China Airlines
2020 Investor Conference

August 26, 2020
TSE：2610

LegalDisclaimer• The information contained in this presentation,
including all forward-looking information, issubject to change without notice, whether as aresult of new information, further events orotherwise, and China Airlines(the “Company”)
undertakes no obligation to publicly update orrevise the information contained in thispresentation.
• No guarantees regarding the completeness,accuracy, and reliability of information contained
are made explicitly or implicitly. They are notintended to represent complete statement of theCompany, industry or future development.

2Agenda1. First Half Year Financial Results for2020
1) Operating Performance2) Composition of Op. Revenue & Cost
3) Financial Risk Management

2. Impact of COVID-19 Pandemic
1) Industry Environment Update2) Operational Performance Update
3) Response to COVID-19

3. Post-COVID-19 Outlook

3

First Half Year Financial Results for 2020

4

Operating Performance – 2020Q2
Consolidated Financial Statistics

TWD 100 Million
2019Q22020Q2

YoY %Operating Revenue

428.92263.16-38.64%

Net Operating Income

5.73

27.48

379.58%Net Income(Loss) After Tax-2.91

22.53-Net Income(Loss) Attributable toOwners of the company

-4.43

24.59

-Earnings(Loss) Per Share (TWD)

-0.08

0.45

-Group Revenue

TWD 100 Million
2019Q2

2020Q2YoY %Passenger Revenue

282.06

15.13-94.63%

Cargo Revenue

109.56234.42113.96%

37.3

13.61

-63.51%428.92263.16-38.64%

Other Operating Revenue
Total Group Operating Revenue

5Operating Performance – 2020H1
Consolidated Financial Statistics

TWD 100 Million

2019H1

2020H1YoY %Operating Revenue

832.98588.73-29.32%Net Operating Income(Loss)

13.34-2.23-Net Loss After Tax-4.38-15.58-Net Loss Attributable toOwners of the company-6.86-13.14-Loss Per Share (TWD)

-0.13

-0.24

-Group Revenue

TWD 100 Million
2019H12020H1

YoY %Passenger Revenue

554.56202.42-63.49%Cargo Revenue

211.18345.3763.54%

Other Operating Revenue

67.24

40.94

-39.11%

Total Group Operating Revenue

832.98588.73-29.32%
6Composition of Op. Revenue - CI
4%

Passenger Revenue

Cargo Revenue

32%

Passenger Revenue

66%

Cargo Revenue 29%

Other Op. Revenue

2019H164%

Other Op. Revenue

2020H15%

Passenger, Cargo and other operating revenue accounted for 32%, 64%
and 4% respectively in 2020H1.

7

Composition of Op. Expenses - CI
2.1%

Airport&Ground
Personnel
Handling
16.5%
12.1%

Rental&Depreciation Maintenance
19.1%
22.5%

OthersFuel
21.8%

P a x S e r vi c e
Sales&General Adm.

2020H1

3.5%

3.5%

2.4%

Personnel
13.8%

Rental&Depreciation Maintenance
13.4%
16.8%

4.3%

4.0%

Others

Airport&Ground
Handling
13.5%

P a x S e r vi c e

Fuel
30.5%

Sales&General Adm.

2019H1

3.7%

Fuel cost accounted for 21.8% of operating expenses due to COVID-19
pandemic in 2020H1.

8Financial Risk Management – Fuel (CI)
Fuel Cost
2019H12020H1

YoY%

Jet Fuel (MOPS)USD/BBL

78.05

45.01

-42.3%

Fuel Consumption

10KBBL

854.58664.63-22.2%

Fuel Expend

TWD/100Million

219.23114.43-47.8%

Hedging Loss

TWD/100Million

0.07

0.26

271.4%

Total Fuel Cost

TWD/100Million

219.3

114.69-47.7%

Fuel Hedging
Year

Hedging%2020.09-20201.08

0.8%

9

Financial Risk Management –Currency of Revenue and Expenditure
2020H1100%

2019H1Rev.

Exp.

15%

7%
2%

Rev.

Exp.
7%

16%

1%

2%

7%

2%

7%

6%

6%
7%12%
5%

9%

38%

42%

13%

15%

50%

49%

47%

45%

40%0%

TWD

USD

JPY

CNYHKDOthers

10Impact of COVID-19 Pandemic
Industry Environment Update

11

COVID-19: Severe Impact on the Global
Airline Industry
A slump in air travel demand due to COVID-19 pandemic which has forced airlines tocut flights.

RPKs

Air
Passengers

Airport
Revenue

FreighterTonnes

YoY%

YoY%

YoY%

YoY%

-55%

-60%

-57%

-17%

IATA forecasted airlines across the world are expected tolose USD 84.3 billion in 2020.
Source：ICAO、IATA、ACI、UNWTO

122019 Level Recovered Only by 2024
• Five years to return to pre-pandemic level of passenger demand• 75% growth forecast for 2021 but RPKs still 36% below 2019 levels

Source： IATA/Tourism Economics ‘Air Passenger Forecasts’ July 202013

Impact of COVID-19 Pandemic
Operational Performance Update

14

Passenger Performance
Revenue

Composition by Region

Trans
Pacific
Ocean
21%

TWD 47.76 Billion▼63.8%

Europe11%
Hong Kong
4%

TWD 17.27 Billion

2019H1

Australia/New
Zealand
10%

South East
Asia
20%

2020H1

MainlandChina
7%

North East
Asia
27%

•Passenger revenue decreased by 63.8% to TWD 17.27 billion in 2020H1.

•

Northeast Asia accounted for the largest share (27%) of revenue, followed byTrans Pacific Ocean with revenue share of 21%.
15

Passenger Operation Index
ASK (MN)

Load Factor
79.8%

Yield (TWD)
2.32▼14.2ppt

65.6%

2.34
▲0.9%

25,821▼56.5%
11,227

2019H1

2020H1

2019H1

2020H1

2019H1

2020H1

ASK and load factor decreased by 56.5% and 14.2ppt respectively while yield
increased by 0.9% in 2020H1.

16

Impact on Passenger Traffic
5,000
4%

0%
4,000
3,240
3,128
3,000-23%
3,253

3,271

3,2293,194

2,984

-40%
2,309
-65%

2,000-80%

1,150
1,000

Round Trips-97%-98%-97%

895386-120%

JanFebMar2019

Apr2020

MayJunYoY change(%)•CAL provided a minimum passengers-carried schedule to meet market demand.

•Our frequencies between April and June plunged more than 97% compared to the same period
last year.
17Passenger Impact- Skeletal NetworkRegion

Route Adjustments

North America

Los Angeles/ San Francisco 2 Flights/wk、Vancouver 1 Flight/wk、NewYork 1~4 Flights/mthEuropeAmsterdam/ Frankfurt/ London 1 Flight/wk

OceaniaSydney/ Melbourne/ Brisbane 2 Flights/mth

Northeast Asia

Tokyo1~2 Flights/wk

Southeast Asia

Jakarta/ Ho Chi Minh City 2~3 Flights/wk、Yangon 2~4 Flights/mth、Others routes 1~3 Flights/wk

Mainland China

Shanghai 3~4 Flights/wk、Xiamen 1~3 Flights/wk、Chengdu 1 Flight/wk、Beijing 2 Flights/mth(KHH departures included)

Hong Kong

4~5 Flights/wk

18

Cargo Performance
Revenue

Composition by Region
Australia/New
Zealand 2%

TWD 34.45Billion
Europe 9%

Hong Kong
4%
North EastAsia 5%▲64.6%TWD 20.93Billion

MainlandChina 7%

TransPacific
Ocean 58%

2019H1South East
Asia 15%

2020H1•

Cargo revenue totaled TWD 34.45 billion, a 64.6% increase, in 2020H1.

•

Trans Pacific Ocean accounted for the largest share(58%) of revenue, followed bySoutheast Asia and Europe with revenue share of 15% and 9% respectively.

19

Cargo Performance Index
FATK (MN)

Load Factor

Yield (TWD)

3,894

3,852

▲ 1.1%

2019H1

12.52

65.8%

2020H1

2019H1▲ 4.8ppt

70.6%
8.25

2020H1

2019H1▲51.8%

2020H1FATK increased by 1.1% and load factor grew 4.8 ppt with a 51.8% rise inyield in 2020H1.

20

Response to COVID-19- Passenger- Cargo

21

Flight Schedule Adjusted in Line with Market DemandOperations remain active in adapting to the dynamic changes of the market landscapeand governments regulations.

Operate selected routes to maintain network connectivity.

Gradually resume flights to align with boarder reopening andregional business travel needs.

Gain Taiwan domestic air travel market via CAL Group’s
subsidiaries

Operate charter flights or repatriation flights to generate revenue

22Resuming Operation with Safety Procedures
CAL is committed to providing passengers a safe and comfortable travel experienceby implementing enhanced measures to ensure travel safety.

On board

Prepare for travel• Clean Cabin• Sky Boutique Pre-Order• COVID-19 ServiceInformation• Flight Messaging
ServiceAt the Airport•••••• Cabin Crew ProtectiveEquipment• PA Announcement• Inflight Supplies• Inflight Meal
• Fresh and recycled airquality• Onboard Lavatory

Wear face masks
Temperature checks
Social distancing
CAL Lounges closed temporarily
Safe Airport Journey PlanArrival• Cabin Disinfection &Cleaning• Meal Carts
Disinfection• Luggage Disinfection
upon Arrival

23Expanding Cargo Service to Seize the window ofOpportunity
COVID-19 has significantly disrupted global supply chain, also led to air cargo capacity
crunch stemming from the evaporation of the belly capacity of passenger aircraft.
• Utilize CAL 18 747-400 freighters• Make the most of belly capacity of passenger aircraft• Improve operational efficiency with upcoming 777F
deliveries• Monthly route review and flexible routeadjustment• Priority for high-yield goods andregular project shipment for route
profit boost• Pursue charter or BSA business tomaintain load factor and revenue uplift

36 destinations with 101 flights per week forcargo service
24Post-COVID-19 Outlook

25

New Normal of Air travel in Post-Covid-19 AgeMarket• Domestic and regional air travel will recover first.
• 3rd/4th traffic rights will be dominant.
• Business travel will recover first, followed by family visit and leisure travel.
• Local staycation becomes popular.
Passenger• International travelers will most concern with safety.

• Wearing masks, checking temperatures, and cleaning hands throughout the journey
will be required.
Service• Digital solution will be implemented to reduce touchpoints literally in the check-inand boarding process

26

Post-COVID-19 Cargo Market Outlook
Potential Business• COVID-19 has led to a major change in consumer behavior toward online channels.
Online demand for essentials and entertainment has increased.
• Work-from-home triggers a jump in demand for chips, laptops and network goods.
Market Challenge• Appreciation of TWD may have an adverse effect on exports .
• US-China trade war results in a slowdown in economic and industrial output growth.

27

Proactive COVID-19 Response Strategies
Reduce cost and conserve cash

Create business resiliency
Integrate sales and marketing strategy
Rebuild passenger confidence in air travel
Comply with regulations to promote safe travel28

Thank you# We fly We fight# We will all be fine2020.08
China Airlines│No.1, Hangzhan S. Rd., Dayuan Dist., Taoyuan City, TaiwanTEL│03.399.8888