.21%-1.90% and0.60%-1.30% as of December 31, 2020 and 2019, respectively.

Time deposits with original maturities of more than 1 year

Non-current

Time deposits with original maturities of more than 3 months

Current

9. FINANCIAL ASSETS AT AMORTIZED COST

These investments in equity instruments are not held for trading. Instead, they are held for medium- tolong-term strategic purposes. Accordingly, the management elected to designate these investments in equity
instruments as at FVTOCI as it believes that recognizing short-term fluctuations in these investments’ fairvalues in profit or loss would not be consistent with the Group’s strategy of holding these investments forlong-term purposes.

Foreign investments
Unlisted shares
Domestic investments
Unlisted shares

Non-current

Investments in Equity Instruments

8. FINANCIAL ASSETS AT FVTOCI

Buy forward contracts

December 31, 2019

Currency

Notional Amount(In Thousands)

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:

9,903,008(206,152)
9,696,856

655

8,440,254(218,665)
8,221,589

299,2452019$ 8,520,834$

December 31$ 9,697,511

$

2020

Amortized cost

$ 9,291,393(13,392)

0.14%$ 9,304,785

Gross carrying amount
Loss allowance (lifetime
ECLs)

Not Past Due
Expected credit loss rate

December 31, 2020

$

$

$

$

132,503(1,608)134,1111.20%

31 to 60 Days

- 31 -

255,708(470)

256,178

0.18%

Up to 30 Days

$

$

2,548

(2,965)5,513

53.78%

61 to 90 Days$$

14,703(187,718)

202,42192.74%

Over 90 Days

$ 9,696,856(206,152)$ 9,903,008

Total

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

The Group writes off a trade receivable when there is information indicating that the debtor is experiencing
severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that havebeen written off, the Group continues to engage in enforcement activity to attempt to recover thereceivables which are due. Where recoveries are made, these are recognized in profit or loss.

The Group applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9,which permits the use of lifetime expected loss allowance for all trade receivables. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience
with the debtors and an analysis of the debtors’ current financial position, adjusted for general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as theforecasted direction of economic conditions at the reporting date. As the Group’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the loss
allowance based on the past due status is not further distinguished according to the different segments of theGroup’s customer base.

The average credit period was 7 to 55 days. In determining the recoverability of a trade receivable, theGroup considered any change in the credit quality of the receivable since the date credit was initiallygranted to the end of the reporting period, and any allowance for impairment loss was based on theestimated irrecoverable amounts determined by reference to the Group’s past default experience with thecounterparty and an analysis of the counterparty’s current financial position. The Group adopted a policy of
only dealing with entities that are rated the equivalent of investment grade or higher and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit rating information is obtained from independent rating agencies where available or, if not available,
the Group uses other publicly available financial information or its own trading records to rate its major
customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored andthe aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed and approved by the risk management committee
annually.

Accounts receivable
Less: Allowance for impairment loss

Accounts receivable

Notes receivable

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

157$ 6,697,539$ 1,330,621$$

91,679(6,021)

97,700

6.16%

31 to 60 Days$$

96,376(17,340)

113,716

15.25%

61 to 90 Days$$

$ 8,470,113$ 8,788,105$

December 31$ 89,296

2020

2019
-

- 32 -

To enhance its competitiveness, the Company plans to introduce new aircraft and retire old aircraft
according to a planned schedule. Such aircraft, classified as non-current assets held for sale, had an original
book value which was higher than the expected sale price and which was recognized as an impairment loss.
However, the actual loss shall be identified by the actual sale price.

Long-term equity investments held for sale - Asian Compressor
Technology Services

12. NON-CURRENT ASSETS HELD FOR SALE

The operating costs recognized for the years ended December 31, 2020 and 2019 included losses frominventory write-downs of $190,548 thousand and $327,919 thousand, respectively.

$ 7,578,125
571,601
283,933
36,4542019$ 218,665$ 7,898,482
627,437
214,362
47,8242020$ 206,152

Balance at December 31

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
Others$ 8,221,589(218,665)$ 8,440,254

Total$ 227,306
24,096(32,717)(3)(17)

December 31$ 218,665
4,895(17,398)(10)(-)

Balance at January 1
Add: Net remeasurement of loss allowance
Less: Amounts written off
Foreign exchange gains and losses
Loss of control of subsidiaries

11. INVENTORIES

5,374(185,162)

190,536

97.18%

Over 90 Days

For the Year Ended December 31
2020
2019

The movements of the loss allowance of trade receivables were as follows:

Amortized cost

(2,019)(8,123)0.15%$ 1,332,640

0.12%$ 6,705,662

Up to 30 Days

Gross carrying amount
Loss allowance (lifetime
ECLs)

Not Past Due

Expected credit loss rate

December 31, 201949

Airport services
Airport services
Forwarding and storage of air cargo
Real estate management
Hotel businessAirport supporting service and investment

54

In-flight catering

48
25
100
100
100

48
25
100
100
100

49

54

59

94

100
100
100
94

100
100
100
94
94

100
100

100

77
100

100
100

59

100

81
100

A holding company, real estate and hotel
services
General investment
Cleaning of aircraft and maintenance ofmachine and equipment
Travel business
Real estate lease and international trade
Hotel business
Sale and maintenance of hardware andsoftware
Air transportation and maintenance of
aircraft
Air cargo and storage

Air transportation
Aircraft maintenance

Main Businesses and Products

Proportion of ownership is considered from the perspective of the Group.

Taiwan Air Cargo Terminal(Note)
Kaohsiung Catering Services,
Ltd.
Taoyuan International Airport
Services
Taiwan Airport Services (Note)
Global Sky Express
Dynasty Properties Co., Ltd.
Dynasty Hotel of Hawaii, Inc.
Taiwan Airport Service (Samoa)

Mandarin Airlines

CAL-Asia Investment
Dynasty Aerotech International
Corp.
Yestrip
Cal Park
Cal Hotel Co., Ltd.
Sabre Travel Network (Taiwan)

Tigerair Taiwan Co., Ltd. (Note)
Taiwan Aircraft Maintenance
And Engineering Co., Ltd.
CAL-Dynasty International

Investee Company

Proportion of
Ownership (%)
December 31
2020
2019

- 33 -In order to prepare for the listing of Tigerair Taiwan Co., Ltd. and comply with the rules relating to theexamination for public listing, the release of the shares of Tigerair Taiwan Co., Ltd. held by the Company
and Mandarin Airlines was resolved in the shareholders’ meeting of the Company on June 25, 2019, and in
the shareholders’ meeting of Mandarin Airlines on June 27, 2019. The shares shall be subscribed by all
shareholders of the Company and Mandarin Airlines on the basis of the percentage of shareholdings. For
the waiver of subscribed shares by the original shareholders or the undersubscribed portion, the chairman
was authorized to designate specific persons for subscription. The subscription price was set at $41 pershare. In October and December 2019, the shares were fully paid and were completely delivered andtransferred. A total of 45,661,000 shares were disposed of, and the Group’s issued share capital decreased
to 77%. The amount of proceeds from disposal was $1,866,474 thousand, and the related gain on disposal
was $1,254,633 thousand and recognized as capital surplus.

Except that the Company has control over Taoyuan International Airport Service, Taiwan Airport Service
and Global Sky Express, the others are investees that the Company had more than 50% of their voting
shares. The above financial information of the subsidiaries for the years ended December 31, 2020 and2019 was reported according to financial reports that were not reviewed by independent auditors.

Note:

Cal-Dynasty
International
Taiwan Airport Services

China Airlines, Ltd.

Investor Company

Subsidiary included in the consolidated financial statements:

13. SUBSIDIARIESThe Company completed the disposal procedures of some aircraft and recognized a loss on disposal of$10,462 thousand in 2019. The fair value was determined by transactions of the related market, and the
proposed sale price was based on the current status of the aircraft. The fair value is classified as Level 3.

158
277,234
5,237
476,219
270,046
51,116$ 1,079,852$

461,263
10,004446,161
248,350
42,7172019$ 1,208,495$

December 31$ 2,223,793$ 1,970,802

2020$ 1,208,495
1,015,298

2019$ 1,079,852
890,950

December 31- 34 -

China Aircraft Services
Dynasty Holidays
Airport air Cargo Terminal (Xiamen)
Airport air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd.

Name of Associate
20%
20%
28%
28%
35%

20%
20%
28%
28%
35%

Proportion of Ownership andVoting Rights
December 31
2020
2019

At the end of the reporting period, the proportion of ownership and voting rights in associates held by
the Group were as follows:

China Aircraft Services
Dynasty Holidays
Airport Air Cargo Terminal (Xiamen)
Airport Air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd.

Unlisted companies

a. The amount of investment in associates were as follows:

Investments in associates
Investments in jointly controlled entities

2020

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

To strengthen the capital structure of Tigerair Taiwan Co., Ltd., the board of directors of the Company
approved the plan to issue ordinary shares for cash at $25 per share on August 6, 2020. The Company
subscribed for 47,228 thousand shares in October 2020 and 26,286 thousand shares in November 2020. The
proportion of ownership of the Group increased to 81%. Because the shares are subscribed at a percentage
different from its existing ownership percentage, the Company’s retained earnings decreased by $169,272
thousand.

$ (48,856)$ (102,758)(4,740)25,57819,124
13,940$$60,44810,36515
21,53525,1463,387

2019695,959
149,353
37,767
7,871
890,950$

801,071
168,547
37,813
7,867

2019$ 1,015,298$

December 31$

2020

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.
- 35 -

51%
55%
49%
51%

51%
55%
49%
51%

Proportion of Ownership andVoting Rights
December 31
2020
2019

At the end of the reporting period, the proportion of ownership and voting rights in jointly controlled
entities held by the Group were as follows:

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

The investments in jointly controlled entities were as follows:b. Investments in jointly controlled entities

The board of directors of the Company decided to sell part of the equity of Dynasty Holidays to H.I.S.
Taiwan Co., Ltd. on January 21, 2019, and completed the transaction on January 31, 2109. After thesale of the equity, the Group’s issued share capital decreased from 51% to 20%. Dynasty Holidays wasclassified as an associate since the Group lost control of the subsidiary. Therefore, the relevant assets
and liabilities were not consolidated in the current period, and only the profit and loss from January 1,
2019 to January 31, 2019 were consolidated. For information about the disposal of the subsidiary,
please refer to Note 30.

The financial statements used as a basis of the amounts and related information on the investments
accounted for using the equity method and the share of profit or loss and other comprehensive incomeof those investments for the years ended December 31, 2020 and 2019 were all independently audited,
except those of China Aircraft Services and Eastern United International Logistics (Holding) Ltd.
However, the management determined that there would have been no significant adjustments had thisinvestee’s financial statements been independently audited.

Other comprehensive income of associates accounted for using the equity method in 2020 and 2019
comprised of losses in the amount of $0.

China Aircraft Services
Dynasty Holidays
Airport air Cargo Terminal (Xiamen)
Airport air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd.

2020

The investment income of associates accounted for using the equity method was as follows:159$ 256,899
15,030(70)(2)$ 271,857$ (136,459)(15,475)(46)
2$ (151,978)- 36 -For details on services, major business offices and the country where the above associates and jointly
controlled entities are registered, refer to Table 6 “Names, Locations, And Other Information of
Investees Over Which the Company Exercises Significant Influence”, and Table 7 “Investments In
Mainland China”, following these notes to the consolidated financial statements.

The financial statements used as a basis of the amounts and related information on the investments
accounted for using the equity method and the share of profit or loss and other comprehensive incomeof those investments for the years ended December 31, 2020 and 2019 were all independently audited,
except for NORDAM Asia Limited. However, the management determined that there would have beenno significant adjustments had this investee’s financial statements been independently audited.

Other comprehensive income of associates accounted for using the equity method in 2020 and 2019
comprised of losses in the amounts of $34,271 thousand and $(32,102) thousand, respectively.

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

For the Year Ended December 31
2020
2019

Details of investment income attributable to investment in jointly controlled entities were as follows:

To expand the Group’s catering business, Kaohsiung Catering entered into a joint venture agreementwith a Japanese brand company to invest in Delica International Co, Ltd., with the Japanese brandcompany having the right to make decisions on operations, and therefore, the Group does not havecontrol.

To enhance the Group’s maintenance capabilities, the Company established a joint venture with the USNORDAM Aerospace Group in December 2017, to provide thrust reversers and composite repair
services in Asia under the NORDAM brand. NORDAM has filed for Chapter 11 bankruptcy
reorganization in the USA on July 22, 2018 to solve the business dispute with its cooperative partner, so
its operation was not impacted. As a result, NORDAM Asia suspended its operation from October 5,2018 to October 4, 2019 and resumed business on October 4, 2019. The Company increased the capitalof NORDAM Asia by $35,525 thousand in November 2019.

The Group entered into a joint venture agreement with the Taikoo Group to invest in China Pacific
Catering Services and China Pacific Laundry Services. According to the agreement, both parties havethe majority of voting power in the board of directors to pass a motion for veto, and therefore the Group
does not have control.

$$

Balance at December 31,
2020, net value$$

Balance at December 31,
2020

Balance at January 1,
2020
Depreciation expense
Disposals
Reclassification
Net exchange difference
Impairment losses

Accumulated depreciationand impairment

Balance at December 31,
2020

Balance at January 1,
2020
Additions
Disposals
Reclassification
Net exchange difference$$

Balance at December 31,
2019, net value

955,823--

955,823

1,002,499(18,026)(28,650)

1,002,499-$

Balance at December 31,
2019

Cost

-

-

Balance at January 1,
2019
Depreciation expense
Disposals
Reclassification
Net exchange difference
Loss of control ofsubsidiaries$$

1,002,499

Accumulated depreciationand impairment-

1,015,564(13,065)

Balance at December 31,
2019$

Balance at January 1,
2019
Additions
Disposals
Reclassification
Net exchange difference
Loss of control ofsubsidiaries

Cost

Freehold Land

$

$

$

$

$

$

$

$

$

$

8,583,998(7,121,637)(7,028,540)(492,734)
371,933
27,704-

15,705,635

16,084,063
48,809(375,083)
304(52,458)

9,055,523(7,028,540)-(6,574,873)(466,943)
1,014
12,262

16,084,063-

13,993,585
209,413(1,130)1,906,078(23,883)

Buildings

15. PROPERTY, PLANT AND EQUIPMENT- 37 -$ 126,630,870$ (155,376,265)$ (141,886,170)(18,007,550)
3,452,870
1,489,158(424,573)$ 282,007,135$ 272,077,692
653,519(3,724,658)
13,000,582-$ 130,191,522$ (141,886,170)-$ (123,507,657)(18,571,992)
14,899,562(14,706,083)-$ 272,077,692-$ 259,695,130
2,248,856(20,698,042)
30,831,748-

FlightEquipment-(4,474)25,805,008(668,721)(25,131,813)
-

$

$

$

$

$

$

$

-

-

-

-

-

-

-

2,112

$ (14,634,822)(741,852)
79,866
15,294,696-$$

Equipment
under FinanceLeases

16,846,835(2,158)17,917,780
864,223(393,058)(1,537,494)(2,458)17,058,648

16,846,835
535,187(387,858)
70,081(5,597)

5,637,427$

5,311,003$ (11,747,645)$ (11,209,408)(925,138)
381,037
1,348
4,516
-

$

$

$

$ (11,209,408)

1,727$ (10,601,997)(921,246)
355,222(45,103)
1,989

$

$

Others$ 141,481,694$ (174,245,547)$ (160,124,118)(19,425,422)
4,205,840
1,490,506
32,220(424,573)$ 315,727,241$ 306,011,089
1,237,515(4,505,625)
13,070,967(86,705)$ 145,886,971$ (160,124,118)

3,839$ (155,319,349)(20,702,033)
15,335,664
543,510
14,251$ 306,011,089(6,632)$ 318,427,067
3,322,492(21,760,951)
6,068,519(39,406)

Total

160
15-25 years
7-20 years
10-20 years
6-8 years
3-10 years
7-12 years
3-15 years
5-12 years

5 years
3-5 years
3-5 years

25 years
3-13 years
3-15 years

45-55 years
10-25 years

Carrying amount
Investment properties- 38 -

2019$ 2,075,068

2019$ 3,316,078$ 3,322,492(6,414)

December 31$ 2,074,798

2020$ 1,237,515

Purchase of property, plant and equipment paid

16. INVESTMENT PROPERTIES$ 1,237,515-

December 31

Increase in property, plant and equipment
Capitalized interest paid

2020

The Group generated the following non-cash investment activities related to the purchase of property, plantand equipment in 2020 and 2019:

Based on the particularity of risk in the aviation industry, all of the Group’s assets such as aircraft, realestate, and movable property are adequately insured to diversify the potential risk related to operations.

Refer to Note 34 for the carrying amounts of property, plant and equipment pledged by the Group.

Regarding changes in fleet composition, current and forecasted market value, and other technical factors,
the Company recognized impairment losses on aircraft equipment of $424,573 thousand in 2020. The fairvalue was determined based on aircraft conditions and market estimates.

Building
Main buildings
Others
Machinery and equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersAssets leased to others
Flight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of theasset:The reclassification mostly resulted from the transfer of prepayments for equipment.

$ 2,082,390

Balance at December 31, 2020

$ 2,406,163$ 2,406,163
130,461(765,426)(7,554)$ 1,763,644

Balance at December 31, 2019
Balance at January 1, 2020
Additions
Reclassification
Amortization expenses
Disposal
Effects of exchange rate changes
Balance at December 31, 2020

$

$

$

$

186,197

186,197-

186,197

186,197-(7,592)(7,322)(270)(7,322)(7,045)(277)$(873,490)$ (1,409,668)
735,881(206,936)
7,243
(10)

$ (1,409,668)$ (1,212,783)(198,237)
1,357
(5)

Accumulated
Amortization

$

$

$

$

Accumulated- 39 -

The above other intangible assets are amortized on a straight-line basis over 2-16 years.

$ 2,237,382
172,639(3,858)-

Balance at January 1, 2019
Additions
Amortization expenses
Disposal of subsidiaries
Effects of exchange rate changes

Relationship
Between
Clients$ 2,082,390-

Balance at January 1, 2020
Depreciation expense

Computer
Software Cost

$ 2,082,390

Balance at December 31, 201917. OTHER INTANGIBLE ASSETS$ 2,082,390-

Balance at January 1, 2019
Depreciation expense

Cost

All of the Group’s investment properties were held under freehold interest.

$ 1,076,351$ 1,182,692
130,461(29,545)(206,936)
(311)
(10)

$ 1,182,692$ 1,210,796
172,639(198,237)(2,501)(5)

Net Value$ 2,074,798$ 2,075,068(270)$ 2,075,068$ 2,075,345(277)

Net Value

The fair value of the investment properties held by the Group was $2,488,931 thousand and $2,506,230
thousand as of December 31, 2020 and 2019, respectively. In addition, management assessed that there wasno significant difference in the fair value as of December 31, 2020 and 2019. The above fair value valuation
was performed by independent qualified professional valuers, and the future income evaluated bymanagement was based on market transactions.

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to others. The buildings are depreciated on a straight-line basis over 55 years.

161$ 13,171,063

Annual discount rate

Commercial paper
Less: Unamortized discount on bills payablea. Short-term bills payable- 40 -$$$ 8,088,882

December 31

0.99%-1.00%

380,000

2019

-

2019

-

-

0.95%-1.07%$ 8,100,000(11,118)

2020

0.92%-1.28%

Interest rates$

December 31$ 1,932,000

2020

Bank loans - unsecured

a. Short-term loans

19. BORROWINGS

The prepayments for aircraft comprised the prepaid deposits and capitalized interest from the purchase of
ATR72-600, A321neo, A320neo and B777F aircraft. For details on the aircraft purchase contracts, refer toNote 35.

9,352,892$

8,863,861
2,819,575
1,261,611
64,213
19,103
142,700

2,655,711

29,490,000
22,532
92,522,704
15,234,374$ 23,470,696
39,584,540

31,730,000
60,14367,663,783
14,148,892

1,929,827
34,064,099

0.55%-1.73%$ 53,514,891

$

2019

2009.2.42032.6.30

2019
2008.2.262030.4.25

December 31- 41 -In accordance with the “Regulations on Relief and Revitalization Measures for Industries andEnterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry ofTransportation and Communications and the “Operational Guides on Relief Loan Guarantees for Ailing
Aviation Industry Affected by Severe Pneumonia with Novel Pathogens”, the Company applied for
project finance loans from financial institutions to maintain its operations; and special funds, credit
guarantees along with subsidized interest rates were provided by the government. The total amount of
the loans is $24,390,000 thousand, which shall be repaid within 2 years from the date of initial
drawdown. As of December 31, 2020, the Company had made a drawdown in the amount of$23,480,000 thousand.

The Group has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until March 2025, were used by the Group to guarantee commercial papers
issued. As of December 31, 2020 and 2019, the commercial papers were issued at discount rates of
1.0263%-1.1629% and 1.1300%-1.3380%, respectively.

Periods

2020

Bank loans (New Taiwan dollars) are repayable quarterly, semiannually or in lump sum upon maturity.
Related information is summarized as follows:

For information on secured bank loans which were secured by buildings, machinery equipment andflight equipment, refer to Note 34.

Interest rates

Less: Current portion

Unsecured bank loans
Secured bank loans
Commercial paper
Proceeds from issue
Less: Unamortized discountDecember 31

0.81%-1.63%

5,725,340
2,216,049
1,138,943
240,467
18,07814,015$$$

296,759
1,690,368
14,618653,966

2020

Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
Others861,179

$

$

2019

$ 77,288,330

136,681348,554
11,065364,879

December 31

$

2020

b. Long-term borrowings

Non-current

Temporary payments
Prepayments
Restricted assets
OthersCurrent

18. OTHER ASSETS

162

2013.01.172020.01.17

Seven-year private unsecured bonds - issued at
par in January 2013; repayable in
January 2019 and 2020; 1.85% interest p.a.,payable annually.
Five-year unsecured bonds - issued at par in
May 2016; repayable in May 2020 and 2021;
1.19% interest p.a., payable annually.
Five-year unsecured bonds - issued at par in
September 2016; repayable in September 2020
and 2021; 1.08% interest p.a., payableannually.
Three-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.2% p.a., payable annually.
Seven-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.75% p.a., payable annually.
Three-year private unsecured bonds - issued at
par in October 2017; repayable on due date;interest of 1.14% p.a., payable annually.
Five-year private unsecured bonds - issued at parin October 2017; repayable in October 2021
and 2022; 1.45% interest p.a., payableannually.
Five-year private unsecured bonds - issued at parin November 2018; repayable inNovember 2022 and 2023; 1.32% interest p.a.,payable annually- 42 -

2018.11.302023.11.30

2017.10.122022.10.12

2017.10.122020.10.12

2017.05.192024.05.19

2017.05.192020.05.19

2016.09.272021.09.27

2016.05.262021.05.26

PeriodCategory

Related issuance conditions were as follows:

Less: Current portion and put option of convertible bonds

Unsecured corporate bonds first-time issued in 2013
Unsecured corporate bonds first-time issued in 2016
Unsecured corporate bonds second-time issued in 2016
Unsecured corporate bonds first-time issued in 2017
Unsecured corporate bonds second-time issued in 2017
Unsecured corporate bonds first-time issued in 2018
Unsecured corporate bonds first-time issued in 2019
Convertible bonds - sixth-time issued

20. BONDS PAYABLE

2,350,000
2,500,000
1,000,000
2,600,000
4,500,000
3,500,000
5,832,859
22,282,859
11,982,859

2,750,000
4,700,000
5,000,000
2,350,000
3,500,000
4,500,000
3,500,000
5,752,625
32,052,625
10,000,000

Rate
(%)

$ 22,052,625

$

2019

Principal repayable in
1.85
January of 2019 and2020; indicator rate;
payable annually.
Principal repayable in May
1.19
of 2020 and 2021; interest
p.a. payable annually.
Principal repayable in
1.08
September of 2020 and2021; interest p.a. payableannually.
Principal repayable on due
1.20date; indicator rate;
payable annually.
Principal repayable on due
1.75date; indicator rate;
payable annually.
Principal repayable on due
1.14date; indicator rate;
payable annually.
Principal repayable in
1.45
October of 2021 and2022; indicator rate;
payable annually.
Principal repayable in
1.32
November of 2022 and2023; indicator rate;
payable annually(Continued)

Conditions$ 10,300,000

$

2020

December 31

2018.11.302025.11.30

Five-year private unsecured bonds - issued at parin November 2018; repayable inNovember 2022 and 2023; 1.45% interest p.a.,payable annually
Five-year private unsecured bonds - issued at par
in June 2019; repayable in June 2023 and2024; 1.10% interest p.a., payable annually2018.01.302023.01.30

Five-year convertible bonds - issued at discountin December 2013; repayable in lump sum
upon maturity; 1.3821% discount rate p.a.

Rate
(%)

Principal repayable in
1.45
November of 2022 and2023; indicator rate;
payable annuallyPrincipal repayable in June
1.10
of 2023 and 2024;
indicator rate; payableannually
Principal repayable in June
1.32
of 2025 and 2026;
indicator rate; payableannually
Except for converting toshare capital or buying
back, principal repayable
in December of 2023
(Concluded)

Conditions$ 5,602,022

Liability component at the date of issuance- 43 -$ 6,012,000(409,978)

Proceeds from issuance
Equity component

The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.

d. Between January 26, 2014 and December 16, 2018 (except for the period between the former dividend
date and the date of the dividend declaration on record), holders may convert the bonds to theCompany’s ordinary shares. The initial conversion price was set at NT$13.2, which is subject toadjustment if there is a capital injection by cash, share dividend distribution, and the proportion of cash
dividends per share in market price exceeding 1.5%. Because the Company distributed cash dividends
on July 29, 2019, the conversion price was adjusted to NT$12.6.

c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions.

b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.

a. The holders may demand a lump-sum payment for the bonds upon maturity.

The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:

The Company issued its 2016 first unsecured corporate bonds with a face value of $5,000,000 thousand,and the purchasers of the bonds included Mandarin Airlines Co., Ltd. and Sabre Travel Network (Taiwan)Co., Ltd., which had a face value of $150,000 thousand, and the amount was eliminated in the consolidated
financial statements.

2019.06.212026.06.21

Seven-year private unsecured bonds - issued at
par in June 2019; repayable in June 2025 and2026; 1.32% interest p.a., payable annually2019.06.212024.06.21

PeriodCategory

163

Carrying amounts
Current
Non-current

b. Lease liabilities

Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment

Additions to right-of-use assets

Carrying amounts
Land
Buildings
Flight equipment
Other equipmenta. Right-of-use assets

21. LEASING- 44 -

7,813,335
1,394,386
50,644,652
9,164

8,153,382
824,955
62,052,701
2,579

2019

362,386
335,553
11,041,881
1,535

2,463,869
376,425
798,933
10,721,575
2,157

5,863,625$ 2,340,873$ 15,801,724

2019$ 11,899,090$$

December 31$ 2,525,957$ 13,279,792

2020$ 11,741,555$$

For Year Ended December 31
2020
2019

$ 71,033,617$

December 31$ 59,861,537

$

2020

The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 6, 2020. The cumulative face value of the bonds shall not exceed $6,000,000
thousand. The bonds are issued at 100%-100.5% of the face value, and the issuance period is 5 years.

The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 7, 2019. The cumulative face value of the bonds shall not exceed $3,000,000
thousand. The bonds are issued at 100%-100.5% of the face value, and the issuance period is 5 years.
During the period of public offerings, the stock market and the domestic capital market were volatile due toCoronavirus Pneumonia and the changes in the share price of the Company were unfavorable to the seventh
issue of the Company’s unsecured convertible bonds. After comprehensive consideration, the issuance wassuspended with the permission of the competent authority based on the best interest of the Company andthe shareholders’ equity.
1.09%-1.80%
0%-3.56%
0.68%-3.34%
1.06%-1.50%

20191.09%-1.65%
0%-3.56%
2.49%-3.34%
1.06%-1.50%

December 31

2021.4.15-2028.5.15

2022.2.9-2028.5.15$ 2,099,550
1,457,058

Recognized in
Other
Comprehensive
IncomeFinancial liabilities for hedging current
Financial liabilities for hedging non-current
Financial liabilities for hedging current
Financial liabilities for hedging non-current

Subject

42,420,205

8,577,482

32,455,333

8,120,445$

352,674(24,029)

Reclassified toIncome$Carrying Value

Refundable deposits
Credit guarantees- 45 -$$

2019
737,895
1,717,953

December 31
725,135
1,756,656

2020

The information of refundable deposits and issuance of letter of credit due to rental of planes:

d. As lessees, China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes,
fifteen A330-300 planes, fifteen 737-800 planes, ten A320-200 planes, five ERJ190 planes and three
ART72-600 planes for operation, lease period are 6 to 12 years from February 2006 to May 2028. The
rental pricing method is partly a fixed amount of funds, and some of them are floating rents, floating
rents are according to benchmark ratio, the rent is revised every half year. When the lease expires, thelease agreements have no purchase rights.

For the year ended December 31, 2020
For the year ended December 31, 2019

Influence of comprehensive income

December 31, 2019

December 31, 2020

Maturity Date

The Group specifies a part of US lease contract as hedging instruments to avoid exchange rate
fluctuations in passenger revenue, and applies the accounting treatment of cash flow hedging. The lease
information is as follows:c. Financial liabilities under hedge accounting

Land
Buildings
Flight equipment
Other equipment

2020

Range of discount rate for lease liabilities (include US lease hedging instruments):

164$
41,568$ (12,410,357)$
52,675$ (13,884,367)

Fuel costs
Ground service expenses
Repair expenses
Interest expense
Short-term employee benefits
Terminal surcharges
Commission expenses
Others

22. OTHER PAYABLES- 46 -

1,853,717
956,956
366,589
120,550
1,948,982
420,194
184,3632,454,906
8,306,257

$

$

2020

3,723,213
1,262,878
1,208,875
219,660
2,040,718
1,122,532
509,520
3,100,576

2019$ 13,187,972$

December 31

The Group chooses to waive the recognition of the contract provisions for the short-term leases and low
price lease, and does not recognize the related right-of-use assets and lease liabilities for such lease.

Short-term and low price lease payment
Total of lease cash outflow

For the Year Ended December 31
2020
2019

The Group uses operating lease agreement for investment properties, refer to Note 16.

g. Other lease informationf. In order to revitalize assets and strengthen the financial structure, the Company sold five of its own
A330-300 aircraft to Altavair L.P. in September 2019 through sale and leaseback arrangement for$4,905,660 thousand. The lease term was 5 to 6 years and a loss of $103,775 thousand was incurred.
The lease agreement had no terms for lease renewal or offtake rights. The annual lease payments foreach aircraft are from US$5,389 thousand to US$5,437 thousand.

The Company also signed related aircraft purchase agreement, please refer to note 35 for details.

In February 2020, Tigerair Taiwan Co., Ltd. signed a rental letter of intent for eight A321neo withICBC Lease Corporation, which is expected to be introduced in 2021.

In October 2019, the Company signed a rental letter of intent for eight A321neo with CALC Lease
Corporation, which is expected to be introduced in 2022.

e. In September 2019, the Company signed a rental contract for six A321neo with Air Lease Corporation,
which is expected to be introduced between 2021 and 2022.

Taiwan Air Cargo Terminal Co. and CAA signed a BOT contract with a land lease agreement. For
details, please refer to Note 35.

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, for the details for the lease agreement, please refer to Note 35. The lease includes an option
to extend the lease, as it is not possible to extend the lease, the amount of the lease related to the period
covered by the option is not included in the lease liability. If the amount of the extended lease period is
included in the lease liability, the lease liability will increase by $885,657 thousand on December 31,
2020.

360,393
10,011,464$ 14,534,286

Balance at December 31, 2020

- 47 -The Group leased flight equipment under operating lease agreements. Under the contracts, when the leases
expire and the equipment is returned to the lessor, the flight equipment has to be repaired according to the
expected years of use, number of flight hours, flight cycles and the number of engine revolutions. The
Group had existing obligations to recognize provisions when signing a lease or during the lease term.
Tigerair Taiwan Co., Ltd. also leased flight equipment under operating lease agreements. In accordance tothe contract, Tigerair must pay maintenance reserves monthly according to the actual number of flight
hours.

$ 10,371,857
6,075,077(1,308,170)(604,478)

8,794,539
4,608,924(2,799,314)(232,292)

Balance at January 1, 2020
Additional provisions recognized
Usage
Effect of exchange rate changes$

Aircraft Lease
Contract$ 10,371,857$$ 10,371,857

2019$ 23,297,084$ 21,060,773
2,236,311$ 10,371,857$ 14,534,286

164,800
14,369,486$ 14,534,286$

2,895,535
20,401,549$ 23,297,084$

December 31

5,330,464$

2020

3,569,360
1,761,104

5,330,464$$

2,671,203
2,659,093
168$

December 31
2020
2019
Contract
Contract
Liabilities
Liabilities

Balance at December 31, 2019

Balance at January 1, 2019
Additional provisions recognized
Usage
Effect of exchange rate changes

Current
Non-current

Operating leases - aircraft

24. PROVISIONS

Current
Non-current

Frequent flyer programs
Advance ticket sales
Others

23. CONTRACT LIABILITIES/DEFERRED REVENUE

165$ 18,793,509(9,055,768)$

Present value of defined benefit obligation
Fair value of plan assets

Deficit (net defined benefit liabilities)

Balance at January 1, 2019
Current service cost
Net interest expense (income)
Recognized in profit or loss

- 48 -$ 17,464,856
1,321,600
161,808
1,483,408

Present Valueof the Defined
BenefitObligation$ (8,661,474)(86,234)(86,234)

Fair Value ofthe Plan Assets

Movements in net defined benefit liabilities (assets) were as follows:2019

9,435,035$

8,803,382
1,321,600
75,574
1,397,174(Continued)

Net Defined
BenefitLiabilities(Assets)$$ 18,457,304(9,022,269)

December 31

9,737,741

2020

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans
were as follows:(303,407)(303,407)(1,304,769)
1,638,230-

9,770
658,370
34,417
702,557(1,638,230)(177,547)$ (9,055,768)(308,223)(1,418,970)
1,452,632(9,022,269)(63,554)(63,554)

633,683
1,090,016(1,452,632)(128,344)
18,457,304
1,323,036
126,390
1,449,426-

440,374(308,223)-$

Fair Value ofthe Plan Assets

15,959-$ 18,793,509$

Present Valueof the Defined
BenefitObligation$$

9,737,741(Concluded)

34,417399,150(1,304,769)(177,547)

658,370

9,770(303,407)

633,683
781,793(1,418,970)(128,344)
9,435,035
1,323,036
62,836
1,385,872

440,374

15,959(308,223)

Net Defined
BenefitLiabilities(Assets)- 49 -

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the
future salaries of plan participants. As such, an increase in the salary of the plan participants will
increase the present value of the defined benefit obligation.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of thedefined benefit obligation; however, this will be partially offset by an increase in the return on theplan’s debt investments.

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. However, in accordance with relevant regulations, the return generated byplan assets should not be below the interest rate for a 2-year time deposit with local banks.

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to thefollowing risks:

Balance at December 31, 2020

The defined benefit plan adopted by the Company and in accordance with the Labor Standards Law isoperated by the government. Pension benefits are calculated on the basis of the length of service andaverage monthly salaries of the six months before retirement. The Company and subsidiary contributeamounts equal to 2%-15% of total monthly salaries and wages to a pension fund administered by thepension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in thecommittee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If
the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees
who conform to retirement requirements in the next year, the Group is required to fund the difference in
one appropriation that should be made before the end of March of the next year. The pension fund ismanaged by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right toinfluence the investment policy and strategy.

b. Defined benefit plans

Employees based in the United States and Japan of China Airlines Co., Ltd. and subsidiaries are
members of the United states and Japan government retirement benefit plans. Subsidiaries should
appropriate a specific portion to retirement benefit plans. The obligation to the government retirement
benefit plans of China Airlines Co., Ltd. and subsidiaries is to appropriate a specific portion amount.

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial (gain) loss - changes indemographic assumptions
Actuarial (gain) loss - changes in financial
assumptions
Actuarial (gain) loss - experience
adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
OthersBalance at December 31, 2019
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial (gain) loss - changes indemographic assumptions
Actuarial (gain) loss - changes in financial
assumptions
Actuarial (gain) loss - experience
adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
OthersThe Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.

a. Defined contribution plans

25. RETIREMENT BENEFIT PLANS

166
0.32%-0.80%
1.00%-2.50%

0.63%-1.10%
1.00%-2.50%

2019$830,329(772,927)(438,527)
457,422$2019

969,324(927,180)(939,308)
1,000,771

December 31

Numbers of authorized shares (in thousands)
Amount of authorized shares
Amount of issued shares

Ordinary sharesa. Share capital- 50 -

2019

7,000,000$ 70,000,000$ 54,209,846

2019

8-11 years$ 930,963

December 31

7,000,000$ 70,000,000$ 54,209,846

2020

8-11 years

The average duration of the defined benefit obligation

26. EQUITY$ 916,627

December 31

The expected contributions to the plan for the next year

2020

The sensitivity analysis presented above may not be representative of the actual change in the present
value of the defined benefit obligation as it is unlikely that the change in assumptions would occur inisolation of one another as some of the assumptions may be correlated.

Discount rate(s)0.25%/0.5% increase
0.25%/0.5% decrease
Expected rate(s) of salary increase
0.5% increase
0.5% decrease2020

If possible reasonable change in each of the significant actuarial assumptions will occur and all otherassumptions will remain constant, the present value of the defined benefit obligation would increase(decrease) as follows:

Discount rate(s)Expected rate(s) of salary increase

2020

December 31

The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as
follows:

146,351
33,513
11,747
119,134
409,978
466,604

315,114
3,909
33,513
11,747
118,962
409,978
1,129,080
466,6042019$ 2,488,907$

December 31$ 1,187,327

$

2020

- 51 -

Under the Company Act, if surplus earnings are distributed in the form of new shares, the distributionof shares shall be approved in the meeting of the board of directors; if such earnings are distributed in
the form of cash, the cash distribution shall be authorized after a resolution has been adopted by amajority vote at a meeting of the board of directors attended by two-thirds of the total number of
directors; and in addition, a report of such distribution shall be submitted to the shareholders’ meeting.
If the Group has no loss, according to laws and regulations, the Group can distribute its capital reserve,in whole or in part, by issuing new shares or cash based on financial, business and management
considerations. If such surplus earnings is distributed in the form of new shares, it shall be approved bya meeting of the board of directors; if such surplus earning is distributed in the form of cash, it shall beauthorized after a resolution has been adopted by a majority vote at a meeting of the board of directors
attended by two-thirds of the total number of directors; and in addition thereto a report of such
distribution shall be submitted to the shareholders’ meeting.

Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”),
where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes,
offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting
aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining
profit together with any undistributed retained earnings shall be used by the Company’s board of
directors as the basis for proposing a distribution plan, which is to distribute dividends and bonus noless than 50% of the remaining profit and undistributed retained earnings. The dividends and bonus
mentioned above can be distributed in the form of new shares or cash, and the cash dividends should be
no less than 30% of the total dividends.

c. Appropriation of earnings and dividend policy

The capital surplus from long-term investments, employee share options expired, dividends distributed
to subsidiaries and retirement of treasury shares may not be used for any purpose. Besides, capitalsurplus from conversion of employee shares and convertible bonds payable may not be used for any
purpose.

The capital surplus from shares issued in excess of par (including additional paid-in capital fromissuance of ordinary shares and treasury share transactions) and the difference in sale price of shares ofsubsidiaries and book value may be used to offset deficits; in addition, when the Company has no
deficit, such capital surplus may be distributed as cash dividends or transferred to capital (but limited toa certain percentage of the Company’s paid-in capital on yearly basis).

Issuance of convertible bonds in excess of par value andconversion premium
Dividend distributed to subsidiaries
Retirement of treasury shares
Expired employee share options
Long-term investments
Bonds payable equity component
Difference in sale price of shares of subsidiaries and book value
Othersb. Capital surplus

167- 52 -On March 18, 2021, the board proposed to offset the accumulated deficit in 2020. The deficit
included a net income of $140,000 thousand and the beginning balance of undistributed retained
earnings of $0, negative adjustment of other retained earnings of $490,581 thousand, the remaining
amount of accumulated deficit was $350,581 thousand and was offset by capital reserve of$350,581 thousand.

2) Offsetting of deficit in 2020

The offsetting of deficit for 2019 is subject to the resolution of the shareholders in their meeting to
be held on June 23, 2020.

On June 23, 2020, the board proposed to offset the accumulated deficit in 2019. The deficit included
a net loss of $1,199,798 thousand, negative adjustment of other retained earnings of $577,427
thousand, the remaining amount of accumulated deficit was $1,777,225 thousand.

1) Offsetting deficit in 2019

The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thecurrent year.

The Company shall set aside profits as a legal reserve until the legal reserve amounts to the authorized
capital. The legal reserve could be used for offsetting deficit of the Company. If the Company has no
deficit in a fiscal year, the Company can distribute all or part of the capital surplus by cash or shareswith due consideration of finance, marketing and management requirements in accordance with thelaws and regulations.

Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”) basedon the amended Company Act, where the Company made profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws andregulations, and then any remaining profit together with any undistributed retained earnings shall be
used by the Company’s board of directors as the basis for proposing a distribution plan with due
consideration of any future aircraft acquisition plans and fund demands, which should be resolved in theshareholders’ meeting for the distribution of dividends and bonuses to shareholders by cash or shares(cash dividends cannot be less than 30% of total dividends distributed). However, if the Company’s
profit before tax in a fiscal year after deductions for the abovementioned items is not sufficient forearnings distribution, retained earnings can be used as a supplement for the deficiency.

$$

Balance at January 1, 2020
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transfers of initial carrying
amount of hedged items
Balance at December 31, 2020$$

Balance at December 31, 2019

Balance at January 1, 2019
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Disposal of subsidiaries
Transfers of initial carrying
amount of hedged items$(45,588)
9,685(35,903)-

20,229(79,545)-- 53 -

71,359--(134,252)--

107,262-$$(99,774)(54,707)107,262-(54,707)64,538105

79,392(14,854)

11,835(53,411)
8,368

-

-

-

-

42,619-$Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI(65,246)(9,664)

Exchange
Differences on
Translation of
the Financial
Statements ofForeign
Operations

The movement of other equity items is as follows:d. Other equity items(603)

1,119,013-(279,604)

20,014

1,378,603-

25,268$ 2,606,659

200,989

1,261,992(365,745)(293,518)

1,921,255-$ 1,143,678$ 1,143,678$

Gain (Loss) on
Hedging
Instruments(603)

1,130,140
8,473

79,392(282,623)

20,014

1,378,603(65,246)

58,223$ 2,543,766

200,989

1,146,544(45,588)(335,831)(293,518)

1,921,255(99,774)$ 1,196,233$ 1,196,233

$

Total

168
$ 3,578,345

8,528
22,586(89,955)(24,957)
619,387(416,438)(1,600)(9,272)
37,10452
331,427(375,024)$ 3,152,090$ 2,965,512
524,796(7,706)(100,136)(13,227)$ 3,578,345(419,814)
1,826
43,1572,993

For the Year Ended December 31
2020
2019

2,075
814

2,075

Shares(In Thousands)

2,889
2,889

$ 18,796
7,376$ 26,172$ 26,172$ 24,999

Market Value

2,075
2,889

Number of
Shares, End ofYear$ 18,796
7,376$ 24,999

Carrying
Amount(814)-

Reduction
During theYear- 54 -

The above acquisitions by subsidiaries of the Company’s shares in previous years was due toinvestment planning. The shares of the Company held by its subsidiaries were treated as treasury shares.
The subsidiaries can exercise shareholders’ right on these treasury shares, except for the right tosubscribe for the Company’s new shares and voting rights.

Mandarin Airlines
Dynasty Aerotech International Corp.

December 31, 2019

Mandarin Airlines

December 31, 2020

Subsidiary

For the year ended December 31, 2020
For the year ended December 31, 2019

Period of Treasury Shares

Number of
Shares,Beginning ofYear(In Thousands of Shares)

Treasury shares are the Company’s shares held by its subsidiaries as of December 31, 2020 and 2019were as follows:f. Treasury sharesEnding balance

Disposal of subsidiaries
Disposal of part equity of subsidiaries
Outstanding share options held by employees of subsidiaries
Acquisition of non-controlling interests in subsidiaries
Dividends paid by subsidiaries

Beginning balance
Net (loss) income attributable to non-controlling interests
Foreign exchange differences
Actuarial gains and losses on defined benefit plans
Cash flow hedge on changes in fair value of hedging instruments
Cumulative (loss) gain arising on changes in fair value ofhedging instruments reclassified to profit or loss
Effect of income tax

e. Non-controlling interests- 55 -

Gain on disposal property, plant and equipment
Net gain on financial assets at FVTPL
Gain (loss) on foreign exchange, net
Impairment loss on flying equipment
Foreign investment impairment loss under equity method
Gain on disposal of investments
Loss on non-current assets held for sale
Loss on sale and leaseback
Othersc. Other gains and losses

Interest income
Subsidy income
Dividend income
Othersb. Other income

Passenger
Cargo
Othersa. Revenue

27. NET INCOME$ 168,444,160$ 115,250,550$ 718,988$ 417,446
38,621
21,422
241,499

13,3472,287
527,234(424,573)(46,757)(337,528)$ (265,990)$

32,46027,580(141,611)
7,656(10,462)(103,775)(285,660)$ (473,812)$

For the Year Ended December 31
2020
2019

$ 686,574$ 282,506
29,30923,043351,716

For the Year Ended December 31
2020
2019

$ 111,413,435
43,793,256
13,237,469$ 25,704,367
81,917,976
7,628,207

For the Year Ended December 31
2020
2019

Dynasty Aerotech International Corp. sold a total of 814 thousand shares of the Company in 2020 andthe disposal price was $6,854 thousand.

169

429,457
771,280
2,139,382

46,528Post-employment benefits
Defined contribution plan
Defined benefit planf. Employee benefits expense

206,936$$$
198,237

12,380185,857

551,154
1,385,872
1,937,026

$
$

$

$

1,971,983(Continued)

574,809
1,397,174

For the Year Ended December 31
2020
2019

14,312
192,624$$ 32,601,400$ 31,167,247

An analysis of amortization by function
Operating costs
Operating expenses$ 30,927,997
1,673,403$ 30,171,665
995,582

An analysis of depreciation by function
Operating costs
Operating expenses$ 32,799,637$ 31,374,183

Depreciation and amortization expense$ 20,702,033
11,899,090
277
198,237$ 19,425,422
11,741,555
270
206,936

For the Year Ended December 31
2020
2019

1.01%-1.35%$$ 3,340,119$

Property, plant, equipment
Right of use assets
Investment properties
Intangible assets

e. Depreciation and amortization expense

0.71%-1.92%

Capitalization rate

78,863$- 56 -

342,963930,083
1,784,917$ 3,057,963$

For the Year Ended December 31
2020
2019

Capitalization interest

Interest expense
Bonds payable
Bank loans
Interest on lease liabilities

d. Finance costs$ 25,295,463$ 28,292,607(Concluded)$ 23,699,685
4,592,922$ 26,320,624$ 23,358,437$ 20,466,080
4,829,383$ 20,813,757
5,506,867$ 17,958,185
5,400,252- 57 -

Income tax expense recognized in profit or loss

Current tax
Current year
Prior year adjustment
Income tax on unappropriated earnings
Deferred tax
Current year
Adjustments to deferred tax attributable to changes in tax rates
and laws

The major components of tax expense were as follows:a. Income tax expense recognized in profit or loss

28. INCOME TAX

24,53487,994$ 578,185

35,149(551,574)$ (373,983)$ 523,670(5,546)378$ 118,814(29,845)628

For the Year Ended December 31
2020
2019

Information on the compensation of employees and remuneration of directors and supervisors resolvedby the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post
System website of the Taiwan Stock Exchange.

Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date that the annual consolidated financial statements are authorized for issue
are adjusted in the year that the bonuses and remuneration were recognized. If there is a change in the
proposed amounts after the annual consolidated financial statements were authorized for issue, thedifferences are recorded as a change in the accounting estimate.

According to the Company’s articles, the Company accrues compensation of employees at rates of noless than 3% of the net profit before income tax and compensation of employees, and accrues profit
bonus at a certain rate of profit before tax on the basis of the collective agreement signed with the China
Airlines Employees Union. For the years ended December 31, 2020 and 2019, the Company has
experienced a deficit, and therefore, no compensation of employees is estimated.

An analysis of employee benefits expense by function
Operating costs
Operating expenses

Other employee benefits
Salary expenses
Personnel service expenses

For the Year Ended December 31
2020
2019

170
586,135(5,546)
24,534(334)

12,129(29,845)
87,994
1,017- 58 -$ (256,643)

Total income tax recognized in other comprehensive income

19,864
9,685(366,022)
79,830$2020(278,664)
156,359

13,454(14,854)$ (123,705)

$

2019

$ 578,185

16,936(45,861)
378
8,468
11,157

388,066(711,001)
628
16,244$ (373,983)$ (19,362)
1,680$ (96,817)$ (130,759)(8,456)$ (653,797)

Recognized in other comprehensive income
Translation of financial statements of foreign operations
Fair value changes of financial assets at FVTOCI
Hedging instruments fair value revaluation for cash flow
hedging
Actuarial gain or loss on defined benefit plan

Deferred tax

b. Income tax recognized in other comprehensive income

Income tax expense recognized in profit or loss

Income tax expense calculated at the statutory rate (% for 2019,20% for 2018)
Effect of different tax of subsidiaries
Effect of adjustment to income tax
Non-deductible expenses in determining taxable income
Tax-exempt income
Income tax on unappropriated earnings (5%)
Basic income tax
Overseas income tax expense
Unrecognized loss carryforwards, investment tax credits andtemporary difference
Adjustments for prior years’ tax
Adjustments to deferred tax attributable to changes in tax rates
and laws
Adjustments to changes in tax rates and laws
Other

Profit before tax

For the Year Ended December 31
2020
2019

A reconciliation of accounting profit and income tax expense is as follows:

81,777475,365
557,142$$$ 5,337,626$ 1,891,851
592,977
2,240,003
296,857
315,938

Temporary differences
Unrealized foreign exchange gains
Others (Note)

Deferred tax liabilities

Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventory
OthersDeferred tax assets

188,447$

86,11281,6564,456

549,692(15,520)(42,447)
282,021(41,590)367,228

$

$

$

$

72,761

81,760(8,999)13,078(29,560)
82,917428,155(38,854)(429,580)

Recognized in
Profit or Loss

$

$

$

$

Recognized in
Profit or Loss

- 59 -

17
188,430$$ 5,152,070$ 1,765,052
510,060
1,811,848
335,711729,399

Beginning
Balance

For the year ended December 31, 2019

Temporary differences
Unrealized foreign exchange gains
Others (Note)

Deferred tax liabilities

Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventory
OthersDeferred tax assets

Beginning
Balance

For the year ended December 31, 2020c. Deferred tax assets and liabilities

414,806

414,806

158,163

80,246
77,917$$$$295,177

295,177

171,472

156,359
15,113

Recognized in
Other
Comprehensive
Income$$$$Recognized in
Other
Comprehensive
Income(34,976)(34,976)(17,281)(17,281)

$

$

$

$

757

757

1,006

1,006

Exchange
Difference

$

$

$

$

Exchange
Difference

163,433
859,651$$

557,142

81,777475,365$ 5,337,626$ 1,891,851
592,977
2,240,003
296,857
315,938

EndingBalance$ 1,023,084$$ 6,028,200$ 1,956,577
550,530
2,522,024
255,267
743,802

EndingBalance171$ 4,563,924

2030

Taiwan Airport Services

2030

Taoyuan International Airport Services

2030

Tigerair Taiwan Co., Ltd.

2026
2028
2030

Mandarin Airline Co., Ltd.

2028
2029

China Airlines, Ltd.

Expiry Year- 60 -

495,779
1,439,287

909,991$$$

223,805(Continued)

556,790$ 2,056,978

312,724
72,589524,678$$ 1,935,066$

UnusedAmount$ 1,348,096$ 6,814,896$ 3,599,987

2019$ 2,899,496
619,799
18,124
546,899
68,415
1,706,913
955,250-

December 31

18,124344,200
68,415671,529
1,645,438
852,281$d. Unused tax loss carryforwards as of December 31, 2020 were as follows:

Difference in depreciation

Loss carryforwards
2021
2022
2025
2026
2027
2028
2029
2030

2020

Deductible temporary differences, and unused loss carryforwards for which no deferred tax assets havebeen recognized in the consolidated balance sheets.

18,124
31,476
68,415
103,161
206,151
241,955
669,282(Concluded)$

85,648114,975

75,188$$$$

UnusedAmount- 61 -

Earnings (loss) used in the computation of diluted earnings (loss) per
share

Earnings (loss) used in the computation of basic earnings per share
Effect of potentially dilutive ordinary shares:
Interest on convertible bonds (after tax)

Basic earnings (loss) per share
Diluted earnings (loss) per share

$

$

$
$

140,000-

140,000

0.03
0.03(0.22)(0.22)$ (1,199,798)-$ (1,199,798)$$

For the Year Ended December 31
2020
2019

The numerators and denominators used in calculating earnings per share were as follows:

29. EARNING PER SHARE

The income tax returns for 2018 of the Company and its subsidiaries have been examined by the tax
authorities.

e. Income tax assessment

2025
2026
2027
2028
2029
2030

Taiwan Aircraft Maintenance And Engineering Co., Ltd.

2030

Kaohsiung Catering Services, Ltd.

2030

Cal Hotel Co., Ltd.

2030

Sabre Travel Network (Taiwan)

Expiry Year

172
5,418,096-

5,418,776

5,418,096

5,418,776$ 50,934

Net assets disposed of- 62 -$

Gain on disposal

7,656$ 34,036(50,934)
10,187
24,957(10,590)

Consideration received
Net assets disposed of
Fair value of equity
Non-controlling interests
Reclassification of other comprehensive income in respect of subsidiaries

c. Gain on disposals of subsidiaries$ 51,449
47,51017,035(49,742)(15,318)$ 34,036

Current assets
Cash and cash equivalents
Other current assets
Non-current assets
Current liabilities
Non-current liabilities

b. Analysis of assets and liabilities on the date control was lost

Consideration received in cash and cash equivalents

a. Consideration received from disposals

On January 21, 2019, the board of directors of the Company decided to sell part of Dynasty Holidays to
H.I.S. Taiwan Co., Ltd. for disposal price of $34,036 thousand and a gain on disposal of $7,656 thousand.
After the disposal, the proportion of ownership decreased from 51% to 20%, and the Company lost controlof the subsidiary.

30. DISPOSAL OF SUBSIDIARIES

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Groupassumed the entire amount of the compensation or bonuses would be settled in shares and the resulting
potential shares were included in the weighted average number of shares outstanding used in thecomputation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential
shares was included in the computation of diluted earnings per share until the number of shares to be
distributed to employees is resolved in the following year.

Weighted average number of ordinary shares used in thecomputation of diluted earnings per share

Weighted average number of ordinary shares in computation of basic
earnings per share
Effect of potentially dilutive ordinary shares:
Convertible bonds
Compensation of employees or bonuses issued to employees

In thousands

For the Year Ended December 31
2020
2019
$ (17,413)$ 34,036(51,449)$ 22,282,859$ 22,459,685

Fair Value

Fair Value$ 32,062,874

2019$ 32,052,625

Carrying
AmountDecember 31- 63 -

2) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) orindirectly (i.e. derived from prices); and1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;

The following table provides an analysis of financial instruments that are measured subsequent toinitial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fairvalue is observable:

b. Fair value of financial instruments measured at fair value on a recurring basis

Some long-term borrowings and capital lease obligations are floating-rate financial liabilities, so
their carrying amounts are their fair values. Fair values of bond payable trading in OTC are basedon quoted market prices (Level 1).

Bonds payable

Financial liabilities

Carrying
Amount2020

Except as detailed in the following table, the management considers the carrying amounts offinancial assets and financial liabilities recognized in the financial statements as approximating theirfair values.

a. Financial instruments not evaluated at fair value

32. FINANCIAL INSTRUMENTS

To support its operating activities and purchase of aircraft, the Group needs to maintain sufficient capital.
Therefore, the goal of capital management is to ensure financial resources and operating plan is able tosupport the future working capital, capital expenditures, debt repayment and dividend expenses and otherneeds.

The Group manages its capital to ensure that entities in the Group will be able to continue as going
concerns while maximizing the return to stakeholders through the optimization of the debt and equity
balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash
equivalents) and equity of the Group comprising issued capital, reserves, retained earnings, other equity andnon-controlling interests.

31. CAPITAL MANAGEMENT

Consideration received in cash and cash equivalents
Less: Cash and cash equivalent balances disposed ofd. Net cash inflow on disposal of subsidiaries

173

Financial assets at
FVTOCI
Investments in equity
instruments
United shares domestic
Unlisted shares foreign

Financial assets at
FVTPL
Domestic money
market funds
Foreign exchange
agreement

December 31, 2019

$

$

$

$

- 64 ----

511,758-

511,758

Level 1

$ 40,575,778

Financial liabilities forhedging

7,613,636---

274,761

$

$

$

$

Level 1

Financial assets forhedging

Financial assets at
FVTOCI
Investments in equity
instruments
United shares domestic
Unlisted shares foreign

Financial assets at
FVTPL
Domestic money
market funds

December 31, 2020

$

$

$

$

$

$

$

$

$

-

-

-

-

-

-

-

-

-

434

434

Level 2

9,307

Level 2

$

$

$

$

$

$

$

$

$

-

-

-

-

209,221

182,356

26,865

Level 3--

163,746

117,457

46,289Level 3

7,613,636

163,746

117,457

46,289274,761

$

$

$

$

209,221(Continued)

182,356

26,865512,192434

511,758

Total$ 40,585,085

$

$

$

$

Total

3) Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).

$ 50,997,687

Financial liabilities forhedging$$$

37,069147

11,749Level 2

$

$

$

3,955

Future cash flows are estimated based on observable forward
exchange rates at the end of the reporting period andcontract forward rates, discounted at a rate that reflects thecredit risk of various counterparties.

Discounted cash flows.

December 31, 2020
December 31, 2019

- 65 -

0.79-16.32
0.75-13.23

Multiplicator

The movements of Level 3 financial instruments are as follows:

80%
80%

Liquidity
Discount

The domestic unlisted equity investment is based on the comparative company valuation toestimate the fair value. The main assumptions are based on the multiplier of the market price ofthe comparable listed company and the net value per share, which have considered the liquidity
discount. The higher the multiplier or the lower the liquidity discount, the higher the fair valueof the relevant financial instruments.

The fair values of foreign exchanges and fuel options are determined using option pricing
models where the significant unobservable inputs are implied fluctuation. Changes in theimplied fluctuations used in isolation would result in an increase or decrease in the fair value ofthe foreign exchange forward contracts and fuel options.

5) Valuation techniques and inputs applied for Level 3 fair value measurement

Derivatives instruments

9,626

11,749Total$ 51,038,711(Concluded)$$

Valuation Techniques and Inputs

4) Valuation techniques and inputs applied for Level 2 fair value measurement
Financial Instruments

9,479

Level 3

There were no transfers between Levels 1 and 2 in the current period.

-$

Financial assets forhedging-$

Financial liabilities at
FVTPL
Derivative
instruments

Level 1

174
$
$
$

Balance at December 31, 2020

Balance at January 1, 2019
Recognized in other comprehensive income

Balance at December 31, 2019

5,524

4,901
623

-

5,524
(5,524)$ 209,221$ 132,191
77,030$ 163,746$ 209,221(45,475)

EquityInstruments

Sensitivity analysis- 66 -The Group has risk management and hedging strategies to respond to changes in the economic andfinancial environment and in the fuel market. To reduce the financial risks from changes in interest
rates, in exchange rates and in fuel prices, the Group has its operating costs stay within a specified
range by using appropriate financial hedging instruments and hedging percentages in accordance withthe “Processing Program of Derivative Financial Instrument Transactions” approved by the Group
shareholders to reduce the impact of market price changes on earnings. These risks include market risk(including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

d. Financial risk management objectives and policies- 67 -For the hedges of highly probable aircraft prepayments, as the critical terms (i.e. the notionalamount, useful life and underlying asset) of the foreign exchange forward contracts and theircorresponding hedged items are the same, the Group performs a qualitative assessment of theeffectiveness, and it is expected that the value of the foreign exchange forward contracts and thevalue of the corresponding hedged items will systematically change in the opposite direction in
response to movements in the underlying exchange rates.

The Group’s hedging strategy is to enter into foreign exchange forward contracts to avoid
exchange rate exposure of its foreign currency denominated receipts and payments and to
manage exchange rate exposure of its aircraft prepayments in the next year. Those transactions
are designated as cash flow hedges. When forecasted purchases actually take place, basis
adjustments are made to the initial carrying amounts of hedged items.

Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term debts, short-term notes payable, notes and accounts payable, accounts payable related parties, other payables, bonds payable, long-term loans, lease liabilities payable, leaseliabilities, provisions, part of other current liabilities, part of other non-current liabilities andguarantee deposits.

11,74951,038,711
144,459,429

512,192
9,626
43,143,106
209,221Note 1: The balances include loans and receivables measured at amortized cost, which comprise cash
and cash equivalents, notes and accounts receivable, accounts receivable - related parties,
other receivables, refundable deposits and other restricted financial assets.

40,585,085
165,458,441$

When New Taiwan dollars increase one dollar against U.S. dollars and all other variables were
held constant, there would be an increase in pre-tax profit and other comprehensive income forthe year ended December 31, 2020 of $345,440 thousand and $1,150,896 thousand and adecrease in pre-tax profit and other comprehensive income for the year ended December 31,
2019 of $105,266 thousand and $1,612,256 thousand, respectively.

Financial liabilities at FVTPL
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

Financial liabilities

274,761
7,613,636
45,898,091
163,746

The following details the Group’s sensitivity to a one dollar increase or decrease in the New
Taiwan dollar (the functional currency) against the relevant foreign currencies (i.e. the US
dollar). This is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis included only outstanding foreign
currency denominated monetary items and foreign currency forward contracts designated as
cash flow hedges and adjusts their translation at the end of the reporting period for US$1
increase/decrease against the New Taiwan dollar.

$

2019

Financial assets at FVTPL
Financial assets for hedging
Financial assets at amortized cost (Note 1)
Financial assets at FVTPCI - equity instrument investment

December 31

The Group was mainly exposed to the US dollar.

2020

The Group enters into foreign currency option contracts to hedge against the risks on change in
related exchange rates, enters into forward contracts to hedge against the risks on changes inforeign-currency assets, liabilities and commitments in the related exchange rates.

a) Foreign currency risk

The Group is primarily exposed to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group entered into derivative financial instruments to manage its exposure toforeign currency risk and interest rate risk. The Group enters into foreign exchange forward
contracts, foreign currency option contracts, and interest swap contracts with fair values that arehighly negatively correlated to the fair values of hedged items and evaluates the hedging
effectiveness of these instruments periodically.

1) Market risk

In addition, the Group has a risk management committee, which meets periodically to evaluate theperformance of derivative instruments and determine the appropriate hedging percentage. This
committee informs the Group of global economic and financial conditions, controls the entire financial
risk resulting from changes in the financial environment and fuel prices, and develops the strategy andresponse to avoid financial risk with the assistance of financial risk experts to effect risk management.

Financial assets

c. Categories of financial instruments

Because some financial instruments and nonfinancial instruments may not have their fair values
disclosed, the total fair value disclosed herein is not the total value of the Group’s collective
instruments.

$

Balance at January 1, 2020
Recognized in other comprehensive income

Derivative
Instruments

175

NTD/USD

NTD/USD

Currency

NTD 142,045/
USD5,000

NTD 127,906/
USD4,371

Notional
Amount2021.1.292021.5.28

2021.1.82021.11.9

Maturity

29.9-29.8

28.5-29.7

Forward Rate

Financial assets forhedging - current/
liabilities for hedging current
Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet

$

-

-

$

5,794

3,513

Carrying AmountAsset
Liability

NTD/USD

Aircraft prepayments forward exchange
contracts

NTD1,411,411/
USD47,000

NTD660,661/
USD22,000

NTD509,507/
USD16,967

Notional
Amount2020.11.4

2020.2.272020.11.30

2020.1.212020.12.24

Maturity

29.6-30.5

29.7-30.7

29.5-30.8

Forward Rate
Financial assets forhedging - current/
liabilities for hedging current
Financial assets forhedging - current/
liabilities for hedging current
Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet
$

77

32

38

$

18,385

10,193

8,491

Carrying AmountAsset
Liability- 68 -

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars, aviation fuel and aircraft
prepayments) was $(8,453) thousand, $(10,161) thousand and $(18,308) thousand, respectively.

NTD/USD

NTD/USD

Currency

Aviation fuel - forward
exchange contracts

Cash flow hedge
Aircraft rentals forward exchange
contracts

Hedging Instruments

9,084

9,137
(53)
-

(Note)

2019- 69 -

Had interest rates increased by one yard (25 basis) points and had all other variables been held
constant, the Group’s pre-tax profit for the year ended December 31, 2019 would havedecreased by $194,555 thousand.

Had interest rates increased by one yard (25 basis) points and all other variables been held
constant, the Group’s pre-tax profit for the year ended December 31, 2020 would havedecreased by $280,811 thousand.

The sensitivity analyses below were determined based on the Group’s exposure to interest rates
for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A one yard
(25 basis) point increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.

$ 91,414,806
77,821,887

December 31$ 68,883,667
112,324,305

2020

The carrying amount of the Group’s financial assets and financial liabilities with exposure tointerest rates at the end of the reporting period were as follows.

Sensitivity analysis(4,703)(Note)$$

AmountReclassified toProfit and Lossand theAdjusted LineItem

The Group enters into interest swap contracts to hedge against the risks on change in net
liabilities interest rates. The risk is managed by the Group by maintaining an appropriate mix of
fixed and floating rate borrowings, and using interest rate swap contracts and forward interest
rate contracts.

b) Interest rate risk

December 31, 2019$$ (92,264)

11,908(16,616)5

Decrease in operating costs or exchange loss.

$ (63,763)$ (35,897)(10,161)(17,705)

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAnd the amount of gains and losses on hedging instruments for the year ended December 31,
2019 reclassified from profit or loss to prepayments for equipment was $(603) thousand.

Note:

Fair value interest rate risk
Cash flow interest rate risk

Increase in operating costs or exchange loss.

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

4,939
4,367
(101,570)-$

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeCash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments

Comprehensive Income

For the year ended December 31, 2019

The amount of gains and losses on hedging instruments for the year ended December 31, 2020
reclassified from profit or loss to prepayments for equipment was $119,878 thousand.

Note:

Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments
Maintenance costComprehensive Income

For the year ended December 31, 2020

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars and aviation fuel) was $(3,513)
thousand and $(5,794) thousand, respectively.

Aviation fuel - forward
exchange contracts

Cash flow hedge
Aircraft rentals forward exchange
contracts

Hedging Instruments

December 31, 2020

The following table summarizes the information relating to the hedging of foreign currency risk.

176

USD

Currency-

Notional
Amount-Maturity-

Forward Rate
Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet

$

-

$

-

Carrying AmountAsset
Liability

Line Item in
Balance Sheet$

Carrying AmountAsset
Liability

-

-

$

-

-

$

-

7,973

The Group has established procedures to management operations related credit risk to maintain thequality of accounts receivable.

Operation - related credit risk

USD

NT$5,524

Note:

Increase in operating costs.

Cash flow hedges - fuel options

Comprehensive Income

Cash flow hedges fuel options- 70 -

2020.3.312020.12.31

$

623

9,479

$ (13,597)

AmountReclassified toProfit and Lossand theAdjusted Line
Item

Financial assets forhedging - current/
liabilities for hedging current

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
Income

US$49.65US$80.75

3,955(Note)$- 71 -

Credit risk on bank deposits, investments income and other financial instruments are measured andmonitor by the Group’s finance department. The Group’s trading partners and other parties were
well-performing banks and financial institutions, corporations, and government agencies, and so therisk of counterparties failing to discharge an obligation is low; therefore, there is no significant
credit risk.

Financial credit risk

Forward Rate

(Note)$

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Group. The Group’s credit risk, primarily comes from accounts receivable
generated from operating activities and bank deposits generated from investing activities, fixed
investment income and other financial instruments, operation related credit risk and financial credit
risk are managed separately.

2) Credit risk

(1,479)1,479

For the year ended December 31, 2019

Maturity$ (52,853)

AmountReclassified toProfit and Lossand theAdjusted Line
Item$

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments) was $5,524 thousand.

Currency$ (5,524)

Hedging Gain
Recognized in
Other
Comprehensive
IncomeFuel price increase of5%
Fuel price decrease of5%

For the Year Ended December 31
2020
2019
Other
Other
CompreComprehensive
hensive
IncomeIncomePre-tax Profit
Pre-tax Profit
Increase
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)

The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.

Sensitivity analysis

To assess individual customers, the Group consider into the financial condition of the customers,
the credit rating agency rating, the Group’s internal credit rating, transaction history and current
economic conditions and many other factors that may affect the repayment. Sometimes, the Group
uses certain credit enhancement tools to reduce the credit risk of specific customers. Since thecustomers of the industry is dispersed and non-related, the credit risk concentration is not criticalaviation.

Hedging Instrument

Notional
AmountIncrease in operating costs.

December 31, 2019

Note:

Cash flow hedges - fuel options

Comprehensive Income

For the year ended December 31, 2020

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments) was $0.

Cash flow hedges fuel options

Hedging Instrument

December 31, 2020

The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel swap contracts to hedge against adverse risks on fuel price changes.

c) Other price risk

177

$ 22,429,000

Lease liabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

December 31, 2020

1.62693.04922.4622

1.1128The Weighted
Average
Effective
Interest Rate(%)

- 72 -$ 113,030,407

9,770,964$ 51,470,765$
60,977,026
32,978,809
9,303,608

3,494,299

1 to 5 Years

26,195,346
9,249,609
12,531,511$

Less than 1Year17,175,894
1,815,449
1,280,778

7,982,767$ 28,254,888$

Over 5 Years

Bank loans with a repayment on demand clause were included in the second column of the tablebelow regardless of whether or not the banks would choose to exercise early their rights to
repayment. The maturity dates for other non-derivative financial liabilities were based on theagreed-upon repayment dates. The Group’s liquidity analysis for its derivative financial instruments
is also shown in the following table. The table was based on the undiscounted contractual net cash
inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted grosscash inflows and outflows on those derivatives that require gross settlement. When the amountpayable or receivable is not fixed, the amount disclosed has been determined by reference to theprojected interest rates as illustrated by yield curves at the end of the reporting period.

The following table shows the remaining contractual maturity analysis of the Group’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Group may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.

Liquidity and interest risk rate table

The Group (China Airlines, Ltd., Mandarin Airlines and Tigerair Taiwan Co.,
Ltd.)

Unused Bank
Loan Limit(Unsecured)The objective of the Group’s management of liquidity is to maintain cash and cash equivalents
sufficient for operating purposes, marketable securities with high liquidity and loan commitmentsthat are sufficient to ensure that the Group has adequate financial flexibility.

3) Liquidity risk

1.90583.11312.25731.1613

The Weighted
Average
Effective
Interest Rate(%)

$ 106,496,473$ 39,497,410$ 10,622,204
36,274,033
39,729,062
19,871,174

3,357,996

1 to 5 Years

15,254,687
10,060,822
10,823,905$

Less than 1Year

16,785,664
6,373,333
3,383,401

8,949,194$ 35,491,592$

Over 5 Years

Other income

Account Items- 73 -

Major shareholder of theCompany
Associate
Joint venture investment

Related Party Type

5,097
122
22,445

$
$
$

$
$

$

1,239
42,45725,457For the Year Ended December 31
2020
2019

Associate (become associate in January 2019)
Associate
Associate
Associate
Associate
Joint venture investment
Joint venture investment
Joint venture investment
Joint venture investment
Director of the Company and major shareholder
Director, key management personnel, chairman,
general manager of the Group, spouse andsecond-degree relative

Dynasty Holidays
China Aircraft Service
Airport Air Cargo Terminal (Xiamen) Co., Ltd.
Airport Air Cargo Service (Xiamen) Co., Ltd.
Eastern United International Logistics (Hong Kong)
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.
China Aviation Development Foundation
Othersb. Operating income

Relationship with the Company

Namea. Related parties’ names and relationships

The transactions, account balances, income and expenses between related parties were eliminated from theconsolidated report and, therefore, were not disclosed in this note. Except for the disclosures stated in othernotes, transactions between the Group and its related parties are disclosed below:

33. RELATED-PARTY TRANSACTIONS

Lease liabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

December 31, 2019

178
1,667

$

$

$
10,348

7,760
2,588

2019

$
56,474$ 414,106$ 1,911,091

December 31

1,667
-

2020

11,417457,005
516,347$$$$

For the Year Ended December 31
2020
2019

52,18776,380128,567$$$

December 31

$

2020

542,015

51,333484,700
5,982

2019

CAL Park
Taiwan Air Cargo Terminal
Tigerair Taiwan
Taiwan Air Craft Maintenance

The Company

g. Endorsements and guarantees- 74 -$ 3,850,000
2,656,591
2,000,000

Authorized
Amount$ 1,892,540
265,062
1,336,000$ 3,850,000
1,080,000
3,012,668
2,000,000

Authorized
AmountDecember 31

ActualAmount Used2020

$ 2,129,400
685,444
1,279,827

ActualAmount Used

2019

Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots, the Company paid the rental based on
usage hours. In 2020 and 2019, the Company had paid rentals of about $11,417 thousand and $56,474
thousand, respectively.

f. Leases of properties (operating leases)

The remaining balance of notes and accounts payable - related parties will be paid in cash if they are notsecured.

Associate
Joint venture investment
Major shareholder of the Company

Related Party Typee. Accounts payable - related parties (generated by operations)

The receivables are not guaranteed, and there is no allowance for doubtful accounts related to accounts
receivable - related parties. The payment periods of such accounts were within 30 to 90 days, and there
are no overdue payments.

Joint venture investment
Major shareholder of the Company

Related Party Typed. Accounts receivable - related parties (generated by operations)

Major shareholder of the Company
Associate
Joint venture investment

Related Party Typec. Purchases$$
35,90133,376
2,525$$

42,05539,6932,362

For the Year Ended December 31
2020
2019

$ 31,260,801
71,033,617
130,052$ 102,424,470

302,807$ 94,334,420

2019$ 34,170,076
59,861,537

December 31- 75 -The original total expenditure of the previous main construction project was $8,490,000 thousand.
However, TACT filed an arbitration for the total amount of expenditure in 2012 to revise the total
amount to $6,840,000 thousand.

a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of transfer of the chartered operation rights from CAA to TACT. The terminal
expansion and improvements and the equipment installation and upgrade in the Taiwan Taoyuan
International Airport cargo terminal and Kaohsiung cargo terminal were expected to be completed in
the first 10 years of the COP. This construction project was approved by TACT’s board of directors in
2003. TACT filed an application for a 10-year extension of the COP for the cargo terminals in the
Taiwan Taoyuan International Airport and Kaohsiung International Airport and received the approval
from the Taoyuan Airport Corporation and CAA in July 2013 and July 2015, respectively.

As of December 31, 2020, except for the disclosures stated in other notes, the Group had commitments andcontingent liabilities as follows:

35. COMMITMENTS AND CONTINGENT LIABILITIESProperty, plant and equipment
Right-of-use assets
Restricted assets - non-current
Pledged certificate deposits

2020

The following assets were pledged or mortgaged as collateral for long-term bank loans, lease obligations
and business transactions:34. PLEDGED ASSETS

The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.

Short-term employee benefits
Post-employment benefits

h. Compensation of key management personnel

179

Cargo Terminal Expansion Construction Consultant
Contract
Cargo Terminal Expansion and Enhancement
Construction
TACT warehouse management system integrated
revision contract

CECI Engineering
Consultant, Inc., Taiwan
Bin Li Construction Co.,
Ltd., Taiwan
Trade-Van Information
Services Co.
30,000275,000$ 552,285- 76 -

During the 50 years beginning from the initial operation date of CAL Park to the end of the construction
period, CAL Park should pay royalties based on the operating revenue estimated in the financial plan of
its investment execution proposal. If the sales and business tax declared and filed by a business entity
for a single year exceeds 10% of the operating revenue as estimated in the financial plan in its
investment execution proposal, CAL Park should pay additional royalties at 10% of this excess.

CAL Park should pay land rentals on the date of the registration of surface rights. The rental rates forthe development stage differ from those for the operation period. The rental rates should follow Article
No. 2 of the “Regulations for Favorable Rentals Regarding Public Land Lease and Superficies inInfrastructure Projects,” which states that rental calculation in the development stage should include theland value added tax plus the necessary maintenance fee; in the operation period, rentals are 60% of theamount based on the National Building Land Rental Standard plus land value tax, value-added tax andthe necessary maintenance fee.

CAL Park’s business scope includes providing business and other operating space related to civil airtransport, hotels, aviation service and related industries adhered to the base and essential services law
and approved by the Taoyuan Airport Corporation.

b. CAL Park Co., Ltd. (“CAL Park”) signed “Taiwan Taoyuan International Airport Aviation Operation
Center (including Airport Hotel) Construction Operating Contract” with the CAA on September 20,
2006. However, on November 1, 2010, the Taoyuan Airport Corporation took over the CAA’s rights on
this contract from the CAA. The contract is effective for 50 years (consisting of the development stage
and operating period) from the contract date. Three years before contract expiry date, CAL Park has thefirst option to renew the contract once with a 20-year extension.

TACT should pay royalties to Taoyuan Airport Corporation and the CAA during the charteredoperation period. The calculation is based on annual sales (including operating and non-operating
revenue but excluding the rental revenue from specific districts), and Taoyuan Airport Corporation and
the CAA have the option to adjust the royalty rates every 3 years starting from the date of transfer of thechartered operation rights on the basis of actual revenue and expenditures. The current royalty rate is
6%.

Assets acquired from cargo terminal improvements, equipment acquisition and subsequent equipment
acquisition and replacement will be transferred to the government without any compensation when thechartered operating license expires.

As of December 31, 2020, the cumulated consultant service expense and construction equipment had
amounted to $487,645 thousand (VAT included) and $5,372,129 thousand (VAT included),
respectively. Upon completion of the projects, the amount of $468,754 thousand (VAT included) and$5,306,700 thousand (VAT included) were reclassified to property, plant, and equipment. The
remaining cumulative payments were recognized under construction in progress.

Contract Title

Client NameContract
Amount (VAT
Included)

As of December 31, 2020, TACT had signed the following construction contracts with unrelatedparties:- 77 -

Since the outbreak of the Covid-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have not removed their travel restrictions.
Because the number of inbound and outbound passengers has decreased significantly, the Group adjusts the
proportion between passenger aircraft and cargo aircraft used in operations to comply with thegovernment’s epidemic prevention policy and cater to market demand. The Company reduces the frequencyof passenger air services that have been severely affected, uses the passenger aircraft to support the cargoflight arrangement and expands the function of all-cargo aircraft to maximize the opportunities from air
cargo business. Since March 2020, cargo has become the main source of revenue for the Group.

36. IMPACT OF COVID-19

e. In October 2019, Tigerair Taiwan Co., Ltd. signed a contract with Airbus S.A.S. to purchase sevenA320neo aircraft and an option to purchase two A320neo aircraft. The total list price of the sevenaircraft is US$729,746 thousand, and the list price of the option to purchase two aircraft is US$208,499
thousand. The expected delivery period of the seven aircraft ranges from 2025 to 2027. As of December
31, 2020, the list price has been paid in the amount of US$18,549 thousand (recognized as prepayments
for aircraft). In addition, in December 2019, Tigerair Taiwan Co., Ltd. signed a contract with
International Aero Engines Company to purchase two backup engines of A320neo aircraft. The total list
price of the two engines is US$27,345 thousand. As of December 31, 2020, the list price has been paidin the amount of US$2,988 thousand (recognized as prepayments for aircraft). In February 2020,
Tigerair Taiwan Co., Ltd. rented three A320-neo aircraft from Sky High 117 Leasing Company
Limited, one A320-neo aircraft from Sky High 118 Leasing Company Limited, one A320-neo aircraftfrom Sky High 119 Leasing Company Limited and one A320-neo aircraft from Sky High 120 Leasing
Company Limited. The total list price was around US$250,000 thousand and lease payment will changeon the basis of actual differences of the year. The aircraft was initially scheduled to be delivered
between 2021 and 2024. As of December 31, 2020, one aircraft that was supposed to be delivered in
2021 had been postponed.

d. In July and August 2019, the Company signed a contract with the Boeing Company to purchase three
B777F aircraft and exercised the option to purchase three B777F aircraft. The total list price of the six
aircraft is US$2,320,315 thousand, and the expected delivery period is from 2020 to 2023. As of
December 31, 2020, two out of the six aircraft has been delivered, the list price had been paid in theamount of US$122,186 thousand (recognized as prepayments for aircraft), and the total list price of theremaining four aircraft is US$1,552,879.

c. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery period of the eleven aircraft ranges from 2024 to 2026. As of
December 31, 2020, the list price has been paid in the amount of US$32,578 thousand (recognized as
prepayments for aircraft). In October 2019, the Company signed a contract with International AeroEngines Company to purchase four backup engines of A321neo. The total list price of the four engines
is US$60,289 thousand.

CAL Park should submit the asset transfer plan within five years before the expiry date of the charteredoperation period, begin the negotiation of the asset transfer contract, and complete the assignation nolater than three years before the expiry date of the chartered period. If CAA decides not to keep thebuilding and equipment on the base area, CAL Park should remove all related building and equipment
within three months after the expiry date.

180$ 19,957,598
635,899
1,261,257
955,769
2,433,737- 78 -

2,208,214
6,513
73,825
3,725,514
144,37628.4091
34.8432
3.66030.27504.344062,733,383
226,949
270,223
1,024,509
627,168

74,501,305
257,155
288,117
1,821,237
659,478$ 19,771,957
619,571
880,868
1,732,130
1,831,012

Carrying
Amount1) Financing provided: Table 1 (attached).

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:

38. ADDITIONAL DISCLOSURES- 79 -

8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 5 (attached)7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 4 (attached)6) Disposals of individual real estates at costs or prices of at least NT$300 million or 20% of thepaid-in capital: None

5) Acquisitions of individual real estates at costs or price of at least NT$300 million or 20% of thepaid-in capital: None

4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: None.

3) Marketable securities held: Table 3 (attached).

28.4091
34.8432
3.66030.27504.344030.0300
33.6700
3.85950.27664.304830.0300
33.6700
3.85950.27664.3048Exchange Rate

For the years ended December 31, 2020 and 2019, the Group’s net foreign exchange gain (losses) were$527,234 thousand and $(141,611) thousand, respectively. It is impractical to disclose net foreign exchange
gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions
and functional currencies of the entities in the Group.

2,480,896
7,638
74,651
6,584,434
153,196

658,407
18,401
228,234
6,262,272
425,343

Monetary items
USD
EUR
HKD
JPY
CNY

702,507
18,250344,577
3,475,525
560,252

Exchange Rate

Carrying
Amount$Foreign
Currencies (InThousands)

2) Endorsements/guarantees provided: Table 2 (attached).

$

Foreign
Currencies (InThousands)

Monetary items
USD
EUR
HKD
JPY
CNY

Financial liabilities

Monetary items
USD
EUR
HKD
JPY
CNY

Financial assets

December 31, 2019

Financial liabilities

Monetary items
USD
EUR
HKD
JPY
CNY

Financial assets

December 31, 2020

The following information was aggregated by the foreign currencies other than functional currencies of thegroup entities and the exchange rates between foreign currencies and respective functional currencies weredisclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

37. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe Group has obtained relief loan from the government. Refer to Note 19 for details on the amount of loan
and its allocation.

Also, the Group received several remedy measures such as government subsidy for operation and reduction
on rent. In 2020, because of the Covid-19, the Group received subsidy of $1,293,388 thousand for the
airport landing fees and parking fees, etc. The subsidy for housing and land rental, and salary expenses was$961,208 thousand, recognized as deduction from other income and expenses.

The Group continues to adjust the response measures according to the situation. In addition, to ensure theadequate liquidity, the Group also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Group’s policies to control spending include suspension of non-urgent capital expenditures, reduction inand postponement of payments.

181

$

Operation profit and losses
Interest revenue
Investments income accounted forusing the equity method
Revenue
Financial costs
Expenses

Total assets- 80 -$ 15,319,185(6,120,289)(84,604)(4,044,571)$$ 284,194,084

1,970,802
78,805,253(653,797)(200,834)
711,308(3,057,963)(573,230)

2,184,416
282,506$ 115,250,550$ 203,418,029$ 194,219,132$$

Identifiable assets
Investments accounted for using
the equity method
Assets(509,281)

7,263,997

Total

$

$

$

For the Year Ended December 31, 2020
Adjustments
Othersand Write-offs

Profit before income tax

2,778,301$ 112,031,124

Operating revenue

Air
Transportation(6,317,254)$ 293,047,979

2,223,793
71,828,530(96,817)332,305495,249(3,340,119)(667,519)

2,665,821
417,446

Total assets

Identifiable assets
Investments
accounted forusing the equity
methodAssetsProfit before
income tax

Operation profit
and losses
Interest revenue
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses

Operating revenue

Total assets

Identifiable assets
Investments
accounted forusing the equity
methodAssetsProfit before
income tax

Operation profit
and losses
Interest revenue
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses

Operating revenue

$

$

$

$

1,399,591

40,324,160

America

1,336,074

53,248,499

America

168,356

10,515,272$$

222,584

39,232,038

Northeast Asia$$

Northeast Asia

213,936

21,782,132$$

154,074

33,354,405

Southeast Asia$$

Southeast Asia

$

$

$

$

$

$

15,383

4,377,261

Australia$$- 81 -

26,707

15,638,657

Europe

$

$

8,985

7,073,170

Australia$$

50,94821,790,943

China

53,322

7,374,972

China

For the Year Ended December 31, 2019

20,984

9,736,725

EuropeFor the Year Ended December 31, 2020

12,260,260

Domestic

18,146,403

Domestic$ 223,450,021$$ 207,730,263$(6,120,289 )(4,044,571 )$$(6,317,254 )(7,115,616 )Adjustment andEliminations$$

Adjustment andEliminations(653,797 )(200,834 )
711,308(3,057,963 )(573,230 )

2,184,416
282,506(96,817 )332,305495,249(3,340,119 )(667,519 )2,665,821
417,446$ 293,047,979

2,223,793
71,828,530$ 218,995,656$$$ 168,444,160

Consolidation$ 284,194,084

1,970,802
78,805,253$ 203,418,029$$$ 115,250,550

Consolidation

The geographical segment information of the Company and its subsidiaries in 2020 and 2019 is listed
below:

b. Geographical segment

Total assets$ 15,915,060$$ 218,995,656$ 209,397,850(86,446)

Identifiable assets
Investments accounted for using
the equity method
AssetsThe Group mainly engages in air transportation services for passengers and cargo; the services include
airport service, storage service, and other air transportation services which are below the financial
threshold for an operating segment of the Group. Therefore, the Group’s main reportable segment is airtransportation. The accounting policies of the reportable segment are consistent with the accounting
policies described in Note 4.

$$

1,449,620

Profit before income tax$

a. Segment information

39. SEGMENT INFORMATION

1,302,647$ 168,444,160$(7,115,616)

Operation profit and losses
Interest revenue
Investments income accounted forusing the equity method
Revenue
Financial costs
Expenses$c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 8 (attached)d. Information of major shareholders: Table 9 (attached)$ 11,067,323

Total$ 164,492,453

For the Year Ended December 31, 2019
Adjustments
Othersand Write-offs

Operating revenue

Air
Transportationb. Investment in mainland China: Table 7 (attached)10) Derivative financial transactions (Notes 7 and 32)

9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 6 (attached)Financial
Statement
Account$ 103,244

HighestBalance for
the Period$

99,432EndingBalance$

28,409ActualBorrowingAmount2.25

Interest Rate(%)
Short-term
financingfacility isnecessary

Nature ofFinancing

The maximum amount of loans to others by the Group is up to 40% of the Group's net worth as stated in its latest financial statements.

Y

RelatedParty

The maximum amount of loans to an individual counterparty by the Group is up to 20% of the Group's net worth as stated in its latest financial statements.

Dynasty Hotel of Notes receivable
Hawaii, Inc.

Borrower

Note 1:

Cal-Dynasty International

Lender

Note 2:

1

No.

FINANCING PROVIDED TO OTHERSFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

182
$

-

Business
Transaction
AmountOperatingcycle capital
expenditure

Reasons for
Short-term
Financing$-

Allowance for
Impairment
Loss
Item
$

Value

Collateral-$ 144,128

Financing
Limit for
Each
Borrower$ 288,256

Aggregate
Financing
Limit

Note

TABLE 1

2,000,000$ 3,850,000
3,038,197
2,000,000$ 3,850,000
2,656,591
1,336,000$ 1,892,540
265,062$

Based on the Company’s guidelines, the allowable aggregate amount of collateral guarantee is up to 50% of the Company’s shareholders’ equity.

11,511,896$ 11,511,896
11,511,896

Note 2:

100% owned subsidiary
75.86% owned subsidiaryby direct and indirect
holdings
100% owned subsidiary

Nature of Relationship

ActualBorrowingAmount

-

3.47

6.69
4.62

Ratio ofAccumulated
Value ofAmount ofCollaterals
Collateral toProperty, Plant Net Equity ofor Equipment
the Latest
Financial
Statement (%)

Based on the Company’s guidelines, the maximum amount of guarantee to an individual counterparty is up to 20% of the Company’s shareholders’ equity.

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

China Airlines
CAL Park(the “Company”) Tigerair Taiwan Co., Ltd.

Name

Limit on EachCounterparty’s
Maximum
Endorsement/
Balance for the Ending Balance
Guarantee
PeriodAmount(Note 1)

Note 1:0No.

Endorsement/
Guarantee
ProviderCounterparty

ENDORSEMENT/GUARANTEE PROVIDEDFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

183

28,779,741$ 28,779,741
28,779,741

Maximum
Collateral/
Guarantee
Amounts
Allowable(Note 2)

Y

Y
Y

N

N
N

N

N
N

Endorsement/ Endorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Given by Parent
Given on Behalf
Given byon Behalf of
Subsidiaries on of Companies in
Subsidiaries Behalf of Parent Mainland China

TABLE 2

Shares
China Airlines

SharesTaikoo (Xiamen) Landing Gear Services
HAECO Composite Structures (Jinjiang)

Beneficiary certificatesFranklin Templeton SinoAm Money Market FundFSITC Money Market Fund

SharesTransAsia Airways

Beneficiary certificates
Taishin 1699 Money Market Fund

Beneficiary certificates
Prudential Financial Money Market Fund
Prudential Financial Return Fund
Taishin 1699 Money Market Fund

Mandarin Airlines

Cal-Asia Investment

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Dynasty Aerotech International Corp.

Kaohsiung Catering Services

Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial Statement Account

-

-

-

-

-

Financial assets at FVTPL - current
Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial assets at FVTPL - current

Financial assets at FVTPL - current

Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial assets at FVTPL - current
Financial assets at FVTOCI - non-current

Parent company Financial assets at FVTOCI - non-current-

Relationshipwith the Holding
Company

Note 3: The table only lists financial assets that are in accordance with IFRS 9.

Note 2: The Company does not issue shares because it is a limited company.

5,407,832
4,493,628
1,106,807

349,523

2,277,786

4,051,153
308,094-

2,074,628

1,359,368
135,937
1,100,000
12,000,000
4,021

Number of
Shares/Units

Note 1: The subsidiary’s net asset value was $117,457 thousand, which included ordinary shares and preference shares as of and for the year ended December 31, 2020.

SharesEverest Investment Holdings Ltd. - ordinary shares
Everest Investment Holdings Ltd. - preference shares
Chung Hua Express Co.
Jardine Air Terminal Services
The Grand Hi Lai Hotel

Marketable Security Type and Issuer/Name

China Airlines (“Parent company”)

Holding Company Name

MARKETABLE SECURITIES HELDDECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

184$

86,281
70,94915,103

4,771-

42,24755,411

16,58524,999106,779
10,67829,704
-

-

-

0.40

-

2.59
5.45

-

13.59
11.00
15.00
0.02

$

86,281
70,94915,103

4,771-

42,24755,411

16,585----Note 2
Note 2--

29,70424,999Note 1

Note

117,457

December 31, 2020
Percentage of Market Value
Carrying
Ownership
or Net Asset
Amount(%)
Value

TABLE 3

Taiwan Air Cargo Terminal
Taiwan Airport Services
Mandarin Airlines
Tigerair Taiwan
Taoyuan International Airport Service
Dynasty Aerotech International Corp.
CAL Park
Global Sky Express
Eastern United International Logistics
China Pacific Catering Services

Taiwan Airport Services
Tigerair Taiwan

CAL Park

Mandarin Airlines

Cal Hotel

Related Party

China Airlines, Ltd.
(“China Airlines”)

Company Name

Same parent company

Same parent company
Same parent company

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Equity-method investee
Equity-method investee

Nature of Relationship

Purchase

Purchase
Purchase

Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase

Purchase/
Sale$

102,220

152,475
149,048

659,596
107,482(221,527)(240,768)
1,043,264
352,214
209,701(139,335)
388,451
473,460

Amount

48.59

4.14
4.05

0.69
0.11
(0.21)(0.23)
1.10
0.37
0.22
(0.13)
0.41
0.50

% of
Total

Transaction Details

1 month

1 month
1 month

30 days
40 days
2 months
1 month
40 days
2 months
2 months
15 days
2 months
90 days

Payment Terms
$

-

-

-

-

-

-

-

$

(76)

(22,407)(11,711)(67,465)(13,046)
69,17912,008(215,542)(49,108)
8,180(41,725)(71,674)(0.25)(5.58)(2.92)(3.39)(0.76)
0.71
0.12(12.56)(2.86)
0.08(2.43)(4.18)

Note/Account Payable or
Receivable% ofPayment Terms Ending Balance
Total

Abnormal Transaction
Unit PriceTOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

185

-

-

-

-

Note

TABLE 4

Parent company

Parent company

Nature of Relationship

215,542$ 101,725

Ending Balance

3.71

Note

Turnover Rate$

AmountAccounts receivable and revenue were not directly correlated because of the particular industry characteristics, and therefore the turnover rate was not applicable.

China Airlines

Taoyuan International Airport Service

Note:

China Airlines

Related Party

Mandarin Airlines

Company Name

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

186
-

-

-

Action Taken

Overdue$

215,542

56,870

Amounts Received
in Subsequent
Period$--Allowance for
Bad Debts

TABLE 5

Represents the consolidated financial information of the foreign holding company disclosed in accordance with local regulations.

The Company does not issue shares because it is a limited company.

Difference caused by lease arrangement between consolidated entities.

Difference caused by acquisition.

Note 4:Note 5:Catering business

Note 3:Kaohsiung, Taiwan

Airport services and investment

Note 2:

Delica International Co., Ltd.

Kaohsiung Catering
Services

Samoa

Forwarding and storage of air cargo

Adopted the treasury shares method in recognizing investment income or loss.

Taiwan Airport Service (Samoa)

Taiwan Airport Services

Hong Kong

Note 1:

Eastern United International Logistics

CAL-Asia Investment

Taoyuan, Taiwan
Air transportation and maintenance of aircraft
Airport services

Taipei, Taiwan
Tokyo, Japan
Taipei, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan

Yestrip
Dynasty Holidays
Global Sky Express
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
NORDAM Asia Ltd.

Taipei, Taiwan
Taipei, Taiwan

Aircraft maintenanceTaoyuan, Taiwan

Dynasty Aerotech International Corp.

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Real estate lease and international trade
Air transportation and maintenance of aircraft
Air cargo and storage
A holding company, real estate and hotel services
In-flight catering
Airport services
General investment
Sale and maintenance of hardware and software
Airport services
Airport services
In-flight catering
Hotel business
Cleaning and leasing of the towel of airlines, hotels,
restaurants and health clubs
Cleaning of aircraft and maintenance of machine andequipment
Travel businessTravel business
Forwarding and storage of air cargo
Air transportation and maintenance of aircraft
Aircraft maintenance

Main Business and ProductTaoyuan, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan
Los Angeles, USA
Taoyuan, Taiwan
Taoyuan, Taiwan
Territory of the British Virgin Islands
Taipei, Taiwan
Hong Kong International Airport
Taipei, Taiwan
Kaohsiung, Taiwan
Taoyuan, Taiwan
Taoyuan, Taiwan

Location

CAL Park
Mandarin Airlines
Taiwan Air Cargo Terminal
Cal-Dynasty International
China Pacific Catering Services
Taoyuan International Airport Services
CAL-Asia Investment
Sabre Travel Network (Taiwan)
China Aircraft Service
Taiwan Airport Services
Kaohsiung Catering Services
Cal Hotel Co., Ltd.
China Pacific Laundry Services

Investee Company

Mandarin Airlines

China Airlines, Ltd.

Investor Company

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars and Foreign Currencies, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

187

US$

HK$

10,200

5,877

3,329

154,330
11,65837,97526,265
JPY
8,000
2,500
3,109,907
1,350,000

77,2701,500,000
2,042,368
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500$

December 31,
2020

US$

HK$

10,200

5,877

3,329

154,330
11,6582,450

26,265
JPY
20,4002,500
1,272,063
1,350,000

77,2701,500,000
2,042,368
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500$

December 31,
2019

Investment Amount

1,020,000-

1,050,000

15,433,000
469,755

3,797,500

1,600,000
160
250,000
212,420,046
135,000,000

77,270150,000,000
188,154,025
135,000,000
2,614,500
43,911,000
34,300,000
7,172,346
13,021,042
28,400,000
20,626,644
21,494,637
46,500,000
13,750,000

51.00

100.00

35.00

5.51
1.08

49.00

100.00
20.00
25.00
75.86
100.00100.00100.0093.99
54.00
100.0051.00
49.00
100.00
93.93
20.00
47.35
53.67
100.00
55.00

$

7,871

373,442

51,116

167,400
4,567

37,767

10,2705,237
7,643
2,304,113
699,793

136,630

1,605,033
1,223,259
1,556,133
1,188,110
695,959
602,688469,979
232,883
277,234
200,794
512,926
405,353
149,353

Balance as of December 31, 2020
Percentage
Number ofof
Carrying
Shares/Units Ownership
Amount(%)$

33,986

4

22,35539,829(1,371,056)(156,739)(93)(15,067)(23,701)
7,796(1,371,056)(222,223)

Note

222,355 Note 3

13,940(104,501)(1,688)

(46)

-

-

-

-

(14,998) Note 4(4,740)1,949(956,008) Note 4(222,196)-

33,967 Note 453,770 Note 4(353,642) Notes 1 and 4
172,017(20,542) Note 2(136,459)(126,858)
45,068(46,951)(102,758)(74,214)(8,309) Note 5(73,906) Note 4(15,475)-

Investment
Income (Loss)

9,350 $
(376,255)
318,494(21,960)(267,566)(258,894)
45,068(49,995)(513,790)(156,739)
9,129(73,586)(28,137)Net Income(Loss) of theInvestee

TABLE 6

Landing gear
2,360,511
maintenance services (US$ 83,090)

Composite material

Taikoo (Xiamen) Landing
Gear Services

HAECO Composite
Structures (Jinjiang)

Investment Amount
Authorized by Investment
Commission, MOEA

$618,216 (Note 3)

Accumulated Investment in
Mainland China as ofDecember 31, 2020

$253,427(US$8,920)

331,335
11,663)Forwarding and storage60,817of air cargo(RMB 14,000)

Airport Air Cargo Service(Xiamen) Co., Ltd.

(US$

Forwarding and storage $ 1,105,474
of air cargo(RMB 254,480)

Main Business andProduct

Indirect(Note 1)

Indirect(Note 1)

Indirect(Note 1)

Indirect(Note 1)

18,068636)

61,1142,151)

55,325
1,947)$34,535,690 (Note 4)

Limit on Investment

(US$

(US$

(US$

$
118,920 $(US$4,186)

Accumulated
Outflow of
Total Amount
Investment Investmentof Paid-infrom Taiwan as
TypeCapitalof January 1,
2020

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Investee Company Name

China Airlines

INVESTMENTS IN MAINLAND CHINAFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

188
Outflow

-

-

-

-

$

Inflow

Investment Flow

-

-

-

-

Net Income(Loss) of
the Investee

(US$

(US$

(US$

18,068636)

61,1142,151)--

55,32568,272
1,947) (RMB 15,976)$
118,920 $91,311(US$4,186) (RMB 21,367)

Accumulated
Outflow ofInvestment
from Taiwan asof December 31,
2020

5.45

2.589

14.00

14.00

% Ownershipof Direct orIndirect
Investment

Accumulated
InwardRemittance ofEarnings as ofDecember 31,
2020

(RMB

-

-

(RMB

10,128357)-

44,333
1,561)(Note 2)

(Continued)

16,585
3,818) (US$

-

9,566
134,918
2,237) (RMB 31,058) (US$$12,794 $
238,717 $
100,470(RMB 2,991) (RMB 54,953) (US$3,537)(Note 2)

Investment
Gain (Loss)

Carrying
Amountas ofDecember 31,
2020

TABLE 7

Forwarding and storageof air cargo(RMB

Airport Air Cargo Service(Xiamen) Co., Ltd.

$168,895(US$5,945)$168,895(US$5,945)

(US$

-

-

$

Inward$254,438(Note 6)Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA

54,737
1,927)$
114,158 $(US$
4,018)

Outward

Remittance of Funds

-

-

(US$

54,737
68,272
1,927) (RMB 15,976)

14.00

14.00

% Ownershipof Direct orIndirect
Investment

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2020

(RMB

9,558
135,128
2,237) (RMB 31,107) (US$Note 6: The RMB and U.S. dollar amounts of assets are translated at year-end rates and those of gains (losses), at the average of the year-end rates for the reporting period.

Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which in return, invested in a company located in mainland China.

(Concluded)

59,426
2,092)$
12,784 $237,502 $129,010(RMB 2,991) (RMB 54,673) (US$4,541)

Investment
Income (Loss)

Carrying
Amount as ofDecember 31,
2020

Note 4: The limit stated in the Investment Commission’s regulation, “Investment or Technical Cooperation in Mainland China Adjustment Rule,” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.

Note 3: The amount comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.

Note 2: The inward remittance of earnings in 2020 amounted to US$3,536,561 and US$1,560,538.

Net Income(Loss) of theInvestee$
114,158 $
91,311(US$
4,018) (RMB 21,367)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2020

Note 1: China Airlines, Ltd. the “Company” invested in CAL-Asia Investment, which, in turn, invested in a company located in mainland China.

Investment Amounts Authorized by
Investment Commission, MOEA

Accumulated Outward
Remittance for Investment in
Mainland China as of December 31, 2020

60,817 Indirect
14,000 ) (Note 5)

Forwarding and storage $ 1,105,474 Indirectof air cargo(RMB 254,480 ) (Note 5)

Main Business andProduct

Accumulated
Outward
Remittance for
Method ofInvestment
Paid-in Capital
Investment
from Taiwan asof January 1,
2020

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Investee Company

Taiwan Airport Services

189

China Airlines, Ltd.

Taiwan Air Cargo Terminal

Mandarin Airlines

Taoyuan International Airport Services

Taiwan Airport Service

Dynasty Aerotech International Corp.

Global Sky Express

CAL Park

Cal Hotel Co., Ltd.

Tigerair Taiwan Co., Ltd.

1

2

3

4

5

6

7

8

9

Company Name

0No.

China Airlines, Ltd.

CAL Park

China Airlines, Ltd.
Cal Hotel Co., Ltd.

China Airlines, Ltd.

China Airlines, Ltd.

China Airlines, Ltd.
Mandarin Airlines

China Airlines, Ltd.
China Airlines, Ltd.

Taiwan Airport Service
China Airlines, Ltd.
China Airlines, Ltd.
China Airlines, Ltd.

China Airlines, Ltd.

Global Sky Express
Mandarin Airlines
Tigerair Taiwan Co., Ltd.
Taoyuan International Airport Services
Taiwan Airport Service
Dynasty Aerotech International Corp.
Taiwan Air Cargo Terminal
CAL Park
Mandarin Airlines
Taoyuan International Airport Services
Mandarin Airlines

Related Party

b

c

b
c

b

b

b
c

b
b

c
b
b
b

b

a
a
a
a
a
a
a
a
a
a
a

Natural of
Relationship(Note 1)

Operating expenses

Operating costs

Operating revenue
Operating revenue

Operating expense

Operating revenue

Operating revenue
Operating revenue

Airport service revenue
Accounts receivable - related parties

Airport service costs
Operating expenses
Accounts receivable - related parties
Financial assets at amortized costs

Sales revenue

Cargo revenue
Other operating revenue
Other operating revenue
Airport service costs
Airport service costs
Airport service costs
Other operating costs
Other operating costs
Accounts payable - related parties
Accounts payable - related parties
Bonds payable - non-current

Financial Statement Account

BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

190$

240,768

102,220

209,701
102,220

137,081352,214

107,482
152,475

1,043,264
215,542

152,475
123,469
101,725
125,000

659,596

137,081
123,469
240,768
1,043,264
107,482352,214659,596
209,701
101,725
215,542
125,000

AmountTransaction Criteria

The same as ordinary transactions

The same as ordinary transactions

The same as ordinary transactions
The same as ordinary transactions

The same as ordinary transactions

The same as ordinary transactions

The same as ordinary transactions
The same as ordinary transactions

The same as ordinary transactions
The same as ordinary transactions

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

The same as ordinary transactions

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

Intercompany Transactions(Continued)

0.21

0.09

0.18
0.09

0.12

0.31

0.09
0.13

0.91
0.07

0.13
0.11
0.03
0.04

0.57

0.12
0.11
0.21
0.91
0.09
0.31
0.57
0.18
0.03
0.07
0.04

% of Total
Consolidated
Total Revenue
or Assets

TABLE 8

Note 3: The Company only discloses transaction amounts or balances of more than $100,000 thousand.

Note 2: Intercompany transactions were eliminated in the consolidated financial statements.

a. Parent to subsidiaries.
b. Subsidiaries to parent.
c. Subsidiaries to subsidiaries.

Note 1: The three directional types for transactions by business relationship between China Airlines, Ltd. and its subsidiaries are as follows:

191(Concluded)

192
1,867,341,935
519,750,519

34.44
9.59

SharesNumber ofPercentage ofSharesOwnership (%)- 92 -

Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by theindividual truster who opened the trust account. For shareholders who declare insider shareholdings
with ownership greater than 10% in accordance with the Security and Exchange Act, theshareholdings include shares held by shareholders and those delivered to the trust over whichshareholders have rights to determine the use of trust property. For information relating to insider
shareholding declaration, please refer to Market Observation Post System.

Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository &Clearing Corporation based on the number of ordinary shares and preferred shares held byshareholders with ownership of 5% or greater, that have been issued without physical registration(including treasury shares) by the Company as of the last business day for the current quarter. The
share capital in the consolidated financial statements may differ from the actual number of shares thathave been issued without physical registration because of different preparation basis.

China Aviation Development Foundation (CADF)
National Development Fund (NDF)

Name of Major Shareholder

INFORMATION OF MAJOR STOCKHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 2020

CHINA AIRLINES, LTD.

TABLE 9

193

3.

OpinionOur objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with the auditing standards generally accepted in the
Republic of China will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.

Recognition of Cargo Revenue

-1-

-2-

Auditors’ Responsibilities for the Audit of the Financial Statements

Key audit matter in the audit of the Company’s financial statements is stated below:

In accordance with IFRS 15 “Revenue from Contracts with Customers”, cargo sales are accounted
for as cargo revenue after relevant transportation services have been provided. For the year ended
December 31, 2020, cargo revenue amounted to NT$81,692,574 thousand. Refer to Notes 4 and 26
to the accompanying financial statements for detailed information.

Those charged with governance, including the audit committee and supervisors, are responsible foroverseeing the Company’s financial reporting process.

In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.

Management is responsible for the preparation and fair presentation of the financial statements inaccordance with the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, and for such internal control as management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud
or error.

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

The financial statements of some investments accounted for using the equity method in Note 13
were audited by other independent auditors, and our audit opinion is based solely on the reports ofother auditors. As of December 31, 2020, the aforementioned investments accounted for using theequity method amounted to NT$2,304,113 thousand, representing 0.88% of total assets. For theyear ended December 31, 2020, comprehensive income (loss) (including share of profit or loss of
subsidiaries, associates and joint ventures and share of other comprehensive income (loss) of
subsidiaries, associates and joint ventures accounted for using the equity method) amounted to
NT$(952,289) thousand.

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for the year ended December 31, 2020. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters

We conducted our audits in accordance with the Regulations Governing Auditing and Attestationof Financial Statements by Certified Public Accountants and auditing standards generally acceptedin the Republic of China. Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with The Norm of Professional Ethics for Certified
Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

Basis for Opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as of December 31, 2020 and 2019, and its financial
performance and its cash flows for the years then ended in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and other regulations.

We sampled the air waybills, confirmed that cargo rates were consistent with those stated in air
waybills, and verified the amount of cargo revenue.

We understood and tested the effectiveness of the information system related to the recognitionof cargo revenue.

We understood the internal controls related to the recognition of cargo, including manual andautomatic control.

Other Matter - Audit by Other Independent Auditors

2.

The Board of Directors and the Shareholders
China Airlines, Ltd.

We have audited the accompanying financial statements of China Airlines, Ltd. (the “Company”),
which comprise the balance sheets as of December 31, 2020 and 2019, and the statements ofcomprehensive income, changes in equity and cash flows for the years then ended, and the notes tothe financial statements, including a summary of significant accounting policies (collectively
referred to as the “financial statements”).

1.

Our main audit procedures performed included the following:

Cargo rates are highly affected by the supply and demand of the market and sales can only berecognized after relevant transportation services are provided, The input, processing andmaintenance of freight information on the air waybills involve manual operations. Therefore, we
identified the recognition of cargo revenue as a key audit matter.

INDEPENDENT AUDITORS’ REPORT(Appendix 2)

194

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the financial statements or,if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditors’ report. However, future events orconditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the financial statements.
We are responsible for the direction, supervision and performance of the audit. We remainsolely responsible for our audit opinion.

2.

3.

4.

5.

6.

-3-

From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements for the year ended December
31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

1.

As part of an audit in accordance with the auditing standards generally accepted in the Republic ofChina, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:

Notice to Readers-4-

For the convenience of readers, the independent auditors’ report and the accompanying financial
statements have been translated into English from the original Chinese version prepared and usedin the Republic of China. If there is any conflict between the English version and the original
Chinese version or any difference in the interpretation of the two versions, the Chinese-language
independent auditors’ report and financial statements shall prevail.

The accompanying financial statements are intended only to present the financial position,
financial performance and cash flows in accordance with accounting principles and practices
generally accepted in the Republic of China and not those of any other jurisdictions. The standards,
procedures and practices to audit such financial statements are those generally applied in the
Republic of China.

March 18, 2021

Deloitte & Touche
Taipei, Taiwan
Republic of China

The engagement partners on the audit resulting in this independent auditors’ report are Jui-Chan
Huang and Shiuh-Ran, Cheng.

195

Total equity

The accompanying notes are an integral part of the financial statements.

TOTAL

-5-

8
2
3
4
3
-

$ 260,909,765

100

22

1
-

(350,581)(350,581)
2,543,766(30,875)
57,559,483

21
-

78

56

13
4
26
1
5
4
3
-

22

3
3
1
3
1
5
6
-

100

80

5
48
21
1
2
3

20

%

54,209,846
1,187,327

203,350,282

EQUITY (Notes 19 and 25)
Share capital
Capital surplus
Retained earnings (accumulated deficit)
Legal reserve
Special reserve
Unappropriated retained earnings (accumulated deficit)
Total retained earnings
Other equity
Treasury shares

146,610,272

32,455,333
10,300,000
68,815,395
1,761,104
13,741,244
875,388
10,055,776
8,217,395
388,637

56,740,010

8,088,882
8,126,239
1,128,517
588,234
7,128,080
2
842,592
3,218,846
12,132,859
14,798,442
687,317

Total non-current liabilities$$ 260,909,765

209,050,980

147,161
12,321,157
126,414,462
54,555,761
2,047,448
867,453
4,981,859
7,715,679

51,858,785$ 19,959,820
5,863,137
7,613,636
9,198,055
101,424
427,72260,1298,093,152
89,296452,4142020
AmountTotal liabilities

NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 4, 20 and 30)
Bonds payable (Notes 4, 19, 30 and 31)
Loans and debts (Notes 18, 30 and 32)
Contract liabilities (Notes 4 and 22)
Provisions (Notes 4 and 23)
Deferred tax liabilities (Notes 4 and 27)
Lease liabilities - non-current (Notes 4 and 20)
Accrued pension costs (Notes 5 and 24)
Other non-current liabilities

Total current liabilities

CURRENT LIABILITIESShort-term bills payable (Notes 18 and 30)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 30)
Financial liabilities for hedging - current (Notes 4, 20 and 30)
Notes and accounts payable (Note 30)
Accounts payable - related parties (Note 31)
Other payables (Notes 21 and 26)
Tax liabilities - current
Lease liabilities - current (Notes 4 and 20)
Contract liabilities current (Notes 4 and 22)
Bonds payable and put option of convertible bonds - current portion (Notes 4, 19, 30 and 31)
Loans and debts - current portion (Notes 18, 30 and 32)
Other current liabilities

LIABILITIES AND EQUITY

TOTAL

Total non-current assets

NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 30)
Investments accounted for using the equity method (Notes 4 and 13)
Property, plant and equipment (Notes 4, 14 and 32)
Right-of-use assets (Notes 4, 20 and 32)
Investment properties (Notes 4 and 15)
Other intangible assets (Notes 4 and 16)
Deferred tax assets (Notes 4 and 27)
Other non-current assets (Notes 17, 20 and 30)

Total current assets

CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 30)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 30)
Financial assets at amortized cost - current (Notes 9 and 30)
Financial assets for hedging - current (Notes 4, 6 and 30)
Notes and accounts receivables, net (Notes 4, 10 and 30)
Accounts receivables - related parties (Note 31)
Other receivables
Current tax assets (Notes 4 and 27)
Inventories, net (Notes 4 and 11)
Non-current assets held for sale (Notes 4 and 12)
Other current assets (Note 17)

ASSETSBALANCE SHEETSDECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD.

56,553,772

466,416
12,967(1,777,225)(1,297,842)
1,196,233(43,372)

54,209,846
2,488,907

212,322,733

144,322,560

42,420,205
22,352,625
48,618,168
2,236,311
9,431,736
399,253
10,909,262
7,588,745
366,255

68,000,173

11,7498,610,015
1,222,410
1,469,434
10,892,203
695,215
18,584,287
10,000,000
13,708,320
2,806,540$ 268,876,505$$ 268,876,505

227,886,893

107,856
13,482,877
131,029,886
64,262,830
2,047,448
971,298
4,757,142
11,227,556

40,989,612$ 20,626,014
434
1,460,450
9,588
7,694,431
232,386
560,819
52,776
8,246,515
2,106,199

2019
Amount

100

21

-

20
1

79

54

16
8
18
1
4
4
3
-

25

3
1
4
7
4
5
1

100

85

5
49
24
1
2
4

15

8
3
3
1

%

4,884,855
440,761(523,827)(2,780,363)(1,850,331)

OPERATING PROFITNON-OPERATING INCOME AND EXPENSES
Other income (Note 26)
Other gains and losses (Notes 12, 13, 14 and 26)
Finance costs (Notes 26 and 31)
Share of the profit of associates and joint ventures(Note 13)

-6-

(9,095)(494,218)

-

(1)

-

39,305--140,000

NET INCOME (LOSS)

-

-

(5)

5

6

11

(474,202)

31,095

INCOME TAX EXPENSE (Notes 4 and 27)

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Loss on hedging instruments subject to basis
adjustments (Notes 4, 25 and 30)
Unrealized (loss) gain on investments in equity
instruments designated as at fair value throughother comprehensive income (Notes 4 and 25)
Remeasurement of defined benefit plans (Notes 4
and 24)
Share of the other comprehensive loss of
associates and joint ventures accounted forusing the equity method (Notes 4 and 25)

171,095

PROFIT (LOSS) BEFORE INCOME TAX(4,713,760)(2)

6,252,089

OPERATING EXPENSES (Notes 4, 26 and 31)

Total non-operating income and expenses(3)

11,136,944

GROSS PROFIT

89

95,190,179

COSTS (Notes 4, 11, 26 and 31)100$ 106,327,123%

REVENUE (Notes 4, 26 and 31)

2020
Amount

STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

CHINA AIRLINES, LTD.

-

-

-

(1)

-

(1)

(1)

1

(2)

-

8

8

92

100

%

(72,718)(Continued)(562,259)

24,490(17,705)(1,199,798)

12,472(1,187,326)(1,267,561)

1,811,960

524,233(569,582)(3,034,172)

80,235

11,284,000

11,364,235

135,008,166$ 146,372,401

2019
Amount196-(399,450)
826,968

Other comprehensive income (loss) for the year,
net of income tax

$
$

0.03
0.03

-7-

The accompanying notes are an integral part of the financial statements.

EARNINGS (LOSS) PER SHARE (NEW TAIWANDOLLARS; Note 28)
Basic
Diluted966,9682

2,098,393

$

-

4,205

TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR-(101,142)1

1-

163,172$%

Income tax relating to items that will not bereclassified subsequently to profit or loss
(Note 27)
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of thefinancial statements of foreign operations(Notes 4 and 25)
Share of the other comprehensive loss of
associates and joint ventures accounted forusing the equity method (Notes 4 and 25)
Gain on hedging instruments not subject to basis
adjustment (Notes 4, 25 and 30)
Income tax relating to items that may bereclassified subsequently to profit or loss
(Note 27)2020
Amount

STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

CHINA AIRLINES, LTD.

$

$

$
$

-

-

-

-

1

-

1

%

(Concluded)(0.22)(0.22)(647,085)

552,713(273,227)

1,425,306(13,259)(59,174)

101,259

2019
Amount-Changes in capital surplus from investments in associates andjoint ventures accounted for using the equity method

Actual disposal or acquisition of interests in subsidiaries

Net loss for the year ended December 31, 2019

Other comprehensive income (loss) for the year ended
December 31, 2019, net of income tax

Total comprehensive income (loss) for the year ended
December 31, 2019

Changes in capital surplus from investments in associates andjoint ventures accounted for using the equity method-

Basis adjustment to gain on hedging instruments

Appropriation of 2019 earnings
Legal reserve
Special reserve
Capital surplus used to cover accumulated deficit

Net profit for the year ended December 31, 2020

Other comprehensive income (loss) for the year ended
December 31, 2020, net of income tax

Total comprehensive income (loss) for the year ended
December 31, 2020

Disposal of treasury shares

The accompanying notes are an integral part of the financial statements.

$ 54,209,846-

Changes in percentage of ownership interests in subsidiaries

BALANCE AT DECEMBER 31, 2020-

Issuance of employee share options by subsidiaries

54,209,846-

BALANCE AT DECEMBER 31, 2019-

Appropriation of 2018 earnings
Legal reserve
Special reserve
Cash dividends - $0.20960737 per share$ 54,209,846

Share Capital

Basis adjustments to gain on hedging instruments

BALANCE AT JANUARY 1, 2019

STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD.

197

$ 1,187,327(3,909)---(1,297,843)

-

-

172

2,488,907

-

-

-

-

1,247,087

606

-

-

$ 1,241,214

Capital Surplus

$

$

-

-

-

-

-

(466,416)
-

-

-

-

466,416

-

-

-

-

-

-

114,493--351,923

Legal Reserve

$

$

-

-

-

-

-

(12,967)
-

-

-

-

12,967

-

-

-

-

-

-

(105,843)--

118,810Special Reserve

Retained Earnings$(350,581)(1,734)(179,576)(319,576)

140,000

466,416
12,967
1,297,843-(169,272)-(1,777,225)-(1,777,225)(577,427)(1,199,798)--(114,493)
105,843(1,136,278)-$ 1,144,928

UnappropriatedEarnings(Accumulated
Deficit)$$(134,252)-(79,545)(79,545)

-

-

-

-

-

(54,707)

8,368(53,411)(53,411)

-

-

-

-

-

(9,664)

Exchange
Differences on
Translation of the
Financial
Statements ofForeign Operations$$

71,359-(35,903)(35,903)

-

-

-

-

-

107,262105

64,53864,538

-

-

-

-

-

42,619Other Equity
Unrealized
Gain (Loss) on
Financial Assets at
Fair Value
Through Other
Comprehensive
Income-1,261,992

1,261,992--

200,989--

1,143,678-

1,119,013

1,119,013

-

-

-

-

(603)

25,268$ 2,606,659$

Gain (Loss) on
Hedging
Instruments$$(30,875)

12,497

-

-

-

-

-

-

-

(43,372)

-

-

-

-

-

-

-

-

(43,372)

Treasury Shares
Held by
Subsidiaries$ 57,559,483

6,854

966,968

826,968

140,000-

200,989(169,272)

172

56,553,772

8,473(647,085)

552,713(1,199,798)

1,247,087

606(1,136,278)(603)$ 57,081,572

Total Equity

198
$

2019

-9-

CASH FLOWS FROM OPERATING ACTIVITIESIncome (loss) before income tax
Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities atfair value through profit or loss
Interest income
Dividend income
Share of loss (profit) of associates and joint ventures
Gain on disposal of property, plant and equipment
Gain on disposal of investments accounted for using the equity
methodLoss on disposal of non-current assets held for sale
Loss on inventories and property, plant and equipment
Impairment loss recognized on property, plant and equipment
Net (gain) loss on foreign currency exchange
Impairment loss recognized on investments accounted for using theequity method
Finance costs
Recognition of provisions
Loss on sale-leasebacks
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
Financial liabilities mandatorily classified as at fair value throughprofit or loss
Notes and accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Notes and accounts payable
Accounts payable - related parties
Other payables
Contract liabilities
Provisions
Other current liabilities
Accrued pension liabilities
Cash generated from operations
Interest received
Dividends received(25,700)(314,944)(10,112)(1,811,960)(26,377)(7,656)
10,462571,960
41,292
3,034,172
3,616,519
103,775
525,266(3,596)(208,081)(8,720)1,850,331(8,005)471,518
424,573(1,048,369)
46,7572,780,363
5,580,416
1,876
4,030
11,5281,507,192
65,925101,047(128,037)
351,186
53,077(114,250)(731,599)
1,851,452(1,970,226)(120,655)
93,70334,578,335
307,503
940,039(Continued)

29,398,635
165,981
24,00028,018,746
169,158
3,000(11,749)(1,467,229)
130,962
107,524(70,344)
1,701,803(59,328)(881,200)(3,724,692)(15,840,648)(705,117)(1,915,678)
134,432
15,643,828
228,141
842,919$ (1,187,326)

171,095- 10 -

The accompanying notes are an integral part of the financial statements.

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

$ 19,959,820

20,626,014(666,194)

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

183,063

10,486,387

8,088,882(10,000,000)
40,200,000(18,912,651)(8,909,975)
166,697(146,566)-(Concluded)$ 20,626,014

18,688,022

1,937,992(220,402)(16,645,990)

3,500,000(4,445,900)
4,905,660
5,500,000(15,336,255)(9,666,313)
167,034(133,938)(1,136,278)(13,941,504)

1,713,825(387,244)
104,825(13,699,043)(157,571)(18,214)
34,599(9,966,342)(95,217)(25,060,447)(1,467,317)
2,310,000(35,525)(2,397,742)
38,59635,692

32,745,888$ (3,038,729)(41,260)

2019(5,896,451)
1,460,450(10,269,055)
2,363,897(1,837,845)(859,654)
23,385-

13,724,803$ (2,966,777)(23,308)2020

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIESNet cash generated from (used in) financing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term bill payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from sale-leasebacks
Proceeds from long-term debts
Repayments of long-term debts
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refunds of guarantee deposits received
Dividends paid to owners of the Company

Net cash used in investing activities

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of financial assets at amortized cost
Disposal of financial assets at amortized cost
Payments to acquire financial assets for hedging
Proceeds from disposal of financial assets for hedging
Acquisition of investments accounted for using the equity method
Payments for disposal of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of non-current assets held for sale
Proceeds from disposal of investments accounted for using the equity
methodIncrease in refundable deposits
Decrease in refundable deposits
Increase in prepayments for equipment
Increase in computer software costs

Net cash generated from operating activities

Interest paid
Income tax paid

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)
2020

CHINA AIRLINES, LTD.

CHINA AIRLINES, LTD.

199

Effective Date
Announced by IASB

January 1, 2022 (Note 5)

January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)

January 1, 2023
January 1, 2023
January 1, 2023

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB

Effective Date
Announced by IASB (Note 1)- 11 -

Note 3: The amendments are applicable to business combinations for which the acquisition date is on
or after the beginning of the annual reporting period beginning on or after January 1, 2022.

The Company applied the amendment from January 1, 2020. Because the abovementioned rent
concessions affect only in 2020, retrospective application of the amendment has no impact on theretained earnings as of January 1, 2020.

- 12 -

Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its
obligations on January 1, 2022.

Note 4: The amendments are applicable to property, plant and equipment that are brought to thelocation and condition necessary for them to be capable of operating in the manner intended
by management on or after January 1, 2021.

Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges offinancial liabilities that occur on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively tothe fair value measurements on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied
retrospectively for annual reporting periods beginning on or after January 1, 2022.

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods
beginning on or after their respective effective dates.

“Annual Improvements to IFRS Standards 2018-2020”
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling aContract”

New IFRSs

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

As of the date the financial statements were authorized for issue, the Company is continuously
assessing the possible impact that the application of other standards and interpretations will have on the
Company’s financial position and financial performance and will disclose the relevant impact when theassessment is completed.

Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon
Applying IFRS 9”
promulgation by the IASB
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
January 1, 2021
“Interest Rate Benchmark Reform - Phase 2”

New IFRSs

b. The IFRSs endorsed by the FSC for application starting from 2021

The Company elected to apply the practical expedient provided in the amendment to IFRS 16 withrespect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The
related accounting policies are stated in Note 4. Prior to the application of the amendment, theCompany shall determine whether or not the abovementioned rent concessions need to be accounted for
as lease modifications.

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC
did not have material impact on the Company’s accounting policies:a. Initial application of the amendments to the International Financial Reporting Standards (IFRS),International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)(collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission(FSC)

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

The financial statements were approved by the Company’s board of directors on March 18, 2021.

2. APPROVAL OF FINANCIAL STATEMENTS

The major shareholders of the Company are China Aviation Development Foundation (CADF) andNational Development Fund (NDF), Executive Yuan. As of December 31, 2020 and 2019, CADF and NDF
jointly held 44.03% of the Company’s shares. As of December 31, 2020 and 2019, the Company had
11,534 and 12,175 employees, respectively.

China Airlines, Ltd. (the “Company”) was founded in 1959 and its shares have been listed on the Taiwan
Stock Exchange since February 26, 1993. The Company primarily provides air transport services forpassengers and cargo. Its other operations include (a) mail services; (b) ground services and routine aircraft
maintenance; (c) major maintenance of flight equipment; (d) communications and data processing services
to other airlines; (e) the sale of aircraft parts, equipment and the entire aircraft; and (f) leasing of aircraft.

1. GENERAL INFORMATIONNOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD.

200
a. Exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an adjustment
to interest costs on those foreign currency borrowings;
b. Exchange differences on transactions entered into in order to hedge certain foreign currency risks.
Exchange differences arising on the retranslation of non-monetary items are included in profit or loss forthe period except for exchange differences arising from the retranslation of non-monetary items in respectof which gains and losses are recognized directly in other comprehensive income, in which case, theexchange differences are also recognized directly in other comprehensive income.
For the purposes of presenting financial statements, the assets and liabilities of the Company’s foreign
operations are translated into New Taiwan dollars using exchange rates prevailing at the end of eachreporting period. Income and expense items are translated at the average exchange rates for the period.
Exchange differences arising are recognized in other comprehensive income (attributed to the owners of theCompany and non-controlling interests as appropriate).

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); andWhen preparing these parent company only financial statements, the Company used the equity method toaccount for its investments in subsidiaries, associates and joint ventures. In order for the amounts of the net
profit for the year, other comprehensive income for the year and total equity in the parent company only
financial statements to be the same with the amounts attributable to the owners of the Company in its
standalone financial statements, adjustments arising from the differences in accounting treatments between
the parent company only basis and the standalone basis were made to investments accounted for using theequity method, the share of profit or loss of subsidiaries, associates and joint ventures, the share of othercomprehensive income of subsidiaries, associates and joint ventures and the related equity items, as
appropriate, in these parent company only financial statements.

- 13 -

b. Assets expected to be realized within 12 months after the reporting period; anda. Assets held primarily for the purpose of trading;Current assets include:

Current and Non-current Assets and Liabilitiesc. Level 3 inputs are unobservable inputs for an asset or liability.

- 14 -

Inventories are primarily expendable and nonexpendable parts and materials, supplies used in operations
and items for in-flight sale and are stated at the lower of cost or net realizable value. The costs ofinventories sold or consumed are determined using the weighted-average method.

Inventories

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect ofthat operation attributable to the owners of the Company are reclassified to profit or loss.

Exchange differences on monetary items arising from settlement or translation are recognized in profit orloss in the period in which they arise except for:The financial statements have been prepared on the historical cost basis except for financial instruments
which are measured at fair value.

Basis of Preparation

Statement of Compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparationof Financial Reports by Securities Issuers and other regulations.

Foreign Currencies

Assets and liabilities that are not classified as current are classified as non-current.

c. Liabilities for which the Company does not have an unconditional right to defer settlement for at least
12 months after the reporting period.

b. Liabilities due to be settled within 12 months after the reporting period; andIn preparing the financial statements of the Company, transactions in currencies other than the Company’sfunctional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items that are measured at historical cost in aforeign currency are not retranslated. Non-monetary items measured at fair value that are denominated inforeign currencies are retranslated at the rates prevailing at the date when the fair value was determined.

4. SIGNIFICANT ACCOUNTING POLICIESThe application of new IFRSs in issue but not yet endorsed and issued into effect by the FSC would nothave any material impact on the Company’s accounting policies. As of the date the financial statements
were authorized for issue, the Company is continuously assessing the possible impact that theapplication of other standards and interpretations will have on the Company’s financial position andfinancial performance and will disclose the relevant impact when the assessment is completed.

Current liabilities include:

Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting
policies that occur on or after the beginning of the annual reporting period beginning on orafter January 1, 2023.
a. Liabilities held primarily for the purpose of trading;c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period.

Note 6: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.

201- 15 -

Profits and losses from downstream transactions with a subsidiary are eliminated in full. Profits andlosses from upstream with a subsidiary and side stream transactions between subsidiaries are recognizedin the Company’s financial statements only to the extent of interests in the subsidiary that are notrelated to the Company.

When the Company ceases to have control over a subsidiary, any retained investment is measured atfair value at that date and the difference between the previous carrying amount of the subsidiary
attributable to the retained interest and its fair value is included in the determination of the gain or loss.
Furthermore, the Company accounts for all amounts previously recognized in other comprehensive
income in relation to that subsidiary on the same basis as would be required if the Company had
directly disposed of the related assets or liabilities.

The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired isrecognized as goodwill. Goodwill is not amortized. The acquisition-date fair value of the net
identifiable assets acquired in excess of the acquisition cost is recognized immediately in profit or loss.

When the Company’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary(which includes any carrying amount of the investment in subsidiary accounted for by the equity
method and long-term interests that, in substance, form part of the Company’s net investment in thesubsidiary), the Company continues recognizing its share of further losses.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company’s lossof control over the subsidiaries are accounted for as equity transactions. Any difference between the
carrying amounts of the investment and the fair value of the consideration paid or received isrecognized directly in equity.

Under the equity method, the investment is initially recognized at cost and the carrying amount isincreased or decreased to recognize the Company’s share of the profit or loss and other comprehensive
income of the subsidiary after the date of acquisition. Besides, the Company also recognizes theCompany’s share of the changes in other equity of the subsidiary.

Subsidiaries (including special purpose entities) are the entities controlled by the Company.

a. Investment in subsidiaries

Investments in subsidiaries, associates and jointly controlled entities are accounted for by the equity
method.

Investments Accounted for by the Equity Method

Non-current assets classified as held-for-sale are measured at the lower of their previous carrying amountand fair value less costs to sell. Recognition of depreciation of those assets would cease.

Non-current assets are classified as held-for-sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the Non-current asset is available for immediate sale in its present condition.
To meet the criteria for the sale being highly probable, the appropriate level of management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one
year from the date of classification.

Non-current Assets Held for Sale

- 16 -The Company discontinues the use of the equity method from the date on which it ceases to havesignificant influence and joint control. Any retained investment is measured at fair value at that date andthe fair value is regarded as its fair value on initial recognition as a financial asset. The difference
between the previous carrying amount of the associate and the jointly controlled entity attributable to
the retained interest and its fair value is included in the determination of the gain or loss on disposal of
the associate and the jointly controlled entity. The Company accounts for all amounts previously
recognized in other comprehensive income in relation to that associate and the jointly controlled entity
on the same basis as would be required if that associate had directly disposed of the related assets or
liabilities.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single
asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is
not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognized to the extent that the recoverable amount of theinvestment subsequently increases.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable
assets and liabilities of an associate and joint ventures recognized at the date of acquisition isrecognized as goodwill, which is included within the carrying amount of the investment and is notamortized. Any excess of the Company’s share of the net fair value of the identifiable assets andliabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company’s share of losses of an associate and joint ventures equals or exceeds its interest inthat associate and joint ventures which includes any carrying amount of the investment accounted forusing the equity method and long-term interests that, in substance, form part of the Company’s net
investment in the associate and joint ventures entity, the Company discontinues recognizing its share offurther losses. Additional losses and liabilities are recognized only to the extent that the Company has
incurred legal obligations, or constructive obligations, or made payments on behalf of that associate andjoint ventures.

When the Company subscribes for additional new shares of an associate and joint ventures at apercentage different from its existing ownership percentage, the resulting carrying amount of theinvestment differs from the amount of the Company’s proportionate interest in the associate and joint
ventures. The Company records such a difference as an adjustment to investments with thecorresponding amount charged or credited to capital surplus. If the Company’s ownership interest is
reduced due to the subscription of additional new shares of the associate and jointly controlled entity,
the proportionate amount of the gains or losses previously recognized in other comprehensive income inrelation to that associate and joint ventures is reclassified to profit or loss on the same basis as would be
required had the investee directly disposed of the related assets or liabilities. When the adjustment
should be debited to capital surplus, but the capital surplus recognized from investments accounted forusing the equity method is insufficient, the shortage is debited to retained earnings.

The Company uses the equity method to account for its investments in associates and joint ventures.
Under the equity method, an investment in an associate and jointly controlled entity is initiallyrecognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss andother comprehensive income of the associate and jointly ventures. The Company also recognizes thechanges in the Company’s share of equity of associates and jointly ventures attributable to theCompany.

An associate is an entity over which the Company has significant influence and that is neither asubsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby theCompany and other parties that have joint control of the arrangement and the rights to the net assets of
the arrangement.

b. Investments in associates and joint ventures

202
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issuance of financial assets and financial liabilities (other thanfinancial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of thefinancial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initialrecognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss.

- 17 -

Intangible assets with finite useful lives that are acquired separately are initially measured at cost andsubsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, andamortization methods are reviewed at the end of each reporting period, with the effects of any changes inthe estimates being accounted for on a prospective basis. The residual value of an intangible asset with afinite useful life shall be assumed to be zero unless the Company expects to dispose of the intangible asset
before the end of its economic life.

Intangible Assets- 18 -

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified
or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include
investments in equity instruments which are not designated as at FVTOCI and debt instrumentsthat do not meet the amortized cost criteria or the FVTOCI criteria.

a) Financial assets at FVTPL

Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.

1) Measurement category

All regular purchases or sales of financial assets are recognized and derecognized on a trade date basis.
All regular purchases or sales of financial assets are buy or sell of financial assets in the period set byregulation or market convention.

a. Financial assets

Financial assets and financial liabilities are recognized when the Company becomes a party to thecontractual provisions of the instruments.

Investment properties are properties held to earn rentals or for capital appreciation. Investment properties
also include land held for a currently undetermined future use.

Any gain or loss arising on the derecognition of investment properties is calculated as the difference
between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss inthe period in which the property is derecognized.

Financial Instruments

Investment Properties

When an impairment loss is subsequently is reversed, the carrying amount of the asset or cash-generating
unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying
amount that would have been determined had no impairment loss been recognized for the asset or
cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets. Assets are depreciated over the shorter of the lease term and their useful lives using the straight-line
method.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and isrecognized in profit or loss.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the Company uses the estimated cash flows discounted by the future pre-tax discount rate, and thediscount rate reflects the current market time value of money and the specific risks to the asset for estimatedfuture cash flows not yet adjusting to the market.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.

At the end of each reporting period, the Company reviews the carrying amounts of its tangible andintangible assets, excluding goodwill, to determine whether there is any indication that those assets havesuffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimatedin order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit towhich the asset belongs. Corporate assets are allocated to the individual cash-generating units on areasonable and consistent basis; otherwise, corporate assets are allocated to the smallest group of
cash-generating units on a reasonable and consistent allocation basis.

Impairment of Tangible and Intangible Assets Other Than Goodwill

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately.
The estimated useful lives, residual values and depreciation methods are reviewed at the end of eachreporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

Freehold land is not depreciated.

Property, plant and equipment are tangible items that are held for use in the production or supply of goods
or services, for rental to others, or for administrative purposes and are expected to be used for more than
one period. The cost of an item of property, plant and equipment shall be recognized as an asset if, and only
if, it is probable that future economic benefits associated with the item will flow to the Company; and thecost of the item can be measured reliably. Property, plant and equipment are stated at cost less recognizedaccumulated depreciation and recognized accumulated impairment loss.

Property, Plant and Equipment

When the Company transacts with its associate and joint ventures, profits and losses resulting from thetransactions with the associate are recognized in the Company’ financial statements only to the extent ofinterests in the associate and the jointly controlled entity that are not related to the Company.

203

The financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; and- 19 -The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables andother receivables. For all other financial instruments, the Company recognizes lifetime ECLs when
there has been a significant increase in credit risk since initial recognition. If, on the other hand, thecredit risk on a financial instrument has not increased significantly since initial recognition, theCompany measures the loss allowance for that financial instrument at an amount equal to 12-month
ECLs.

The Company recognizes a loss allowance for expected credit losses on financial assets at
amortized cost (including trade receivables), as well as contract assets.

2) Impairment of financial assets

Dividends on these investments in equity instruments are recognized in profit or loss when the
Company’s right to receive the dividends is established, unless the dividends clearly represent a
recovery of part of the cost of an investment.

Investments in equity instruments at FVTOCI are subsequently measured at fair value withgains and losses arising from changes in fair value recognized in other comprehensive income
and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit orloss on disposal of the equity investments; instead, they will be transferred to retained earnings.

On initial recognition, the Company may make an irrevocable election to designate investmentsin equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if an equity
investment is held for trading or if it is contingent consideration recognized by an acquirer in abusiness combination.

c) Investments in equity instruments at FVTOCI

Cash equivalents include time deposits with original maturities within 3 months from the date ofacquisition, which are highly liquid, readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. These cash equivalents are held for the
purpose of meeting short-term cash commitments.

Interest income is calculated by applying the effective interest rate to the gross carrying amountof a financial asset.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash
equivalents, trade receivables, other receivables and other financial assets, are measured atamortized cost, which equals the gross carrying amount determined using the effective interest
method less any impairment loss. Exchange differences are recognized in profit or loss.

ii. The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

i.

- 20 -The difference between the carrying amount of a financial liability derecognized and theconsideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss.

2) Derecognition of financial liabilities

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized costusing the effective interest method.

1) Subsequent measurementc. Financial liabilities

Repurchase of the Company’s own equity instruments is recognized in and deducted directly fromequity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of theCompany’s own equity instruments.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue
costs.

Debt and equity instruments issued by the Company are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of afinancial liability and an equity instrument.

b. Equity instruments

On derecognition of a financial asset at amortized cost in its entirety, the difference between theasset’s carrying amount and the sum of the consideration received and receivable is recognized in
profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference
between the asset’s carrying amount and the sum of the consideration received and receivable andthe cumulative gain or loss which had been recognized in other comprehensive income isrecognized in profit or loss. However, on derecognition of an investment in an equity instrument at
FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration
received and receivable is recognized in profit or loss, and the cumulative gain or loss which had
been recognized in other comprehensive income is transferred directly to retained earnings, without
recycling through profit or loss.

The Company derecognizes a financial asset only when the contractual rights to the cash flows fromthe asset expire or when it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another party.

3) Derecognition of financial assets

The impairment loss of all financial assets is recognized in profit or loss by a reduction in theircarrying amounts through a loss allowance account, except for investments in debt instruments thatare measured at FVTOCI, for which the loss allowance is recognized in other comprehensive
income and the carrying amounts of such financial assets are not reduced.

Financial assets that meet the following conditions are subsequently measured at amortized
cost:b) Financial assets at amortized cost

Expected credit losses reflect the weighted average of credit losses with the respective risks of a
default occurring as the weights. Lifetime ECL represents the expected credit losses that will result
from all possible default events over the expected life of a financial instrument. In contrast,
12-month ECL represents the portion of lifetime ECL that is expected to result from default eventson a financial instrument that are possible within 12 months after the reporting date.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses
arising on remeasurement recognized in profit or loss. Fair value is determined in the manner
described in Note 31.

204- 21 -The Company enters into some derivative transactions that aim to manage interest rates, foreign exchange
rates, fuel prices, and other factors affecting gains or losses on assets and liabilities. The hedging
transactions are defined as cash flow hedges. When entering into hedging transactions, the Company has
prepared official documents that describe the hedging relationship between hedging instruments and items
which have been hedged, the objective of risk management, the hedging strategy, and the way to evaluate
the effectiveness of the hedging instrument.

Hedge Accounting

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of
IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid
contract. Derivatives embedded in non-derivative host contracts that are not financial assets within thescope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet thedefinition of a derivative, their risks and characteristics are not closely related to those of the hostcontracts, and the host contracts are not measured at FVTPL.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into andare subsequently remeasured to their fair value at the end of each reporting period. The resulting gain orloss is recognized in profit or loss immediately unless the derivative is designated and effective as ahedging instrument, in which event, the timing of the recognition in profit or loss depends on the natureof the hedging relationship. When the fair value of a derivative financial instrument is positive, thederivative is recognized as a financial asset; when the fair value of a derivative financial instrument isnegative, the derivative is recognized as a financial liability.

The Company enters into a variety of derivative financial instruments to manage its exposure to interest
rate, foreign exchange rate and fuel price risks, including foreign exchange forward contracts, interest
rate swaps, currency options swaps and fuel swaps.

e. Derivative financial instruments

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability andequity components in proportion to the allocation of the gross proceeds. Transaction costs relating to
the equity component are recognized directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component.

The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and includedin equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion
option classified as equity will remain in equity until the conversion option is exercised, in which case,the balance recognized in equity will be transferred to capital surplus - share premiums. When theconversion option remains unexercised at maturity, the balance recognized in equity will be transferred
to capital surplus - share premiums.

On initial recognition, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recorded as a liability on anamortized cost basis using the effective interest method until extinguished upon conversion or the
instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The component parts of compound instruments (i.e. convertible bonds) issued by the Company areclassified separately as financial liabilities and equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equity instrument.

d. Convertible bonds

Identifying the contract with the customer;
Identifying the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; andRecognize revenue when the Company satisfies a performance obligation.

- 22 -The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date ofa lease, except for short-term leases and low-value asset leases accounted for applying a recognition
exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

The Company as lessee

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

Leasing

Passenger and cargo revenue are recognized as revenue when the passengers and goods are actually carried.
When the tickets are sold, due to the fact that the fulfillment obligations of the shipment have not been met,
the relevant amount of revenue is first recorded as contract liabilities until passengers actually board.

Shipping service revenue







The Company recognizes revenue by applying the following steps:

Revenue Recognition

The amount recognized as a provision is the best estimate of the expenditure required to settle the present
obligation, taking into account the risks and uncertainties surrounding the obligation as of the balance sheet
date. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows. When the aircraft lease contracts expire and will
be returned to lessor, the Company will assess if there are existing obligations and if a provision is required
when signing the lease contract.

The Company recognizes provisions when the Company has a present obligation (legal or constructive)
arising from past events (legal or constructive obligation), payment for the obligation is probable, and theexpenditure for settling the obligation can be estimated reliably.

Provisions

Starting from 2018, the Company discontinues hedge accounting only when the hedging relationship ceases
to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or
exercised. The cumulative gain or loss on the hedging instrument that has been previously recognized inother comprehensive income from the period in which the hedge was effective remains separately in equity
until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, thegain or loss accumulated in equity is recognized immediately in profit or loss.

The associated gains or losses that were recognized in other comprehensive income are reclassified fromequity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in thesame period as when the hedged item affects profit or loss. If a hedge of a forecasted transaction
subsequently results in the recognition of a non-financial asset or a non-financial liability, the associatedgains and losses that were recognized in other comprehensive income are removed from equity and areincluded in the initial cost of the non-financial asset or non-financial liability.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion isrecognized immediately in profit or loss.

205- 23 -

Defined benefit costs (including service cost, net interest and remeasurement) under the defined
contribution retirement benefit plan are determined using the projected unit credit method. Service cost(including current service cost and past service cost) and net interest on the net defined benefit
liabilities (assets) are recognized as employee benefits expense in the period in which they occur.
Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest),

Payments to the defined contribution retirement benefit plan are recognized as expenses whenemployees have rendered services entitling them to the contributions.

b. Retirement benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related services.

a. Short-term employee benefits

Employee Benefits

For sale and leaseback transactions, if the transfer of an asset satisfies the requirements of IFRS 15 to beaccounted for as a sale, the Company recognizes only the amount of any gain or loss which relates to therights transferred to the buyer-lessor, and adjusts the off-market terms to measure the sale proceeds at fairvalue. If the transfer does not satisfy the requirements of IFRS 15 to be accounted for as a sale, it isaccounted for as a financing transaction.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, withinterest expense recognized over the lease terms. When there is a change in a lease term, a change in theamounts expected to be payable under a residual value guarantee, a change in the assessment of an option topurchase an underlying asset, or a change in future lease payments resulting from a change in an index or arate used to determine those payments, the Company remeasures the lease liabilities with a corresponding
adjustment to the right-of-use-assets. Lease liabilities are presented on a separate line in the balance sheets.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed
payments, in-substance fixed payments, variable lease payments which depend on an index or a rate,
residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to
exercise that option, and payments of penalties for terminating a lease if the lease term reflects suchtermination, less any lease incentives payable. The lease payments are discounted using the interest rate
implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, theCompany uses the lessee’s incremental borrowing rate.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to theearlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if
leases transfer ownership of the underlying assets to the Company by the end of the lease terms or if thecosts of right-of-use assets reflect that the Company will exercise a purchase option, the Company
depreciates the right-of-use assets from the commencement dates to the end of the useful lives of theunderlying assets.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of leaseliabilities adjusted for lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives
received. Right-of-use assets are subsequently measured at cost less accumulated depreciation andimpairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets arepresented on a separate line in the balance sheets.

- 24 -

The fair value determined at the grant date of the equity-settled share-based payments is expensed on astraight-line basis over the vesting period, based on the Company’s estimate of equity instrument that will
eventually vest, with a corresponding increase in capital surplus - employee share options. The fair value
determined at the grant date of the equity-settled share-based payments is recognized as an expense in fullat the grant date when the granted share options are vested immediately.

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments
at the grant date.

Share-based Payment Arrangements

A portion of passenger revenue attributable to the rewards for the frequent flyer program is deferred. The
Company recognizes this deferred revenue as revenue only when the Company has fulfilled its obligations
on the granting of rewards or when the period for converting the mileage to rewards has expired.

The Company has a “Dynasty Flyer Program” through which program members can convert accumulated
mileage to a cabin upgrade, free tickets and other member rewards.

Frequent Flyer Programs

The benefit of a government loan received at a below-market rate of interest is treated as a government
grant measured as the difference between the proceeds received and the fair value of the loan based onprevailing market interest rates.

Government grants that are receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Company with no future related costs are recognizedin profit or loss in the period in which they are received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which theCompany recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants are not recognized until there is reasonable assurance that the Company will comply
with the conditions attached to them and that the grants will be received.

Government Grants

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period
in which they are incurred.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets(assets which are substantially ready for their intended use or sale through a fairly long period) are added tothe cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Borrowing Costs

Net defined benefit liabilities (assets) represent the actual deficit in the Company’s defined benefit
plans.

is recognized in other comprehensive income in the period in which it occurs. Remeasurement
recognized in other comprehensive income is reflected immediately in retained earnings and will not bereclassified to profit or loss.

206
The overhaul costs of an owned or leased aircraft that meet the criteria for fixed asset capitalization are
capitalized as replacements for aircraft and engines and are depreciated on a straight line basis over the
expected annual overhaul cycle.

a. Current tax- 25 -

Current and deferred taxes are recognized in profit or loss, except when they relate to items that arerecognized in other comprehensive income or directly in equity, in which case, the current and deferredtaxes are also recognized in other comprehensive income or directly in equity, respectively.

c. Current and deferred taxes for the year

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period inwhich the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that havebeen enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which theCompany expects, at the end of the reporting period, to recover or settle the carrying amount of its
assets and liabilities.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all orpart of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at theend of each reporting period and recognized to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates and interests in joint ventures, except where the Company is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not reversein the foreseeable future. Deferred tax assets arising from deductible temporary differences associatedwith such investments and interests are only recognized to the extent that it is probable that there will be
sufficient taxable profit against which to utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.

Deferred tax is recognized on temporary differences between the carrying amounts of assets andliabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards
and unused tax credits for purchases of machinery, equipment and technology, research anddevelopment expenditures, and personnel training expenditures to the extent that it is probable thattaxable profit will be available against which those deductible temporary differences can be utilized.

b. Deferred tax

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided foras income tax in the year the shareholders approve the retention of these earnings.

- 26 -Cash on hand and revolving funds
Checking accounts and demand deposits
Cash equivalents
Time deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

6. CASH AND CASH EQUIVALENTS$ 20,626,014

58,661
4,867,015$ 19,959,820

$

2019

12,662,162
3,038,176

65,987
12,864,010

December 31

5,880,682
1,149,141$

2020

The present value of defined benefit obligations at the end of the reporting period is calculated using
actuarial assumptions. Those assumptions, which are based on management’s judgments and estimates,
comprise the discount rate and expected return on plan assets. Changes in actuarial assumptions may have amaterial impact on the amount of defined benefit obligations.

Defined Benefit Obligations

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of thereporting period that have a significant risk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next financial year are discussed below.

Key Sources of Estimation Uncertainty

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised if the revisions affect only that
period or in the period of the revisions and future periods if the revisions affect both current and future
periods.

In the application of the Company’s accounting policies as disclosed in Note 4, management is required tomake judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered relevant. Actual results may differ from these estimates.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY

Routine maintenance costs are recognized in profit or loss in the period in which they are incurred.

Income tax expense represents the sum of the current tax and deferred tax.

The current tax liabilities are based on current taxable profit. Since part of the income and expenses aretaxable or deductible in other periods, or in accordance with the relevant tax laws are taxable ordeductible, current taxable profit differs from net profit reported in the statements of comprehensive
income. The Company’s current tax liabilities are calculated by the tax rate was legislated or
substantially legislated at the balance sheet date.

Maintenance and Overhaul Costs

Taxation

207

0.00%-1.90%
0.30%-0.55%
0.41%-0.49%

2019

0.01%-1.90%
0.60%-2.55%
0.55%-0.70%

December 31

2021.1.4-2021.11.1

Financial assets for hedging - current

Subject$ (372,632)

Recognized in
Other
Comprehensive
Income (Loss)$ 7,613,636

CarryingValue- 27 -

Derivative financial instruments (not under hedge accounting)Foreign exchange forward contracts

Financial liabilities - current

Financial assets mandatorily classified at FVTPL
Derivative financial instruments (not under hedge accounting)Foreign exchange forward contracts

Financial assets - current

$

$

2020

-

-

434

2019

$ 11,749$

December 31

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)The amount of hedging instrument settlements recognized as prepayments for equipment in 2020 was$81,111 thousand.

For the year ended December 31, 2020

Impact on comprehensive income (loss)

December 31, 2020

Maturity Date

The Company designated some deposits denominated in USD and repurchase agreements collateralized bybonds as hedging instruments to avoid exchange rate fluctuations on final payments of aircraft orders andprepayments for equipment, and applied cash flow hedge accounting to hedge its foreign exchange
exposure. The contract information is as follows:

Bank balanceTime deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

2020

The market rate intervals of cash in banks and cash equivalents at the end of the reporting period were as
follows:

NTD/USD

2020.01.15-2020.07.31

Maturity Date

NTD570,571/USD19,000

Notional Amount(In Thousands)

26,865$ 107,856$ 147,161

80,991

2019

29,704$

December 31$ 117,457

2020

2019

$ 1,460,450

December 31$ 5,863,137

2020- 28 -The range of interest rates for time deposits with original maturities of more than 3 months wasapproximately 0.40%-0.53% and 0.60%-2.44% per annum as of December 31, 2020 and 2019, respectively.

Time deposits with original maturities of more than 3 months

Current

9. FINANCIAL ASSETS AT AMORTIZED COST

These investments in equity instruments are not held for trading. Instead, they are held for medium- tolong-term strategic purposes. Accordingly, the management elected to designate these investments in equity
instruments as at FVTOCI as it believes that recognizing short-term fluctuations in these investments’ fairvalues in profit or loss would not be consistent with the Company’s strategy of holding these investments
for long-term purposes.

Foreign investments
Unlisted shares
Domestic investments
Unlisted shares

Non-current

Investments in Equity Instruments

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Buy forward contracts

December 31, 2019

Currency

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:208$ 7,694,431

297,075$ 9,198,055

$

2019

7,577,460(180,104)
7,397,356-

December 31

9,363,777(165,722)
9,198,055$

2020- 29 -The Company writes off a trade receivable when there is information indicating that the debtor isexperiencing severe financial difficulty and there is no realistic prospect of recovery. For accounts
receivable that have been written off, the Company continues to engage in enforcement activity to attempt
to recover the receivables which are due. Where recoveries are made, these are recognized in profit or loss.

The Company applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9,which permits the use of lifetime expected loss allowance for all trade receivables. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience
with the debtors and an analysis of the debtors’ current financial position, adjusted for general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as theforecasted direction of economic conditions at the reporting date. As the Company’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the loss
allowance based on the past due status is not further distinguished according to the different segments of theCompany’s customer base.

The average credit period was 7 to 55 days. In determining the recoverability of a trade receivable, theCompany considered any change in the credit quality of the receivable since the date credit was initiallygranted to the end of the reporting period, and any allowance for impairment loss was based on theestimated irrecoverable amounts determined by reference to the Company’s past default experience with thecounterparty and an analysis of the counterparty’s current financial position. The Company adopted apolicy of only dealing with entities that are rated the equivalent of investment grade or higher and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit rating information is obtained from independent rating agencies where available or, if not available,
the Company uses other publicly available financial information or its own trading records to rate its major
customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored
and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit
exposure is controlled by counterparty limits that are reviewed and approved by the risk management
committee annually.

At amortized cost
Gross carrying amountLess: Allowance for impairment loss

Accounts receivable

Notes receivable

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

1,758(1,608)

3,366

$

$

31,871(6,020)37,89115.89%

31 to 60 Days$$

47.77%

31 to 60 Days-

(2,887)

2,887

$

$

56,880(16,178)

73,05822.14%

61 to 90 Days

$

$

100%

61 to 90 Days$$

$ 7,397,356(180,104)$ 7,577,460

-

Total

$ 9,198,055(165,722)$ 9,363,777

-

Total

$ 8,246,515$ 8,093,152- 30 -The operating costs for the years ended December 31, 2020 and 2019 included losses from inventory
write-downs of 190,548 thousand and $317,629 thousand, respectively.

$ 7,390,981
571,601
283,933$ 7,251,353
627,437
214,3622019$ 180,104$ 191,079
24,000(34,975)-

December 31$ 165,722

Balance at December 31

2020$ 180,104
3,000(17,382)-

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services-(153,992)

153,992

100%

Balance at January 1
Add: Net remeasurement of loss allowance
Less: Amounts written off
Foreign exchange gains and losses

11. INVENTORIES-(160,859)

160,859Over 90 Days

$

$

100%

Over 90 Days

For the Year Ended December 31
2020
2019

The movements of the loss allowance of accounts receivables were as follows:$ 1,239,904(1,862)$ 6,068,701(2,052)

Amortized cost

$ 1,241,766$ 6,070,753

Gross carrying amount
Loss allowance (lifetime
ECLs)

0.15%

Up to 30 Days

29,154(309)

29,4630.03%

Not Past Due

$

$

1.04%

Up to 30 Days

Expected credit loss rate

December 31, 2019

$ 9,167,143(59)$ 9,167,202

Gross carrying amount
Loss allowance (lifetime
ECLs)
Amortized cost-

Not Past Due
Expected credit loss rate

December 31, 2020

The following table details the loss allowance of trade receivables based on the Company’s provision
matrix.

209$

December 31$ 89,296

2020

2019
-

- 31 -

Tigerair Taiwan Co., Ltd.
CAL Park
Mandarin Airlines
CAL-Dynasty International
Taiwan Air Cargo Terminal
Taoyuan International Airport Services
CAL-Asia Investment
Sabre Travel Network (Taiwan)
CAL Hotel
Taiwan Airport Services
Dynasty Aerotech International Corp
Taiwan Aircraft Maintenance And Engineering Co., Ltd.
Yestrip
Global Sky Express
Kaohsiung Catering Services

Unlisted companies

a. Investment in subsidiaries

Investments in subsidiaries
Investments in associates
Investments in jointly controlled entities

2,304,113
1,605,033
1,223,259
1,188,110
1,556,133
602,688469,979
232,883
405,353
200,794
136,630
699,793
10,2707,643
512,926

1,946,328
1,552,310
1,494,603
1,276,546
1,517,946
737,245559,562460,213479,259
276,134
88,313921,989
25,2687,294
661,1702019$ 12,004,180$

December 31$ 11,155,607

$

2020

$ 13,482,877$ 12,321,157

2019$ 12,004,180
471,267
1,007,430

December 31$ 11,155,607
282,471883,0792020

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

The fair value was determined by transactions of the related market, and the proposed sale price was basedon the current status of the aircraft. The fair value is classified as Level 3.

In 2019, the Company completed the disposal procedures of some aircraft and recognized a loss on disposalof $10,462 thousand for the year ended December 31, 2019.

To enhance its competitiveness, the Company plans to introduce new aircraft and retire old aircraft
according to a planned schedule. Such aircraft, classified as non-current assets held for sale, had an original
book value which was higher than the expected sale price and which was recognized as an impairment loss.
However, the actual loss shall be identified by the actual sale price.

Aircraft held for sale

12. NON-CURRENT ASSETS HELD FOR SALE

69%
54%
100%
94%
100%
49%
100%
94%
47%
100%
100%
100%
100%
25%
54%

100%
25%
54%

2019

76%
54%
100%
94%
100%
49%
100%
94%
47%
100%
100%
100%

December 31

Share of profit (loss)- 32 -$ (1,590,853)

2020$ 1,529,721

2019

The share of profit or loss of subsidiaries recognized under the equity method was as follows:

To strengthen the capital structure of Tigerair Taiwan Co., Ltd., the board of directors of the Company
approved the plan to issue ordinary shares for cash at $25 per share on August 6, 2020. The Company
subscribed for 47,228 thousand shares in October 2020 and 26,286 thousand shares in November 2020.
Because the shares are subscribed at a percentage different from its existing ownership percentage, theCompany’s retained earnings decreased by $169,272 thousand.

In order to prepare for the listing of Tigerair Taiwan Co., Ltd. and comply with the rules relating to theexamination for public listing, the release of the shares of Tigerair Taiwan Co., Ltd. held by theCompany was resolved in the shareholders’ meeting of the Company on June 25, 2019. The shares shallbe subscribed by all shareholders of the Company on the basis of the percentage of shareholdings. For
the waiver of subscribed shares by the original shareholders or the undersubscribed portion, thechairman was authorized to designate specific persons for subscription. The subscription price was set
at $41 per share. In October and December 2019, the shares were fully paid and were completely
delivered and transferred. The amount of proceeds from disposal was $1,679,789 thousand, and therelated gain on disposal was $1,129,080 thousand and recognized as capital surplus.

Each of the Company’s holdings of the issued share capital of Taoyuan International Airport Service,Taiwan Airport Service and Global Sky Express did not exceed 50%, but since the Company had
control over these investees, they were listed as subsidiaries.

Tigerair Taiwan Co., Ltd.
Taiwan Air Cargo Terminal
CAL Park
Mandarin Airlines
CAL-Dynasty International
Taoyuan International Airport Services
CAL-Asia Investment
Sabre Travel Network (Taiwan)
Taiwan Airport Services
CAL Hotel
Dynasty Aerotech International Corp
Taiwan Aircraft Maintenance And Engineering Co., Ltd.
Dynasty Holidays
Yestrip
Global Sky Express
Kaohsiung Catering Services

2020

At the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by
the Company were as follows:

210$ 471,267$ 282,471

2019$ 461,263
10,004

December 31$ 277,234
5,237

2020

20%
20%

December 31
20%
20%

2019

$
$

$ (102,758)(4,740)$ (107,498)

10,38010,36515

2019

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

- 33 -The investments in jointly controlled entities were as follows:c. Investments in jointly controlled entities

695,959
149,353
37,767883,079$

801,070
168,547
37,8132019$ 1,007,430$

December 31

$

2020

The board of directors of the Company decided to sell a portion of the equity of its subsidiary, Dynasty
Holidays, to H.I.S. Taiwan Co., Ltd. on January 21, 2019 and completed the transaction on January 31,
2109. After the disposal of the equity, the Company’s issued share capital decreased from 51% to 20%.
Dynasty Holidays was classified as an associate since the Company lost control of the subsidiary.
Therefore, the relevant assets and liabilities were not consolidated in the current period and only the
profit and loss from January 1, 2019 to January 31, 2019 were consolidated. For information on thedisposal of the subsidiary, refer to Note 31.

China Aircraft Services
Dynasty Holidays

2020

The recognized investment income of associates accounted for using the equity method was as follows:

Note: Dynasty Holidays was listed as an associate on January 31, 2019.

China Aircraft Services
Dynasty Holidays (Note)2020

At the end of the reporting period, the proportion of ownership and voting rights in associates held by
the Company were as follows:

China Aircraft Services
Dynasty Holidays

Unlisted companies

b. Investments in associates

51%
55%
49%

December 31

51%
55%
49%

2019

$ 256,899
15,030(70)$ 271,859$ (151,980)

2019$ (136,459)(15,475)(46)

December 31- 34 -For details on services, major business offices and the country where the above associates and jointly
controlled entities are registered, refer to Table 6 “Names, Locations, And Other Information of
Investees Over Which the Company Exercises Significant Influence”, and Table 7 “Investments In
Mainland China”, following the notes to the financial statements.

The financial statements used as a basis of the amounts of and related information on the investments
accounted for using the equity method and the share of profit or loss and other comprehensive incomeof those investments for the years ended December 31, 2020 and 2019 were all independently audited,
except for China Aircraft Services. However, the management determined that there would have beenno significant adjustments had this investee’s financial statements been independently audited.

The Company’s shares of other comprehensive income of subsidiaries, associates and jointly controlled
entities were losses of $4,890 thousand and $85,977 thousand in 2020 and 2019, respectively.

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

2020

Details of the investment income attributable to investments in jointly controlled entities were as
follows:

To enhance the Company’s maintenance capabilities, the Company established a joint venture with the
US NORDAM Aerospace Group in December 2017, to provide thrust reversers and composite repair
services in Asia under the NORDAM brand. NORDAM has filed for Chapter 11 bankruptcy
reorganization in the USA on July 22, 2018 to solve the business dispute with its cooperative partner, so
its operation was not impacted. NORDAM Asia suspended its operation from October 5, 2018 to
October 4, 2019 and resumed business on October 4, 2019. The Company increased the capital of
NORDAM Asia by $35,525 thousand in November 2019.

The Company signed a joint venture agreement with the Taikoo Company to invest in China Pacific
Catering Services and China Pacific Laundry Services. According to the agreement, both parties havethe majority of voting power in the board of directors to pass a motion for veto, and therefore theCompany does not have control.

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

2020

At the end of the reporting period, the percentages of ownership and voting rights in jointly controlled
entities held by the Company were as follows:

211

$

Balance at December 31,
2020, net value

181,593--

181,593

193,013(11,420)-

193,013--

193,013

193,013
-

$

$

$

$

$

$

$

$

$

$

3,166,230(3,867,341)(4,056,383)(180,609)
369,651-

7,033,571

7,383,758
19,464(369,651)-

3,327,375(4,056,383)(3,880,602)(175,943)
162-

7,383,758

7,335,537
37,725(162)
10,658

Buildings$ 122,190,324$ (153,413,840)$ (140,336,300)(17,588,803)
3,446,678(424,573)
1,489,158$ 275,604,164$ 266,907,914
621,587(3,718,075)
11,792,738$ 126,571,614$ (140,336,300)$ (122,357,428)(18,186,434)
14,899,562(14,692,000)$ 266,907,914$ 255,579,627
2,211,321(20,698,042)
29,815,008

FlightEquipment-

25,211,677(79,866)(25,131,811)

$

$

$

$

$

$

$

-

-

-

-

-

-

-

$ (14,074,608)(741,780)
79,866
14,736,522$$

Equipment
under FinanceLeases

$

$

$

$

$

$

$

$

$

$

- 35 -

Reclassification is mainly resulted from the transfer of prepayments for equipment.

$

$

$

Balance at December 31,
2020

Balance at January 1,
2020
Depreciation expense
Disposals
Impairment losses
Reclassification

Accumulated depreciationand impairment

Balance at December 31,
2020

Balance at January 1,
2020
Additions
Disposals
Reclassification$$

Balance at December 31,
2019, net value

Cost

$

$

$

$

Balance at December 31,
2019

Balance at January 1,
2019
Depreciation expense
Disposals
Reclassification

Accumulated depreciationand impairment

Balance at December 31,
2019

Balance at January 1,
2019
Additions
Disposals
Reclassification

Cost

Freehold Land

14. PROPERTY, PLANT AND EQUIPMENT

867,315(5,688,435)(5,571,763)(293,613)
171,378
5,563

6,564,750

6,509,647
218,603(171,769)
8,269

937,884(5,571,763)(5,318,708)(284,537)
76,586(45,104)

6,509,647

6,340,546
148,696(85,852)
106,257

Others$ 126,414,462$ (162,969,616)$ (149,964,446)(18,063,025)
3,987,707(424,573)
1,494,721$ 289,384,078$ 280,994,332
859,654(4,270,915)
11,801,007$ 131,029,886$ (149,964,446)$ (145,631,346)(19,388,694)
15,056,176(582)$ 280,994,332$ 294,660,400
2,397,742(20,863,922)
4,800,112

Total

18-25 years
10-20 years
12-20 years
6-8 years
3-10 years
8-12 years
3-15 years
5-12 years

5 years
3-5 years

25 years
3-13 years
3-15 years

45-55 years
10-25 years

2019$ 2,047,448

December 31$ 2,047,448

2020- 36 -

The fair value of the investment properties held by the Company was $2,456,472 thousand and $2,473,771
thousand as of December 31, 2020 and 2019, respectively. The fair value valuation was performed byindependent qualified professional valuers, and the future income evaluated by management was based onmarket transactions. All of the Company’s investment properties were held under freehold interest.

The investment properties held by the Company were land located in Nankan, which were leased to others.

Carrying amount
Investment properties

15. INVESTMENT PROPERTIES

Based on the particularity of risk in the aviation industry, all of the Company’s assets such as aircraft, realestate, and movable property are adequately insured to diversify the potential risk related to operations.

Refer to Note 32 for the carrying amounts of aircraft equipment and right-of-use assets pledged by theCompany.

Regarding changes in fleet composition, current and forecasted market values, and other technical factors,
the Company recognized impairment losses on a part of aircraft equipment of $424,573 thousand in 2020.

Building
Main buildings
Others
Machinery and equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersFlight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimateduseful life of the asset:

212$ 2,218,356$ 2,218,356
95,217(765,786)$ 1,547,787

Balance at December 31, 2019

Balance at January 1, 2020
Additions
Amortization expense
Reclassification

Balance at December 31, 2020$

(680,334)$ (1,247,058)(169,158)
735,882$ (1,247,058)$ (1,081,077)(165,981)

Accumulated
Amortization

$

$

$

$

$ 11,227,556$ 7,715,679$ 2,106,199

94,682
1,551,113
460,404$ 8,322,518
2,264,220
621,715
19,103452,414

$

$

2019

$ 5,069,541
2,042,609
585,451
18,078

19,111
134,055
299,248$2020

December 31- 37 -The prepayments for aircraft comprised the prepaid deposits and capitalized interest from the purchase of
A321neo and B777F aircraft. For details on the A321neo and B777F aircraft purchase contracts, refer toNote 33.

Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Other financial assets

Non-current

Temporary payments
Prepayments
OthersCurrent

17. OTHER ASSETS

867,453

971,298
95,217(169,158)(29,904)

971,298

979,708
157,571(165,981)

Net Value

The above items of other intangible assets are amortized on a straight-line basis over 2-10 years.

$ 2,060,785
157,571-

Computer
Software Costs

Balance at January 1, 2019
Additions
Amortization expense

16. OTHER INTANGIBLE ASSETS

$

-

-

1.08%-1.46%$ 48,618,168$ 68,815,395
0.81%-1.22%

31,300,000
59,38262,326,488
13,708,320

650,000
30,435,870

2019

-

2019

29,100,000
22,046
83,613,837
14,798,442$

December 31$ 21,650,000
32,885,883

2020

0.99%-1.00%$ 8,088,882$

December 31$ 8,100,000
11,1182020

2016/6/272032/6/30

2019
2008/2/262030/4/25

December 31- 38 -In accordance with the “Regulations on Relief and Revitalization Measures for Industries andEnterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry ofTransportation and Communications and the “Operational Guides on Relief Loan Guarantees for Ailing
Aviation Industry Affected by Severe Pneumonia with Novel Pathogens”, the Company applied for
project finance loans from financial institutions to maintain its operations; and special funds, credit
guarantees along with subsidized interest rates were provided by the government. The total amount of
the loans is $20,000,000 thousand, which shall be repaid within 2 years from the date of initial
drawdown. As of December 31, 2020, the Company had made a drawdown in the amount of$20,000,000 thousand.

The Company has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until March 2025, were used by the Company to guarantee commercial paper
which it issued. The commercial paper was issued at discount rates of 1.0263%-1.1167% in 2020 and
1.1300%-1.1680% in 2019.

Periods

2020

Bank loans (New Taiwan dollars and U.S. dollars) are repayable quarterly, semiannually or in lumpsum upon maturity. Related information is summarized as follows:

For information on secured bank loans which were secured by flight equipment, refer to Note 32.

Interest rates

Less: Current portion

Unsecured bank loans
Secured bank loans
Commercial paper
Proceeds from issue
Less: Unamortized discountb. Long-term borrowings

Annual discount rate

Commercial paper
Less: Unamortized discount on bills payablea. Short-term bills payable

18. BORROWINGS

213

2013.01.172020.01.17

Seven-year private unsecured bonds - issued at
par in January 2013; repayable in January
2019 and 2020; 1.85% interest p.a., payableannually
Five-year unsecured bonds - issued at par in
May 2016; repayable in May 2020 and2021; 1.19% interest p.a., payable annually
Five-year unsecured bonds - issued at par in
September 2016; repayable in
September 2020 and 2021; 1.08% interestp.a., payable annually
Three-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.2% p.a., payable annually
Seven-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.75% p.a., payable annually
Three-year private unsecured bonds - issued at
par in October 2017; repayable on due date;interest of 1.14% p.a., payable annually
Five-year private unsecured bonds - issued at
par in October 2017; repayable in October
2021 and 2022; 1.45% interest p.a., payableannually
Five-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2022 and 2023; 1.32% interestp.a., payable annually- 39 -

2018.11.302023.11.30

2017.10.122022.10.12

2017.10.122020.10.12

2017.05.192024.05.19

2017.05.192020.05.19

2016.09.272021.09.27

2016.05.262021.05.26

PeriodCategory

Related issuance conditions were as follows:

Less: Current portion and put option of convertible bonds

Unsecured corporate bonds first-time issued in 2013
Unsecured corporate bonds first-time issued in 2016
Unsecured corporate bonds second-time issued in 2016
Unsecured corporate bonds first-time issued in 2017
Unsecured corporate bonds second-time issued in 2017
Unsecured corporate bonds first-time issued in 2018
Unsecured corporate bonds first-time issued in 2019
Convertible bonds - sixth-time issue

19. BONDS PAYABLE

2,500,000
2,500,000
1,000,000
2,600,000
4,500,000
3,500,000
5,832,859
22,432,859
12,132,859

Rate
(%)

Principal repayable in
1.85
January of 2019 and 2020;
indicator rate; payableannually
Principal repayable in May of
1.19
2020 and 2021; interest p.a.
payable annuallyPrincipal repayable in
1.08
September of 2020 and2021; interest p.a. payableannually
Principal repayable on due
1.20date; indicator rate;
payable annuallyPrincipal repayable on due
1.75date; indicator rate;
payable annuallyPrincipal repayable on due
1.14date; indicator rate;
payable annuallyPrincipal repayable in
1.45
October of 2021 and 2022;
indicator rate; payableannually
Principal repayable in
1.32
November of 2022 and2023; indicator rate;
payable annually(Continued)

Conditions

2,750,000
5,000,000
5,000,000
2,350,000
3,500,000
4,500,000
3,500,000
5,752,625
32,352,625
10,000,000

2019$ 22,352,625$

December 31$ 10,300,000

$

2020

Principal repayable in June of2025 and 2026; indicatorrate; payable annually

Except for converting to sharecapital or buying back,principal repayable in
December of 2023
(Concluded)

2019.06.212026.06.21
2018.01.302023.01.30

1.32

1.10

$ 5,602,022

Liability component at the date of issuance- 40 -$ 6,012,000(409,978)

Proceeds from issuance
Equity component

The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.

d. Between January 26, 2014 and December 16, 2018 (except for the period between the former dividend
date and the date of the dividend declaration on record), holders may convert the bonds to theCompany’s ordinary shares. The initial conversion price was set at NT$13.2, which is subject toadjustment if there is a capital injection by cash, share dividend distribution, and the proportion of cash
dividends per share in market price exceeding 1.5%. Because the Company distributed cash dividends
on July 29, 2019, the conversion price was adjusted to NT$12.6.

c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions.

b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.

a. The holders may demand a lump-sum payment for the bonds upon maturity.

The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:

The Company issued its 2016 first unsecured corporate bonds with a face value of $5,000,000 thousand,and the purchasers of the bonds included Mandarin Airlines Co., Ltd. and Sabre Travel Network (Taiwan)Co., Ltd., which had a face value of $150,000 thousand, and the amount was eliminated in the Company’s
financial statements.

2019.06.212024.06.21

1.45

Principal repayable inNovember of 2022 and2023; indicator rate;
payable annuallyPrincipal repayable in June of2023 and 2024; indicatorrate; payable annually2018.11.302025.11.30

Seven-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2022 and 2023; 1.45% interestp.a., payable annually
Five-year private unsecured bonds - issued at
par in June 2019; repayable in June 2023
and 2024; 1.10% interest p.a., payableannually
Seven-year private unsecured bonds - issued at
par in June 2019; repayable in June 2025
and 2026; 1.32% interest p.a., payableannually
Five-year convertible bonds - issued at
discount in January 2018; repayable in lumpsum upon maturity; 1.3821% discount rate
p.a.

Rate
(%)

Conditions

PeriodCategory

214

Carrying amounts
Current
Non-current

171,147
767,9399,070,855

5,043,409$
842,592$ 10,055,776$
695,215$ 10,909,262

2019$ 10,009,941$$

December 31

9,955,721$

2020

172,757
383,898
9,399,066$

2,084,799

Depreciation for right-of-use assets
Land
Buildings
Flight equipmentb. Lease liabilities

3,442,366
6,950,330
53,870,134$ 64,262,830

$

2019

For the Year Ended December 31
2020
2019
$

- 41 -

3,367,875
6,986,866
44,201,020$ 54,555,761

$

2020

December 31

Additions to right-of-use assets

Carrying amounts
Land
Buildings
Flight equipmenta. Right-of-use assets

20. LEASE AGREEMENTS

The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 6, 2020. The cumulative face value of the bonds shall not exceed $6,000,000
thousand. The bonds are issued at 100%-100.5% of the face value, and the issuance period is 5 years.

The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 7, 2019. The cumulative face value of the bonds shall not exceed $3,000,000
thousand. The bonds are issued at 100%-100.5% of the face value, and the issuance period is 5 years.
During the period of public offerings, the stock market and the domestic capital market were volatile due toCoronavirus Pneumonia and the changes in the share price of the Company were unfavorable to the seventh
issue of the Company’s unsecured convertible bonds. After comprehensive consideration, the issuance wassuspended with the permission of the competent authority based on the best interest of the Company andthe shareholders’ equity.
1.09%-1.65%
0%-3.56%
0.68%-3.16%

20191.09%-1.65%
0%-3.56%
2.49%-3.16%

December 31

Subject$ 2,099,550
1,457,058

42,420,205

8,577,482

32,455,333

8,120,445$

352,674(24,029)

Reclassified toIncome$Carrying Value$

438,1171,330,772$

2019
463,115
1,406,702

December 31- 42 -The Company signed a rental contract for six A321neo with Air Lease Corporation on September 2019,
which is expected to be introduced between 2021 and 2022.

e. Lease agreement

Refundable deposits
Credit guarantees

2020

The information of refundable deposits and issuance of letter of credit due to rental of planes:

As lessee, China Airlines leased ten 777-300ER planes, fifteen A330-300 planes and fifteen 737-800
planes for operation, lease period are 8 to 12 years from February 2006 to May 2028. The rental pricing
method is partly a fixed amount of funds, and some of them are floating rents, floating rents areaccording to benchmark ratio, the rent is revised every half year. When the lease expires, the leaseagreements have no purchase rights.

d. Material leasing activities and terms

For the year ended December 31, 2020
For the year ended December 31, 2019

Recognized in
Other
Comprehensive
IncomeFinancial liabilities for hedging current
Financial liabilities for hedging non-current
2021.4.15-2028.5.15 Financial liabilities for hedging current
Financial liabilities for hedging non-current

2022.2.9-2028.5.15

Influence of comprehensive income

December 31, 2019

December 31, 2020

Maturity Date

The Company specifies a part of US lease contract as hedging instruments to avoid exchange rate
fluctuations is passenger revenue, and applies the accounting treatment of cash flow hedging. The lease
information is as follows:c. Financial liabilities under hedge accounting

Land
Buildings
Flight equipment

2020

Range of discount rate for lease liabilities (include US lease hedging instruments):

215$
16,450$ (10,528,143)$
18,144$ (11,583,349)

Fuel costs
Short-term employee benefits
Ground service expenses
Terminal surcharges
Repair expenses
Commission expenses
Interest expenses
Others

21. OTHER PAYABLES- 43 -

1,718,503
1,592,141
956,831
346,952
285,146
184,363
116,168
1,927,976
7,128,080$

3,419,803
1,577,322
1,178,184
914,428
1,136,588
509,520
214,089
1,942,269

2019$ 10,892,203$

December 31

$

2020

The Company chooses to waive the recognition of the contract provisions for the short-term leases andlow price lease, and does not recognize the related right-of-use assets and lease liabilities for such lease.

Short-term and low price lease payment
Total of lease cash outflow

For the Year Ended December 31
2020
2019

The Company uses operating lease agreement for investment properties, refer to Note 15.

g. Other lease information

As lessee, the Company leased office buildings and equipment from CAL Park. Lease period is 2 years,
and the fixed payment (tax included) is $20,238 thousand per month.

In order to revitalize assets and strengthen the financial structure, the Company sold five of its own
A330-300 aircraft to Altavair L.P. in September 2019 through sale and leaseback arrangement for$4,905,660 thousand. The lease term was 5 to 6 years and a loss of $103,775 thousand was incurred.
The lease agreement had no terms for lease renewal or offtake rights. The annual lease payments foreach aircraft are from US$5,389 thousand to US$5,437 thousand.

f. Sale and leaseback

The Company also signed related aircraft purchase agreement, please refer to note 33 for details.

The Company signed a rental letter of intent for eight A321neo with CALC Lease Corporation on
October 2019, which is expected to be introduced in 2022.

2,884,122
17,936,476$

Current
Non-current

$

$

$

9,431,736

9,431,736

9,431,736$ 13,741,244

Balance at December 31, 2020

- 44 -$

Balance at January 1, 2020
Additional provisions recognized
Usage
Effect of exchange rate changes

9,431,736
5,580,416(705,117)(565,791)

9,431,736$

Balance at December 31, 2019

7,999,015
3,616,519(1,970,226)(213,572)$

Balance at January 1, 2019
Additional provisions recognized
Usage
Effect of exchange rate changes

Aircraft Lease
Contract

The Company rented flight equipment under operating lease agreements. Under the contracts (some of theleased flight equipment’s lease payments are calculated monthly), when the lease expires and the equipment
is returned to the lessor, the flight equipment has to be repaired according to the expected years of use,
number of flight hours, flight cycle and the number of engine revolutions. The Company had existingobligations to recognize provisions when signing a lease or during the lease term.

$ 13,741,244

13,741,244$ 13,741,244

2019$ 20,820,598$ 18,584,287
2,236,311$ 20,820,598$

December 31

4,979,950$

2020

3,218,846
1,761,104

4,979,950$$

2,657,942
2,322,008$

December 31
2020
2019
Contract
Contract
Liabilities
Liabilities

Operating leases - aircraft

23. PROVISIONS

Current
Non-current

Frequent flyer programs
Advance ticket sales

22. CONTRACT LIABILITIES/DEFERRED REVENUE

216

Balance at January 1, 2019
Service cost
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
(56,049)(56,049)(219,345)(219,345)(1,038,624)
1,154,724

1,187,281
118,5171,305,798
290,044491,560
781,604(1,154,724)- 45 -$ (6,184,472)

Fair Value ofthe Plan Assets$ 13,117,255

Present Valueof the Defined
BenefitObligation

Movements in net defined benefit liabilities (assets) were as follows:$

Net defined benefit liabilities

8,217,395$ 14,458,016(6,240,621)

2019

7,588,745$

290,044491,560
562,259(1,038,624)(Continued)(219,345)

1,187,281
62,4681,249,749

6,932,783

Net Defined
BenefitLiabilities(Assets)$$ 13,932,511(6,343,766)

December 31

Present value of defined benefit obligation
Fair value of plan assets

2020

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as
follows:

Before the end of each year, the Company assesses the balance in the pension fund. If the amount of thebalance in the pension fund is inadequate to pay retirement benefits for employees who conform toretirement requirements in the next year, the Company is required to fund the difference in one
appropriation that should be made before the end of March of the next year. The pension fund ismanaged by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right toinfluence the investment policy and strategy.

The Company adopted the defined benefit plan under the Labor Standards Law, under which pension
benefits are calculated on the basis of the length of service and average monthly salaries of the six
months before retirement. The Company contribute amounts equal to 15% of total monthly salaries andwages to a pension fund administered by the pension fund monitoring committee. Pension contributions
are deposited in the Bank of Taiwan in the committee’s name.

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
b. Defined benefit plansa. Defined contribution plans

24. RETIREMENT BENEFIT PLANS$ (6,240,621)(213,741)(933,458)
1,294,147-

498,254
209,705
707,959(1,294,147)(154,058)(17,232)(43,803)(43,803)(6,343,766)(213,741)$-

1,186,945
96,0381,282,983(117,492)
70
13,932,511$ 14,458,016$

Fair Value ofthe Plan Assets$$

8,217,395(Concluded)498,254
209,705494,218(933,458)(154,058)(17,232)(213,741)

1,186,945
52,235
1,239,180(117,492)
70
7,588,745

Net Defined
BenefitLiabilities(Assets)

Discount rate
Expected rate of salary increase- 46 -

2019
0.71%
1.00%

December 31
0.34%
1.00%

2020

The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as
follows:3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the
future salaries of plan participants. Thus, an increase in the salaries of the plan participants will
increase the present value of the defined benefit obligations.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of thedefined benefit obligation; however, this will be partially offset by an increase in the return on theplan’s debt investments.

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. Based on relevant regulations, the return generated by plan assets should
not be below the interest rate for a two-year time deposit with local banks.

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to thefollowing risks:

Balance at December 31, 2020

Direct payment to employees from theemployer
Effect of exchange rate changes
Balance at December 31, 2019
Service cost
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
Direct payment to employees
Effect of exchange rate changes

Present Valueof the Defined
BenefitObligation

217$ (613,408)$ 653,413$ 626,743$ (600,073)$ 651,673$ (610,077)2019$ (318,904)$ 332,769

December 31- 47 -

Income of convertible bonds in excess of par value andconversion premium
Dividends distributed to subsidiaries
Retirement of treasury shares
Difference in sale price of share of subsidiaries and book value
Expired employee share options
Long-term investments
Bonds payable equity component
Othersb. Capital surplus

Number of authorized shares (in thousands)
Amount of authorized shares
Amount of issued shares

Ordinary sharesa. Share capital

146,351
33,513
11,747
119,134
409,978
466,604

315,114
3,909
33,513
1,129,080
11,747
118,962
409,978
466,604$ 2,488,907

$

2019

7,000,000$ 70,000,000$ 54,209,846

2019

9.6 years

December 31$ 1,187,327

$

2020

2019

$ 736,056

December 31

7,000,000$ 70,000,000$ 54,209,846

2020

9.5 years

The average duration of the defined benefit obligation

25. EQUITY$ 740,777

December 31

The expected contributions to the plan for the next year

2020

The sensitivity analysis presented above may not be representative of the actual change in the present
value of the defined benefit obligation as it is unlikely that the change in assumptions would occur inisolation of one another as some of the assumptions may be correlated.

Discount rate
0.25%/0.5% increase
0.25%/0.5% decrease
Expected rate of salary increase
0.5% increase
0.5% decrease2020

If possible reasonable change in each of the significant actuarial assumptions will occur and all otherassumptions will remain constant, the present value of the defined benefit obligation would increase(decrease) as follows:- 48 -The Company shall set aside profits as a legal reserve until the legal reserve amounts to the authorized
capital. The legal reserve could be used for offsetting deficit of the Company. If the Company has no
deficit in a fiscal year, the Company can distribute all or part of the capital surplus by cash or shareswith due consideration of finance, marketing and management requirements in accordance with thelaws and regulations.

Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”) basedon the amended Company Act, where the Company made profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations,and then any remaining profit together with any undistributed retained earnings shall be used by theCompany’s board of directors as the basis for proposing a distribution plan with due consideration of
any future aircraft acquisition plans and fund demands, which should be resolved in the shareholders’meeting for the distribution of dividends and bonuses to shareholders by cash or shares (cash dividends
cannot be less than 30% of total dividends distributed). However, if the Company’s profit before tax ina fiscal year after deductions for the abovementioned items is not sufficient for earnings distribution,
retained earnings can be used as a supplement for the deficiency.

Under the Company Act, if surplus earnings are distributed in the form of new shares, the distributionof shares shall be approved in the meeting of the board of directors; if such earnings are distributed in
the form of cash, the cash distribution shall be authorized after a resolution has been adopted by amajority vote at a meeting of the board of directors attended by two-thirds of the total number of
directors; and in addition, a report of such distribution shall be submitted to the shareholders’ meeting.
If the Company has no loss, according to laws and regulations, the Company can distribute its capitalreserve, in whole or in part, by issuing new shares or cash based on financial, business and management
considerations. If such surplus earnings is distributed in the form of new shares, it shall be approved bya meeting of the board of directors; if such surplus earning is distributed in the form of cash, it shall beauthorized after a resolution has been adopted by a majority vote at a meeting of the board of directors
attended by two-thirds of the total number of directors; and in addition thereto a report of such
distribution shall be submitted to the shareholders’ meeting.

Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”),
where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes,
offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting
aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining
profit together with any undistributed retained earnings shall be used by the Company’s board of
directors as the basis for proposing a distribution plan, which is to distribute dividends and bonus noless than 50% of the remaining profit and undistributed retained earnings. The dividends and bonus
mentioned above can be distributed in the form of new shares or cash, and the cash dividends should be
no less than 30% of the total dividends.

c. Appropriation of earnings and dividend policy

The capital surplus from long-term investments, employee shares options expired, dividends distributed
to subsidiaries and retirement of treasury shares may not be used for any purpose, expect for offsetting a
deficit. As for capital surplus from conversion of convertible bonds payable may not be used for any
purpose.

The capital surplus from shares issued in excess of par (additional paid-in capital from issuance ofordinary shares) may be used to offset a deficit; in addition, when the Company has no deficit, suchcapital surplus may be distributed as cash dividends or transferred to capital (limited to a certain
percentage of the Company’s paid-in capital).

218

$

$

Balance at January 1, 2019
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Share of profit or associates
accounted for using equity
methodEffects of income tax
Other comprehensive income(loss) recognized in the period
Disposal of subsidiaries
Transfers of initial carrying
amount of hedged items

Balance at December 31, 2019

54,902(14,854)
64,538105-(6,072)
11,835(53,411)8,368-- 49 -

107,262

24,490-$--(54,707)--42,619-$Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI(59,174)(9,664)

Exchange
Differences on
Translation of
the Financial
Statements ofForeign
Operations

The movement of other equity items is as follows:d. Other equity items(603)

1,119,013-(7,187)(281,401)

-

9,305

1,398,296-

25,268$ 1,143,678$

Gain (Loss) on
Hedging
Instruments(Continued)(603)

1,130,140
8,473

41,643(284,420)

24,4909,305

1,398,296(59,174)

58,223$ 1,196,233

$

Total

On March 18, 2021, the board proposed to offset the accumulated deficit in 2020. The deficit
included a net income of $140,000 thousand and the beginning balance of undistributed retained
earnings of $0, negative adjustment of other retained earnings of $490,581 thousand, the remaining
amount of accumulated deficit was $350,581 thousand and was offset by capital reserve of$350,581 thousand.

2) Offsetting of deficit in 2020

On June 23, 2020, the board proposed to offset the accumulated deficit in 2019. The deficit included
a net loss of $1,199,798 thousand, negative adjustment of other retained earnings of $577,427
thousand, the remaining amount of accumulated deficit was $1,777,225 thousand. The Company
covered the deficit with legal reserve of $466,416 thousand, special reserve of $12,967 thousand
and capital reserve of $1,297,843 thousand.

1) Offsetting of deficit in 2019

The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thefollowing year.

$$

71,359-(134,252)(35,903)(79,545)

39,305-(84,893)
9,685

-

-

1,368
20,229--107,262-$$(101,142)(54,707)

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI$ 2,606,659

200,989

1,261,992

2,837(365,036)-(283,210)

1,907,401-$ 1,143,678

Gain (Loss) on
Hedging
Instruments(Concluded)$ 2,543,766

200,989

1,146,544(80,688)(335,122)

39,305(283,210)

1,907,401(101,142)$ 1,196,233

Total

Mandarin Airlines
Dynasty Aerotech International Corp

December 31, 2019

Mandarin Airlines

December 31, 2020

Subsidiary

For the year ended December 31, 2020
For the year ended December 31, 2019

Period of Treasury Shares- 50 -

2,075
814

2,075

Shares(In Thousands)

2,889
2,889

Number of
Shares,Beginning ofYear$ 18,796
7,376$ 26,172$ 26,172$ 24,999

Market Value

2,075
2,889

Number of
Shares, End ofYear$ 18,796
7,376$ 24,999

Carrying
Amount(814)-

Reduction
During theYear

Treasury shares are the Company’s shares held by its subsidiaries, as of December 31, 2020 and 2019were as follows:(In Thousands of Shares)e. Treasury shares

Balance at December 31, 2020

Balance at January 1, 2020
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Share of profit or associates
accounted for using equity
methodEffects of income tax
Other comprehensive income(loss) recognized in the period
Transfers of initial carrying
amount of hedged items

Exchange
Differences on
Translation of
the Financial
Statements ofForeign
Operations

219- 51 -

Gain on disposal property, plant and equipment
Net loss on financial assets as held for trading
Gain (loss) on foreign exchange, net
Impairment loss recognized on non-current assets held for saleImpairment loss recognized on flight equipment
Gain on disposal of investment
Loss on non-current assets held for sale
Loss on sale and leaseback
Othersc. Other gains and losses

Interest income
Dividend income
Subsidy income
Othersb. Other income

Passenger
Cargo
Othersa. Revenue

26. NET INCOME$ 146,372,401$ 106,327,123$ 524,233$ 440,761

8,005
3,596
259,796(46,757)(424,573)(323,894)$ (523,827)$

26,37725,700(262,610)
7,656(10,462)(103,775)(252,468)$ (569,582)$

For the Year Ended December 31
2020
2019

$ 314,944
10,112
38,621
160,556$ 208,081
8,720
29,309194,651

For the Year Ended December 31
2020
2019

$ 96,176,865
43,406,487
6,789,049$ 20,508,133
81,692,574
4,126,416

For the Year Ended December 31
2020
2019

Dynasty Aerotech International Corp. sold a total of 814 thousand shares of the Company in 2020 andthe disposal price was $6,854 thousand.

The above acquisitions by subsidiaries of the Company’s shares in previous years was due toinvestment planning. The shares of the Company held by its subsidiaries were treated as treasury shares.
The subsidiaries can exercise shareholders’ right on these treasury shares, except for the right tosubscribe for the Company’s new shares and voting rights.

Post-employment benefits
Defined contribution plans
Defined benefit plans

f. Employee benefits expense

An analysis of amortization by function
Operating expenses

An analysis of depreciation by function
Operating costs
Operating expenses

Property, plant and equipment
Right-of-use assets
Intangible assets

e. Depreciation and amortization expenses

Capitalization interest
Capitalization rate

- 52 -

Information about capitalized interest was as follows:

Interest expense
Bonds payable
Bank loans
Interest on lease liabilities

d. Finance costs

344,034
834,6111,601,718

431,599703,681
1,898,892$ 3,034,172$$
36,404
1.01%-1.28%

169,158$

165,981$ 29,398,635

347,320
1,239,180
1,586,500

$
$

$

$

1,622,936(Continued)

373,187
1,249,749

For the Year Ended December 31
2020
2019

$

$ 28,018,746$ 28,373,597
1,025,038$ 29,564,616$ 28,187,904$ 27,360,911
657,835$ 19,388,694
10,009,941
165,981$ 18,063,025
9,955,721
169,158

For the Year Ended December 31
2020
2019

$
75,701
0.71%-1.45%

For the Year Ended December 31
2020
2019

$ 2,780,363$

For the Year Ended December 31
2020
2019

220
$ 17,862,954
4,106,857$ 21,969,811(Concluded)$ 18,931,104$ 20,346,875$ 17,344,604$ 14,918,454
4,012,650$ 14,475,115
1,282,461
4,589,299$ 12,892,488
1,149,065
3,303,051- 53 -

Income tax expense recognized in profit or loss

Current tax
Current year
Prior year adjustment
Deferred tax
Current year
Adjustments to deferred tax attributable to changes in tax rates
and laws

The major components of tax expense were as follows:a. Income tax recognized in profit or loss

27. INCOME TAX$ 31,095$ 12,472

26,512

82,885

8,836(6,658)(16,218)$(67,746)$ 15,676
280

For the Year Ended December 31
2020
2019

Information on the compensation of employees and remuneration of directors and supervisors resolvedby the Company’s board of directors is available at the Market Observation Post System website of the
Taiwan Stock Exchange.

Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date the annual financial statements are authorized for issue are adjusted in
the year that the bonus and remuneration were recognized. If there is a change in the proposed amounts
after the annual financial statements were authorized for issue, the differences are recorded as a change
in the accounting estimate.

According to the Company’s articles, the Company accrues compensation of employees at rates of noless than 3% of the net profit before income tax and compensation of employees, and accrues profit
bonus at a certain rate of profit before tax on the basis of the collective agreement signed with the China
Airlines Employees Union. For the years ended December 31, 2020 and 2019, the compensation of
employees was not estimated since it was a loss before income tax.

An analysis of employee benefits expense by function
Operating costs
Operating expenses

Other employee benefits
Salary expenses
Labor and health insurance
Personnel service expenses

For the Year Ended December 31
2020
2019

Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserve
Allowance for reduction of
inventory
OthersDeferred tax assets- 54 -

46,182$ 4,757,142

30,333(42,817)295,849(41,590)(195,593)$$

Recognized in
Profit or Loss

294,799
280,953$ 1,527,211
590,694
2,063,485

Beginning
Balance

For the year ended December 31, 2020$$

178,535

79,691

98,844-

Recognized in
Other
Comprehensive
Income$ (236,278)

20,229Total income tax recognized in other comprehensive income$(365,036)
98,844
9,685

c. Deferred tax assets and liabilities$$

12,472

26,512

17,900(347,338)
8,836
550,685(6,658)(237,465)$ (1,187,326)(281,401)
112,452(14,854)

11,835$ 4,981,859(Continued)

253,209
165,051$ 1,656,388
547,877
2,359,334

EndingBalance$ (171,968)$

For the Year Ended December 31
2020
2019

Recognized in other comprehensive income
Translation of foreign operations
Fair value revaluation of hedging instruments for cash flow
hedgesActuarial gain or loss on defined benefit plan
Fair value changes of financial assets at FVTOCI

Deferred tax

b. Income tax recognized in other comprehensive income

31,095

Income tax expense recognized in profit or loss$

82,885369,518(334,324)
15,676(137,159)
280

34,219$

Income tax expense calculated at the statutory rate
Add (deduct) tax effects of:Nondeductible expenses in determining taxable income
Tax-exempt income
Overseas income tax expense
Unrecognized loss carryforwards and investment tax credits
Adjustments for prior years’ tax
Adjustments to deferred tax attributable to changes in tax rates
and laws

171,095$

Profit before tax

For the Year Ended December 31
2020
2019

A reconciliation of accounting profit and income tax expense is as follows:221

81,778317,475

399,253$$

Temporary differences
Unrealized foreign exchange
gains
Others (Note)

Deferred tax liabilities

Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserve
Allowance for reduction of
inventory
OthersDeferred tax assets

61,322

61,322-

21,195$- 55 -

21,195$$$
81,77881,778-71,484$$ 4,561,346

18,72680,634
388,512(38,854)(377,534)$

Recognized in
Profit or Loss$$

Recognized in
Profit or Loss

333,653646,627$ 1,396,033
510,060
1,674,973

Beginning
Balance

For the year ended December 31, 2019

Temporary differences
Unrealized foreign exchange
gains
Others (Note)

Deferred tax liabilities

Beginning
Balance414,813414,813

$

$

$

$

296,280

296,280

124,312

11,860112,452-

Recognized in
Other
Comprehensive
Income$$Recognized in
Other
Comprehensive
IncomeEndingBalance875,388(Concluded)

143,100
732,288$$399,253

81,778317,475$ 4,757,142

294,799
280,953$ 1,527,211
590,694
2,063,485$$

EndingBalance$ 4,479,141

495,779
1,439,287$ 1,935,066$

UnusedAmount$$Earnings used in the computation of diluted earnings per share- 56 -

0.03
0.03$ (0.22)$ (0.22)$ (1,199,798)-

140,000$ (1,199,798)

140,000

For the Year Ended December 31
2020
2019

$
$

For the Year Ended December 31
2020
2019

Earnings used in the computation of basic earnings per share
Effect of potentially dilutive ordinary shares:
Interest on convertible bonds (after tax)

Basic earnings per share
Diluted earnings per share

28. EARNINGS PER SHARE

The income tax returns of the Company through 2018 have been examined by the tax authorities.

e. Income tax returns

2028
2029

Expiry Year$ 1,097,908$ 6,002,092$ 1,935,066

2019$ 2,899,496
619,799
202,699
1,519,941
760,157

December 31

495,779
1,439,287$

d. Unused tax loss carryforwards as of December 31, 2020 were as follows:

Other

Loss carryforwards
2021
2022
2026
2028
2029

2020

Deductible temporary differences, unused loss carryforwards and unused investment credits for which
no deferred tax assets have been recognized in the balance sheets are as follows:222
5,418,096-

5,418,776

5,418,096

5,418,776$ 22,609,683$ 32,352,625$ 32,363,301- 57 -

Some long-term borrowings are floating-rate financial liabilities, so their carrying amounts are their fairvalues. The fair values of bonds payable are based on those which are traded in the stock exchange andbased on quoted market prices (Level 1).

$ 22,432,859$ 50,997,687

$

-

-

$
$

-

-

$

$

Level 1

$

$

$

$

$

$

$

$

$

$

-

-

-

28,578109

11,749--434

Level 2

5,794

Level 2

$

$

$

$

$

$

$

$

$

$

- 58 -

-

3,955

9,479

-

107,856

26,86580,991

Level 3--

147,161

29,704
117,457

Level 3

There were no transfers between Level 2 and 3 in the current and prior periods.

Financial liabilities for hedging

Financial assets for hedging

Fair Value

Bonds payable

Carrying
Amount2019

Financial liabilities at FVTPL
Derivative instruments

Fair Value

December 31

Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign

Financial assets at FVTPL
Derivative instruments

December 31, 2019

$ 40,575,778

Financial liabilities for hedging-$$ 7,613,636-$

Level 1

Financial assets for hedging

Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign

December 31, 2020

147,161

29,704
117,457

9,588

11,749107,856

26,86580,991434$ 51,030,220

$

$

$

$

$

Total

$ 40,581,572$ 7,613,636

$

$

Total

3) Level 3 fair value measurements are those derived from valuation techniques that include inputs forthe asset or liability that are not based on observable market data (unobservable inputs).

2) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) orindirectly (i.e. derived from prices); and1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;

The following table provides an analysis of financial instruments that are measured subsequent to initialrecognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value isobservable:

b. Fair value of financial instruments measured at fair value on a recurring basis

Financial liabilities

Carrying
Amount2020

a. Fair values of financial instruments not measured at fair value

30. FINANCIAL INSTRUMENTS

To support its operating activities and purchase of aircraft, the Company needs to maintain sufficient
capital. Therefore, the goal of capital management is to ensure financial resources and operating plan is able
to support the future working capital, capital expenditures, debt repayment and dividend expenses and otherneeds.

The Company manages its capital to ensure that entities in the Company will be able to continue as going
concerns while maximizing the return to stakeholders through the optimization of the debt and equity
balance. The capital structure of the Company consists of net debt (borrowings offset by cash and cash
equivalents) and equity of the Company comprising issued capital, reserves, retained earnings, other equity
and non-controlling interests.

29. CAPITAL MANAGEMENT

If the Company offers to settle compensation or bonuses paid to employees in cash or shares, the Company
assumes the entire amount of the compensation or bonuses would be settled in shares, and the resulting
potential shares were included in the weighted average number of shares outstanding used in thecomputation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential
shares was included in the computation of diluted earnings per share until the number of shares to be
distributed to employees is resolved in the following year.

Weighted average number of ordinary shares used in thecomputation of diluted earnings per share (in thousands)

Weighted average number of ordinary shares in computation of basic
earnings per share (in thousands)
Effect of potentially dilutive ordinary shares:
Convertible bonds (in thousands)

For the Year Ended December 31
2020
2019

223

The fair values of derivatives (except options) have been
determined based on discounted cash flow analyses using
interest yield curves applicable for the duration of thederivatives. The estimates and assumptions that the Company
used to determine the fair values are identical to those used in
the pricing of financial instruments for market participants.

Valuation Techniques and Inputs$

11,74951,030,220
129,800,759

434
9,588
31,214,918
107,856

2019$

Balance at December 31, 2019

5,524

4,901
623

83,36624,490$ 107,856$- 59 -

Because some financial instruments and nonfinancial instruments may not have their fair values
disclosed, the total fair value disclosed herein is not the total value of the Company’s collective
instruments.

$

EquityInstruments

Derivative
Instruments

Balance at January 1, 2019
Recognized in other comprehensive income$ 147,161$ 107,856
39,305-$

Balance at December 31, 2020

5,524
(5,524)EquityInstruments

Derivative
Instruments
$

80%
80%

Liquidity
Discount

0.79-16.32
0.75-13.23

Multiplicator

Balance at January 1, 2020
Other comprehensive income recognized during the period

December 31, 2020
December 31, 2019

The movements of Level 3 financial instruments are as follows:- 60 -The Company enters into forward contracts, foreign currency option contracts, and interest swap
contracts with fair values that are highly negatively correlated to the fair values of hedged items andevaluates the hedging effectiveness of these instruments periodically.

The Company is primarily exposed to the financial risks of changes in foreign currency exchange
rates and interest rates. The Company entered into derivative financial instruments to manage its
exposure to foreign currency risk and interest rate risk.

1) Market risk

In addition, the Company has a risk management committee, which meets periodically to evaluate theperformance of derivative instruments and determine the appropriate hedging portion. This committee
informs the Company of global economic and financial conditions, controls the Company’s entire
financial risk resulting from changes in the financial environment and fuel prices, and develops thestrategy and response to avoid financial risk with the assistance of financial risk experts to effect risk
management.

The Company has risk management and hedging strategies to respond to changes in the economic,
financial environment and in the fuel market. To reduce the financial risks from changes in interest rates,in exchange rates and fuel prices, the Company has its operating costs stay within a specified range byusing appropriate financial hedging instruments and hedging percentages in accordance with the“Processing Program of Derivative Financial Instrument Transactions” approved by Company
shareholders to reduce the impact of market price on earnings. These risks include market risk(including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

d. Financial risk management objectives and policies

Note 2: The balance of financial liabilities measured at amortized cost comprised short-term notes
payable, notes and accounts payable, accounts payable - related parties, other payables, bonds
payable and long-term loans, lease liabilities, provisions, parts of other current liabilities, partsof other noncurrent liabilities and guarantee deposits.

Note 1: The balances include financial assets measured at amortized cost, which comprise cash andcash equivalents, time deposits with original maturities of more than 3 months, notes andaccounts receivable, accounts receivable - related parties, other receivables, refundable
deposits and other restricted financial assets.

40,581,572
148,012,657

7,613,636
36,153,687
147,161

December 31

The domestic unlisted equity investment is based on the comparative company valuation to estimate
the fair value. The main assumptions are based on the multiplier of the market price of thecomparable listed company and the net value per share, which have considered the liquidity
discount. The higher the multiplier or the lower the liquidity discount, the higher the fair value ofthe relevant financial instruments.

$

2020

Financial liabilities at FVTPL
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

Financial liabilities

Financial assets at FVTPL
Financial assets for hedging
Financial assets at amortized cost (Note 1)
Financial assets at FVTOCI - equity instrument investment

Financial assets

c. Categories of financial instruments

The fair values of currency options and fuel options are determined using option pricing models
where the significant unobservable inputs are implied fluctuation. An increase in the implied
fluctuation used in isolation would result in a decrease in the fair value of currency options and fueloptions.

5) Valuation techniques and inputs applied for Level 3 fair value measurement

Derivative instruments

Financial Instruments

4) Valuation techniques and inputs applied for Level 2 fair value measurement

224

NTD/USD

Currency

NTD 142,045/
USD 5,000

Notional
Amount2021.1.292021.5.28

Maturity

29.4-29.8

Forward Rate

Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet

$

-

$

5,794

Carrying AmountAsset
Liability- 61 -

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aviation fuel) was $(5,794) thousand.

Cash flow hedge
Aviation fuel - forward
exchange contracts

Hedging Instruments

December 31, 2020

The following table summarizes the information relating to the hedging of foreign currency risk.
For the information related to lease contract as hedging instruments, please refer to Note 20.

For the hedges of highly probable aircraft prepayments, as the critical terms (i.e. the notionalamount, useful life and underlying asset) of the foreign exchange forward contracts and theircorresponding hedged items are the same, the Company performs a qualitative assessment of
the effectiveness, and it is expected that the value of the foreign exchange forward contracts andthe value of the corresponding hedged items will systematically change in the opposite direction
in response to movements in the underlying exchange rates.

The Company’s hedging strategy is to enter into foreign exchange forward contracts to avoid
exchange rate exposure of its foreign currency denominated receipts and payments and to
manage exchange rate exposure of its aircraft prepayments in the next year. Those transactions
are designated as cash flow hedges. When forecasted purchases actually take place, basis
adjustments are made to the initial carrying amounts of hedged items.

When New Taiwan dollars increase one dollar against U.S. dollars and all other variables were
held constant, there would be an increase in pre-tax profit of $126,947 thousand and othercomprehensive income of $1,155,267 thousand for the year ended December 31, 2020. A
decrease in pre-tax profit of $40,775 thousand and increase in pre-tax other comprehensive
income of $1,629,223 thousand for the year ended December 31, 2019.

The following details the Company’s sensitivity to a one dollar increase and decrease in the
New Taiwan dollar (the functional currency) against the U.S. dollar. The sensitivity amountused when reporting foreign currency risk internally to key management personnel and which
represents management’s assessment of the reasonably possible change in foreign exchange
rates is one dollar. The sensitivity analysis included only outstanding foreign currency
denominated monetary items and foreign exchange forward contracts designated as cash flow
hedges and adjusts their translation at the end of the reporting period for the New Taiwan dollar
strengthening or weakening one dollar against the U.S. dollar.

The Company is mainly exposed to the U.S. dollar.

Sensitivity analysis

The Company enters into currency option to hedge against the risks of changes in related
exchange rates, and enters into foreign exchange forward contracts to hedge against the risks ofchanges in the related exchange rates of foreign-currency assets, liabilities and commitments.

a) Foreign currency risk

$ (16,616)5$ (16,611)$ (97,203)

AmountReclassified toProfit and Lossand theAdjusted Line
Item

4,367
(101,570)-$

Hedging Gain
Recognized in
Other
Comprehensive
IncomeNTD/USD

NTD/USD

Currency

NTD1,411,411/
USD47,000

NTD660,661/
USD22,000

Notional
Amount2020.11.4

2020.2.272020.11.30

Maturity

29.6-30.5

29.7-30.7

Forward Rate

Financial assets forhedging - current/
liabilities for hedging current
Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet
$

77

32

18,385$ 10,193

Carrying AmountAsset
Liability$ 28,321$ (50,080)

Decrease in operating costs or foreign exchange loss.

$ 28,374(53)-

AmountReclassified toProfit and Lossand theAdjusted LineItem
$ (22,214)(10,161)(17,705)

Hedging Gain
Recognized in
Other
Comprehensive
Income(Note)- 62 -For the year ended December 31, 2019, the amount of hedging instruments reclassified toprepayments for equipment was $(603) thousand.

Note:

Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments

Comprehensive Income

For the year ended December 31, 2019

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aviation fuel and aircraft rentals in U.S. dollars) was $(10,161)
thousand and $(18,308) thousand, respectively.

Aircraft rentals forward exchange
contracts

Cash flow hedge
Aviation fuel - forward
exchange contracts

Hedging Instruments

December 31, 2019

For the year ended December 31, 2020, the amount of hedging instruments reclassified toprepayments for equipment was $119,878 thousand.

Cash flow hedge
Aviation fuelAircraft prepayments
Maintenance costComprehensive Income

For the year ended December 31, 2020

225

$ 63,008,637
102,601,087$ 83,350,312
73,930,965

2019

USD

Currency-

Notional
Amount-Maturity-

Forward Rate

Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet

$

-

$

-

Carrying AmountAsset
Liability- 63 -

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (fuel payments) was $0.

Cash flow hedges - fueloptions

Hedging Instrument

December 31, 2020

The Company was exposed to fuel price risk on its purchase of aviation fuel. The Company
enters into fuel swap contracts to hedge against adverse risks on fuel price changes.

c) Other price risk

Had interest rates increased by one yard (25 basis) and all other variables been held constant,
the Company’s pre-tax profit for the year ended December 31, 2019 would have decreased by$184,827 thousand.

Had interest rates increased by one yard (25 basis) and all other variables been held constant,
the Company’s pre-tax profit for the year ended December 31, 2020 would have decreased by$256,503 thousand.

The sensitivity analyses below were determined based on the Company’s exposure to interest
rates for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. One yard (25basis) increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.

Sensitivity analysis

Fair value interest rate risk
Cash flow interest rate risk

2020

December 31

The carrying amount of the Company’s financial liabilities with exposure to interest rates at theend of the reporting period were as follows.

The risk is managed by the Company through maintaining an appropriate mix of fixed andfloating rate borrowings, and using interest rate swap contracts and forward interest rate
contracts.

The Company enters into interest swap contracts to hedge against the risks on change in net
liabilities interest rates.

b) Interest rate risk

Hedging Instrument

Currency
USD

NTD5,524

Maturity
2020.3.312020.12.31

USD49.65USD80.75

Forward Rate$

(Note)

9,479

$

3,955

Carrying AmountAsset
Liability$ (52,853)

AmountReclassified toProfit and Lossand theAdjusted Line
Item

Financial assets forhedging - current/
liabilities for hedging current

Line Item in
Balance Sheet$ (5,524)

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeIncrease in operating costs.

$

623

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
Income$ (13,597)

AmountReclassified toProfit and Lossand theAdjusted Line
Item
(Note)

Fuel price increase of5%
Fuel price decrease of5%$- 64 -(1,479)

1,479

$

-

-

$

-

-

$

-

7,973

For the Year Ended December 31
2020
2019
Other
Other
CompreComprehensive
hensive
IncomeIncomePre-tax Profit
Pre-tax Profit
Increase
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)

The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.

Sensitivity analysis

Note:

Cash flow hedges - fuel options

Comprehensive Income

For the year ended December 31, 2019

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (fuel payments) was $5,524 thousand.

Cash flow hedges - fueloptions

Notional
AmountIncrease in operating costs.

December 31, 2019

Note:

Cash flow hedges - fuel options

Comprehensive Income

For the year ended December 31, 2020

226

- 65 -

Bank loans with a repayment on demand clause were included in the second column of the tablebelow regardless of whether or not the banks would choose to exercise early their rights to
repayment. The maturity dates for other non-derivative financial liabilities were based on theagreed-upon repayment dates. The Company’s liquidity analysis for its derivative financial
instruments is also shown in the following table. The table was based on the undiscounted
contractual net cash inflows and outflows on derivative instruments that settle on a net basis, andthe undiscounted gross cash inflows and outflows on those derivatives that require gross settlement.
When the amount payable or receivable is not fixed, the amount disclosed has been determined byreference to the projected interest rates as illustrated by yield curves at the end of the reporting
period.

The following table shows the remaining contractual maturity analysis of the Company’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Company may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.

Liquidity and interest risk rate table

The objective of the Company’s management of liquidity is to maintain cash and cash equivalents
sufficient for operating purposes, marketable securities with high liquidity and loan commitmentsthat are sufficient to ensure that the Company has adequate financial flexibility.

3) Liquidity risk

Endorsements given by the Company on behalf of its subsidiaries can be found in Notes 31(g).

Credit risk on bank deposits, investments income and other financial instruments are measured andmonitor by the Company’s finance department. The Company’s trading partners and other parties
were well-performing banks and financial institutions, corporations, and government agencies, andso the risk of counterparties failing to discharge an obligation is low; therefore, there is no
significant credit risk.

Financial credit risk

Since the customers of the industry is dispersed and non-related, the credit risk concentration is notcritical aviation.

To assess individual customers, the Company consider into the financial condition of the customers,
the credit rating agency rating, the Company’s internal credit rating, transaction history and current
economic conditions and many other factors that may affect the repayment. Sometimes, theCompany uses certain credit enhancement tools to reduce the credit risk of specific customers.

The Company has established procedures to management operations related credit risk to maintainthe quality of accounts receivable.

Operation - related credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Company. The Company’s credit risk, primarily comes from accounts
receivable generated from operating activities, bank deposits generated from investing activities,
fixed investment income and other financial instruments. Operation related credit risk and financial
credit risk are managed separately.

2) Credit risk

0.9576
3.1131
2.52730.1448The Weighted
Average
Effective
Interest Rate(%)

0.91020.25412.46220.1355

The Weighted
Average
Effective
Interest Rate(%)

Unused bank loan limit (unsecured)

Loan commitments

Finance leaseliabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

December 31, 2019

Finance leaseliabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

December 31, 2020

- 66 -

14,752,347
1,815,449
1,280,779

9,929,842$ 18,422,000

2019$ 34,995,624

14,787,869
6,373,333
3,383,401$ 10,451,021

Over 5 Years$ 27,778,417$

Over 5 Years

December 31$ 21,559,000

2020$ 97,419,817

3,362,181$ 36,083,236$

34,457,400
39,729,062
19,871,174

914,419

1 to 5 Years

14,284,090
10,060,822
10,823,905$

Less than 1
Year$ 99,883,867

2,778,984$ 38,410,202$

54,822,466
32,978,809
9,303,608

915,897

1 to 5 Years

15,559,492
9,249,609
12,685,204$

Less than 1
Year

227

Other income

Account Items

b. Operating income

Others- 67 -

Subsidiary
Major shareholder of theCompany
Associate
Joint venture investment

Relationship with the Company

696,100
5,097
122
22,445

$
$
$
$

$
$

1,239
42,457$ 2,577,039$
25,457For the Year Ended December 31
2020
2019

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate (become associate in January
2019)
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Associate
Associate
Associate
Joint venture investment
Joint venture investment
Joint venture investment
Joint venture investment
Director of the Company and major
shareholder
Director, key management personnel,
chairman, general manager of theCompany, spouse and second-degree
relative

Related Party Type

CAL-Dynasty International Inc.
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance and Engineering Co., Ltd.
Kaohsiung Catering Services
China Aircraft Service
Airport Air Cargo Terminal (Xiamen) Co., Ltd.
Airport Air Cargo Service (Xiamen) Co., Ltd.
Eastern United International Logistics (Hong Kong)
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.
China Aviation Development Foundation

Taiwan Aircargo Terminal Company
Taoyuan International Airport Service Co., Ltd.
Sabre Travel Network (Taiwan), Ltd.
Taiwan Airport Service Co., Ltd.
Taiwan Airport Service (Samoa)
Dynasty Aerotech International Corp.
Yestrip
Global Sky Express
Mandarin Airlines
CAL Park
CAL Hotel Co., Ltd.
CAL-Asia Investment
Dynasty Holidays, Inc.

Name

a. Related parties’ names and relationships

Except for the disclosures stated in other notes, transactions between the Company and its related partiesare disclosed below:

31. RELATED-PARTY TRANSACTIONS

99,757
1,667
101,424$$$

232,386

222,038
7,760
2,588

2019

$ 3,915,258$
56,474$ 414,106$ 1,911,091

December 31$

2020$ 2,611,679$
11,417$ 457,005$ 516,347

For the Year Ended December 31
2020
2019

459,667
52,18776,380588,234$

927,419
51,333484,700
5,982

2019

$ 1,469,434$

December 31$

2020- 68 -In March 2010, the Company signed a yearly renewable operating lease agreement to use the Operatingand Aviation Headquarters building of the Taiwan Taoyuan International Airport with CAL Park. In
2020 and 2019, the Company paid rentals of $207,003 and $231,288 thousand, respectively.

Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots. The Company paid the rental based on
usage hours. In 2020 and 2019, the Company paid rentals of about $11,417 thousand and $56,474
thousand, respectively.

The Company rented out planes to Mandarin Airlines under an operating lease contract. The monthly
rent received is based on flight hours. In 2020 and 2019, the rentals received amounted to $384,080
thousand and $1,624,568 thousand, respectively.

f. Leases of properties (operating leases)

The remaining balance of notes and accounts payable - related parties will be paid in cash if they are notsecured.

Subsidiary
Associate
Joint venture investment
Major shareholder of the Company

Related Party Typee. Accounts payable - related parties (generated by operations)

The receivables are not guaranteed, and there is no allowance for doubtful accounts related to accounts
receivable - related parties. The payment periods of such accounts were within 30 to 90 days, and there
are no overdue payments.

Subsidiary
Joint venture investment
Major shareholder of the Company

Related Party Typed. Accounts receivable - related parties (generated by operations)

Subsidiary
Major shareholder of the Company
Associate
Joint venture investment

Related Party Typec. Purchases

228$ 1,892,540
265,062
1,336,000

ActualAmount Used2020

$ 3,850,000
1,080,000
3,012,668
2,000,000

Authorized
Amount$ 2,129,400
685,444
1,279,827

ActualAmount Used

2019

125
25

$

125,000
25,000December 31, 2020
Aggregate
Units
Par/Dollars

33,3762,525
35,901$$$$42,05539,6932,362

For the Year Ended December 31
2020
2019

The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.

Short-term employee benefits
Post-employment benefits

Compensation of key management personnel

In 2020, interest expense was $2,499 thousand. This bonds payable will be paid off in May 2021. As of
December 31, 2020 the interest payable was $1,071 thousand.

Mandarin Airlines
Sabre Travel Network (Taiwan)

The first issue of unsecured bonds in 2016

Related Party

Property, plant and equipment
Right-of-use asset- 69 -$ 91,219,461$ 84,668,932

2019$ 26,956,631
64,262,830

December 31$ 30,113,171
54,555,761

2020

The following assets were pledged or mortgaged as collateral for long-term bank loans, lease obligations
and business transactions:32. PLEDGED ASSETSi.

$ 3,850,000
2,656,591
2,000,000

Authorized
AmountDecember 31

Related parties that invested in the first issue of unsecured bonds in 2016 (Note 19) are summarized asfollows:

h. Bonds payable - related parties

CAL Park
Taiwan Air Cargo Terminal
Tigerair Taiwan
Taiwan Air Craft Maintenance

The Company

g. Endorsements and guarantees- 70 -The Company has obtained relief loan from the government. Refer to Note 18 for details on the amount ofloan and its allocation.

In 2020, because of the Covid-19, the Company received subsidy of $1,251,632 thousand for the airport
landing fees and parking fees, etc. The subsidy for housing and land rental, and salary expenses was$745,820 thousand, recognized as deduction from other income and expenses.

The Company continues to adjust the response measures according to the situation. In addition, to ensure
the adequate liquidity, the Company also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Company’s policies to control spending include suspension of non-urgent capital expenditures, reduction in
unnecessary expenses for administrative management and sales, negotiation with suppliers for a lower priceand postponement of payments.

Since the outbreak of the Covid-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have not removed their travel restrictions.
Because the number of inbound and outbound passengers has decreased significantly, the Company adjusts
the proportion between passenger aircraft and cargo aircraft used in operations to comply with thegovernment’s epidemic prevention policy and cater to market demand. The Company reduces the frequencyof passenger air services that have been severely affected, uses the passenger aircraft to support the cargoflight arrangement and expands the function of all-cargo aircraft to maximize the opportunities from air
cargo business. Since March 2020, cargo has become the main source of revenue for the Company.

34. IMPACT OF COVID-19

b. In July and August 2019, the Company signed a contract with the Boeing Company to purchase three
777F aircraft and exercised the option to purchase three 777F aircraft. The total list price of the six
aircraft is US$2,320,315 thousand, and the expected delivery periods are from 2020 to 2023. As of
December 31, 2020, two out of the six aircraft has been delivered, the list price had been paid in theamount of US$122,186 thousand (recognized as prepayments for aircraft), and the total list price of theremaining four aircraft is US$1,552,879.

a. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery periods of the eleven aircraft are from 2024 to 2026. As of December
31, 2020, the list price of the fourteen aircraft had been paid in the amount of US$32,578 thousand(recognized as prepayments for aircraft). In October 2019, the Company signed a contract with
International Aero Engines Company to purchase four backup engines of A321neo. The total list priceof the four engines is US$60,289 thousand. The Company also signed related aircraft rental agreement,
please refer to Note 20 for details.

As of December 31, 2020, except for the disclosures stated in other notes, the Company had commitments
and contingent liabilities as follows:

33. COMMITMENTS AND CONTINGENT LIABILITIES2291) Financing provided: Table 1 (attached).

10) Derivative financial transactions: Notes 7 and 30.

9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 6 (attached).

8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 5 (attached).

7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 4 (attached).

6) Disposals of individual real estates at costs or prices of at least NT$100 million or 20% of thepaid-in capital: None.

5) Acquisitions of individual real estates at costs or price of at least NT$100 million or 20% of thepaid-in capital: None.

4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: None.

Monetary items
USD
EUR
HKD
JPY
RMB

Financial liabilities- 71 -$

2,179,056
7,639
67,5295,706,141
132,622502,608
18,401225,078
5,531,849
371,64230.0300
33.6700
3.85950.27664.304830.0300
33.6700
3.85950.27664.304865,437,049
257,211
260,630
1,578,319
570,913$ 15,093,328
619,571868,689
1,530,109
1,599,846- 72 -The Company mainly engages in air transportation services for passengers, cargo and others. The major
revenue-generating asset is the fleet, which is jointly used for passenger and cargo services. Thus, theCompany’s sole reportable segment is the flight segment. For operating segment reporting in the financial
statements, the Company’s reportable segment comprises the flight and the non-flight businessdepartments.

37. SEGMENT INFORMATION

c. Information of major shareholders: Table 8 (attached).

Carrying
Amount54,762,089
226,949
264,994821,220594,941$ 18,193,504
635,752
1,240,403
939,9422,373,786

Monetary items
USD
EUR
HKD
JPY
RMB

Exchange Rate

28.4091
34.8432
3.66030.27504.344028.4091
34.8432
3.66030.27504.3440b. Investment in mainland China: Table 7 (attached).

Foreign
Currencies(In Thousands)

1,927,625
6,513
72,3972,986,256
136,957

640,411
18,246
338,880
3,417,972
546,452

Financial assets

December 31, 2019

Monetary items
USD
EUR
HKD
JPY
RMB

Financial liabilities$

3) Marketable securities held: Table 3 (attached).

Carrying
AmountMonetary items
USD
EUR
HKD
JPY
RMB

Exchange Ratea. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:2) Endorsements/guarantees provided: Table 2 (attached).

Foreign
Currencies(In Thousands)

36. ADDITIONAL DISCLOSURESFor the years ended December 31, 2020 and 2019, the Company’s net foreign exchange (losses) gains were$259,796 thousand and $(262,610) thousand, respectively. It is impractical to disclose net foreign exchange
gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

Financial assets

December 31, 2020

The following information was aggregated by the foreign currencies other than functional currencies of theCompany entities and the exchange rates between foreign currencies and respective functional currencies
were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

35. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESFinancial
Statement
Account$ 103,244

HighestBalance for
the Period$

99,432EndingBalance$

28,409ActualBorrowingAmount2.25

Interest Rate(%)
Short-term
financingfacility isnecessary

Nature ofFinancing

The maximum amount of loans to an individual counterparty by the Company is up to 20% of the Company's net worth as stated in its latest financial statements.

Y

RelatedParty

The maximum amount of loans to others by the Company is up to 40% of the Company's net worth as stated in its latest financial statements.

Dynasty Hotel of Notes receivable
Hawaii, Inc.

Borrower

Note 2:

Cal-Dynasty International

Lender

Note 1:

1No.

FINANCING PROVIDED TO OTHERSFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

230
$

-

Business
Transaction
AmountOperatingcycle capital
expenditure

Reasons for
Short-term
Financing$-

Allowance for
Impairment
Loss
Item
$

Value

Collateral-$ 144,128

Financing
Limit for
Each
Borrower$ 288,256

Aggregate
Financing
Limit

Note

TABLE 1

2,000,000$ 3,850,000
3,038,197
2,000,000$ 3,850,000
2,656,591
1,336,000$ 1,892,540
265,062$

Based on the Company’s guidelines, the allowable aggregate amount of collateral guarantee is up to 50% of the Company’s shareholders’ equity.

11,511,896$ 11,511,896
11,511,896

Note 2:

100% subsidiary
75.86% subsidiary bydirect and indirect
holdings
100% subsidiary

Nature of Relationship

ActualBorrowingAmount

-

3.47

6.69
4.62

Ratio ofAccumulated
Value ofAmount ofCollaterals
Collateral toProperty, Plant Net Equity ofor Equipment
the Latest
Financial
Statement (%)

Based on the Company’s guidelines, the maximum amount of guarantee to an individual counterparty is up to 20% of the Company’s shareholders’ equity.

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

China Airlines
CAL Park(the “Company”) Tigerair Taiwan Co., Ltd.

Name

Limit on EachCounterparty’s
Maximum
Endorsement/
Balance for the Ending Balance
Guarantee
PeriodAmount(Note 1)

Note 1:0No.

Endorsement/
Guarantee
ProviderCounterparty

ENDORSEMENT/GUARANTEE PROVIDEDFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

231

28,779,741$ 28,779,741
28,779,741

Maximum
Collateral/
Guarantee
Amounts
Allowable(Note 2)

Y

Y
Y

N

N
N

N

N
N

Endorsement/ Endorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Given by Parent
Given on Behalf
Given byon Behalf of
Subsidiaries on of Companies in
Subsidiaries Behalf of Parent Mainland China

TABLE 2

Shares
China Airlines

SharesTaikoo (Xiamen) Landing Gear Services
HAECO Composite Structures (Jinjiang)

Beneficiary certificatesFranklin Templeton SinoAm Money Market FundFSITC Money Market Fund

SharesTransAsia Airways

Beneficiary certificates
Taishin 1699 Money Market Fund

Beneficiary certificates
Prudential Financial Money Market Fund
Prudential Financial Return Fund
Taishin 1699 Money Market Fund

Mandarin Airlines

Cal-Asia Investment

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Dynasty Aerotech International Corp.

Kaohsiung Catering Services

Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial Statement Account

-

-

-

-

-

Financial assets at FVTPL - current
Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial assets at FVTPL - current

Financial assets at FVTPL - current

Financial assets at FVTPL - current
Financial assets at FVTPL - current

Financial assets at FVTPL - current
Financial assets at FVTOCI - non-current

Parent company Financial assets at FVTOCI - non-current-

Relationshipwith the Holding
Company

Note 3: The table only lists financial assets that are in accordance with IFRS 9.

Note 2: The Company does not issue shares because it is a limited company.

5,407,832
4,493,628
1,106,807

349,523

2,277,786

4,051,153
308,094-

2,074,628

1,359,368
135,937
1,100,000
12,000,000
4,021

Number of
Shares/Units

Note 1: The subsidiary’s net asset value was $117,457 thousand, which included ordinary shares and preference shares as of and for the year ended December 31, 2020.

SharesEverest Investment Holdings Ltd. - ordinary shares
Everest Investment Holdings Ltd. - preference shares
Chung Hua Express Co.
Jardine Air Terminal Services
The Grand Hi Lai Hotel

Marketable Security Type and Issuer/Name

China Airlines (“Parent company”)

Holding Company Name

MARKETABLE SECURITIES HELDDECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

232$

86,281
70,94915,103

4,771-

42,24755,411

16,58524,999106,779
10,67829,704
-

-

-

0.40

-

2.59
5.45

-

13.59
11.00
15.00
0.02

$

86,281
70,94915,103

4,771-

42,24755,411

16,58524,99929,704-

117,457

December 31, 2020
Percentage of Market Value
Carrying
Ownership
or Net Asset
Amount
(%)
Value

-

-

-

-

Note 2
Note 2-

Note 1Note

TABLE 3

Taiwan Air Cargo Terminal
Taiwan Airport Services
Mandarin Airlines
Tigerair Taiwan
Taoyuan International Airport Service
Dynasty Aerotech International Corp.
CAL Park
Global Sky Express
Eastern United International Logistics
China Pacific Catering Services

Taiwan Airport Services
Tigerair Taiwan

CAL Park

Mandarin Airlines

Cal Hotel

Related Party

China Airlines, Ltd.
(“China Airlines”)

Company Name

Same parent company

Same parent company
Same parent company

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Equity-method investee
Equity-method investee

Nature of Relationship

Purchase

Purchase
Purchase

Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase

Purchase/
Sale$

102,220

152,475
149,048

659,596
107,482(221,527)(240,768)
1,043,264
352,214
209,701(139,335)
388,451
473,460

Amount

48.59

4.14
4.05

0.69
0.11
(0.21)(0.23)
1.10
0.37
0.22
(0.13)
0.41
0.50

% of
Total

Transaction Details

1 month

1 month
1 month

30 days
40 days
2 months
1 month
40 days
2 months
2 months
15 days
2 months
90 days

Payment Terms
$

-

-

-

-

-

-

-

$

(76)

(22,407)(11,711)(67,465)(13,046)
69,17912,008(215,542)(49,108)
8,180(41,725)(71,674)(0.25)(5.58)(2.92)(3.39)(0.76)
0.71
0.12(12.56)(2.86)
0.08(2.43)(4.18)

Note/Account Payable or
Receivable% ofPayment Terms Ending Balance
Total

Abnormal Transaction
Unit PriceTOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

233

-

-

-

-

Note

TABLE 4

Parent company

Parent company

Nature of Relationship

215,542$ 101,725

Ending Balance

3.71

Note

Turnover Rate$

AmountAccounts receivable and revenue were not directly correlated because of the particular industry characteristics, and therefore the turnover rate was not applicable.

China Airlines

Taoyuan International Airport Service

Note:

China Airlines

Related Party

Mandarin Airlines

Company Name

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

234
-

-

-

Action Taken

Overdue$

215,542

56,870

Amounts Received
in Subsequent
Period$--Allowance for
Bad Debts

TABLE 5

Represents the financial information of the foreign holding company disclosed in accordance with local regulations.

The Company does not issue shares because it is a limited company.

Difference caused by lease arrangement between consolidated entities.

Difference caused by acquisition.

Note 4:Note 5:Catering business

Note 3:Kaohsiung, Taiwan

Airport services and investment

Note 2:

Delica International Co., Ltd.

Kaohsiung Catering
Services

Samoa

Forwarding and storage of air cargo

Adopted the treasury shares method in recognizing investment income or loss.

Taiwan Airport Service (Samoa)

Taiwan Airport Services

Hong Kong

Note 1:

Eastern United International Logistics

CAL-Asia Investment

Taoyuan, Taiwan
Air transportation and maintenance of aircraft
Airport services

Taipei, Taiwan
Tokyo, Japan
Taipei, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan

Yestrip
Dynasty Holidays
Global Sky Express
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
NORDAM Asia Ltd.

Taipei, Taiwan
Taipei, Taiwan

Aircraft maintenanceTaoyuan, Taiwan

Dynasty Aerotech International Corp.

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Real estate lease and international trade
Air transportation and maintenance of aircraft
Air cargo and storage
A holding company, real estate and hotel services
In-flight catering
Airport services
General investment
Sale and maintenance of hardware and software
Airport services
Airport services
In-flight catering
Hotel business
Cleaning and leasing of the towel of airlines, hotels,
restaurants and health clubs
Cleaning of aircraft and maintenance of machine andequipment
Travel businessTravel business
Forwarding and storage of air cargo
Air transportation and maintenance of aircraft
Aircraft maintenance

Main Business and ProductTaoyuan, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan
Los Angeles, USA
Taoyuan, Taiwan
Taoyuan, Taiwan
Territory of the British Virgin Islands
Taipei, Taiwan
Hong Kong International Airport
Taipei, Taiwan
Kaohsiung, Taiwan
Taoyuan, Taiwan
Taoyuan, Taiwan

Location

CAL Park
Mandarin Airlines
Taiwan Air Cargo Terminal
Cal-Dynasty International
China Pacific Catering Services
Taoyuan International Airport Services
CAL-Asia Investment
Sabre Travel Network (Taiwan)
China Aircraft Service
Taiwan Airport Services
Kaohsiung Catering Services
Cal Hotel Co., Ltd.
China Pacific Laundry Services

Investee Company

Mandarin Airlines

China Airlines, Ltd.

Investor Company

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars and Foreign Currencies in Thousands, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

235

US$

HK$

10,200

5,877

3,329

154,330
11,65837,97526,265
JPY
8,000
2,500
3,109,907
1,350,000

77,2701,500,000
2,042,368
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500$

December 31,
2020

US$

HK$

10,200

5,877

3,329

154,330
11,6582,450

26,265
JPY
20,4002,500
1,272,063
1,350,000

77,2701,500,000
2,042,368
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500$

December 31,
2019

Investment Amount

1,020,000-

1,050,000

15,433,000
469,755

3,797,500

1,600,000
160
250,000
212,420,046
135,000,000

77,270150,000,000
188,154,025
135,000,000
2,614,500
43,911,000
34,300,000
7,172,346
13,021,042
28,400,000
20,626,644
21,494,637
46,500,000
13,750,000

51.00

100.00

35.00

5.51
1.08

49.00

100.00
20.00
25.00
75.86
100.00100.00100.0093.99
54.00
100.0051.00
49.00
100.00
93.93
20.00
47.35
53.67
100.00
55.00

$

7,871

373,442

51,116

167,400
4,567

37,767

10,2705,237
7,643
2,304,113
699,793

136,630

1,605,033
1,223,259
1,556,133
1,188,110
695,959
602,688469,979
232,883
277,234
200,794
512,926
405,353
149,353

Balance as of December 31, 2020
Percentage
Number ofof
Carrying
Shares/Units Ownership
Amount(%)$

33,986

4

22,35539,829(1,371,056)(156,739)(93)(15,067)(23,701)
7,796(1,371,056)(222,223)

Note

222,355 Note 3

13,940(104,501)(1,688)

(46)

-

-

-

-

(14,998) Note 4(4,740)1,949(956,008) Note 4(222,196)-

33,967 Note 453,770 Note 4(353,642) Notes 1 and 4
172,017(20,542) Note 2(136,459)(126,858)
45,068(46,951)(102,758)(74,214)(8,309) Note 5(73,906) Note 4(15,475)-

Investment
Income (Loss)

9,350 $
(376,255)
318,494(21,960)(267,566)(258,894)
45,068(49,995)(513,790)(156,739)
9,129(73,586)(28,137)Net Income(Loss) of theInvestee

TABLE 6

Landing gear
2,360,511
maintenance services (US$ 83,090)

Composite material

Taikoo (Xiamen) Landing
Gear Services

HAECO Composite
Structures (Jinjiang)

Investment Amount
Authorized by Investment
Commission, MOEA

$618,216 (Note 3)

Accumulated Investment in
Mainland China as ofDecember 31, 2020

$253,427(US$8,920)

331,335
11,663)Forwarding and storage60,817of air cargo(RMB 14,000)

Airport Air Cargo Service(Xiamen) Co., Ltd.

(US$

Forwarding and storage $ 1,105,474
of air cargo(RMB 254,480)

Main Business andProduct

Indirect(Note 1)

Indirect(Note 1)

Indirect(Note 1)

Indirect(Note 1)

18,068636)

61,1142,151)

55,325
1,947)$34,535,690 (Note 4)

Limit on Investment

(US$

(US$

(US$

$
118,920 $(US$4,186)

Accumulated
Outflow of
Total Amount
Investment Investmentof Paid-infrom Taiwan as
TypeCapitalof January 1,
2020

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Investee Company Name

China Airlines

INVESTMENTS IN MAINLAND CHINAFOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars, Unless Stated Otherwise)

CHINA AIRLINES, LTD. AND SUBSIDIARIES

236
Outflow

-

-

-

-

$

Inflow

Investment Flow

-

-

-

-

Net Income(Loss) of
the Investee

(US$

(US$

(US$

18,068636)

61,1142,151)--

55,32568,272
1,947) (RMB 15,976)$
118,920 $91,311(US$4,186) (RMB 21,367)

Accumulated
Outflow ofInvestment
from Taiwan asof December 31,
2020

5.45

2.589

14.00

14.00

% Ownershipof Direct orIndirect
Investment

Accumulated
InwardRemittance ofEarnings as ofDecember 31,
2020

(RMB

-

-

(RMB

10,128357)-

44,333
1,561)(Note 2)

(Continued)

16,585
3,818) (US$

-

9,566
134,918
2,237) (RMB 31,058) (US$$12,794 $
238,717 $
100,470(RMB 2,991) (RMB 54,953) (US$3,537)(Note 2)

Investment
Gain (Loss)

Carrying
Amountas ofDecember 31,
2020

TABLE 7

Forwarding and storageof air cargo(RMB

Airport Air Cargo Service(Xiamen) Co., Ltd.

$168,895(US$5,945)$168,895(US$5,945)

(US$

-

-

$

Inward$254,438(Note 6)Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA

54,737
1,927)$
114,158 $(US$
4,018)

Outward

Remittance of Funds

-

-

(US$

54,737
68,272
1,927) (RMB 15,976)

14.00

14.00

% Ownershipof Direct orIndirect
Investment

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2020

(RMB

9,558
135,128
2,237) (RMB 31,107) (US$Note 6: The RMB and U.S. dollar amounts of assets are translated at year-end rates and those of gains (losses), at the average of the year-end rates for the reporting period.

Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which in return, invested in a company located in mainland China.

(Concluded)

59,426
2,092)$
12,784 $237,502 $129,010(RMB 2,991) (RMB 54,673) (US$4,541)

Investment
Income (Loss)

Carrying
Amount as ofDecember 31,
2020

Note 4: The limit stated in the Investment Commission’s regulation, “Investment or Technical Cooperation in Mainland China Adjustment Rule,” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.

Note 3: The amount comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.

Note 2: The inward remittance of earnings in 2020 amounted to US$3,536,561 and US$1,560,538.

Net Income(Loss) of theInvestee$
114,158 $
91,311(US$
4,018) (RMB 21,367)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2020

Note 1: China Airlines, Ltd. the “Company” invested in CAL-Asia Investment, which, in turn, invested in a company located in mainland China.

Investment Amounts Authorized by
Investment Commission, MOEA

Accumulated Outward
Remittance for Investment in
Mainland China as of December 31, 2020

60,817 Indirect
14,000 ) (Note 5)

Forwarding and storage $ 1,105,474 Indirectof air cargo(RMB 254,480 ) (Note 5)

Main Business andProduct

Accumulated
Outward
Remittance for
Method ofInvestment
Paid-in Capital
Investment
from Taiwan asof January 1,
2020

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Investee Company

Taiwan Airport Services

237

238
1,867,341,935
519,750,519

34.44
9.59

SharesNumber ofPercentage ofSharesOwnership (%)- 81 -

Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by theindividual truster who opened the trust account. For shareholders who declare insider shareholdings
with ownership greater than 10% in accordance with the Security and Exchange Act, theshareholdings include shares held by shareholders and those delivered to the trust over whichshareholders have rights to determine the use of trust property. For information relating to insider
shareholding declaration, please refer to Market Observation Post System.

Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository &Clearing Corporation based on the number of ordinary shares and preferred shares held byshareholders with ownership of 5% or greater, that have been issued without physical registration(including treasury shares) by the Company as of the last business day for the current quarter. The
share capital in the financial statements may differ from the actual number of shares that have been
issued without physical registration because of different preparation basis.

China Aviation Development Foundation (CADF)
National Development Fund (NDF)

Name of Major Shareholder

INFORMATION OF MAJOR STOCKHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 2020

CHINA AIRLINES, LTD.

TABLE 8China Airlines Co., Ltd.
ChairmanƝHsieh, Su-Chien