China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theYears Ended December 31, 2023 and 2022 andIndependent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordancewith the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports andConsolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2023 are
all the same as the companies required to be included in the consolidated financial statements of parent
and subsidiary companies as provided in International Financial Reporting Standard No. 10,“Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated
financial statements of affiliates has all been disclosed in the consolidated financial statements of parent
and subsidiary companies. Hence, we did not prepare a separate set of consolidated financial statementsof affiliates.

Very truly yours,
CHINA AIRLINES, LTD.
By

March 8, 2024

-1-

INDEPENDENT AUDITORS’ REPORTThe Board of Directors and Shareholders
China Airlines, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of China Airlines, Ltd. (the“Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise theconsolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements ofcomprehensive income, changes in equity and cash flows for the years then ended, and the notes tothe consolidated financial statements, including material accounting policy information(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, 2023 and 2022, 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 Financial Statement Audit
and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of 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 our report. 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 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.
Key Audit Matters
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, 2023. 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.

-2-

Key audit matter in the audit of the Group’s consolidated financial statements is stated below:
Passenger Revenue Recognition
In accordance with IFRS 15 “Revenue from Contracts with Customers”, passenger sales areaccounted for as contract liabilities before relevant transportation services were provided. After
providing the related services, contract liabilities are reclassified to passenger revenue. For the year
ended December 31, 2023, passenger revenue was NT$115,722,524 thousand. Refer to Notes 4 and
27 to the accompanying consolidated financial statements for related detailed information.
Since relevant sales can only be recognized as passenger revenue when passengers actuallyboarded, the risk that revenue recorded in the wrong period may arise from complex information
technology system involved in the process; therefore, we identified passenger revenue recognition
as a key audit matter.
The main audit procedures that we performed included the following:1.

We understood and tested the internal controls related to the process of revenue frompassenger, including manual and automatic controls.

2.

We understood and tested the effectiveness of the information system related to the recognitionof passenger revenue.

3.

We sampled several flight tickets, which were used and recognized as revenue, to verify
whether the boarding date matched the date recorded on the tickets, from advanced sales oftickets, ensuring the occurrence of revenue recognition.

Other Matter
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.
As of December 31, 2023 and 2022, total assets of these subsidiaries amounted to NT$18,043,139
thousand and NT$14,466,840 thousand, representing 6.20% and 4.91% of the consolidated total
assets, respectively. For the years ended December 31, 2023 and 2022, revenue from thesesubsidiaries amounted to NT$12,256,938 thousand and NT$824,496 thousand, representing 6.63%
and 0.55% of the consolidated total revenue, respectively.
We have also audited the parent company only financial statements of China Airlines, Ltd. as ofand for the years ended December 31, 2023 and 2022, on which we have issued an unmodified
opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
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.

-3-

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.
Those charged with governance, including the audit committee, are responsible for overseeing theGroup’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
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 Standards on
Auditing of 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 theaggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
As part of an audit in accordance with the Standards on Auditing of the Republic of China, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:1.

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.

2.

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.

3.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

4.

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.

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.
6.

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.

-4-

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.
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.
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, 2023 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.
The engagement partners on the audits resulting in this independent auditors’ report are Kuan-Hao
Lee and Shiuh-Ran Cheng.

Deloitte & Touche
Taipei, Taiwan
Republic of China
March 8, 2024

Notice to Readers
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.
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.

-5-

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

2023
Amount%2022
Amount%$ 30,391,564
186,560
4,079,619
10,353,943
10,000,732
16,176
265,955
808,005
27,984
10,678,706
1,290,581
1,593,490

10
1
4
3
4
1
1

$ 34,980,469
119,462
6,218,617
4,031,662
11,126,642
4,849
963,004
5,259
10,775,467
1,596,912

12
2
1
4
4
1

69,693,315

24

69,822,343

24

103,982
224,9121,737,235
123,342,731
52,231,083
2,071,785
791,567
8,192,270
187,901
32,665,650

1
42
18
1
3
11

123,033
205,765
1,453,244
128,207,404
59,015,407
2,072,012
883,420
8,446,347
24,183,218

44
20
1
3
8

221,549,116

76

224,589,850

76$ 291,242,431

100$ 294,412,193

100

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 31)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 31)
Financial assets at amortized cost - current (Notes 4, 9 and 31)
Financial assets for hedging - current (Notes 4, 6 and 31)
Notes and accounts receivable, net (Notes 4, 10 and 31)
Notes and accounts receivable - related parties (Notes 31 and 32)
Finance lease receivables - current (Notes 4, 21 and 31)
Other receivables (Notes 4 and 31)
Current tax assets (Notes 4 and 28)
Inventories (Notes 4 and 11)
Non-current assets held for sale (Notes 4, 5 and 12)
Other current assets (Note 18)
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 31)
Financial assets at amortized cost - non-current (Notes 4, 9 and 31)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 33)
Right-of-use assets (Notes 4 and 21)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred tax assets (Notes 4 and 28)
Finance lease receivables - non-current (Notes 4, 21 and 31)
Other non-current assets (Notes 18, 21, 25, 31 and 33)
Total non-current assets
TOTAL

LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term borrowings (Notes 19 and 31)
Short-term bills payable (Notes 19 and 31)
Financial liabilities for hedging - current (Notes 4, 21 and 31)
Notes and accounts payable (Note 31)
Accounts payable - related parties (Notes 31 and 32)
Other payables (Notes 22 and 31)
Current tax liabilities (Notes 4 and 28)
Lease liabilities - current (Notes 4, 21 and 31)
Contract liabilities - current (Notes 4 and 23)
Provisions - current (Notes 4 and 24)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 20, 26 and 31)
Current portion of long-term borrowings (Notes 19, 31 and 33)
Other current liabilities (Note 31)

835,000
9,983,959
1,357,805
317,810
15,207,259
492,415
3,027,890
17,409,654
3,691,812
2,350,000
13,225,516
3,355,958

3
1
5
1
6
1
1
5
1

31

71,255,078

24

26,099,758
4,925,000
46,478,031
2,964,299
16,865,601
196,899
15,783,549
9,706,647
698,110

9
2
16
1
6
5
3
-

32,190,102
7,649,674
65,109,050
1,280,906
17,271,121
166,864
15,439,535
9,229,640
2,366,781

11
3
22
6
5
3
1

Total non-current liabilities

123,717,894

42

150,703,673

51

Total liabilities

213,763,561

73

221,958,751

75

60,513,407
3,887,046

21
1

60,135,374
3,120,311

20
1

1,230,977
534,375
9,146,199
10,911,551(690,014)(30,875)

1
3
4-925,385
6,384,381
7,309,766(534,375)(30,875)

1
2
3-

74,591,115

26

70,000,201

24

2,887,755

1

2,453,241

1

77,478,870

27

72,453,442

25$ 291,242,431

100$ 294,412,193

100

Total current liabilities
NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 4, 21 and 31)
Bonds payable - non-current (Notes 4, 20, 26 and 31)
Long-term borrowings (Notes 19, 31 and 33)
Contract liabilities - non-current (Notes 4 and 23)
Provisions - non-current (Notes 4 and 24)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 4, 21 and 31)
Net defined benefit liabilities - non-current (Notes 4, 5 and 25)
Other non-current liabilities (Note 31)

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 20 and 26)
Share capital
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated retained earnings
Total retained earnings
Other equity
Treasury shares
Total equity attributable to owners of the Company
NON-CONTROLLING INTERESTS (Note 26)
Total equity
TOTAL

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 8, 2024)-6-$35,00020,0008,889,205
1,382,344
670,81417,750,515
205,147
3,364,630
26,473,116
2,742,402
4,723,814
18,669,326
5,119,354

3
1
6
1
9
1
2
6
2

90,045,667$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)%

2022
Amount%$ 184,816,790

100$ 150,722,471

100

OPERATING COSTS (Notes 4, 10, 11, 17, 24, 25, 27
and 32)160,986,016

87

139,352,258

92

GROSS PROFIT

23,830,774

13

11,370,213

8

OPERATING EXPENSES (Notes 4, 25, 27 and 32)

13,673,353

8

8,785,479

6

PROFIT FROM OPERATIONS

10,157,421

52,584,734

2

2,205,800(866,936)(2,608,298)

1(1)

1,588,586
1,103,071(2,540,792)

1
1
(2)

417,485-(74,839)-(851,949)-

76,026-

PROFIT BEFORE INCOME TAX

9,305,472

5

2,660,760

2

INCOME TAX EXPENSE (Notes 4 and 28)

1,834,271

1415,359

1

NET PROFIT FOR THE YEAR

7,471,201

42,245,401

1(354,851)-(144,906)-(18,154)-

54,956-(648,987)-

355,040-(55,639)-

18,070-129,759(947,872)-

OPERATING REVENUE (Notes 4, 27 and 32)

NON-OPERATING INCOME AND EXPENSES
Other income (Notes 4, 8 and 27)
Other gains and losses (Notes 12, 14, 15, 27 and 31)
Finance costs (Notes 27 and 31)
Share of the profit of associates and joint ventures(Note 14)
Total non-operating income and expenses

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Gain (loss) on hedging instruments subject tobasis adjustment (Notes 4, 26 and 31)
Unrealized gain (loss) on investments in equity
instruments at fair value through othercomprehensive income (Note 26)
Remeasurement of defined benefit plans (Notes 4
and 25)
Share of the other comprehensive income (loss) of
associates and joint ventures accounted forusing the equity method (Notes 4 and 14)
Income tax related to items that will not bereclassified subsequently to profit or loss
(Note 28)

-7-

2023
Amount(132,980)
150,180(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2023
AmountItems that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of thefinancial statements of foreign operations(Notes 4 and 26)
Gain (loss) on hedging instruments not subject tobasis adjustment (Notes 4, 26 and 31)
Income tax related to items that may bereclassified subsequently to profit or loss
(Note 28)$

NET PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests

TOTAL COMPREHENSIVE INCOME (LOSS)ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests

%

-

-

(4,140,897)(3)(13,480)
44,912-

799,193(3,194,109)

1(2)(902,960)-(3,043,929)(2)$

6,568,241

4$(798,528)(1)$

6,818,552
652,6494-$2,859,503(614,102)

2
(1)

$

7,471,201

4$2,245,401

1$

6,049,509
518,7323
1$(292,972)(505,556)(1)$

6,568,241

4$(798,528)(1)

EARNINGS PER SHARE (NEW TAIWANDOLLARS; Note 29)
Basic
Diluted$$(12,572)-

70,964

1.13
1.11

$

%

147,595

Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR

2022
Amount

$
$

0.48
0.47

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 8, 2024)-8-(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Company

Retained Earnings

BALANCE AT JANUARY 1, 2022

Share Capital

Capital Surplus

Legal Reserve

Special Reserve

UnappropriatedEarnings$ 59,412,243

$

$

$

$

2,694,529--

9,253,848

Exchange
Differences on
Translation of the
Financial
Statements ofForeign
Operations$(120,079)

Other Equity
Unrealized Gain
(Loss) on
Financial Asset atFair Value
Through Other
Comprehensive
Income$(5,512)Gain (Loss) on
Hedging
Instruments$

2,839,419

Treasury Shares
Held by
Subsidiaries
$

Total

(30,875)$ 74,043,573

Non-controlling
Interests

Total Equity$

3,161,445$ 77,205,018

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

100,687-

100,687-

100,687

Appropriation of 2021 earnings
Legal reserve
Cash dividends - $0.83145736 per share--

925,385--(925,385)(5,000,000)

-

-

-

-

(5,000,000)-(5,000,000)

Changes in capital surplus from dividends distributed to subsidiaries

-

1,725

-

-

-

-

-

-

-

1,725

-

1,725

Net profit (loss) for the year ended December 31, 2022

-

-

-

-

2,859,503

-

-

-

-

2,859,503(614,102)

2,245,401

Other comprehensive income (loss) for the year ended December 31, 2022,
net of income tax

-

-

-

-

196,415

115,781

46,430(3,511,101)-(3,152,475)

108,546(3,043,929)

Total comprehensive income (loss) for the year ended December 31, 2022

-

-

-

-

3,055,918

115,781

46,430(3,511,101)-(292,972)(505,556)(798,528)

723,131424,050

-

-

-

-

-

-

-

1,147,181-

1,147,181

Cash dividends distributed to non-controlling interests by subsidiaries

-

-

-

-

-

-

-

-

-

-

(202,650)(202,650)

Others

-

7

-

-

-

-

-

-

-

7

2

9

60,135,374

3,120,311

925,385-

6,384,381(4,298)40,918(570,995)(30,875)

70,000,201

2,453,241

72,453,442

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

168,844-

168,844-

168,844

Appropriation of 2022 earnings
Legal reserve
Special reserve
Cash dividends - $0.4602191 per share--

305,592-

534,375-(305,592)(534,375)(2,772,207)

-

-

-

-

(2,772,207)-(2,772,207)

Changes in capital surplus from dividends distributed to subsidiaries

-

955

-

-

-

-

-

-

-

955

-

955

Changes in percentage of ownership interests in subsidiaries-

452,110

-

-

-

-

-

-

-

452,110

164,355

616,465

Issuance of employee share options by the subsidiaries-

24,055

-

-

-

-

-

-

-

24,055

5,227

29,282

Net profit for the year ended December 31, 2023

-

-

-

-

6,818,552

-

-

-

-

6,818,552

652,649

7,471,201

Other comprehensive income (loss) for the year ended December 31, 2023,
net of income tax

-

-

-

-

(444,560)(8,667)(18,192)(297,624)-(769,043)(133,917)(902,960)

Total comprehensive income (loss) for the year ended December 31, 2023

-

-

-

-

6,373,992(8,667)(18,192)(297,624)-

6,049,509

518,732

6,568,241

378,033

289,615

-

-

-

-

-

-

-

667,648-667,648

-

-

-

-

-

-

-

-

-

-

(253,800)(253,800)(30,875)$ 74,591,115

2,887,755$ 77,478,870

Convertible bonds converted to ordinary shares

BALANCE AT DECEMBER 31, 2022

Convertible bonds converted to ordinary shares
Cash dividends distributed to non-controlling interests by subsidiaries
BALANCE AT DECEMBER 31, 2023

$ 60,513,407$

3,887,046$

1,230,977$

534,375$

9,146,199

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 8, 2024)-9-$(12,965)$

22,726$(699,775)$$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

2023
CASH FLOWS FROM OPERATING ACTIVITIESIncome 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
Finance costs
Interest income
Dividend income
Compensation costs of employee share options
Share of loss (profit) of associates and joint ventures
Gain on disposal of property, plant and equipment
Loss (gain) on disposal of non-current assets held for sale
Gain on disposal of investments
Impairment loss recognized on flight equipment
Loss on inventories and property, plant and equipment
Net loss on foreign currency exchange
Recognition of provisions
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
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
Defined benefit liabilities
Other liabilities
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash generated from operating activities- 10 -$

9,305,472

2022$

2,660,760

30,433,350
223,600
693

30,103,942
223,096
38,474(1,758)2,608,298(1,802,654)(21,662)
29,282(417,485)(555,914)
2,364(2,523)
1,901,450
2,915,549
125,439
6,192,669
167,165(365)
2,540,792(639,845)(12,666)
74,839(30,006)(558,477)
1,641
605,466
2,285,096
5,209,904
84,435(65,340)
1,037,497(291,042)
126,265(2,275,270)
33,013
326,155
618,193
4,641,168
10,645,541(7,429,593)
1,677,934(172,293)(1,330,451)
58,645,112
1,733,515
139,718(2,928,539)(1,744,205)

36,9932,391,598
68,142(186,284)(2,287,180)(1,018,961)
365,095
124,409644,258
14,186,269(4,306,337)
1,044,042(282,784)
73,72253,440,068
635,372
76,513(2,680,263)(4,622,949)

55,845,601

46,848,741(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost
Proceeds from sale of financial assets at amortized cost
Purchase of financial assets for hedging
Proceeds from sale of financial assets for hedging
Net cash generated from disposal of investments accounted for using
equity method
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 finance lease receivable
Decrease in finance lease receivable
Increase in prepayments for equipment
Payments for other intangible assets
Decrease (increase) in restricted assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Increase in short-term bill payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refund of guarantee deposits received
Proceeds from issuance of ordinary shares of subsidiaries tonon-controlling interests
Dividends paid
Dividends paid to non-controlling interests
Capital returned to non-controlling interests by subsidiaries on capital
reduction
OthersNet cash used in financing activities
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES- 11 -2023

2022$ (19,043,551)
21,083,676(16,276,122)
9,497,256$ (6,923,725)
13,573,488(9,535,604)
9,063,037

2,523
1,077,006(1,997,578)
2,495,160(199,825)
306,618(786,163)
336,001(27,187,511)(167,860)
199,899

679,951(2,568,507)
41,219(347,149)
490,711(24,393,851)(151,010)(109,994)(30,660,471)(20,181,434)(800,000)
20,0002,650,000(2,350,000)
14,483,108(27,670,317)(13,595,372)
175,552(317,618)(1,097,000)(2,525,200)
7,634,984(23,694,020)(11,870,422)
165,176(97,801)

821,464(2,771,252)(253,800)(4,998,275)(202,650)(205,000)-9(29,813,235)(36,685,199)

39,200(271,505)(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

2023

2022

$ (4,588,905)$ (10,289,397)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

34,980,469

45,269,866

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

$ 30,391,564$ 34,980,469

NET DECREASE IN CASH AND CASH EQUIVALENTS

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 8, 2024)- 12 -(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION
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 is primarily involved in (a) air transport services
for passengers, cargo and mail; (b) ground services and routine aircraft maintenance; (c) major maintenanceof flight equipment; (d) communications and data processing services to other airlines; (e) the sale ofaircraft parts, equipment and the entire aircraft; and (f) leasing of aircraft.
The major shareholders of the Company are China Aviation Development Foundation (CADF) andNational Development Fund (NDF), Executive Yuan. As of December 31, 2023 and 2022, CADF and NDF
held a combined 39.43% and 39.69%, respectively of the Company’s shares.

2. APPROVAL OF FINANCIAL STATEMENTS
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 8, 2024.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
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 “IFRS Accounting Standards”) endorsed and issued into effect by the Financial
Supervisory Commission (FSC)
The initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC
did not have material impact on the Group’s accounting policies.
b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024

New, Amended and Revised Standards and Interpretations
Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

Effective Date
Announced by IASB (Note 1)
January 1, 2024 (Note 2)
January 1, 2024
January 1, 2024
January 1, 2024 (Note 3)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards will be effective for annual
reporting periods beginning on or after their respective effective dates.
Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback
transactions entered into after the date of initial application of IFRS 16.
Note 3: The amendments provide some transition relief regarding disclosure requirements.

- 13 -

As of the date the consolidated financial statements were authorized for issue, the Group has assessedthat the application of other standards and interpretations will not have a material impact on the Group’s
financial position and financial performance.
c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretations
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 IFRS 17 “Initial Application of IFRS 9 and IFRS 17 Comparative Information”
Amendments to IAS 21 “Lack of Exchangeability”

Effective Date
Announced by IASB (Note 1)
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2025 (Note 2)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual
reporting periods beginning on or after their respective effective dates.
Note 2: An entity shall apply those amendments for annual reporting periods beginning on or afterJanuary 1, 2025. Upon initial application of the amendments, the entity recognizes any effectas an adjustment to the opening balance of retained earnings. When entity uses a presentation
currency other than its functional currency, it shall, at the date of initial application, recognize
any effect as an adjustment to the cumulative amount of translation differences in equity.
As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact of the application of other standards and interpretations on
the Group’s financial position and financial performance and will disclose the relevant impact when theassessment is completed.

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATIONStatement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IFRS Accounting Standards as endorsed andissued into effect by the FSC.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments which are measured at fair value and net defined benefit liabilities which are measured at thepresent value of the defined benefit obligation less the fair value of plan assets.
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); andc. Level 3 inputs are unobservable inputs for an asset or liability.
- 14 -

Current and Non-current Assets and Liabilities
Current assets include:a. Assets held primarily for the purpose of trading;b. Assets expected to be realized within 12 months after the reporting period; andc. 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.
Current liabilities include:a. Liabilities held primarily for the purpose of trading;b. Liabilities due to be settled within 12 months after the reporting period; andc. Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12
months after the reporting period.
Assets and liabilities that are not classified as current are classified as non-current.
Basis of Consolidation
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 comprehensive income from the effective dates ofacquisitions 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 line with those of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total
comprehensive income of subsidiaries is attributed to the owners of the Company and to thenon-controlling interests even if this results in the non-controlling interests having a deficit balance.
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.
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.
Foreign Currencies
In preparing the consolidated financial statements of the Group, the transactions in currencies other than the
Company’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailingat the dates of the transactions.

- 15 -

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Exchange differences on monetary items arising from settlement ortranslation are recognized in profit or loss in the period in which they arise except for exchange differenceson:a. Foreign currency borrowings relating to assets under construction for future productive use, which areincluded in the cost of those assets when they are regarded as an adjustment to interest costs on thoseforeign currency borrowings; andb. Transactions entered into in order to hedge certain foreign currency risks.
Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at
the rates prevailing at the date when the fair value is determined. Exchange differences arising from theretranslation of non-monetary items are included in profit or loss for the period except for exchange
differences arising from the retranslation of non-monetary items in respect of which gains and losses arerecognized directly in other comprehensive income, in which case, the exchange differences are also
recognized directly in other comprehensive income.
Non-monetary item denominated in a foreign currency and measured at historical cost is stated at thereporting currency as originally translated from the foreign currency.
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. The
resulting currency translation differences are recognized in other comprehensive income (attributed to theowners of the Company and non-controlling interests as appropriate).
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.
Inventories
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.
Non-current Assets Held for Sale
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 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.
Investments in Associates and Joint Ventures
An associate is an entity over which the Group has significant influence and which is neither a subsidiarynor 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.

- 16 -

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 ventures attributable to the Group.
Any excess of the cost of acquisition over the Group’s share of net fair value of the identifiable assets andliabilities of an associate and a joint venture at the date of acquisition is recognized as goodwill, which isincluded 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,is recognized immediately in profit or loss.
When the Group subscribes for additional new shares of an associate and a 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 capital surplus from investments in associates and joint ventures accounted forusing the equity method. If the Group’s ownership interest is reduced due to its additional subscription of
the 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 recognizedfrom investments accounted for using the equity method is insufficient, the shortage is debited to retained
earnings.
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 loss, if any. 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.
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 forms partof the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent
that the recoverable amount of the investment subsequently increases.
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 the investment’s fair value on initial recognition as a financial asset. The difference
between the previous carrying amount of the associate and joint venture attributable to the retained interestand its fair value is included in the determination of the gain or loss on disposal of the associate and thejoint venture. The Group accounts for all amounts previously recognized in other comprehensive income inrelation to that associate and 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 toapply the equity method and does not remeasure the retained interest.
Property, Plant and Equipment
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; the cost of
the item can be measured reliably. Property, plant and equipment are stated at cost less recognizedaccumulated depreciation and recognized accumulated impairment loss.

- 17 -

Freehold land is not depreciated.
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. The impact of any changes in accounting estimates is accounted for on a prospective basis
under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.
Investment Properties
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 are initially measured at cost, including transaction costs. Subsequent to initialrecognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss.
Depreciation is recognized using the straight-line method, which is the amount of cost less residual value
divided by the useful life of the investment property.
On derecognition of an investment property, the difference between the net disposal proceeds and thecarrying amount of the asset is included in profit or loss.
Intangible Assets
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. The residual value of an intangible
asset with a finite useful life shall be assumed zero unless the Group expects to dispose of the intangible
asset before the end of its economic life. The impact of any changes in accounting estimates is accounted
for on a prospective basis under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
Impairment of Property, Plant and Equipment, Right-of-use Asset, Investment Properties andIntangible Assets Other Than Goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant andequipment, right-of-use asset, investment properties 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 to determine 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 the asset belongs. Corporate assets areallocated to the individual cash-generating units on a reasonable and consistent basis; otherwise, corporate
assets are allocated to the smallest group of cash-generating units on a reasonable and consistent allocationbasis.
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.
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.

- 18 -

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.
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.
Financial Instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instruments.
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.
a. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade datebasis. All regular way purchases or sales of financial assets are buy or sell of financial assets in the
period set by regulation or market convention.
1) Measurement categories
Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.
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.
Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement
gains or losses on such financial assets are recognized in profit or loss. Fair value is determinedin the manner described in Note 31.
b) Financial assets at amortized cost
Financial assets that meet the following conditions are subsequently measured at amortized
cost:
i. The financial assets are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; andii. The contractual terms of the financial assets give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding.
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.
- 19 -

Interest income is calculated by applying the effective interest rate to the gross carrying amountof a financial asset.
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.
c) Investments in equity instruments at FVTOCI
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.
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.
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.
2) Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets at amortizedcost (including trade receivables and finance lease receivables).
The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables, financelease receivables and other receivables. 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 sinceinitial recognition, the Group measures the loss allowance for that financial instrument at an amountequal to 12-month ECLs.
Expected credit losses reflect the weighted average of credit losses with the respective risks of a
default occurring as the weights. Lifetime ECLs 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 ECLs represents the portion of lifetime ECLs that is expected to result from default
events on a financial instrument that are possible within 12 months after the reporting date.
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.
3) Derecognition of financial assets
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.

- 20 -

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 an equity instrument at FVTOCI, the difference
between the asset’s carrying amount and the sum of the consideration received and receivable isrecognized in profit or loss, and the cumulative gain or loss which had been recognized in othercomprehensive income is transferred directly to retained earnings, without recycling through profit
or loss.
b. Equity instruments
Equity instruments issued by the Group are classified as equity in accordance with the substance of thecontractual arrangements and the definitions of an equity instrument.
Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue
costs.
The repurchase of the Group’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 theGroup’s own equity instruments.
c. Financial liabilities
1) Subsequent measurement
Except for derivative financial instruments, all financial liabilities are measured at amortized costusing the effective interest method.
2) Derecognition of financial liabilities
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.
d. Convertible bonds
The component parts of compound instruments (i.e., convertible bonds) issued by the Group 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.
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 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.
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.
- 21 -

e. Derivative financial instruments
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, fuel options and swap.
Derivatives are initially recognized at fair value at the date on which the derivative contracts are enteredinto and are subsequently remeasured to their fair value at the end of each reporting period. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated andeffective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends
on the nature of the hedging relationship. When the fair value of a derivative financial instrument is
positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial
instrument is negative, the derivative is recognized as a financial liability.
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 that iswithin the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meetthe definition 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.
Hedge Accounting
The Group designates certain hedging instruments, which include derivatives and non-derivatives in respectof foreign currency risk, 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.
The effective portion of gains and losses on derivatives that are designated and qualify as cash flow hedges
is recognized in other comprehensive income. The gains or losses relating to the ineffective portion arerecognized 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 reclassification adjustments in the line items relating to the hedged item in thesame period in which 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 andincluded in the initial cost of the non-financial asset or non-financial liability.
The Group 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 in othercomprehensive 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, thegains or losses accumulated in equity are recognized immediately in profit or loss.
Provisions
The Group recognizes provisions when the Group has a present obligation (legal or constructive obligation)arising from past events, the payment for the obligation is probable, and the expenditure for settling theobligation can be reliably estimated.

- 22 -

The amount recognized as a provision is measured at the best estimate of the expenditure required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured at the estimate of using the cash flows to settle
the present obligation, its carrying amount is the present value of those cash flows. When the aircraft lease
contracts expire and the leased item will be returned to the lessor, the Group will assess if there are existingobligations exist and if a provision is required to be recognized when signing the lease contract.
Revenue Recognition
The Group recognizes revenue by applying the following steps:






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.

Shipping service revenue
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 of performance obligations of the shipment
have not been met, the relevant amount of revenue is initially recorded as contract liabilities until
passengers actually board.
Leasing
At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.
The Group as lessee
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.
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.
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, thelessee’s incremental borrowing rate will be used.

- 23 -

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. However, if the carrying amount of the right-of-use assets is reduced
to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities arepresented on a separate line in the consolidated balance sheets.
The Group negotiates with the lessor for rent concessions as a direct consequence of Covid-19 to change
the lease payments originally due by June 30, 2022, which results in the revised consideration for the lease
substantially the same as, or less than, the consideration for the lease immediately preceding the change.
There is no substantive change to other terms and conditions. The Group elects to apply the practical
expedient to rent concessions for the abovementioned lease contracts, and therefore, does not assess
whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction in lease
payment in profit or loss in the period in which the events or conditions that trigger the concession occurs
and makes a corresponding adjustment to the lease liability.
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.
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.
Employee Benefits
a. Short-term employee 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.
b. Retirement benefits
Payments to the defined contribution retirement benefit plan are recognized as expenses whenemployees have rendered services entitling them to the contributions.
Defined benefit costs (including service cost, net interest and remeasurement) under defined 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) arerecognized 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 inother comprehensive income in the period in which it occurs. Remeasurement recognized in othercomprehensive income is reflected immediately in retained earnings and will not be reclassified to
profit or loss.
Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined
benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds
from the plans or reductions in future contributions to the plans.

- 24 -

Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets areadded to the cost of those assets, until such time as the assets are substantially ready for their intended use
or sale.
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.
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.
Government Grants
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 related to income are recognized in profit or loss on a systematic basis over the periods
in which the Group recognizes as expenses the related costs that the grants intend to compensate.
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.
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.
Frequent Flyer Programs
The Group 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
Group should recognizes this deferred revenue as revenue only when the Group has fulfilled its obligations
on the granting of rewards or when the period for converting the mileage to rewards has expired.
Share-based Payment Arrangements
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.
Income Tax
Income tax expense represents the sum of the current tax and deferred tax.

- 25 -

a. Current 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 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.
According to the Income Tax Act in the R.O.C Income Tax Law, an additional tax of unappropriatedearnings is provided for as income tax in the year the shareholders approve the retain earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
b. Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets andliabilities 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 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.
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.
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 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.
c. Current and deferred taxes
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.
Maintenance and Overhaul Costs
Routine maintenance costs are recognized in profit or loss in the period in which they are incurred.

- 26 -

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.

5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
In the application of the Group’s accounting policies as disclosed in Note 4, management is required tomake judgments, estimations and assumptions on the carrying amounts that are not readily apparent fromother sources. The estimates and associated assumptions are based on historical experience and otherfactors that are considered relevant. Actual results may differ from these estimates.
Key Sources of Estimation Uncertainty
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.
Defined Benefit Obligations
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.
Useful Lives of Property, Plant and Equipment - Flight Equipment
Flight equipment is measured at cost less residual value and are depreciated on a straight-line basis overtheir estimated useful lives. The estimated useful lives and residual values are evaluated based on the
Company’s historical experience and current usage condition in the aviation industry.
Because of the change in fleet planning to match the economic benefits with the useful lives, on March 8,
2024, the Company’s board of directors resolved to modify the estimated useful lives of eight B747-400F
freighters from 24 years to 22 years and the estimated useful lives of two 80C2 engines from 8 years to 6
years, effective on May 1, 2024. It is estimated that the depreciation expense in 2024 will increase by $679
million.

6. CASH AND CASH EQUIVALENTS
December 31
2023
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- 27 -$

903,815
9,077,246

2022$

599,368
8,001,937

14,293,056
6,117,447

20,620,078
5,759,086$ 30,391,564$ 34,980,469

The market rate intervals of cash in banks and cash equivalents at the end of the reporting period were as
follows:
December 31

Bank balanceTime deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

2023

2022

0%-5.10%
0.61%-6.20%
0.70%-5.78%

0%-1.00%
0.33%-4.95%
0.58%-4.70%

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:

Maturity Date
December 31, 2023
December 31, 2022

2024.1.5-2024.2.7
2023.1.3-2023.1.18

Carrying
Value

Subject
Financial assets for hedging - current
Financial assets for hedging - current$ 10,307,692
3,987,730

Impact on comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the year ended December 31, 2023
For the year ended December 31, 2022

$ (449,744)(40,217)

For the years ended December 31, 2023 and 2022, the amounts of hedging instrument settlements
recognized as prepayments for equipment were $159,683 thousand and $101,626 thousand, respectively.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
December 31
2023

2022

$ 186,560$ 119,462

Financial assets - current
Financial assets mandatorily classified as at FVTPL
Non-derivative financial assets
Beneficiary certificates- 28 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME(FVTOCI)
Investments in Equity Instruments
December 31
2023

2022

Non-current
Foreign investments
Unlisted shares
Domestic investments
Unlisted shares$

81,197$

81,90522,785

41,128$ 103,982$ 123,033

These investments in equity instruments are not held for trading. Instead, they are held for medium- tolong-term strategic purposes and are expected to profit through long-term investments. Accordingly, themanagement elected to designate these investments in equity instruments as at FVTOCI as they believe thatrecognizing short-term fluctuations in these investments’ fair values in profit or loss would not be
consistent with the Group’s strategy of holding these investments for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST
December 31
2023

2022

$ 4,079,619$ 6,218,617$$

Current
Time deposits with original maturities of more than 3 months
Non-current
Time deposits with original maturities of more than 1 year

224,912205,765

The ranges of interest rates for time deposits with original maturities of more than 3 months were0.21%-5.89% and 0.45%-5.05% per annum as of December 31, 2023 and 2022, respectively.

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE
December 31
2023
Notes receivable$

176,960

2022$

72,435

Accounts receivable
At amortized cost
Gross carrying amountLess: Allowance for impairment loss

- 29 -

10,081,225(257,453)
9,823,772

11,315,652(261,445)
11,054,207$ 10,000,732$ 11,126,642

The average credit period was 7 to 55 days. In determining the recoverability of an accounts 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,
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.
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 accounts receivable. The expected credit
losses on accounts receivable 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 Group writes off accounts 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 Group continues to engage in enforcement activity to attempt torecover the past due receivables. Where recoveries are made, these are recognized in profit or loss.
The following table details the loss allowance of accounts receivable based on the Group’s provision
matrix.
December 31, 2023
Not Past Due

1 to 30 Days
Past Due

31 to 60 Days
Past Due61 to 90 Days
Past DueOver 90 Days
Past Due

0.88%

10.07%

52.21%

99.95%

99.99%

Expected credit loss rate
Gross carrying amount
Loss allowance (lifetime ECLs)$

9,763,070(85,963)$

155,960(15,709)$

13,399(6,996)$

9,669(9,664)$

139,127(139,121)

Amortized cost$

9,677,107$

140,251

$

6,403

$

5

$

6

Total

$ 10,081,225(257,453)$

9,823,772

December 31, 2022

Expected credit loss rate

Not Past Due

1 to 30 Days
Past Due

31 to 60 Days
Past Due61 to 90 Days
Past DueOver 90 Days
Past Due

1.04%

7.66%

11.02%

46.42%

99.29%

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$ 11,076,632(114,644)$

82,406(6,315)$

16,704(1,841)

$

517
(240)

$

139,393(138,405)$ 11,315,652(261,445)

Amortized cost

$ 10,961,988$

76,091$

14,863

$

277

$

988

$ 11,054,207- 30 -

The movements of the loss allowance of accounts receivable were as follows:
For the Year Ended December 31
2023
2022
Balance at January 1
Add: Net remeasurement of loss allowance
Add: Amounts recovered
Less: Amounts written off
Foreign exchange gains and losses$ 261,445
693
35(4,720)-$ 235,560
38,474208(12,812)
15

Balance at December 31$ 257,453$ 261,445

11. INVENTORIES
December 31
2023
Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
Others$2022

9,536,389
659,584
388,582
94,151$ 10,678,706$

9,756,141
625,959
301,368
91,999$ 10,775,467

The operating costs for the years ended December 31, 2023 and 2022 included losses from inventory
write-downs of $1,177,118 thousand and $286,742 thousand, respectively.

12. NON-CURRENT ASSETS HELD FOR SALE
December 31
2023
Aircraft held for sale

$ 1,290,581

2022
$

-

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
carrying amount which was higher than the expected sale price and which was recognized as an impairment
loss, and would be continuously assessed whether there are further impairments in subsequent periods.
However, the actual loss shall be identified by the actual sale price. The Company recognized the
impairment losses of $979,459 thousands for the year ended December 31, 2023.
The fair value measurement is classified as Level 3, and the fair value was determined according to similartransactions of the related markets. The proposed sale prices were based on the current status of the aircraft.
The Company disposed of the aircraft held for sale for the years ended December 31, 2023 and 2022, andrecognized a loss of 2,364 thousand and a gain of $558,477 thousand, respectively.

- 31 -

13. SUBSIDIARIES
Subsidiaries included in the consolidated financial statements were as follow:

Investor Company
China Airlines, Ltd.

Investee Company

Main Businesses and Products

Tigerair Taiwan Co., Ltd. (Note)
Taiwan Aircraft Maintenance
And Engineering Co., Ltd.
Cal-Dynasty International
Cal-Asia Investment
Dynasty Aerotech International
Corp.
Cal Park
Cal Hotel Co., Ltd.
Sabre Travel Network (Taiwan)
Mandarin Airlines

Cal-Dynasty
International
Taiwan Airport Services

Note:

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)

Proportion of
Ownership (%)
December 31
2023
2022

Air transportation
Aircraft maintenance

79
100

82
100

A holding company, real estate and hotel
services
General investment
Cleaning of aircraft and maintenance ofmachine and equipment
Real estate lease and international trade
Hotel business
Sale and maintenance of hardware andsoftware
Air transportation and maintenance of
aircraft
Air cargo and storage

100

100

100
100

100
100

100
100
94

100
100
94

97

97

59

59

In-flight catering

54

54

Airport services

49

49

Airport services
Forwarding and storage of air cargo
Real estate management
Hotel businessAirport supporting service and investment

48
25
100
100
100

48
25
100
100
100

Proportion of ownership is considered from the perspective of the Group.

The Company has control over Taoyuan International Airport Service, Taiwan Airport Service and Global
Sky Express despite its ownership of less than 50% and owns more than 50% of voting shares in othersubsidiaries. The above financial information of the subsidiaries for the years ended December 31, 2023
and 2022 was reported according to financial statements that were audited by independent auditors.
On February 13, 2023, the board of directors of Tigerair Taiwan Co., Ltd. resolved to issue 36,000
thousand ordinary shares for cash to strengthen its capital structure. On March 9, 2023, the board of
directors of the Company approved the subscription plan at $25 per share. In April 2023, the Company
subscribed for 23,993 thousand shares. The proportion of ownership of the Group decreased to 81%.
Because the shares were subscribed at a percentage different from its existing ownership percentage, theCompany’s capital surplus increased by $85,930 thousand. In addition, Tigerair Taiwan Co., Ltd. reserves
15% of the total of issuances for employees to subscribe to according to article 267, item 1 of the Company
Act. Therefore, the Company’s capital surplus increased by $24,055 thousand and non-controlling interests
increased by $5,227 thousand.
In addition, Tigerair Taiwan Co., Ltd. applied for a listing on the Taiwan Innovation Board of the Taiwan
Stock Exchange on December 21, 2022. The board of directors of the Taiwan Stock Exchange approved thelisting application on February 21, 2023, and it was reported to the competent authority. To cooperate withthe public underwriting before the initial listing on the Taiwan Innovation Board, the board of directors ofTigerair Taiwan Co., Ltd. approved the issuance of 13,000 thousand ordinary shares for cash on May 5,2023, and the issuance was approved by the competent authority in July 2023. In addition, due to relevant
regulations, the Group did not participate in ordinary shares for cash, so the Group's comprehensive
subscribing percentage dropped to 79%. Because the shares were subscribed at a percentage different fromits existing ownership percentage, the Company’s capital surplus increased by $366,180 thousand.

- 32 -

Taiwan Air Cargo Terminal carried out a capital reduction to return investment to shareholders by $500,000
thousand. The reduction date was in August 2023. After capital deduction, the proportion of ownership in
the Company remained unchanged.
In June 2023, Cal Park made up a gain of $28,896 thousand by capital increase out of retained earnings; theproportion of ownership of the Company remained unchanged.
In November 2022, Taiwan Aircraft Maintenance and Engineering Co., Ltd. made up a loss of $140,000
thousand by capital reduction; the proportion of ownership of the Company remained unchanged.
In December 2022, Cal Hotel Co., Ltd. made up a loss of $130,200 thousand by capital reduction; theproportion of ownership of the Company remained unchanged.

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
December 31
2023
Investments in associates
Investments in joint ventures

$

2022

860,285
876,950$ 1,737,235$

885,608
567,636$ 1,453,244

a. The investments in associates were as follows:
December 31
2023

2022

Unlisted companies
Dynasty Holidays
Airport Air Cargo Terminal (Xiamen)
Airport Air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd. (Hong
Kong)

$

511,283
299,972$

518,715309,705

49,03057,188$ 860,285$ 885,608

At the end of the reporting period, the proportion of ownership and voting rights in associates held by
the Group were as follows:
Proportion of Ownership andVoting Rights
December 31
2023
2022

Name of Associate
Dynasty Holidays
Airport air Cargo Terminal (Xiamen)
Airport air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd. (HongKong)- 33 -

28%
28%

20%
28%
28%

35%

35%

The share of profit or loss of associates accounted for using the equity method was as follows:
For the Year Ended December 31
2023
2022
Dynasty Holidays
Airport air Cargo Terminal (Xiamen)
Airport air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd. (Hong
Kong)

$

28,12520,017$23,50830,185

4,390

12,572$ 52,532$ 66,265

The Group’s share of other comprehensive income of associates accounted for using the equity method
amounted to $0 for the years ended December 31, 2023 and 2022.
The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on these investees’ financial statements whichhave been audited, for Eastern United International Logistics (Holding) Ltd (Hong Kong). However, themanagement determined that there would have been no significant adjustments had these investees’
financial statements been independently audited.
China Aircraft Services issued ordinary shares to meet the needs for funds in March 2022. The Group
did not participate in the subscription, so the proportion of ownership of the Group decreased from 20%
to 4% and the Group lost significant influence over China Aircraft Services. Therefore, the investment
in China Aircraft Services which was initially classified as investments accounted for using the equity
method was reclassified as financial assets at fair value through other comprehensive income since
March 2022.
Dynasty Holidays was classified as associate accounted for using the equity method. On May 31, 2022,
the provisional shareholders’ meeting was held, and the shareholders resolved to dissolve Dynasty
Holidays, and the liquidation process has completed in June 2023. The Company has gained theliquidation income by $2,523 thousand.
b. Investments in joint ventures
The investments in joint ventures were as follows:
December 31

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

- 34 -

2023

2022$ 767,615
101,705
7,630$ 448,222
92,68419,196
7,534$ 876,950$ 567,636

At the end of the reporting period, the proportion of ownership and voting rights in joint ventures heldby the Group was as follows:
Proportion of Ownership andVoting Rights
December 31
2023
2022
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

51%
55%
49%
51%

51%
55%
49%
51%

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 right to make motion votes on the board of directors, and therefore, the Group does not have control.
NORDAM Asia was classified as associate accounted for using the equity method. On October 27,
2023, the provisional shareholders’ meeting was held and the shareholders resolved to dissolve
NORDAM Asia, and the liquidation process is in progress.
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.
The share of profit or loss of joint ventures accounted for using the equity method was as follows:
For the Year Ended December 31
2023
2022
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

$ 371,539
12,514(19,196)96$ (104,360)(26,931)(9,640)(173)$ 364,953$ (141,104)

The Group’s shares of other comprehensive income of joint ventures accounted for using the equity
method for the years ended December 31, 2023 and 2022 were $(55,639) thousand and $18,070
thousand, respectively.
Except for NORDAM Asia, the investments accounted for using the equity method and the share of
profit or loss and other comprehensive income of those investments were based on these investees’
financial statements which have been audited. However, the management determined that there would
have been no significant adjustments had this investee’s financial statements been independently
audited.
For information on the major businesses and products and the locations of registration for the major
business offices of the above entities, refer to Table 7 (names, locations, and related information of
investees on which the Company exercises significant influence) and Table 8 investment in mainland
China following the notes to the consolidated financial statements.

- 35 -

15. PROPERTY, PLANT AND EQUIPMENT
Freehold Land

Buildings

FlightEquipment

OthersTotal

Cost
Balance at January 1, 2022
Additions
Disposals
Reclassification
Net exchange differences$

943,305
52,564$

15,921,862
78,007(25,304)
6,349
97,370$ 247,842,073
1,581,677(2,806,062)
9,813,832-$

17,625,366
908,823(341,614)
78,152
10,530$ 282,332,606
2,568,507(3,172,980)
9,898,333
160,464

Balance at December 31, 2022$

995,869$

16,078,284$ 256,431,520$

18,281,257$ 291,786,930

Balance at January 1, 2022
Depreciation expense
Disposals
Reclassification
Net exchange differences
Impairment losses

$

-

$

(7,582,813)(500,489)
25,304(55,163)-$ (132,691,333)(15,534,520)
2,486,594
3,319,913(1,641)$ (12,426,414)(948,487)
338,035551(9,063)-$ (152,700,560)(16,983,496)
2,849,933
3,320,464(64,226)(1,641)

Balance at December 31, 2022

$

-

$

(8,113,161)$ (142,420,987)$ (13,045,378)$ (163,579,526)

Balance at December 31, 2022, net value$

995,869$

7,965,123$ 114,010,533$

5,235,879$ 128,207,404

Balance at January 1, 2023
Additions
Disposals
Reclassification
Net exchange differences$

995,869
1,668$

16,078,284
122,706(1,263)
1,565
3,187

$ 256,431,520
1,413,490(23,236,983)(6,815,126)-$

18,281,257
461,382(585,983)
84,733279$ 291,786,930
1,997,578(23,824,229)(6,728,828)
5,134

Balance at December 31, 2023$

997,537$

16,204,479$ 227,792,901$

18,241,668$ 263,236,585

Balance at January 1, 2023
Depreciation expense
Disposals
Reclassification
Net exchange differences
Impairment losses

$

-

$

(8,113,161)(503,359)
1,255(1,734)-$ (142,420,987)(15,380,355)
20,865,317
19,996,073(921,991)$ (13,045,378)(963,355)
588,564
6,204
(947)
-

$ (163,579,526)(16,847,069)
21,455,136
20,002,277(2,681)(921,991)

Balance at December 31, 2023

$

-

$

(8,616,999)$ (117,861,943)$ (13,414,912)$ (139,893,854)

Balance at December 31, 2023, net value$

997,537$

7,587,480$ 109,930,958$$ 123,342,731

Accumulated depreciation and impairment

Cost

Accumulated depreciation and impairment

4,826,756

Reclassification is mainly resulted from the transfer of prepayments for equipment and adaption of
non-current assets held for sale.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of theasset as follows:
Building
Main buildings
Others
Machinery and equipment
Electro-mechanical equipment
Others
Office equipment

45-55 years
10-25 years
25 years
3-13 years
3-15 years(Continued)- 36 -

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

5 years
3-5 years
3-5 years
15-25 years
7-13 years
10-20 years
6-8 years
3-7 years
7-12 years
3-15 years
5-12 years(Concluded)

To replace aging aircraft and revitalize the fleet, the Company’s board of directors resolved the sale of fiveand two 747-400F aircraft on May 10 and August 9, 2023, respectively.
Considering the changes in model mix and phase-out plans, the Group used the fair value (Level 3)
deducting transaction costs as the recoverable amount of some flight equipment and the Group recognizedimpairment losses of $921,991 thousand and $1,641 thousand for the years ended December 31, 2023 and2022, respectively. The fair value was determined with reference to factors such as the condition of theflight equipment and possible market estimates.
Refer to Note 33 for the carrying amounts of property, plant and equipment pledged by the Group.
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.

16. INVESTMENT PROPERTIES
December 31

Carrying amount
Investment properties

2023

2022

$ 2,071,785$ 2,072,012

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to other parties. The buildings are depreciated on a straight-line basis over 55 years.
The fair value of the investment properties held by the Group were $3,137,644 thousand and $2,488,931
thousand as of December 31, 2023 and 2022, respectively. The above fair value valuation was performed
by independent qualified professional valuers, and the future income evaluated by management was basedon market transactions.

- 37 -

All of the Group’s investment properties were held under freehold interest.

Cost

Accumulated
Depreciation

Net Value

Balance at January 1, 2022
Depreciation expense
Reclassification$ 2,082,390(3,160)$(7,859)(265)906$ 2,074,531(265)(2,254)

Balance at December 31, 2022

$ 2,079,230$(7,218)$ 2,072,012

Balance at January 1, 2023
Depreciation expense
Reclassification$ 2,079,230(25)$(7,218)(227)
25$ 2,072,012(227)-

Balance at December 31, 2023

$ 2,079,205$(7,420)$ 2,071,785

Accumulated
Amortization

Net Value

17. OTHER INTANGIBLE ASSETS
Computer
Software Cost

OthersBalance at January 1, 2022
Additions
Reclassification
Amortization expense
Disposals
Effects of exchange rate changes$ 1,880,049
84,609(47,057)(4,197)-$

168,280-$ (1,039,337)
59,961(223,096)
4,197
11$ 1,008,992
84,60912,904(223,096)
11

Balance at December 31, 2022

$ 1,913,404$

168,280$ (1,198,264)$

883,420

Balance at January 1, 2023
Additions
Reclassification
Amortization expense
Disposals
Effects of exchange rate changes$ 1,913,404
151,653(85,186)(3,381)-$

168,280-$ (1,198,264)
65,279(223,600)
3,381
1

$

883,420
151,653(19,907)(223,600)
1Balance at December 31, 2023

$ 1,976,490$

168,280$ (1,353,203)$

791,567

The above items of other intangible assets are amortized on a straight-line basis over 2-16 years.

- 38 -

18. OTHER ASSETS
December 31
2023

2022

Current
Temporary payments
Prepayments
Restricted assets
Others$456,611729,226
13,954
393,699$

243,064
991,200
13,336349,312$

1,593,490$

1,596,912

Non-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
Others$ 28,814,500
2,567,078
877,753
378,179
11,815
16,325$ 18,445,099
4,127,308
888,831
689,124
14,797
18,059$ 32,665,650$ 24,183,218

The prepayments for aircraft are comprised of prepaid deposits and capitalized interest from the purchase of
A321neo, A320neo, ATR72-600, B777F, B787-9 and B787-10 aircraft. For details of the contract for thepurchase of the aircraft, refer to Note 34.

19. BORROWINGSa. Short-term borrowings
December 31
2023

2022

Bank loans - unsecured$

35,000$ 835,000

Interest rates

1.81%-2.10%

1.39%-1.90%

b. Short-term bills payable
December 31
2023
Commercial paper$ 20,000

Annual discount rate

1.92%

- 39 -

2022$-

c. Long-term borrowings
December 31

Unsecured bank loans
Secured bank loans
Commercial paper
Proceeds from issuance
Less: Unamortized discount

2023

2022

8,655,391
40,062,527$ 21,730,551
35,978,893

16,470,000
40,561
65,147,357
18,669,326

20,670,000
44,87878,334,566
13,225,516$ 46,478,031$ 65,109,050

1.65%-2.25%

0.90%-2.02%$

Less: Current portion

Interest rates

Secured bank loans are secured by flight equipment, buildings, and other equipment, refer to Note 33.
Bank loans (denominated in New Taiwan dollars) are repayable quarterly, semiannually or in lump sum
upon maturity. The related information is summarized as follows:
December 31
2023
2022
Periods

2009.2.42035.12.14

2009.2.42034.10.12

The Group has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until September 2026, were used by the Group to guarantee commercial papers
issued. As of December 31, 2023 and 2022, the commercial papers were issued at discount rates of
1.7368%-2.173% and 1.683%-1.9013%, respectively.
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 Group applied for a
special loan project to maintain its operations, and the fund along with subsidized interest rates were
provided by the government. The total amount of the loans is $35,480 million, which shall be repaid
within 2 to 4 years from the date of initial drawdown. As of December 31, 2023, the Group had made adrawdown in the amount of $34,800 million and repaid $29,170 million of the drawdown.

20. BONDS PAYABLE
December 31

Unsecured corporate bonds first-time issued in 2017
Unsecured corporate bonds first-time issued in 2018
Unsecured corporate bonds first-time issued in 2019
Unsecured corporate bonds first-time issued in 2023
Convertible bonds - seventh-time issued
Less: Current portion and put option of convertible bonds- 40 -

2023

2022$ 1,000,000
2,050,000
2,375,000
2,650,000
1,573,814
9,648,814
4,723,814$ 1,000,000
3,275,000
3,500,000
2,224,674
9,999,674
2,350,000$ 4,925,000$ 7,649,674

Related issuance conditions were as follows:

Category

PeriodConditions

Seven-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.75% p.a., payable annually
Five-year private unsecured bonds - issued at parin November 2018; repayable inNovember 2022 and 2023; 1.32% interest p.a.,payable annually
Seven-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2024 and 2025; 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 annually
Seven-year private unsecured bonds - issued at
par in June 2019; repayable in June 2025 and2026; 1.32% interest p.a., payable annually
Five-year private unsecured bonds - issued at parin May 2023; repayable in May 2027 and
2028; 1.90% interest p.a., payable annually
Five-year convertible bonds - issued at discountin April 2021; repayable in lump sum uponmaturity; 0.8612% discount rate p.a.

2017.05.192024.05.19

Principal repayable on due
date; indicator rate;
payable annuallyPrincipal repayable inNovember of 2022 and2023; indicator rate;
payable annuallyPrincipal repayable inNovember of 2024 and2025; indicator rate;
payable annuallyPrincipal repayable in June of2023 and 2024; indicatorrate; payable annuallyPrincipal repayable in June of2025 and 2026; indicatorrate; payable annuallyPrincipal repayable in May of2027 and 2028; indicatorrate; payable annually
Unless bonds are converted toshare capital or redeemed,principal repayable one
time in April of 2026;
0.8612 discount rate p.a.

2018.11.302023.11.30

2018.11.302025.11.30

2019.06.212024.06.21
2019.06.212026.06.21
2023.05.222028.05.22
2021.4.282026.4.28

Rate
(%)
1.75

1.32

1.45

1.10

1.32

1.90

-

a. The Company issued the seventh issue of its unsecured convertible bonds, and the issuance conditions
were as follows:
1) The holders may demand a lump-sum payment for the bonds upon maturity.
2) The holders can request that the Company repurchase their bonds at face value on the third
anniversary of the offering date. The holders can exercise the right to sell on April 28, 2024.
3) The Company may redeem the bonds at face value between July 28, 2021 and March 18, 2026
under certain conditions.
4) Between July 28, 2021 and April 28, 2026 (except for the period between the former dividend date
and the date of the dividend declaration on record), holders may convert their bonds into theCompany’s ordinary shares. The initial conversion price was set at NT$19 per share, which is
subject to adjustment if there is a capital injection by cash or share dividend distribution. Because
the Company distributed cash dividends on July 16, 2023, the conversion price was adjusted to
NT$18. As of December 31, 2023, a total face value of $2,894,700 thousand of convertible bonds
was converted into 154,182 thousand ordinary shares of the Company.

- 41 -

The convertible bonds contain both liability and equity components. The equity component waspresented in equity under the heading of capital surplus - options. The effective interest rate of theliability component was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component
Liability component at the date of issuanceInterest charged at an effective interest rate
Convertible bonds converted into ordinary shares
Liability component at December 31, 2022
Interest charged at an effective interest rate
Convertible bonds converted into ordinary shares$ 4,500,000(188,862)
4,311,138
45,648(2,132,112)
2,224,674
16,788(667,648)

Liability component at December 31, 2023

$ 1,573,814

b. On March 9, 2023, the board of directors of the Company resolved to issue unsecured corporate bonds.
The unsecured corporate bonds may be issued by installments in 2023 with a limited total face value of$8,000 million. The face value of a bond is $1,000 thousand. As of December 31, 2023, $2,650 million
had been issued.
c. On March 8, 2024, the board of directors of the Company resolved to issue unsecured corporate bonds.
The unsecured corporate bonds may be issued by installments in 2024 with a limited total face value of$8,000 million.

21. LEASE AGREEMENTS
a. Right-of-use assets
December 31
2023
Carrying amountLand
Buildings
Flight equipment
Other equipment$

5,501,123
3,106,392
43,607,168
16,400$ 52,231,083

2022

$

5,747,477
2,801,527
50,452,470
13,933$ 59,015,407

For Year Ended December 31
2023
2022
Additions to right-of-use assets
Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment$

7,653,438$ 15,845,881$

406,103755,774
12,420,040
4,137

$

$ 13,586,054- 42 -

383,378
274,520
12,460,623
1,660$ 13,120,181

b. Lease liabilities
December 31

Carrying amountCurrent
Non-current

2023

2022

$ 3,364,630$ 15,783,549$ 3,027,890$ 15,439,535

Range of discount rates for lease liabilities (include leases denominated in USD designated as hedging
instruments):
December 31

Land
Buildings
Flight equipment
Other equipment

2023

2022

0%-1.80%
0%-4.65%
0.68%-5.73%
0%-1.65%0%-1.80%
0%-4.65%0%-3.34%0%-1.43%c. Financial liabilities under hedge accounting
The Group specifies a part of aircraft leases denominated in USD 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:
Maturity Date
December 31, 2023

December 31, 2022

2024.5.1-2034.12.31

2023.2.7-2034.12.31

Subject

Carrying Value

Financial liabilities for hedging current
Financial liabilities for hedging non-current
Financial liabilities for hedging current
Financial liabilities for hedging non-current$

8,766,634
26,094,250
9,817,440
32,183,170

Influence of comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the year ended December 31, 2023
For the year ended December 31, 2022$

- 43 -

127,327(4,111,327)

Reclassified toIncome$(329,884)
114,759

d. Material leasing activities and terms
China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, fifteen A330-300
planes, ten 737-800 planes, eight A320-200 planes, six A320neo planes, ten A321neo planes, and three
ART72-600 planes for operation, lease period are 4 to 16 years from February 2007 to December 2034.
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, the lease agreements have no purchase rights.
The information of refundable deposits and opening of letter of credit due to rental of planes:
December 31
2023
Refundable deposits
Credit guarantees$

384,035
1,755,126

2022$

553,3212,085,941

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 34. 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 would have increased by $921,583 thousand on
December 31, 2023.
Taiwan Air Cargo Terminal Co. and Civil Aeronautics Administration (CAA) signed a BOT contract
with a land lease agreement. For details, please refer to Note 34.
e. Lease agreement signed but not yet delivered
In October 2019, the Company signed a rental contract for eight A321neo with CALC Lease
Corporation, which is expected to be introduced between 2022 and 2025. As of December 31, 2023,
four A321neo have been delivered.
In November, 2023, the Company signed a rental contract for one A350-900 with lease corporation,
which was delivered to Taiwan on December 30, 2023 and proceed with painting and maintenance
operations at the Engineering and Maintenance Organization immediately. The first rental payment was
expected to be paid in March 2024 when the aircraft turns into operation.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental contract for eight A320neo with ICBC
Lease Corporation, which are expected to be delivered between 2021 and 2024. As of December 31,
2023, six A320neo have been delivered.
The Group also signed related aircraft purchase agreement, please refer to Note 34 for details.
f. Aircraft leases
In order to revitalize assets, the Company signed a lease agreement for two 747-400F aircraft with US
Cargo Company in August 2021 and September 2021, respectively. The lease commencement dates
were on July 15, 2022 and October 10, 2022, respectively. Due to early termination of the leaseagreements, these two cargo aircraft were sold to Icelandic owner Air Atlanta Icelandic in August 2023.
One of the cargo aircraft was sold on a finance lease basis, and ownership can only be obtained after thepayment is paid in accordance with the 24-installment payment schedule.

- 44 -

Finance lease receivables
December 31
2023

2022

Undiscounted lease payments
Year 1
Year 2$

Less: Unearned finance income$ 289,300
192,866
482,166(28,310)-Net investment in leases presented as finance lease receivables$ 453,856$-

Current
Non-current$ 265,955$ 187,901$$-

The Group measures the loss allowance for finance lease receivables at an amount equals to lifetime
ECLs. As of the date of balance sheet, no finance lease receivable was past due. The Group has notrecognized a loss allowance for finance lease receivables after considering the historical default
experience and the future prospects of the industries in which the lessees operate, together with thevalue of collateral held over these finance lease receivables.
g. Other lease information
The Group uses operating lease agreement for investment properties, refer to Note 16.
For the Year Ended December 31
2023
2022
Short-term leases and low-value asset leases
Total cash outflow for leases$
101,822$ (15,184,558)$
76,650$ (13,434,898)

The Group chooses to waive the recognition of the contract provisions for the short-term leases andlow-value asset leases and does not recognize the related right-of-use assets and lease liabilities for suchleases.

22. OTHER PAYABLES
December 31
2023
Short-term employee benefits
Fuel costs
Repair expenses
Ground service expenses
Terminal surcharges
Commission expenses
Finance costs
Others$5,655,168
4,740,640
1,967,750
953,666
922,902277,088
156,5023,076,799$ 17,750,515- 45 -

2022$

4,194,176
4,715,624
1,518,603
899,401
901,498
85,140102,550
2,790,267$ 15,207,259

23. CONTRACT LIABILITIES
December 31
2023
Frequent flyer program
Advance ticket sales$

Current
Non-current

2022

3,961,174
25,476,241$

3,185,357
15,505,203$ 29,437,415$ 18,690,560$ 26,473,116
2,964,299$ 17,409,654
1,280,906$ 29,437,415$ 18,690,560

24. PROVISIONS
December 31
2023

2022

Leases - aircraft$ 19,608,003$ 20,962,933

Current
Non-current$$

2,742,402
16,865,601$ 19,608,003

3,691,812
17,271,121$ 20,962,933
Aircraft Lease
Contracts

Balance at January 1, 2022
Additional provisions recognized
Usage
Unwinding of discounts and effects of changes in the discount rate
Effect of foreign currency exchange differences$ 18,654,223
5,209,904(4,306,337)
15,956
1,389,187

Balance at December 31, 2022

$ 20,962,933

Balance at January 1, 2023
Additional provisions recognized
Usage
Unwinding of discounts and effects of changes in the discount rate
Effect of foreign currency exchange differences$ 20,962,933
6,192,669(7,429,593)
13,051(131,057)

Balance at December 31, 2023

$ 19,608,003

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 revolution. 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 with thecontract, Tigerair had to pay the maintenance reserve monthly accounted for by using the actual number offlight hours.

- 46 -

25. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, the Group makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
Employees of the Group’s subsidiaries in the United States and Japan are members of the United States
and Japan government retirement benefit plans. Subsidiaries should appropriate a specific amount toretirement benefit plans. The obligation to the government retirement benefit plans of the Group is toappropriate a specific amount.
b. Defined benefit plans
The defined benefit plans adopted by the Company in accordance with the Labor Standards Act is
operated by the government of the ROC. Pension benefits are calculated on the basis of the length ofservice and average monthly salaries of the 6 months before retirement. The Company and subsidiary
contribute amounts equal to 2%-15% of total monthly salaries and wages to a pension fundadministered by the pension fund monitoring committee. Pension contributions are deposited in the
Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balancein 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 is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); theGroup has no right to influence the investment policy and strategy.
The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans
were as follows:
December 31
2023

2022

Present value of defined benefit obligation
Fair value of plan assets$ 20,606,320(10,908,890)$ 19,794,148(10,575,834)

Deficit$

9,697,430$

9,218,314

Net defined benefit liabilities
Net defined benefit assets$$

9,706,647
9,217

$
$

9,229,640
11,326

Movements in net defined benefit liabilities were as follows:

Balance at January 1, 2022
Service cost
Current service cost
Past service cost and loss on settlements
Net interest expense (income)
Recognized in profit or loss

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)$ 19,159,344$ (9,346,800)$

1,203,387
100
126,384
1,329,871(62,469)(62,469)- 47 -

9,812,544
1,203,387
100
63,915
1,267,402(Continued)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in demographic
assumptions
Actuarial gain - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
OthersBalance at December 31, 2022
Service cost
Current service cost
Past service cost and loss on settlements
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in demographic
assumptions
Actuarial loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
OthersBalance at December 31, 2023

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)

$

$

$

-

(724,458)(724,458)

119

-

119

(1,010,815)
1,380,114
369,41849(920,785)(143,749)
19,794,148(724,458)(1,362,892)
920,785(10,575,834)(1,010,815)
1,380,114(355,040)(1,362,843)(143,749)
9,218,314

1,121,551
187
245,318
1,367,056(132,177)(132,177)

1,121,551
187
113,141
1,234,879

17,834(91,546)(73,712)

123,589-

123,589

146,470452,640
740,533
31(1,128,752)(166,696)(91,546)(1,238,085)
1,128,752-

146,470452,640
648,987(1,238,054)(166,696)$ 20,606,320$ (10,908,890)$

9,697,430(Concluded)

Through the defined benefit plans under the Labor Standards Act, the Group is exposed to the following
risks:
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.
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.
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.

- 48 -

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:
December 31

Discount rate
Expected rate of salary increase

2023

2022

1.13%-1.28%
1.00%-3.00%

1.20%-1.50%
1.00%-2.50%

If possible reasonable changes in each of the significant actuarial assumptions occur and all otherassumptions remain constant, the present value of the defined benefit obligation would increase(decrease) as follows:
December 31

Discount rate
0.25% increase
0.25% decrease
Expected rate of salary increase
0.5% increase
0.5% decrease

2023

2022

$ (411,212)
414,349$ (394,736)
413,748809,727(768,321)

793,878(754,010)

The sensitivity analysis presented above may not be representative of the actual changes in the present
value of the defined benefit obligation as it is unlikely that changes in assumptions will occur inisolation of one another as some of the assumptions may be correlated.
December 31
2023

2022

Expected contributions to the plan for the next year

$ 1,078,204$ 1,031,457

Average duration of the defined benefit obligation

7-10 years

7-10 years

26. EQUITY
a. Share capital
Ordinary shares
December 31

Numbers of shares authorized (in thousands of shares)
Amount of shares authorized
Amount of shares issued

2023

2022

7,000,000$ 70,000,000$ 60,513,407

7,000,000$ 70,000,000$ 60,135,374

The Company issued the 6th and the 7th domestic unsecured convertible bonds, and the holders of theconvertible bonds applied for conversion in the amount of $683,500 thousand and $1,178,600 thousand,respectively, for the years ended December 31, 2023 and 2022. The number of ordinary sharesexchanged was 37,803 thousand and 72,313 thousand, respectively and entitled to registration change
after the issuance of new shares.

- 49 -

b. Capital surplus
December 31
2023

2022

$ 2,382,046
2,680
958,221$ 2,092,431
1,725
929,535

476,712547

67,387

96,073$ 3,887,046$ 3,120,311

May be used to offset a deficit, distributed as cash dividends, ortransferred to share capital (1)Issuance of convertible bonds in excess of par value andconversion premium
Dividend distributed to subsidiaries
Expired equity component of convertible bonds
May only be used to offset a deficit (2)Long-term investments
May not be used for any purpose
Equity component of convertible bonds

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit,
such capital surplus may be distributed as cash dividends or transferred to share capital (limited to acertain percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries
resulting from equity transactions other than actual disposals or acquisitions or from changes in thecapital surplus of subsidiaries accounted for using the equity method.
c. Appropriation of earnings and dividend policy
The board of directors of the Company proposed to amend the Company Act on January 10, 2024, andthe amendments are subject to the resolution of shareholders’ meeting to be held on May 30, 2024.
Under the dividend policy as set forth in the amended Company Act, 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 inaccordance 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. The profit 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.
Under the Company Act before the amendments, where the Company made a profit in a fiscal year, theprofit 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 thelaws and regulations. Then, if any remaining profit together with any undistributed retained earnings, it
shall be used by the Company’s board of directors as the basis for proposing a distribution plan that
dividends and bonus shall be no less 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. If surplus earnings are
distributed in the form of new shares, the distribution of shares shall be resolved in the shareholders’meeting; if such earnings are distributed in the form of cash, the cash distribution shall be authorized
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; 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- 50 -

Company 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 capital reserve is distributed in the form of
new shares, it shall be resolved by a meeting of the shareholders; if such capital reserve is distributed in
the form of cash, it shall be authorized 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; in addition
thereto a report of such distribution shall be submitted to the shareholders’ meeting.
The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thecurrent year.
1) Appropriation of earnings in 2021
The appropriation of earnings in 2021 which was resolved and recognized in the shareholders’meeting on May 26, 2022 is as follows:

Legal reserve
Cash dividends

Appropriationof Earnings

Dividends Per
Share (NT$)$$ 0.83145736

925,385
5,000,000

2) Appropriation of earnings in 2022
The appropriation of earnings in 2022, which were proposed by the Company’s board of directors
on May 31, 2023, were as follows:
Appropriationof Earnings

Dividends Per
Share (NT$)$

305,592
534,375
2,772,207$ 0.4602191

Gain (Loss) on
Hedging
Instruments

Total(5,512)$ 2,839,419$ 2,713,828

144,064--

144,064--(4,066,119)(4,066,119)--(219,724)

Legal reserve
Special reserve
Cash dividends
d. Other equity items
The movement of other equity items is as follows:
Exchange
Differences on
the Translationof the Financial
Statements ofForeign
Operations
Balance at January 1, 2022
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative gain (loss) on changes
in fair value of hedging
instruments
Cumulative gain (loss) on changes
in fair value of hedging
instruments reclassified to profit
or loss$(120,079)

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI$(219,724)(Continued)- 51 -

Exchange
Differences on
the Translationof the Financial
Statements ofForeign
Operations
Unrealized gain (loss) on financial
assets at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transferred to initial carrying
amount of hedged items$(28,283)

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI$

54,956(8,526)

Gain (Loss) on
Hedging
Instruments$

774,742

Total$

54,956
737,933

115,781

46,430(3,511,101)(3,348,890)--

100,687

100,687

Balance at December 31, 2022$

(4,298)$40,918$(570,995)$(534,375)

Balance at January 1, 2023
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative gain (loss) on changes
in fair value of hedging
instruments
Cumulative gain (loss) on changes
in fair value of hedging
instruments reclassified to profit
or loss
Unrealized gain (loss) on financial
assets at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transferred to initial carrying
amount of hedged items$(4,298)$40,918$(570,995)$(534,375)

Balance at December 31, 2023$

(10,086)--(10,086)--(628,201)(628,201)--

344,884

344,884

1,419(18,154)(38)(14,307)(18,154)(12,926)(8,667)(18,192)(297,624)(324,483)--

168,844

168,844(12,965)$

22,726$(699,775)$(690,014)(Concluded)e. Non-controlling interests
For the Year Ended December 31
2023
2022
Beginning balance
Net profit (loss) attributable to non-controlling interests
Other comprehensive income recognized for the year
Exchange differences on translation of the financial statementsof foreign entities
Actuarial gains and losses on defined benefit plans
Cash flow hedge on changes in fair value of hedging
instruments
Cumulative gain (loss) arising on changes in fair value ofhedging instruments reclassified to profit or loss
Effect of income tax- 52 -$ 2,453,241
652,649$ 3,161,445(614,102)(2,486)(162,838)

3,531
132,110(1,689)(5,471)

1,119
31,977(133,917)

5,511(27,135)
108,546(Continued)

For the Year Ended December 31
2023
2022
Outstanding share options held by employees of subsidiaries
Change in equity in subsidiaries
Proceeds from refund of the capital reduction of subsidiaries
Dividends paid by subsidiaries
Others$5,227
369,355(205,000)(253,800)-

Ending balance$ 2,887,755$(202,650)2$ 2,453,241(Concluded)

f. Treasury shares
Treasury shares are the Company’s shares held by its subsidiaries as of December 31, 2023 and 2022
were as follows:(In Thousands of Shares)

Period of Treasury Shares

Number of
Shares,Beginning ofYear

For the year ended December 31, 2023
For the year ended December 31, 2022

Name of Subsidiary

2,075
2,075
Number of
Shares(In Thousands)

Reduction
During theYear-

Number of
Shares, End of
Year
2,075
2,075

Carrying
AmountMarket Value

2,075$ 44,916$ 44,916

2,075$ 39,418$ 39,418

December 31, 2023
Mandarin Airlines
December 31, 2022
Mandarin Airlines

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.

- 53 -

27. NET INCOME
a. Revenue
For the Year Ended December 31
2023
2022
Passenger
Cargo
Others$ 115,722,524
57,146,060
11,948,206$ 25,481,670
116,249,972
8,990,829$ 184,816,790$ 150,722,471

b. Other income
For the Year Ended December 31
2023
2022
Interest income
Dividend income
Others$ 1,802,654
21,662
381,484$

639,845
12,666
936,075$ 2,205,800$ 1,588,586

In 2002, CAA terminated the lease of six aircraft with the Company on a unilateral basis, which arose anumber of litigations between the Company and CAA. Because the aircraft leases were terminated inadvance, the agreement had turned from financial lease to operating lease, which caused the situation of
overpaid rental owing from the differential of the calculation basis. Therefore, in 2016, the Company
sued CAA for an approximate amount of $1,200 million. The Company lost the case in the first andsecond instances and won the part of the case after remanding in the third instance.
The Supreme Court dismissed the appeal and affirmed the conviction that CAA should pay back theprincipal amount with interest.
CAA has paid the abovementioned amount in October 2022. The Company recognized the amount of$288 million as other income - others in 2022.
c. Other gains and losses
For the Year Ended December 31
2023
2022
Gain on disposal of property, plant and equipment
Gain (loss) on disposal of non-current assets held for sale
Gain on financial assets mandatorily classified as at FVTPL
Net foreign exchange gain
Impairment loss recognized on flight equipment
Gain on disposal of investments
Others- 54 -$

555,914(2,364)
1,758
808,734(1,901,450)
2,523(332,051)$(866,936)$

30,006558,477365
797,017(1,641)(281,153)$ 1,103,071

d. Finance costs
For the Year Ended December 31
2023
2022
Interest expense
Bonds payable
Bank loans
Interest on lease liabilities
Loss arising from derivatives designated as hedging
instruments in cash flow hedge accounting relationships
reclassified from equity to profit or loss$

144,279
976,139
1,487,364$

156,189
892,967
1,487,826

516

3,810

$ 2,608,298$ 2,540,792

Capitalization interest$$

Capitalization rate

1.64%-2.06%

392,969

176,264

0.81%-1.58%

e. Depreciation and amortization expense
For the Year Ended December 31
2023
2022
Property, plant, equipment
Right-of-use assets
Investment properties
Intangible assets$ 16,847,069
13,586,054
227
223,600$ 16,983,496
13,120,181
265
223,096

Depreciation and amortization expense$ 30,656,950$ 30,327,038

An analysis of depreciation by function
Operating costs
Operating expenses$ 28,813,405
1,619,945$ 28,939,068
1,164,874$ 30,433,350$ 30,103,942

$

6,725
216,875$

5,110
217,986$

223,600$

223,096

An analysis of amortization by function
Operating costs
Operating expenses

f. Employee benefits expense
For the Year Ended December 31
2023
2022
Post-employment benefits
Defined contribution plan
Defined benefit plan

- 55 -$

565,088
1,234,879$

521,027
1,267,402$

1,799,967$

1,788,429(Continued)

For the Year Ended December 31
2023
2022
Other employee benefits
Salary expenses
Personnel service expenses

An analysis of employee benefits expense by function
Operating costs
Operating expenses$ 22,302,781
7,337,182$ 18,670,644
5,446,734$ 29,639,963$ 24,117,378$ 25,591,048
5,848,882$ 21,136,884
4,768,923$ 31,439,930$ 25,905,807(Concluded)

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. When the Company
has an accumulated deficit, the Company shall set aside some amounts to offset the deficit in advance.
For the years ended December 31, 2023 and 2022, the estimated amount of compensation of employees
were $249,138 thousand and $120,275 thousand, respectively.
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 compensation and remuneration are recognized. If there is a change inthe proposed amounts after the annual consolidated financial statements are authorized for issue, thedifferences are recorded as a change in the accounting estimate.
There was no difference between the actual appropriated amounts of compensation of employees andthe amounts recognized in the consolidated financial statements for the years ended December 31, 2022
and 2021.
Information on the compensation of employees resolved by the Company’s board of directors isavailable at the Market Observation Post System website of the Taiwan Stock Exchange.

28. INCOME TAX
a. Income tax expense recognized in profit or loss
The major components of tax expense are as follows:
For the Year Ended December 31
2023
2022
Current tax
Current year
Adjustments for prior year
Deferred tax
Current year
Adjustments for prior year
Income tax expense recognized in profit or loss

- 56 -$ 1,473,177(44,432)$ 2,082,931
23,594

199,319
206,207(1,677,289)(13,874)$ 1,834,271$

415,362

A reconciliation of accounting profit and income tax expense was as follows:
For the Year Ended December 31
2023
2022
Profit before tax from continuing operations$ 9,305,472$ 2,660,760

Income tax expense calculated at the statutory rate (20%)
Effect of different tax of subsidiaries
Effect of adjustments to income tax:
Non-deductible expenses in determining taxable income
Temporary differences
Tax-exempt income
Overseas income tax expense
Unrecognized loss carryforwards, investment tax credits andtemporary difference
Adjustments for prior years’ tax
Adjustments prior years’ deferred tax
Others$ 1,861,094
1,698

$

Income tax expense recognized in profit or loss

$ 1,834,271

532,152(1,923)

13,747(233)(70,179)
16,883645,034(1,022,734)
48,129(152,086)(44,432)
206,207
1,572

198,694
23,594(13,874)
6,287$

415,359

b. Income tax recognized in other comprehensive income
For the Year Ended December 31
2023
2022
Deferred tax
Recognized in other comprehensive income
Translation of foreign operations
Fair value changes of financial assets at FVTOCIFair value changes of hedging instruments for cash flow
hedging
Remeasurement of defined benefit plans$

Total income tax recognized in other comprehensive income

712
(38)

$ (28,989)(8,526)(14,192)
129,797774,736(71,008)$ 116,279$ 666,213

c. Deferred tax assets and liabilities
For the year ended December 31, 2023

Beginning
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive
Income$ 1,854,113
651,447
2,504,776
296,915
1,706,530
1,432,566$(30,454)
145,309276,383
197,653(483,040)(475,987)$

127,315(10,142)$(1,114)$ 8,446,347$(370,136)$

117,173$(1,114)

Exchange
Difference

EndingBalance

Deferred tax assets
Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventories
Tax losses
Others$ 1,950,974
796,756
2,781,159
494,568
1,223,490
945,323$ 8,192,270(Continued)- 57 -

Beginning
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive
Income$20772
166,072$

27,004
5,107

$

894
-

$

(2,970)$166,864$

32,111$894$(2,970)Exchange
Difference

EndingBalance

Deferred tax liabilities
Temporary differences
Unrealized foreign exchange gains
Defined benefit plans
Others$27,024
1,666
168,209$

196,899(Concluded)
For the year ended December 31, 2022

Beginning
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive
Income$ 1,985,556
585,9612,468,306
282,189
1,018,633
590,333$(62,336)
65,48636,47014,726
687,897
826,397$(69,107)(18,930)$

34,766$ 1,854,113
651,447
2,504,776
296,915
1,706,530
1,432,566$ 6,930,978$ 1,568,640$(88,037)$

34,766$ 8,446,347$

133,275
181
888,097$(133,255)
24,606$591(754,841)

$

8,210

$

20
772
166,072$ 1,021,553$(108,649)$(754,250)

$

8,210

$

166,864

Exchange
Difference

EndingBalance

Deferred tax assets
Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventories
Tax losses
OthersDeferred tax liabilities
Temporary differences
Unrealized foreign exchange gains
Defined benefit plans
Others

Deductible temporary differences and unused loss carryforwards for which no deferred tax assets havebeen recognized in the consolidated balance sheets were as follows:
December 31
2023
Loss carryforwards
Expiry in 2025
Expiry in 2026
Expiry in 2027
Expiry in 2028
Expiry in 2029
Expiry in 2030
Expiry in 2031
Expiry in 2032
Expiry in 2033$

Others temporary differences- 58 -

18,125344,200
68,415
175,712206,151
1,299,401
2,452,815
2,220,547
75,3262022$

18,124344,200
68,415
175,712206,151
1,282,549
1,596,332
1,740,887-$ 6,860,692$ 5,432,370$ 5,861,203$ 6,529,753

d. Unused tax loss carryforwards as of December 31, 2023 were as follows:
UnusedAmountExpiry Year
Mandarin Airline Co., Ltd.
2026
2028
2030
2031
2032

$

312,724
72,551
524,478
1,339,212
999,076$ 3,248,041
Tigerair Taiwan Co., Ltd.
2031
2032

$ 2,350,239
2,816,123$ 5,166,362

Taoyuan International Airport Services
2030
2031
2032

$

591,291
385,855
887,123$ 1,864,269
Taiwan Airport Services
2030
2031
2032

$

239,159
276,530
227,896$

743,585$5,460
61,107
14,798$81,365$83,302
101,461
55,616$240,379(Continued)

Sabre Travel Network (Taiwan)
2030
2031
2032

Cal Hotel Co., Ltd.
2030
2031
2032

- 59 -

UnusedAmountExpiry Year
Kaohsiung Catering Services, Ltd.
2031
2032

$

113,751
132,869$

246,620$

18,12531,476
68,415
103,161
206,151
275,075
149,807108,597
75,326

Taiwan Aircraft Maintenance And Engineering Co., Ltd.
2025
2026
2027
2028
2029
2030
2031
2032
2033

$ 1,036,133(Concluded)
e. Income tax assessment
The income tax returns of the Company through 2021 have been examined by the tax authorities.
Except Taiwan Airport Services, the income tax returns of the Company’s subsidiaries through 2021
have been examined by the tax authorities.

29. EARNING PER SHARE
For the Year Ended December 31
2023
2022
Basic earnings per share
Diluted earnings per share$ 1.13$ 1.11$ 0.48$ 0.47

Earnings used in the computation of basic earnings per share
Effect of potentially dilutive ordinary shares:
Interest on convertible bonds (after tax)

$ 6,818,552$ 2,859,503

16,466

21,415

Earnings used in the computation of diluted earnings per share$ 6,835,018- 60 -$ 2,880,918(Continued)

For the Year Ended December 31
2023
2022
In thousands of shares
Weighted average number of ordinary shares in computation of basic
earnings per share
Effect of potentially dilutive ordinary shares:
Compensation of employees or bonuses issued to employees
Convertible bonds
Weighted average number of ordinary shares used in thecomputation of diluted earnings per share

6,029,240

5,996,406

12,580108,167

9,155
137,708

6,149,987

6,143,269(Concluded)

The Group may settle compensation or bonuses paid to employees in cash or shares; therefore, the Groupassumes the entire amount of the compensation or bonuses will be settled in shares and the resulting
potential shares will be 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.

30. CAPITAL MANAGEMENTThe Group manages its capital to ensure that it will be able to continue as a 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 and non-controlling interests.
To support operating activities and purchase of aircraft, the Group needs to maintain sufficient capital.
Therefore, the goal of capital management is to ensure that financial resources and operating plan is able tosupport the future working capital, capital expenditures, debt repayment, dividend payments and otherneeds in the next 12 months.

31. FINANCIAL INSTRUMENTS
a. Financial instruments not evaluated at fair value
Except as detailed in the following table, the management considers the carrying amounts of financial
assets and financial liabilities recognized in the financial statements as approximating their fair values.
December 31
2023
Carrying
Amount2022
Carrying
AmountFair Value

Fair Value

Financial liabilities
Bonds payable$

9,648,814$ 10,076,215$

9,999,674$ 10,313,545

Lease liabilities and long-term borrowings are floating-rate financial liabilities, so their carrying
amounts are their fair values. Fair values of bonds payable trading in OTC are based on quoted market
prices (Level 1).
- 61 -

b. Fair value of financial instruments measured at fair value on a recurring basis
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:
1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;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); and3) 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).
December 31, 2023
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

186,560

$

-

$

-

$

186,560

$

-

$

-

$

22,785
81,197$22,785
81,197

$

-

$

-

$

103,982$

103,982

Financial assets for hedging$ 10,307,692$

40,796$

5,455$ 10,353,943

Financial liabilities for hedging$ 34,860,884$

50,598$77,481$ 34,988,963

Financial assets at FVTOCI
Investments in equity instruments
United shares - domestic
Unlisted shares - foreign

December 31, 2022
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

119,462

$

-

$

-

$

119,462

$

-

$

-

$

41,12881,905$

41,12881,905

$

-

$

-

$

123,033$

123,033

Financial assets for hedging$ 3,987,730

$

4,935

$

38,997$ 4,031,662

Financial liabilities for hedging$ 42,000,610$

117,693$

55,758$ 42,174,061

Financial assets at FVTOCI
Investments in equity instruments
United shares - domestic
Unlisted shares - foreign

There were no transfers between Levels 1 and 2 in the current period.

- 62 -

4) Valuation techniques and inputs applied for Level 2 fair value measurement
Financial Instrument
Derivatives

Valuation Techniques and Inputs
The fair values of derivatives (except for options) have been
determined based on discounted cash flow analysis using
interest yield curves applicable for the duration of thederivatives. The estimates and assumptions that the Group used
to determine the fair values are identical to those used in thepricing of financial instruments for market participants.

5) Valuation techniques and inputs applied for Level 3 fair value measurement
The fair values of currency options and fuel options are determined using option pricing models
where the significant unobservable inputs are implied fluctuation. Changes in the implied
fluctuations used in isolation would result in an increase or decrease in the fair value of the currency
options and fuel options and swap.
The domestic and foreign unlisted equity investment are based on the comparative company
valuation to estimate the fair value. The main assumptions are based on the multiplier of the market
price of the comparable listed company and the net value per share, which have considered theliquidity discount. The higher the multiplier or the lower the liquidity discount, the higher the fairvalue of the relevant financial instruments.
The multiplier and liquidity discount of financial instruments based on Level 3 fair value
measurement were as follows:

Multiplicator
December 31, 2023
December 31, 2022

Liquidity
Discount

0.60-12.24
0.39-12.39

80%
80%

The movements of financial instruments based on Level 3 fair value measurement were as follows:
Derivative
Instruments

EquityInstruments

Balance at January 1, 2023
Recognized in other comprehensive income$ (16,761)(55,265)$ 123,033(19,051)

Balance at December 31, 2023

$ (72,026)$ 103,982

Balance at January 1, 2022
Recognized in other comprehensive income$$

Balance at December 31, 2022

$ (16,761)

6,124(22,885)

67,884
55,149$ 123,033

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.

- 63 -

c. Categories of financial instruments
December 31
2023

2022

Financial assets
Financial assets at FVTPL
Financial assets for hedging
Financial assets at amortized cost (Note 1)
Financial assets at FVTOCI - investments in equity instruments$

186,560
10,353,943
47,256,565
103,982$

119,462
4,031,662
55,105,434
123,033

Financial liabilities
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

34,988,963
134,158,636

42,174,061
147,815,221

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, finance lease receivable, otherreceivables, refundable deposits, restricted financial assets and other financial assets.
Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term borrowings, short-term bills payable, notes and accounts payable, accounts payable- related parties, other payables, bonds payable, long-term borrowings, lease liabilities,
provisions, parts of other current liabilities, parts of other non-current liabilities and guarantee
deposits.
d. Financial risk management objectives and policies
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,
exchange rates and in fuel prices, the Group 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 the Group’s
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.
In addition, the Group has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. This committee informs theGroup of global economic and financial conditions, controls the entire financial risk resulting fromchanges in the financial environment and fuel prices, and develops the strategy and response to avoid
financial risk with the assistance of financial risk experts to effect risk management.
1) Market 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.

- 64 -

a) Foreign currency risk
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.
Sensitivity analysis
The Group was mainly exposed to the U.S. dollar.
An increase/decrease in U.S. dollars one dollar against New Taiwan dollars when reporting
foreign currency risk internally to key management personnel represents management’s
assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis
included only outstanding foreign currency denominated monetary items at the end of thereporting period for U.S. dollars increase/decrease by one dollar against New Taiwan dollars inforeign currency rates.
When New Taiwan dollars increased by one dollar against U.S. dollars and all other variables
were held constant, there would be a decrease in pre-tax profit and an increase in othercomprehensive income for the year ended December 31, 2023 of $422,688 thousand and$673,801 thousand, respectively; and a decrease in pre-tax profit and an increase in othercomprehensive income for the year ended December 31, 2022 of $113,514 thousand and$1,126,710 thousand, respectively.
The Group’s hedging strategy is to enter into foreign exchange forward contracts and foreign
currency option contracts to avoid exchange rate exposure of its foreign currency denominatedreceipts and payments and to manage exchange rate exposure of its aircraft prepayments in thenext 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.
For the hedges of highly probable aircraft prepayments, as the critical terms (i.e., the notionalamount, useful life and underlying asset) of the foreign currency options contracts and foreignexchange forward contracts and their corresponding hedged items are the same. The Group
performs a qualitative assessment of the effectiveness. The value of the foreign exchange
forward contracts and the value of the corresponding hedged items are expected to changesystematically in the opposite direction in response to movements in the underlying exchange
rates.
The following table summarizes the information relating to the hedging of foreign currency risk.
Refer to Note 21 for rental contract for hedging.
December 31, 2023
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aircraft prepayments forward exchange
contracts

Notional
AmountMaturity

Forward Rate

NTD/USD

NTD251,908/
USD8,187

2024.01.262024.11.27

29.919-30.954

NTD/USD

NTD3,569,231/
USD116,000

2024.01.312024.10.31

29.37-31.581

Currency

Line Item in
Balance Sheet

Financial assets for hedging current/liabilities forhedging - current
Financial assets for hedging current/liabilities forhedging - current

Carrying AmountAsset
Liability$-

40,796$2,720

42,370

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $(4,294) thousand.

- 65 -

For the year ended December 31, 2023

Comprehensive Income

Hedging Gains(Losses)
Recognized in
Other
Comprehensive
IncomeAmountReclassified toProfit and Lossand theAdjusted Line
Item

Cash flow hedge
Aircraft rentals
Aircraft prepayments$ (2,522)
94,893$ (5,797)-$ 92,371$ (5,797)

Note:(Note)

Increase in operating costs or exchange loss.

For the year ended December 31, 2023, the amount of hedging instrument settlements
recognized as an increase of aircraft prepayments were $9,161 thousand.
December 31, 2022
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aircraft prepayments forward exchange
contracts

Notional
AmountMaturity

Forward Rate

NTD/USD

NTD138,344/
USD4,510

2023.1.182023.8.25

29.979-30.702

NTD/USD

NTD3,312,883/
USD 108,000

2023.1.192023.6.30

29.5-31.9

Currency

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets for hedging current/liabilities forhedging - current
Financial assets for hedging current/liabilities forhedging - current

$

-

4,935

$

198

110,563

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $(105,826) thousand.
For the year ended December 31, 2022
Hedging Gains(Losses)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

251
(104,689)$ (24,701)-$ (104,438)$ (24,701)(Note)

Increase in operating costs or exchange loss.

For the year ended December 31, 2022, the amount of hedging instrument settlements
recognized as a decrease of aircraft prepayments were $939 thousand.

- 66 -

b) Interest rate risk
The Group enters into interest swap contracts to hedge against the risks on change in interest
rates of long-term borrowings. The Group was exposed to interest rate risk because the Groupborrowed funds at both fixed and floating interest rates.
The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rateborrowings and using interest rate swap contracts.
The carrying amount of the Group’s financial liabilities with exposure to interest rates at the endof the reporting period were as follows.
December 31

Fair value interest rate risk
Cash flow interest rate risk

2023

2022

$ 53,218,97875,641,256$ 59,825,679
89,811,596

Sensitivity analysis
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 points) 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.
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 years ended December 31, 2023 and 2022 would
have decreased by $189,103 thousand and $224,529 thousand, respectively.
The following tables summarize the information relating to the hedges for interest rate risk.
December 31, 2023
Hedging Instrument
Cash flow hedge
Interest expense on
long-term borrowings- interest rate swaps

Note:

Currency

NTD

Notional
Amount

NTD900,000

Maturity

Forward Rate

2027.4.12027.5.24

1.39%-1.58%

Line Item in
Balance Sheet

Financial assets for hedging current/liabilities forhedging - non-current

Carrying AmountAsset
Liability

$

-

$

5,508

The Company recognized interest receivable and interest payable for $76 thousand and$(46) thousand, respectively.

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (interest expense on long-term borrowings) was $(5,508)
thousand.

- 67 -

For the year ended December 31, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge - Interest expense on long-termborrowings
Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

1,424

$

(516)

(Note)

Increase in finance costs or other losses.

December 31, 2022
Hedging Instrument
Cash flow hedge
Interest expense on
long-term borrowings- interest rate swaps

Note:

Currency

NTD

Notional
Amount

NTD900,000

Maturity

Forward Rate

2027.4.12027.5.24

1.39%-1.58%

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets for hedging current/liabilities forhedging - non-current

$

-

$

6,932

The Company recognized interest expense payable for $(637) thousands.

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (interest expense on long-term borrowings) was $(6,932)
thousand.
For the year ended December 31, 2022

Comprehensive Income

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified toProfit and Lossand theAdjusted LineItem

$ (6,932)$ (3,810)

Cash flow hedge - Interest expense on long-termborrowings
Note:(Note)

Increase in finance costs or other losses.

c) Other price risk
The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel options and swap contracts to hedge against adverse risks on fuel price changes.
December 31, 2023
Hedging Instrument
Cash flow hedges
Aviation fuel - fueloptions
Cash flow hedges
Aviation fuel - swap

Currency

Notional
AmountMaturity

Forward RateLine Item in
Balance Sheet

USD

NTD7,533

2024.03.312024.9.30

USD60USD102.5

Financial assets for hedging current/liabilities forhedging - current

USD

NTD64,472

2024.03.312024.12.31

USD74.04USD87.5

Financial assets for hedging current/liabilities forhedging - current- 68 -

Carrying AmountAsset
Liability

$

4,036

$ 11,590

1,419

65,891

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$(72,026) thousand.
For the year ended December 31, 2023

Comprehensive Income

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified toProfit and Lossand theAdjusted LineItem

$ (55,265)$ (9,806)

Cash flow hedges - aviation fuel
Note:

(Note)

Increase in operating costs.

December 31, 2022
Hedging Instrument
Cash flow hedges
Aviation fuel - fueloptions
Cash flow hedges
Aviation fuel - swap

Notional
AmountCurrency

Maturity

Forward RateLine Item in
Balance Sheet

Carrying AmountAsset
Liability

USD

NTD7,094

2023.03.312023.12.31

USD60USD148

Financial assets for hedging current/liabilities forhedging - current$ 38,997$ 46,091

USD

NTD9,667

2023.3.31

USD96

Financial assets for hedging current/liabilities forhedging - current

-

9,667

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$(16,761) thousand.
For the year ended December 31, 2022

Comprehensive Income
Cash flow hedges - aviation fuelNote:

Increase in operating costs.

- 69 -

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified toProfit and Lossand theAdjusted LineItem

$ (22,885)$ 88,690(Note)

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Year Ended December 31
2023
2022
Other
Other
CompreComprehensive
hensive
Pre-tax Profit
IncomePre-tax Profit
IncomeIncrease
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
Fuel price increase of5%
Fuel price decrease of
5%

$

980
(1,435)$

3,601(3,601)$

3,624(7,066)

$

838
(838)

2) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in a 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, fixedincome investments and other financial instruments, operation related credit risk and financial credit
risk are managed separately.
Operation - related credit risk
The Group has established procedures to manage operations related credit risk to maintain thequality of accounts receivable.
To assess the risk of individual customers, the Group consider into the financial condition of thecustomers, the credit rating agency rating, the Group’s internal credit rating, transaction history andcurrent economic conditions and many other factors that may affect the repayment. Sometimes, theGroup uses certain credit enhancement tools to reduce the credit risk of specific customers.
Since the customers of the aviation industry are dispersed and non-related, the credit risk
concentration is not critical.
Financial credit risk
Credit risk on bank deposits, fixed income investments and other financial instruments aremeasured and monitor by the Group’s finance department. The Group’s trading partners and otherparties are well-performing banks and financial institutions, corporations, and government agencies,
and so the risk of counterparties failing to discharge an obligation is low; therefore, there is no
significant credit risk.

- 70 -

3) Liquidity risk
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.
Undrawn Bank
Loan
Commitments(Unsecured)
The Group (China Airlines, Ltd., Mandarin Airlines and Tigerair Taiwan Co.,Ltd.)

$ 35,388,894

Liquidity and interest risk rate table
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.
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.
December 31, 2023
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

2.2381Less than 1Year

1 to 5 Years

Over 5 Years

$

$

$

2.00953.06861.31054,439,050

9,956,071

8,972,175

20,034,592
55,690,097
4,850,264

32,043,243
30,628,483
4,989,543

15,677,622
10,022,879-$ 85,014,003$ 77,617,340$ 34,672,676- 71 -

December 31, 2022
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

2.5047Less than 1Year

1 to 5 Years

Over 5 Years

$

$

$

1.57942.83901.04654,001,479

9,815,619

7,695,130

15,275,398
11,026,182
2,454,645

53,591,807
27,455,159
7,729,726

12,743,750
7,480,222-$ 32,757,704$ 98,592,311$ 27,919,102

32. RELATED-PARTY TRANSACTIONS
The transactions between subsidiaries (obtain business) relationship with China Airlines, Ltd., remaining
account balance, revenue and expense are eliminated when combined, which is not disclosed in this note.
Besides information disclosed elsewhere in other notes, details of transactions between the Group and otherrelated parties are as follows:a. Related party name and relationship
Related Party Name

Relationship with the Company

China Aircraft Service
Airport Air Cargo Terminal (Xiamen) Co., Ltd.
Airport Air Cargo Service (Xiamen) Co., Ltd.
Eastern United International Logistics (Hong Kong)
Dynasty Holidays
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.

Delica International Co., Ltd.
China Aviation Development Foundation
Others- 72 -

Associate (became not related party since
March 2022)
Associate
Associate
Associate
Associate (completed the dissolution andliquidation procedures in June 2023)
Joint venture
Joint venture
Joint venture (the provisional shareholders’meeting was held in October 2023, and theshareholders resolved to dissolve. And, theliquidation process is in progress inaccordance)
Joint venture
Director of the Company and major
shareholder
Director, key management personnel,
chairman, general manager of the Group,
spouse and second-degree relative

b. Operating income

Account Items
Other income

Related Party TypeFor the Year Ended December 31
2023
2022

Major shareholder of theCompany
Joint venture$ 18,553$

9,131$ 50,999$ 46,801c. Purchases
For the Year Ended December 31
2023
2022

Related Party Type
Major shareholder of the Company
Associate
Joint venture$
40,705$ 266,826$ 2,558,012$$$

18,972415,611665,802d. Accounts receivable - related parties (generated by operations)
December 31
Related Party Type

2023

Joint venture
Major shareholder of the Company

2022

$

13,966
2,210

$

3,804
1,045

$

16,176$

4,849

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.
e. Accounts payable - related parties (generated by operations)
December 31
Related Party Type

2023

Associate
Joint venture
Major shareholder of the Company

2022

$

19,980645,734
5,100$

39,491
275,898
2,421$

670,814$317,810

The remaining balance of accounts payable - related parties will be paid in cash if they are not secured.
f. Lease arrangements (operating leases)
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. For the years ended December 31, 2023 and 2022, the Company had paid rentals of about$40,705 thousand and $18,972 thousand, respectively.

- 73 -

g. Endorsements and guarantees
December 31
2023

2022

Authorized
AmountActualAmount Used

Authorized
AmountActualAmount Used

$ 3,400,000
2,877,292
2,000,000$ 1,225,080
289,059
1,675,500$ 3,850,000
2,868,466
2,000,000$ 1,444,200
286,202
1,517,000

The Company
CAL Park
Tigerair Taiwan
Taiwan Air Craft Maintenanceh. Remuneration of key management personnel
For the Year Ended December 31
2023
2022
Short-term employee benefits
Post-employment benefits$

62,766
16,982$

59,047
13,503$79,748$72,550

The remuneration of directors and key executives, as determined by the remuneration committee, isbased on the performance of individuals and market trends.

33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were pledged or mortgaged as collateral for long-term bank loans and business
transactions:
December 31

Property, plant and equipment
Restricted assets- 74 -

2023

2022$ 47,707,813
440,564$ 36,711,923
765,059$ 48,148,377$ 37,476,982

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESIn addition to those disclosed in the other notes, significant commitments and contingent liabilities of theGroup at December 31, 2023 were as follows:a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with Civil Aeronautics
Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20 years from thedate of transfer of the chartered operation rights from CAA to TACT. TACT filed an application for a
10-year extension of the COP for the cargo terminals in the Taiwan Taoyuan International Airport andKaohsiung International Airport and received the approval from Taoyuan Airport Corporation and CAA
in July 2013 and July 2015, respectively.
In addition, TACT filed an arbitration in 2012 to revise the total amount of expenditure to $6,840,000
thousand. As of December 31, 2023, TACT had signed the following construction contracts withunrelated parties:

Client NameContract Title

INBRIDGE
CONSTRUCTION CO.,LTD

Project A of the renovation and expansion project of
Taoyuan Air Cargo Terminal for the plan tocontinue to operate - steel structure rust removal
and painting of three-dimensional parking lot,mechanical and electrical pipeline renewal andexterior wall painting projectContract
Amount (VAT
Included)$ 77,770

As of December 31, 2023, TACT had no outstanding payments of construction in process forconstruction equipment.
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.
TACT should pay royalties to Taoyuan Airport Corporation and CAA during the chartered operation
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 CAA havethe option to adjust the royalty rates every 3 years starting from the date of transfer of the charteredoperation rights on the basis of actual revenue and expenditures. The current royalty rate is 6% for lessthan $2 billion and 8% for $2 billion to $4 billion.
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 with a 20-year extension.
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.

- 75 -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 fees.
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 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 assignment 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.
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$1,672,763 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, 2023, the list price had been paid in the amount of US$84,820 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 price of the four engines is
US$60,289 thousand. As of December 31, 2023, two out of the four backup engines have beendelivered. The Group also signed related aircraft lease agreement, please refer to Note 21.
d. In July and August 2019, the Company signed a contract with Boeing Company to purchase three 777F
aircraft and exercised the option to purchase three 777F aircraft. In January 2022, the Company signed
an additional contract with Boeing Company to purchase another four 777F aircraft. The expected
delivery periods are from 2023 to 2024. The total list price of the ten aircraft is US$3,905,142 thousand.
As of December 31, 2023, seven out of the ten aircraft have been delivered. The total list price of theremaining three aircraft is US$1,223,689 thousand, and the list price has been paid in the amount of
US$244,738 thousand (recognized as prepayments for aircraft).
e. On September 28, 2022, the Company signed a contract with the Boeing Company to purchase sixteen
787-9 aircraft and the option to purchase eight 787-9 aircraft. On May 23 and June 20, 2023, theCompany exercised the option to purchase eight aircraft, six 787-9 aircraft transfer to 787-10,
twenty-four aircraft (include eighteen 787-9 aircraft and six 787-10 aircraft) of the total list price areapproximately US$9,246,181 thousand. The expected delivery periods are from 2025 to 2028. As of
December 31, 2023, the list price has been paid in the amount of US$512,698 thousand (recognized as
prepayments for aircraft).
f. 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, 2023, the list price has been paid in the amount of US$30,202 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, 2023, one out of the two backup
engines has been delivered, and the other was expected to be delivered in 2024. The Group also signed
related aircraft lease agreement, please refer to Note 21.
- 76 -

g. On March 27, 2023, the board of directors of Mandarin Airlines approved to sign a contract with
AVIONS DE TRANSPORT REGIONAL G.I.E to purchase three ATR72-600 aircraft. The total list
price of the contract is approximately US$69,000 thousand. The expected delivery periods are from2023 to 2024. On May 30, 2023, the board of directors of Mandarin Airlines approved the activation of
the original contract option to AVIONS DE TRANSPORT REGIONAL G.I.E. to order three more
ATR72-600 aircraft. The total contract price is approximately US$69,000 thousand. The expected
delivery date is 2025. As of December 31, 2023, the list price has been paid in the amount of
US$30,311 thousand (recognized as prepayments for aircraft).

35. IMPACT OF COVID-19
For the year ended December 31, 2022, because of the COVID-19 pandemic, the Group received subsidies
of $1,135,323 thousand, for airport landing fees and parking fees, etc. The subsidies for housing and land
rental, and salary and interest expenses were $829,165 thousand. These subsidies were recognized as otherincome or deduction from other expenses. The Group has not received such subsidies since 2023.
The Group has obtained a relief loan from the government. Refer to Note 19 for details on the amount ofloan and its allocation.

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currency ofentities in the Group, 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:
December 31, 2023
Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
Amount1,119,615
20,145
303,304
3,162,264
548,986

30.7692
34.0136
3.93240.21734.3290$ 34,449,664
685,220
1,192,712
687,1442,376,559

1,494,906
9,519
72,4403,303,548
101,866

30.7692
34.0136
3.93240.21734.329045,997,053
323,789
284,862
717,887
440,978

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

- 77 -

December 31, 2022
Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
Amount1,130,182
35,074
310,589
6,179,784
572,690

30.6748
32.7869
3.93860.23174.4131$ 34,668,125
1,149,979
1,223,286
1,431,856
2,527,337

2,255,888
6,849
48,341
3,309,634
112,93930.6748
32.7869
3.93860.23174.4131

69,198,932
224,557
190,397
766,842
498,411

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

For the years ended December 31, 2023 and 2022, the Group’s net foreign exchange gains were $808,734
thousand and $797,017 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 andfunctional currencies of the entities in the Group.

37. ADDITIONAL DISCLOSURESa. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided to others: Table 1 (attached)2) Endorsements/guarantees provided: Table 2 (attached)
3) Marketable securities held: Table 3 (attached)4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: Table 4 (attached)5) Acquisitions of individual real estates at costs of at least NT$300 million or 20% of the paid-in
capital: None
6) Disposals of individual real estates at costs of at least NT$300 million or 20% of the paid-in capital:
None7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 5 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 6 (attached)- 78 -

9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 7 (attached)10) Trading in derivative instruments (Notes 6 and 31)
b. Information on investments in mainland China: Table 8 (attached)c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 9 (attached)d. Information of major shareholders: Table 10 (attached)

38. SEGMENT INFORMATION
a. Segment information
The Group mainly engages in air transportation services for passengers, cargo and others. Its major
revenue-generating asset is its aircraft fleet, which is used jointly for passenger and cargo services.
Thus, the Group’s sole reportable segment is its flight segment. For the disclosure of operating segmentin the consolidated financial statements, the reportable segment of the Group comprises flight andnon-flight business departments. The accounting policy applied for reportable segments are consistent
with the policies aforementioned in Note 4.
Air
Transportation

For the Year Ended December 31, 2023
Adjustments
Othersand Write-offs

Total

Operating revenue$ 180,249,150$ 10,529,766$(5,962,126)$ 184,816,790

Operation profit and loss
Interest income
Investment income accounted forusing the equity method
Revenue
Finance costs
Expenses$$$(61,128)$ 10,157,421
1,802,654

9,308,194

910,355

417,485
1,769,711(2,608,298)(2,233,501)

Profit before income tax
Identifiable assets
Investments accounted for using
the equity method
Assets$$ 170,472,334$ 13,527,117$(6,353,852)

9,305,472$ 177,645,599
1,737,235
111,859,597

Total assets$ 291,242,431- 79 -

Air
Transportation

For the Year Ended December 31, 2022
Adjustments
Othersand Write-offs

Operating revenue$ 146,692,621$

8,649,589$(4,619,739)

Operation profit and loss
Interest income
Investment income accounted forusing the equity method
Revenue
Finance costs
Expenses$$(101,135)$(68,904)

2,754,773

Total$ 150,722,471$

2,584,734
639,845(74,839)
2,332,965(2,540,792)(281,153)

Profit before income tax$

Identifiable assets
Investments accounted for using
the equity method
Assets$ 180,804,314$ 14,393,849$(5,903,340)

2,660,760$ 189,294,823
1,453,244
103,664,126

Total assets$ 294,412,193

b. Geographical segment
The geographical segment information of the Company and its subsidiaries in 2023 and 2022 is listed
below:For the Year Ended December 31, 2023

Operating revenue$

America

Northeast Asia

Southeast Asia

59,382,935$$

38,465,561

31,422,519

Europe$21,214,463

Australia$

8,694,246

China$

11,122,603$

Domestic

Adjustment andEliminations

Consolidation

20,476,589$$ 184,816,790(5,962,126 )Operation profit
and losses
Interest income
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses$

417,485
1,769,711(2,608,298 )(2,233,501 )Profit before
income tax
Identifiable assets
Investments
accounted forusing the equity
methodAssets

10,157,421
1,802,654$$

1,654,115$

1,524,401$

218,237$

2,432,464$

1,424,118$

43,805$ 176,702,311$(6,353,852 )

9,305,472$ 177,645,599

1,737,235
111,859,597

Total assets$ 291,242,431

For the Year Ended December 31, 2022

Operating revenue$

America

Northeast Asia

Southeast Asia

73,067,296$$

9,980,352

25,373,554

Europe$16,887,811

Australia$

6,182,493

China$

9,345,979$

Domestic

Adjustment andEliminations

Consolidation

14,504,725$$ 150,722,471(4,619,739 )Operation profit
and losses
Interest income
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses$(74,839 )2,332,965(2,540,792 )(281,153 )Profit before
income tax
Identifiable assets
Investments
accounted forusing the equity
methodAssets2,584,734
639,845$$

1,461,417$

1,698,903$

130,978$

2,659,121$

1,550,607$

42,890$ 187,654,247$(5,903,340 )2,660,760$ 189,294,823

1,453,244
103,664,126

Total assets$ 294,412,193- 80 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)No.

Lender1

Cal-Dynasty International

Borrower

Financial
Statement
Account

Dynasty Hotel of Notes receivable
Hawaii, Inc.

RelatedParty

HighestBalance for
the PeriodEndingBalance

ActualAmountBorrowed

Interest Rate
(%)

Yes

$ 113,636$ 107,692$ 107,692

2.25

Nature ofFinancing

Short-term
financingfacility isnecessary

Cal-Dynasty International’s operational procedures for financing provided to others or legal requirements:
Note 1:

The maximum amount of loans provided to others by the Group is up to 40% of the Group’s net worth as stated in its latest financial statements.

Note 2: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.

- 81 -

Business
Transaction
AmountReasons for
Short-term
Financing$Operatingturnovercapitalexpenditure-

Allowance for
Impairment
Loss
$

-

Collateral
Item

-

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 157,511$ 315,022

NoteTABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENTS/GUARANTEES PROVIDEDFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Endorsee/Guarantee
Endorser/
Guarantor

No.

0

Name

China Airlines
CAL Park(the “Company”) Tigerair Taiwan Co., Ltd.

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Relationship100% owned subsidiary
78.89% owned subsidiaryby direct and indirect
holdings
100% owned subsidiary

Limit onEndorsement/
Guarantee
Given on Behalfof Each Party(Note 1)

Maximum
AmountEndorsed/
Guaranteed
During the
PeriodOutstanding
Endorsement/
Guarantee atthe End of the
PeriodRatio ofAccumulated
Endorsement/ Endorsement/ Endorsement/
AmountAggregate
Endorsement/
Guarantee
Guarantee
Guarantee
Actual AmountEndorsed/Endorsement/
Guarantee toGiven by Parent
Given byGiven on Behalf
Borrowed
Guaranteed by
Guarantee
Net Equity inon Behalf of
Subsidiaries on of Companies in
Collateral
Limit (Note 2)
Latest Financial
Subsidiaries Behalf of Parent Mainland China
Statements (%)$ 14,918,223
14,918,223$ 3,850,000
3,036,104$ 3,400,000
2,877,292$ 1,225,080
289,059

14,918,223

2,000,000

2,000,000

1,675,500

$

-

4.56
3.86

$ 37,295,558
37,295,558

Yes
Yes

No
No

No
No

-

2.68

37,295,558

Yes

No

No

Note 1:

Based on the Company’s operational procedures for endorsements/guarantees, the maximum amount of guarantee to an individual counterparty is up to 20% of the Company’s shareholders’ equity.

Note 2:

Based on the Company’s operational procedures for endorsements/guarantees, the maximum amount of collateral guarantee is up to 50% of the Company’s shareholders’ equity.

- 82 -TABLE 3

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELDDECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name

Type and Name of Marketable Securities

China Airlines (“Parent company”)

SharesEverest Investment Holdings Ltd. - ordinary shares
Everest Investment Holdings Ltd. - preferred shares
Chung Hua Express Co.
China Aircraft Services Limited
The Grand Hi Lai Hotel

Mandarin Airlines

Cal-Asia Investment

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Kaohsiung Catering Services

Relationshipwith the Holding
Company

Financial Statement AccountNumber of
Shares/Units

December 31, 2023
Percentage of Market Value
Carrying
Ownership
or Net Asset
Amount
(%)
Value

Note

-

Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTOCI - non-current
Financial assets at FVTPL - current

16,724
1,672
1,100,000
28,400,000
1,072$ 34,218
3,422
22,785
-

13.59
11.00
4.00
-

$ 37,640
22,785-Note 1
Note 1-

Parent company

Financial assets at FVTOCI - non-current

2,074,628

44,916-44,916-

SharesTaikoo (Xiamen) Landing Gear Services
Taikoo Spirit Aerospace Systems (Jinjiang) Composite-

Financial assets at FVTPL - current
Financial assets at FVTOCI - non-current-

43,5572.59
5.45

43,557Note 2
Note 2

Beneficiary certificates
FSITC Money Market Fund
FTSA Money Market Fund
CAPITAL Money Market Fund-

Financial assets at FVTPL - current
Financial assets at FVTPL - current
Financial assets at FVTPL - current

70,9283,301,613
2,114,700

12,99235,08335,076-

12,99235,08335,076-

SharesTransAsia Airways-

Financial assets at FVTPL - current

2,277,786---

Beneficiary certificates
Prudential Financial Money Market Fund
Taishin 1699 Money Market Fund-

Financial assets at FVTPL - current
Financial assets at FVTPL - current

3,163,289
3,728,020

51,431
51,97851,431
51,978-

SharesChina Airlines

Note 1: The subsidiary’s net asset value was $37,640 thousand, which included ordinary shares and preference shares as of December 31, 2023.
Note 2: The company does not issue shares because it is a limited company.
Note 3: The table only lists financial assets that are in accordance with IFRS 9.

- 83 -

0.4-

TABLE 4

CHINA AIRLINES, LTD. AND ITS REINVESTMENT COMPANIESMARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name

China Airlines(the “Company”)

Type and Name ofMarketable Securities(Note 1)

Financial Statement
Account

Tigerair Taiwan co., Ltd. Investments accounted forusing the equity method

Counterparty(Note 2)

Relationship(Note 2)Tigerair Taiwan co., Ltd. Subsidiary

Beginning Balance
Shares/Units
Amount(In Thousands)-$

Acquisition
Shares/Units
Amount(In Thousands)

-

-

$

-

Shares/Units(In Thousands)-

DisposalCarrying
AmountAmountGain on
Disposal

$

$

-

$

-

-

Ending Balance
Shares/Units
Amount(In Thousands)-

Note 1:Marketable securities in this table include shares, bonds, beneficiary certificates and securities derived from these items.

Note 2:Fill in the two columns if marketable securities are accounted for using the equity method.

Note 3:

The accumulated buying and selling amount should be calculated separately at the market price, whether it reaches $300 million or 20% of the paid-in capital.

Note 4:Paid-in capital is the paid-in capital of the Company shares of issuers without par value, or NT$10 per share, calculated according to 10% of the total equity attributable to the owners of the Company based on the regulation on transaction amounts of 20% of paid-in capital.

Note 5:The Company’s subsidiaries issued shares for public offering.

- 84 -$-TABLE 5

CHINA AIRLINES, LTD. AND SUBSIDIARIESTOTAL 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, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.
(“China Airlines”)

Related Party

Relationship

Purchase/
Sale

% of
Total

Payment Terms

Unit Price

363,051
231,514
213,426(1,090,121)
491,256
1,076,485
198,371(363,877)
342,252

0.25
0.16
0.15
(0.67)
0.34
0.75
0.14
(0.23)
0.24

2 months
2 months
2 months
2 months
30 days
40 days
40 days
1 month
1 month

$Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase

Subsidiary
Equity-method investee
Equity-method investee
Equity-method investee
Equity-method investee

Purchase
Purchase
Purchase
Purchase
Purchase

292,742
261,972
169,1112,238,889
150,013

0.20
0.18
0.12
1.55
0.10

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Same parent company
Same parent company

Purchase
Purchase

211,676
275,018

Tigerair Taiwan Co., Ltd. Taoyuan International Airport Service
Taiwan Airport Services

Same parent company
Same parent company

Purchase
Purchase

Cal Hotel

Same parent company

Purchase

Mandarin Airlines

CAL Park$

AmountDynasty Aerotech International Corp.
CAL Park
Cal Hotel Co., Ltd.
Mandarin Airlines
Taiwan Air Cargo Terminal
Taoyuan International Airport Service
Taiwan Airport Services
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
Kaohsiung Catering Service, Ltd.
Eastern United International Logistics
China Pacific Laundry Services
China Pacific Catering Services
NORDAM Asia Limited- 85 -

Notes/Accounts Receivable
or Payable% ofPayment Terms Ending Balance
Total

Abnormal Transaction( 49,543)(27,609 )111,348( 41,804)( 282,203)( 40,418)
32,750(41,262 )(2.11)(1.18)
1.14(1.78)(12.02)(1.72)
0.34(1.76)-(58,364 )(19,533)( 29,472)( 616,262)-(2.49)(0.83)(1.26)(26.25)---(3,534)(0.47)

40 days
40 days--(78,904)(11,632)(7.24)(1.07)

1 month

-

-

-

-

-

90 days
2 months
90 days
90 days
90 days

-

4.13
5.37

1 month
1 month

225,883
101,5272.50
1.12

114,392

30.13

$

-

Note

TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Overdue
Company Name

Related Party

RelationshipEnding Balance

Turnover Rate

China Pacific Catering Services

China Airlines

Parent company$ 616,262

5.14

Taoyuan International Airport Service

China Airlines

Parent company

282,203

China Airlines

Mandarin Airlines

Subsidiary

111,348- 86 -

Amount$Action Taken

Amounts Received
in Subsequent
PeriodAllowance for
Impairment Loss--

$ 416,987

$

-

4.39

-

-

281,896

-

11.42

-

-

111,289-

TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Original Investment Amount
Investor Company

Investee Company

Location

Main Business and Product

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)
Taiwan Airport Services
Kaohsiung Catering Services
Cal Hotel Co., Ltd.
China Pacific Laundry Services

Taoyuan, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan
Los Angeles, USA
Taoyuan, Taiwan
Taoyuan, Taiwan
Territory of the British Virgin Islands
Taipei, Taiwan
Taipei, Taiwan
Kaohsiung, Taiwan
Taoyuan, Taiwan
Taoyuan, Taiwan

Dynasty Aerotech International Corp.

Taoyuan, Taiwan

Global Sky Express
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
NORDAM Asia Ltd.

Taipei, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan

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
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
Forwarding and storage of air cargo
Air transportation and maintenance of aircraft
Aircraft maintenanceTaoyuan, Taiwan

CAL-Asia Investment

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services
Eastern United International Logistics

Taiwan Airport Services
Kaohsiung Catering
Services

China Airlines, Ltd.

Mandarin Airlines

December 31,
2023

December 31,
2022

$

$

$

$

77,27077,27077,270100.00124,583

19,06019,041 Notes 4

2,500
6,240,018
1,350,000

2,500
5,640,197
1,350,000

250,000
337,624,477
56,000,000

25.00
75.19
100.006,421
3,179,817
377,137

3,058
1,826,847(74,185)765
1,402,543 Note 4(74,185)-

Composite repair and manufacturing business

37,97537,975

3,797,500

49.00

-

(26,080)(19,196)-

Taipei, Taiwan
Taipei, Taiwan
Hong Kong

Air transportation and maintenance of aircraft
Airport services
Forwarding and storage of air cargo

183,846
11,658HK$
3,329

154,330
11,658HK$
3,329

16,613,624
469,755
1,050,000

3.70
1.08
35.00

156,471
1,484
49,0301,826,847
38,965
11,05569,017
420
4,390

-

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

US$

5,877

-

100.00406,02123,082

Delica International Co., Ltd.

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,630

188

The treasury shares method is adopted in recognizing investment income or loss.

Note 2:

It represents the consolidated financial information of the foreign holding company disclosed in accordance with local regulations.

Note 3:The company does not issue shares because it is a limited company.

Note 4:The difference is due to lease arrangement between consolidated entities.

Note 5:The difference is due to acquisition.

- 87 -

20,412
462,190
340,655
55,608728,508
111,655
30,57657,04638,965
137,136
18,95522,75358,369447,118
183,833
54,900371,539
54,711
30,57653,58318,45070,52435,214
12,514Note

100.0096.96
54.00
100.0051.00
49.00
100.00
93.93
47.35
53.67
100.0055.00

10,2001,786,823
1,664,600
1,376,778
1,418,175
767,615414,674
622,487
237,347
65,256417,978
340,162
101,705

Share of profit(Loss)

154,435,974
387,831,234
108,000,000
2,614,500
43,911,000
34,300,000
7,172,346
13,021,042
20,626,644
21,494,637
33,480,000
13,750,000

5,877

$

Net Income(Loss) of theInvestee

1,500,000
4,039,140
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,20012,289383,846
334,800
137,500

Note 1:1,500,000
4,039,140
1,080,000
US$ 26,145
439,110147,000
US$
7,172
52,20012,289383,846
334,800
137,500

As of December 31, 2023
Percentage
Number ofof
Carrying
SharesOwnership
Amount(%)

Note 4
Notes 1 and 4
Note 4
Notes 2 and 4
Note 5Note 4-

22,691 Note 3
96-

TABLE 8

CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION ON INVESTMENTS IN MAINLAND CHINAFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars, Unless Stated Otherwise)

China Airlines

Investee Company

Accumulated
Outward
Remittance forMain Businesses andMethod ofPaid-in Capital
Investment
Products
Investment
from Taiwan asof January 1,
2023

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Forwarding and storage $ 1,101,644
of air cargo(RMB 254,480)

Indirect(Note 1)

Airport Air Cargo Service(Xiamen) Co., Ltd.

Forwarding and storage60,606of air cargo(RMB 14,000)

Indirect(Note 1)

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,556,613
maintenance services (US$ 83,090)

Indirect(Note 1)

Taikoo Spirit Aerospace
Systems (Jinjiang)

Composite material

Indirect(Note 1)

358,864(US$ 11,663)

Remittance of Funds

Outward$128,799 $(US$4,186)

Inward--(US$59,921
1,947)

66,191
2,151)

-

(US$

-

(US$

19,569636)

Accumulated Outward Remittancefor Investment in Mainland China
as of December 31, 2023

Investment Amount
Authorized by the Investment
Commission, MOEA

Upper Limit on the Amount of
Investments Stipulated by theInvestment Commission, MOEA

$274,481(US$8,920)$664,951 (Note 3)$46,487,322 (Note 4)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2023$% Ownershipof Direct orIndirect
Investment

Net Income(Loss) of
the Investee

Carrying
Amount as ofDecember 31,
2023

Investment
Gain (Loss)

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2023

-

$
128,799 $103,389(US$4,186) (RMB 23,508)

14.00

$
14,063 $256,248 $
130,806(RMB 3,291) (RMB 59,193) (US$4,251)(Note 2)

-

14.00

(US$

59,92175,925
1,947) (RMB 17,264)

10,009149,882(RMB 2,417) (RMB 34,623) (US$66,191
2,151)

-

2.59

-

(US$

-

5.45

-

(US$

19,569
636)

-

-

-

68,5632,228)(Note 2)-43,557(RMB 10,062) (US$21,998715)(Continued)- 88 -

Taiwan Airport Services

Investee Company

Accumulated
Outward
Remittance forMain Businesses andMethod ofPaid-in Capital
Investment
Products
Investment
from Taiwan asof January 1,
2023

Airport Air Cargo Terminal(Xiamen) Co., Ltd.

Forwarding and storage $ 1,101,644
of air cargo(RMB 254,480)

Indirect(Note 5)$
123,642 $(US$4,018)

Airport Air Cargo Service(Xiamen) Co., Ltd.

Forwarding and storage60,606of air cargo(RMB 14,000)

Indirect(Note 5)

(US$

Accumulated Outward
Investment Amounts Authorized by theRemittance for Investment in
Investment Commission, MOEA
Mainland China as of December 31, 2023
$182,926(US$5,945)$182,926(US$5,945)

Remittance of Funds

Outward

Inward-59,285
1,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2023

$

-

-

Net Income(Loss) of theInvestee% Ownershipof Direct orIndirect
Investment$
123,642 $103,389(US$
4,018) (RMB 23,508)

14.00

59,28575,925
1,927) (RMB 17,264)

14.00

(US$

Investment
Gain (Loss)

Carrying
Amount as ofDecember 31,
2023

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2023$
14,062 $255,035 $
161,716(RMB 3,291) (RMB 58,913) (US$5,256)(RMB

10,008150,0902,417) (RMB 34,671) (US$84,9102,760)

Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA
$82,690(Note 4)Note 1: The Company invested in CAL-Asia Investment, which invested in a company located in mainland China.
Note 2: As of December 31, 2023, the inward remittance of earnings amounted to US$4,251,192 and US$2,228,304.
Note 3: The amount comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.
Note 4: The limit stated in the Investment Commission’s regulation “The Review Principle of Investment or Technical Cooperation in Mainland China” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.
Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are converted at period-end rates and the gains (losses) are converted at the average of the period-end rates for the reporting period.
(Concluded)- 89 -TABLE 9

CHINA AIRLINES, LTD. AND SUBSIDIARIES
BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars)Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account0

China Airlines, Ltd.

Mandarin Airlines
Tigerair Taiwan Co., Ltd.
Taoyuan International Airport Services
Taiwan Airport Services
Dynasty Aerotech International Corp.
Taiwan Air Cargo Terminal
Cal Park
Cal Hotel Co., Ltd.
Kaohsiung Catering Services
Mandarin Airlines
Taiwan Airport Services
Taiwan Aircraft Maintenance andEngineering Co., Ltd.

a
a
a
a
a
a
a
a
a
a
a
a

Air transport service revenue
Other operating revenue
Airport service costs
Airport service costs
Airport service costs
Other operating costs
Other operating costs
Other operating costs
Other operating costs
Accounts receivable - related parties
Accounts receivable - related parties
Operating costs

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

Sales revenue

2

Mandarin Airlines

China Airlines, Ltd.
Taiwan Airport Service
China Airlines, Ltd.

bcb

Tigerair Taiwan Co., Ltd.

AmountTransaction Criteria% of Total
Consolidated
Total Revenue
or Assets$ 1,022,662
363,877
1,076,485
198,371363,051
491,256
231,514
213,426
292,742
111,348
282,203342,252

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

0.55
0.20
0.58
0.11
0.20
0.27
0.13
0.12
0.16
0.04
0.10
0.19

491,256

The same as ordinary transactions

0.27

1,022,662
275,018
111,348

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

0.55
0.15
0.04

c

Air transport service costs
Airport service costs
Accounts payable and note payable - relatedparties
Operating expenses

211,529

The same as ordinary transactions

0.11

1,076,485
282,203
225,883

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

0.58
0.10
0.12

3

Taoyuan International Airport Services

China Airlines, Ltd.
China Airlines, Ltd.
Tigerair Taiwan Co., Ltd.

bbc

Airport service revenue
Accounts receivable - related parties
Airport service revenue

4

Taiwan Airport Services

China Airlines, Ltd.
Tigerair Taiwan Co., Ltd.
Mandarin AirlinesbccOperating revenue
Operating revenue
Operating revenue

198,371
101,527275,018

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

0.11
0.05
0.15

5

Dynasty Aerotech International Corp.

China Airlines, Ltd.

b

Operating revenue

363,051

The same as ordinary transactions

0.20

6

CAL Park

China Airlines, Ltd.
Cal Hotel Co., Ltd.

bc

Operating revenue
Operating revenue

231,514
114,392

The same as ordinary transactions
The same as ordinary transactions

0.13
0.06

7

Cal Hotel Co., Ltd.

China Airlines, Ltd.
CAL ParkbcOperating revenue
Operating costs

213,426
114,392

The same as ordinary transactions
The same as ordinary transactions

0.12
0.06
(Continued)- 90 -

Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account8

Tigerair Taiwan Co., Ltd.

China Airlines, Ltd.
Mandarin Airlines
Taoyuan International Airport Services
Taiwan Airport Services

b
c
c
c

Operating expenses
Operating revenue
Airport service costs
Operating costs

9

Taiwan Aircraft Maintenance andEngineering Co., Ltd.

China Airlines, Ltd.

b

10

Kaohsiung Catering Services

China Airlines, Ltd.

b

Amount$Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets

363,877
211,529
225,883
101,527

The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions
The same as ordinary transactions

0.20
0.11
0.12
0.05

Operating revenue

342,252

The same as ordinary transactions

0.19

Operating revenue

292,742

The same as ordinary transactions

0.16

Note 1: The three directional types for transactions by business relationship between China Airlines, Ltd. and its subsidiaries are as follows:a. Parent to subsidiaries.
b. Subsidiaries to parent.
c. Subsidiaries to subsidiaries.
Note 2: Intercompany transactions were eliminated in the consolidated financial statements.
Note 3: The Company only discloses transaction amounts or balances of more than $100,000 thousand.
(Concluded)- 91 -TABLE 10

CHINA AIRLINES, LTD.
INFORMATION OF MAJOR SHAREHOLDERSDECEMBER 31, 2023

SharesNumber ofPercentage ofSharesOwnership (%)

Name of Major Shareholder

China Aviation Development Foundation (CADF)
National Development Fund (NDF)

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

30.85
8.58

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 preference 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.
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.

- 92 -