China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theNine Months Ended September 30, 2023 and 2022 andIndependent Auditors’ Review ReportINDEPENDENT AUDITORS’ REVIEW REPORTThe Board of Directors and the Shareholders
China Airlines, Ltd.
Introduction
We have reviewed the accompanying consolidated balance sheets of China Airlines, Ltd. and its
subsidiaries (collectively, the “Group”) as of September 30, 2023 and 2022, the related
consolidated statements of comprehensive income for the three months ended September 30, 2023
and 2022 and for the nine months ended September 30, 2023 and 2022, the consolidated statementsof changes in equity and cash flows for the nine months then ended, and the related notes to theconsolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”). Management is responsible forthe preparation and fair presentation of the consolidated financial statements in accordance with theRegulations Governing the Preparation of Financial Reports by Securities Issuers and International
Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the
Financial Supervisory Commission of the Republic of China. Our responsibility is to express a
conclusion on the consolidated financial statements based on our reviews.
Scope of Review
Except as explained in the following paragraph, we conducted our reviews in accordance with theStandards on Review Engagements of the Republic of China 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”. A review of consolidated
financial statements consists of making inquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. A review is substantiallyless in scope than an audit and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Basis for Qualified Conclusion
As disclosed in Notes 13 and 14 to the consolidated financial statements, the financial statements ofsome non-significant subsidiaries and investments accounted for using the equity method were notreviewed. As of September 30, 2023 and 2022, the combined total assets of these non-significant
subsidiaries were NT$21,188,696 thousand and NT$21,404,409 thousand, respectively,
representing 7.29% and 7.55%, respectively, of the consolidated total assets, and the combined
total liabilities of these non-significant subsidiaries were NT$12,534,686 thousand andNT$12,216,657 thousand, respectively, representing 5.87% and 5.78%, respectively, of theconsolidated total liabilities; for the three months ended September 30, 2023 and 2022, the amountsof the combined comprehensive income (loss) of these non-significant subsidiaries were
NT$297,051 thousand and NT$64,439 thousand, respectively, representing 15.48% and (3.03%),
respectively, of the consolidated total comprehensive income (loss), and for the nine months ended
September 30, 2023 and 2022, the amounts of the combined comprehensive income (loss) of these
non-significant subsidiaries were NT$608,348 thousand and NT$97,660 thousand, respectively,
representing 9.35% and (8.28%), respectively, of the consolidated total comprehensive income. As-1-

of September 30, 2023 and 2022, the aforementioned investments accounted for using the equity
method were NT$1,740,531 thousand and NT$1,470,236 thousand, respectively; for the threemonths ended September 30, 2023 and 2022, the amounts of the Group’s share of the profit of suchinvestments accounted for using the equity method were NT$112,275 thousand and NT$(23,593)
thousand, respectively, and for the nine months ended September 30, 2023 and 2022, the amountsof the Group’s share of the profit of such investments accounted for using the equity method were
NT$286,726 thousand and NT$(107,647) thousand, respectively.
Qualified Conclusion
Based on our reviews, except for adjustments, if any, as might have been determined to benecessary had the financial statements of the non-significant subsidiaries and investments
accounted for using the equity method as described in the preceding paragraph been reviewed,
nothing has come to our attention that caused us to believe that the accompanying consolidated
financial statements do not present fairly, in all material respects, the consolidated financial
position of the Group as of September 30, 2023 and 2022, its consolidated financial performancefor the three months ended September 30, 2023 and 2022, and its consolidated financial
performance and its consolidated cash flows for the nine months ended September 30, 2023 and2022 in accordance with the Regulations Governing the Preparation of Financial Reports by
Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
Other Matters - Use of Other Accountants’ Review Reports
We did not review the financial statements of some subsidiaries included in the consolidated
financial statements of the Group, but such statements were reviewed by other auditors. Our
conclusion, insofar as it relates to the amounts included in the consolidated financial statements forthese subsidiaries, is based solely on the report of other auditors. The total assets of thesesubsidiaries were NT$16,647,080 thousand and NT$14,412,306 thousand, representing 5.72% and5.08% of the consolidated total assets as of September 30, 2023 and 2022, respectively; and for thethree months ended September 30, 2023 and 2022, the total revenue of these subsidiaries was
NT$3,515,705 thousand and NT$15,012 thousand, representing 7.37% and 0.04%, of theconsolidated total revenue, respectively, and for the nine months ended September 30, 2023 and2022, the total revenue of these subsidiaries was NT$8,837,572 thousand and NT$51,840 thousand,representing 6.42% and 0.05% of the consolidated total revenue, respectively. For the three months
ended September 30, 2023 and 2022, the amounts of the combined comprehensive income (loss) ofthese non-significant subsidiaries were NT$577,206 thousand and NT$(1,015,596) thousand,respectively, representing 30.09% and 47.76%, of the consolidated total comprehensive income(loss), and for the nine months ended September 30, 2023 and 2022, the amounts of the combined
comprehensive income (loss) of these non-significant subsidiaries were NT$1,343,236 thousand
and NT$(2,450,184) thousand, respectively, representing 20.65% and 207.78%, respectively, of theconsolidated total comprehensive income (loss).

-2-

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

Deloitte & Touche
Taipei, Taiwan
Republic of China
November 8, 2023

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 review such consolidated financial statements arethose generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ review 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’ review report and consolidated financial statements
shall prevail.

-3-

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

September 30, 2023
Amount%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, 5, 10 and 31)
Notes and accounts receivable - related parties (Notes 31 and 32)
Net finance lease receivables (Notes 4, 21 and 31)
Other receivables (Note 31)
Current tax assets (Notes 4 and 28)
Inventories, net (Notes 4 and 11)
Non-current assets held for sale (Notes 4, 5 and 12)
Other current assets (Notes 18 and 33)

September 30, 2022
Amount%$ 35,648,237
161,333
7,844,237
250,5999,998,128
16,750248,726
1,092,932
179,608
11,273,212
1,915,725
2,064,493

12
3
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

$ 37,623,078
131,292
1,349,341
1,572,219
11,864,041
4,356
1,074,266
22,900
10,228,901
116,213
1,214,787

13
1
1
4
4
-

70,693,980

24

69,822,343

24

65,201,394

23

135,728
230,423
4,473
1,740,531
128,531,750
51,594,164
2,071,842
833,391
8,268,149
293,808
26,423,440

1
44
18
1
3
9

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

70,897
244,997
1,470,236
126,107,320
58,168,590
2,074,332
909,743
8,509,314
20,726,543

1
44
21
1
3
7

220,127,699

76

224,589,850

76

218,281,972

77$ 290,821,679

100$ 294,412,193

100$ 283,483,366

100

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)
Financial assets for hedging - non-current (Notes 4 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, 5 and 28)
Long-term finance lease receivables (Notes 4, 21 and 31)
Other non-current assets (Notes 18, 21, 31 and 33)
Total non-current assets
TOTAL

December 31, 2022
Amount%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)
Contract liabilities - current (Notes 4, 5 and 23)
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 and 21)
Provisions - current (Notes 4, 24 and 31)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 20 and 31)
Current portion of long-term borrowings (Notes 19, 31 and 33)
Other current liabilities (Note 31)$

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

3
6
1
5
1
1
1
5
1

31

71,255,078

26,778,003
5,950,000
43,317,672
2,205,188
16,972,906
367,580
15,995,856
9,076,150
872,285

9
2
15
1
6
6
3
-

Total non-current liabilities

121,535,640

Total liabilities

Total current liabilities
NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 4, 21 and 31)
Bonds payable - non-current (Notes 4, 20 and 31)
Long-term borrowings - non-current (Notes 19, 31 and 33)
Contract liabilities - non-current (Notes 4, 5 and 23)
Provisions - non-current (Notes 4, 24 and 31)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 4 and 21)
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’ review report dated November 8, 2023)-4-285,000
30,0009,528,042
25,481,877
1,223,118
666,536
17,105,513
86,853
3,327,439
3,623,645
4,924,414
19,332,783
6,211,832

3
9
6
1
1
2
7
2

91,827,052$$

1,782,000
10,172,917
8,507,579
1,397,567
219,840
12,999,112
552,325
2,978,850
3,597,866
3,650,000
12,849,453
2,628,886

1
4
3
5
1
1
1
5
1

24

61,336,395

22

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

32,846,991
8,869,852
62,481,708
1,103,333
17,773,633
167,603
15,574,735
9,564,946
1,568,724

12
3
22
6
6
3
1

42

150,703,673

51

149,951,525

53

213,362,692

73

221,958,751

75

211,287,920

75

60,511,130
3,885,306

21
1

60,135,374
3,120,311

20
1

60,135,374
3,120,311

21
1

1,230,977
534,375
9,669,775
11,435,127(1,215,548)(30,875)

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

12
3-

925,385
6,946,913
7,872,298(1,389,828)(30,875)

3
3
(1)
-

74,585,140

26

70,000,201

24

69,707,280

24

2,873,847

1

2,453,241

1

2,488,166

1

77,458,987

27

72,453,442

25

72,195,446

25$ 290,821,679

100$ 294,412,193

100$ 283,483,366

100

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended September 30
2023
2022
Amount%Amount%OPERATING REVENUE(Notes 4, 27 and 32)

47,681,526

100

37,697,760

100$ 137,566,531

100$ 111,783,277

100

OPERATING COSTS (Notes 4,
11, 15, 17, 21, 24, 25, 27
and 32)

41,687,108

88

36,017,635

96

118,367,517

86

101,906,124

91

GROSS PROFIT

5,994,418

12

1,680,125

4

19,199,014

14

9,877,153

9

OPERATING EXPENSES(Notes 4, 15, 25, 27 and 32)

3,513,199

7

2,017,350

5

10,125,231

7

5,628,194

5

PROFIT (LOSS) FROMOPERATIONS

2,481,219

5(337,225)(1 )

9,073,783

7

4,248,959

4

580,9011

640,0702

1,618,495

1

1,173,156

1

600,3671

217,705

1

107,521-374,044-(635,460)(1 )(635,110)(2 )(2,008,510)(1 )(1,846,599)(1 )112,275-(23,593)-286,726-(107,647)-

658,0831

199,072

1

4,232

-

(407,046)-

3,139,302

6(138,153)-

9,078,015

7

3,841,913

4

INCOME TAX EXPENSE(BENEFIT) (Notes 4 and 28)

598,024

1(126,668)-

1,675,752

1

700,293

1

NET INCOME (LOSS) FOR
THE PERIOD

2,541,278

5(11,485)-

7,402,263

6

3,141,620

3

140,719-

109,670-

256,216-

245,064

-

6,561

-

6,182

-

12,573

-

2,698

-

(120)
147,160-(358)
115,494-(3,687)265,102-

NON-OPERATING INCOME
AND EXPENSES
Other income (Note 27)
Other gains and losses(Notes 15, 21 and 27)
Finance costs (Notes 27
and 31)
Share of the profit (loss) of
associates and joint ventures(Note 14)
Total non-operating
income and expenses
PROFIT (LOSS) BEFOREINCOME TAXOTHER COMPREHENSIVEINCOME (LOSS)
Items that will not bereclassified subsequently to
profit or loss:
Gain on hedging instruments
subject to basis adjustment
Unrealized gain on
investments in equity
instruments at fair value
through othercomprehensive income
Income tax relating to items
that will not bereclassified subsequently
to profit or loss (Note 28)$$

For the Nine Months Ended September 30
2023
2022
Amount%Amount%-5-(52,131)
195,631(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended September 30
2023
2022
Amount%Amount%Items that may be reclassified
subsequently to profit orloss:
Exchange differences ontranslation of the financial
statements of foreign
operations (Notes 4
and 26)
Loss on hedging instruments
not subject to basis
adjustment (Notes 4, 21,
26 and 31)
Income tax relating to items
that may be reclassified
subsequently to profit orloss (Note 28)$

89,986-

72,682-(2 )(2,878,392)(8 )(1,525,059)

195,016(770,059)

1(1 )

557,964(2,230,442)

2(6 )(622,899)(1 )(2,114,948)

(6 )

$

1,918,379

4$(2,126,433)

(6 )

$

2,297,287
243,9915-$

125,956(137,441)$

2,541,278

5$$

1,669,459
248,9203
1$

1,918,379

4

Other comprehensive loss
for the period, net ofincome tax
TOTAL COMPREHENSIVEINCOME (LOSS) FOR THE
PERIODNET INCOME (LOSS)ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests

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

EARNINGS PER SHARE (NEWTAIWAN DOLLARS;
Note 29)
Basic
Diluted78,579-(1,043,654)

$
$

0.38
0.37

$

For the Nine Months Ended September 30
2023
2022
Amount%Amount%196,377-(1 )(5,844,088)(5 )

290,522(1,161,855)(1 )

1,131,253(4,516,458)

1(4 )(896,753)(1 )(4,320,827)

(4 )

$

6,505,510

5$(1,179,207)

(1 )

-

$

6,897,568
504,695

5-$

3,618,450(476,830)

3-(11,485)-$

7,402,263

5$

3,141,620

3$(1,989,661)(136,772)

(5 )
(1 )

$

6,000,686
504,8244
1$(708,576)(470,631)

(1 )
-

$

(2,126,433)

(6 )

$

6,505,510

5$(1,179,207)

(1 )

$
$

0.02
0.02

$

$
$

1.15
1.12

$

$
$

0.60
0.59

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 8, 2023)-6-(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(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(Accumulated
Deficits)$ 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 Assets
at Fair Value
Through Other
Comprehensive
IncomeGain (Loss) on
Hedging
Instruments$$(5,512)

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

-

-

-

-

-

-

-

223,370-

223,370-

223,370

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 income (loss) for the nine months ended September 30, 2022

-

-

-

-

3,618,450

-

-

-

-

3,618,450(476,830)

3,141,620

Other comprehensive income (loss) for the nine months ended
September 30, 2022, net of income tax

-

-

-

-

-

154,403

4,013(4,485,442)-(4,327,026)

6,199(4,320,827)

Total comprehensive income (loss) for the nine months ended
September 30, 2022

-

-

-

-

3,618,450

154,403

4,013(4,485,442)-(708,576)(470,631)(1,179,207)

723,131424,050

-

-

-

-

-

-

-

1,147,181-

1,147,181

Cash dividends from subsidiaries paid to non-controlling interests

-

-

-

-

-

-

-

-

-

-

(202,650)(202,650)

Others

-

7

-

-

-

-

-

-

-

7

2

9

Convertible bonds converted to ordinary shares

BALANCE AT SEPTEMBER 30, 2022

$ 60,135,374$

3,120,311$

925,385$-$

6,946,913$

34,324$(1,499)$ (1,422,653)$(30,875)$ 69,707,280$

2,488,166$ 72,195,446

BALANCE AT JANUARY 1, 2023

$ 60,135,374$

3,120,311$

925,385$-$

6,384,381$(4,298)$40,918$$(30,875)$ 70,000,201$

2,453,241$ 72,453,442(570,995)

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

215,709-

215,709-

215,709

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 income for the nine months ended September 30, 2023

-

-

-

-

6,897,568

-

-

-

-

6,897,568

504,695

7,402,263

Other comprehensive income (loss) for the nine months ended
September 30, 2023, net of income tax

-

-

-

-

-

58,0708,886(963,838)-(896,882)

129(896,753)

Total comprehensive income (loss) for the nine months ended
September 30, 2023

-

-

-

-

6,897,568

58,0708,886(963,838)-

6,000,686

504,824

6,505,510

375,756

287,875

-

-

-

-

-

-

-

663,631-663,631

-

-

-

-

-

-

-

-

-

-

(253,800)(253,800)

49,804$ (1,319,124)(30,875)$ 74,585,140

2,873,847$ 77,458,987

Convertible bonds converted to ordinary shares
Cash dividends from subsidiaries paid to non-controlling interests
BALANCE AT SEPTEMBER 30, 2023

$ 60,511,130$

3,885,306$

1,230,977$

534,375$

9,669,775

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 8, 2023)-7-$

53,772$$$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)

For the Nine Months Ended
September 30
2023
2022
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 at fair value
through profit or loss
Interest income
Dividend income
Compensation costs of employee share options
Share of (profit) loss of associates and joint ventures
Gain on disposal of property, plant and equipment
Gain on disposal of non-current assets held for sale
Gain on disposal of investments
Loss on inventory and property, plant and equipment
Impairment loss recognized on aircraft equipment
Finance costs
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-8-$

9,078,015$

3,841,913

23,195,842
166,293-

22,384,863
167,959
28,855(1,190)(1,323,296)(14,840)
29,282(286,726)(99,708)(2,523)
1,250,801
498,352
2,008,510
87,5544,448,248
48,190(384)(307,186)(850)
107,647(16,747)(116,676)
611,103
1,641
1,846,599
1,381,550
3,994,333(9,569)(40,681)
1,193,554(259,946)(39,239)(722,600)(342,782)
47,080538,019
1,241,173
8,921,758(5,514,127)
2,919,908(153,490)
311,749
47,183,180
1,227,299
14,840(1,930,538)(1,680,452)

24,872
1,865,559
124,367(235,940)(1,997,163)(547,155)
67,963(45,818)(1,902,600)
5,106,567(3,157,305)
280,455(249,828)
27,84733,276,872
232,858
850(1,835,719)(4,629,711)

44,814,329

27,045,150(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)

For the Nine Months Ended
September 30
2023
2022
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
Proceeds from disposal of non-current assets held for sale
Net cash generated from disposal of investments accounted for using
equity method
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
Increase in other intangible assets
Increase in restricted assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Increase in short-term bills 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
Payment of cash dividends
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-9-$ (15,511,765)
14,197,510(5,501,876)
9,479,715-$ (8,985,310)
20,545,777(5,342,055)
7,603,306
130,144

2,523(1,467,388)
1,519,720(167,199)
225,725(786,163)
260,802(19,822,627)(113,432)(43,088)(1,965,232)
23,755(102,395)
212,490(15,093,029)(123,469)(69,100)(17,727,543)(3,165,118)(550,000)
30,0002,650,000(1,125,000)
9,013,068(24,697,179)(10,285,898)
146,459(229,714)(150,000)(200)
2,559,673(21,622,115)(8,687,337)
75,421(8,703)

821,464(2,771,252)(253,800)(4,998,275)(202,650)(205,000)-9(27,456,852)(33,034,177)

1,037,834

1,507,357(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)

For the Nine Months Ended
September 30
2023
2022
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS$

667,768$ (7,646,788)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD

34,980,469

45,269,866

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$ 35,648,237$ 37,623,078

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 8, 2023)- 10 -(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 and aviation equipment; 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 September 30, 2023, December 31, 2022 andSeptember 30, 2022, CADF and NDF held a combined 39.43%, 39.69% and 39.69%, respectively of theCompany’s shares.

2. APPROVAL OF CONSOLIDATED 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 November 8, 2023.

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 “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission(FSC)
The application of the IFRSs endorsed and issued into effect by the FSC did not have material impact
on the Group’s accounting policies.
b. The IFRSs endorsed by the FSC for application starting from 2024

New, Amended and Revised Standards and Interpretations
Amendments to IFRS 16 “Leases 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 IFRSs are effective for annual reporting periods beginningon 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.

- 11 -

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.
c. The IFRSs 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 IFRSs are effective for annual reporting periods beginningon 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 the entity uses apresentation 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 translationdifferences 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 INFORMATION
Except for the policies listed below, the accounting policies adopted for these consolidated financial
statements are the same as those of for the consolidated financial statements for the year ended December
31, 2022.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” asendorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated
financial statements is less than the disclosure information required in a complete set of annual consolidated
financial statements.

- 12 -

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.
Basis of Consolidation
The consolidated financial statements reporting principles are the same as those in the consolidated
financial statements for the year ended December 31, 2022.
Employee Benefits
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determinedpension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since thattime and for significant plan amendments, settlements, or other significant one-off events.
Income Tax
Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income
taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income thetax rate that would be applicable to expected total annual earnings.

5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
The material accounting judgments and key sources of estimation uncertainty for these interim consolidated
financial statements are the same as those applied for the consolidated financial statements for the year
ended December 31, 2022.

6. CASH AND CASH EQUIVALENTS

Cash on hand and revolving funds
Checking accounts and demand deposits
Cash equivalentTime deposits with original maturities of lessthan three months
Repurchase agreements collateralized by bonds

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

751,025
8,563,246

599,368
8,001,937

696,7138,640,786

22,739,232
3,594,734

20,620,078
5,759,086

26,535,852
1,749,727$ 35,648,237$ 34,980,469$ 37,623,078- 13 -

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

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

September 30,
2023

December 31,
2022

September 30,
2022

0%-5.10%0%-1.00%

0%-3.00%

0.61%-5.85%
0.90%-5.70%

0.33%-4.95%
0.58%-4.70%

0.10%-4.05%
0.23%-3.05%

The Group designated some deposits denominated in USD and repurchase agreements collateralized bybonds denominated in USD as hedging instruments to avoid exchange rate fluctuations on final paymentsof aircraft orders and prepayments for equipment and applied cash flow hedge accounting to hedge its
foreign exchange exposure. The contract information is as follows:

December 31, 2022
September 30, 2022

Maturity Date

Subject

Carrying Value

2023.1.3-2023.1.18
2022.10.4-2022.10.6

Financial assets for hedging - current
Financial assets for hedging - current$ 3,987,730
1,523,810

Impact on other comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the nine months ended September 30, 2023
For the three months ended September 30, 2023
For the nine months ended September 30, 2022
For the three months ended September 30, 2022$

46,135
14,694
229,535
95,238For the nine months ended September 30, 2023 and 2022, the amount of hedging instrument settlements
recognized as prepayments for equipment were $159,683 thousand and $224,456 thousand, respectively.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
September 30,
2023

December 31,
2022

September 30,
2022$ 161,333$ 119,462$ 131,292

Financial assets - current
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Beneficiary certificates- 14 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME(FVOCI)
Investments in Equity Instruments
September 30,
2023

December 31,
2022

September 30,
2022

Non-current
Foreign investments
Unlisted shares
Domestic investments
Unlisted shares$ 100,465$

81,90535,263

41,128$ 135,728$ 123,033$

32,81938,078$70,897

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 investment. 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
September 30,
2023

December 31,
2022

September 30,
2022$ 7,844,237-$ 6,218,617-$ 1,348,790
551$ 7,844,237$ 6,218,617$ 1,349,341

$

$

$

Current
Time deposits with original maturities of morethan 3 months
Government bonds

Non-current
Time deposits with original maturities of morethan 1 year

230,423

205,765244,997

The ranges of interest rates for time deposits with original maturities of more than 3 months were0.92%-5.65%, 0.45%-5.05% and 0.21%-1.35% per annum as of September 30, 2023, December 31, 2022
and September 30, 2022, respectively.

- 15 -

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE, NET

Notes receivable

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

153,599

72,435

15,132

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

10,101,891(257,362)
9,844,529

11,315,652(261,445)
11,054,207

12,113,320(264,411)
11,848,909

9,998,128$ 11,126,642$ 11,864,041

The average credit period is 7 to 55 days. In determining the recoverability of a trade receivable, the Groupconsidered any change in the credit quality of the receivable since the date credit was initially granted to theend of the reporting period, and any allowance for impairment loss was based on the estimatedirrecoverable amounts determined by reference to the Group’s past default experience with the counterparty
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 theaggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure iscontrolled 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 receivables. 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 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.

- 16 -

The following table details the loss allowance of accounts receivable based on the Group’s provision
matrix:
September 30, 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

1.12%

5.56%

5.76%

5.89%

99.06%

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

9,790,868(109,637)$

128,928(7,164)$27,346(1,575)$

15,361(904)$

139,388(138,082)

Amortized cost$

9,681,231$

121,764$

25,771$

14,457

$

1,306

Total

$ 10,101,891(257,362)$

9,844,529

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

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%

5.04%

46.45%-

99.14%

September 30, 2022

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$ 11,783,308(104,092)$

176,864(8,915)

$

816
(379)

$

-

$

152,332(151,025)$ 12,113,320(264,411)

Amortized cost

$ 11,679,216$

167,949

$

437

$

-

$

1,307

$ 11,848,909

The movements of the loss allowance of accounts receivable were as follows:
For the Nine Months Ended
September 30
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
13(4,104)8$ 235,560
28,855
190
(215)
21

Balance at September 30$ 257,362$ 264,411- 17 -

11. INVENTORIES

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
Others

September 30,
2023

December 31,
2022

September 30,
2022$ 10,010,603
646,676
517,870
98,063$$$ 11,273,212$ 10,775,467

9,756,141
625,959
301,368
91,9999,091,971
631,756
412,943
92,231$ 10,228,901

The operating costs for the nine months ended September 30, 2023 and 2022 included losses frominventory write-downs of $628,888 thousand and $246,648 thousand, respectively. And the operating costs
recognized for the three months ended September 30, 2023 and 2022 included losses from inventory
write-downs of $246,876 thousand and $84,598 thousand, respectively.

12. NON-CURRENT ASSETS HELD FOR SALE

Aircraft held for sale

September 30,
2023

December 31,
2022

September 30,
2022$ 1,915,725

$

$

-

116,213

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 fair value measurement is classified as Level 3, and the fair value was determined according to similartransactions of the related market and the proposed sale price which was based on the current status of theaircraft.

13. SUBSIDIARIES
Subsidiaries included in the consolidated financial statements are as follows:

Investor Company
China Airlines, Ltd.

Investee Company
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
Taiwan Air Cargo Terminal (Note)
Kaohsiung Catering Service, Ltd.
Taoyuan International Airport
Services

Main Businesses and Products

Proportion of Ownership (%)
September 30,
December 31,
September 30,
2023
2022
2022

Air transportation
Aircraft maintenance

79
100

82
100

82
100

A holding company, real estate and hotel
services
General investing
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
In-flight catering
Airport services

100

100

100

100
100

100
100

100
100

100
100
94

100
100
94

100
100
94

97

97

97

59
54
49

59
54
49

59
54
49

(Continued)- 18 -

Investor Company

Cal-Dynasty International
Taiwan Airport Services

Investee Company
Taiwan Airport Services (Note)
Global Sky Express
Dynasty Properties Co., Ltd.
Dynasty Hotel of Hawaii, Inc.
Taiwan Airport Service (Samoa)

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

Proportion of Ownership (%)
September 30,
December 31,
September 30,
2023
2022
2022
48
25
100
100
100

48
25
100
100
100

48
25
100
100
100

(Concluded)
Note:

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 for the other subsidiaries, the Company had control
and more than 50% of their voting shares. The above financial information of the subsidiaries for the ninemonths ended September 30, 2023 and 2022 was reported according to financial statements that were notreviewed by independent auditors, except for Mandarin Airlines and Tigerair Taiwan Co., Ltd.
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 in accordance with article 267, item 1 of theCompany Act, so the Company’s capital surplus increased by $24,055 thousand and non-controllinginterests 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.
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.

- 19 -

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates
Investments in joint ventures

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

923,182
817,349

885,608
567,636

939,668
530,568$ 1,740,531$ 1,453,244$ 1,470,236

September 30,
2023

December 31,
2022

September 30,
2022

a. Investments in associates
The investments in associates were as follows:

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

539,118
326,546$

518,715309,705$

543,010
332,439

57,51857,18864,219$ 923,182$ 885,608$ 939,668

At the end of the reporting period, the proportion of ownership and voting rights of associates held by
the Group were as follows:
Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2023
2022
2022

Name of Associate
Dynasty Holidays
Airport Air Cargo Terminal (Xiamen)
Airport Air Cargo Service (Xiamen)
Eastern United International Logistics(Holdings) Ltd. (Hong Kong)

28%
28%

20%
28%
28%

20%
28%
28%

35%

35%

35%

The investment gain (loss) recognized for associates accounted for using the equity method was asfollows:
For the Three Months Ended
September 30
2023
2022
Dynasty Holidays
Airport Air Cargo Terminal(Xiamen)
Airport Air Cargo Service(Xiamen)Eastern United International
Logistics (Holdings) Ltd.
(Hong Kong)

$

$

-

$

-

For the Nine Months Ended
September 30
2023
2022
$

-

$

-

6,943

4,245

20,082

16,519

6,360

5,611

16,62725,485(5,370)

3,704

305

10,6197,933$ 13,560$ 37,014$ 52,623- 20 -

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 not been independently reviewed. However, the management determined that there would havebeen no significant adjustments had these investee’s financial statements been independently reviewed.
China Aircraft Services issued ordinary shares to meet the need for funds in March 2022. The Group
did not participate in the subscription, so its proportion of ownership 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,has been 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:
September 30,
2023

December 31,
2022

September 30,
2022$ 706,521
100,823
2,471
7,534

$ 448,222
92,68419,196
7,534$ 416,852
91,977
13,864
7,875$ 817,349$ 567,636$ 530,568

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

At the end of the reporting period, the proportion of ownership and voting rights in joint ventures heldby the Group were as follows:
Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2023
2022
2022
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

51%
55%
49%
51%

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 major motion vetoes on the board of directors, and therefore, the Group does not havecontrol.
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.

- 21 -

The investment gain (loss) recognized for joint ventures accounted for using the equity method was asfollows:

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

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$ 103,922
5,542(5,122)-$ (24,127)(6,248)(6,778)-$ 258,299
8,139(16,726)-$ (116,399)(28,900)(14,971)-$ 104,342$ (37,153)$ 249,712$ (160,270)

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 whichwere not independently reviewed. However, the management determined that there would have been no
significant adjustments had these investees’ financial statements been independently reviewed.
For information on the major businesses and products and the locations of registration for the major
business offices of the above entities, refer to Tables 7 and 8 (names, locations, and related informationof investees on which the Company exercises significant influence and investment in mainland China)
following the notes to the consolidated financial statements.

15. PROPERTY, PLANT AND EQUIPMENT
Freehold Land

Buildings

FlightEquipment

OthersTotal

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

943,305
71,496$15,921,862
62,621(1,563)
6,191
132,390$ 247,842,073
1,193,232(2,043,319)
3,958,072-$

17,625,366
709,379(220,132)
64,25814,259$ 282,332,606
1,965,232(2,265,014)
4,028,521
218,145

Balance at September 30, 2022$

1,014,801$

16,121,501$ 250,950,058$

18,193,130$ 286,279,490

Balance at January 1, 2022
Depreciation expenses
Disposals
Reclassification
Net exchange differences

$

-

$

(7,582,813)(376,154)
1,560(74,844)$ (132,691,333)(11,563,463)
1,777,142
3,268,802-$ (12,426,414)(707,676)
215,416(110)(12,283)$ (152,700,560)(12,647,293)
1,994,118
3,268,692(87,127)

Balance at September 30, 2022

$

-

$

(8,032,251)$ (139,208,852)$ (12,931,067)$ (160,172,170)

Balance at September 30, 2022, net value$

1,014,801$

8,089,250$ 111,741,206$

5,262,063$ 126,107,320

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

995,869
27,984$

16,078,284
85,288(1,263)731
52,612$ 256,431,520
1,041,027(18,378,934)(397,919)-$

18,281,257
341,073(387,894)
77,752
5,956$ 291,786,930
1,467,388(18,768,091)(319,436)
86,552

Balance at September 30, 2023$

1,023,853$

16,215,652$ 238,695,694$

18,318,144

Accumulated depreciation and impairment

Cost$ 274,253,343(Continued)- 22 -

Freehold Land

Buildings

FlightEquipment

Others

Total

Accumulated depreciation and impairment
Balance at January 1, 2023
Depreciation expenses
Disposals
Reclassification
Net exchange differences
Impairment loss

$

-

$

(8,113,161)(376,758)
1,254(31,220)-$ (142,420,987)(11,769,246)
16,449,207
14,421,739(498,352)$ (13,045,378)(719,409)
385,603133(5,018)-$ (163,579,526)(12,865,413)
16,836,064
14,421,872(36,238)(498,352)

Balance at September 30, 2023

$

-

$

(8,519,885)$ (123,817,639)$ (13,384,069)$ (145,721,593)

Balance at September 30, 2023, net value$

1,023,853$

7,695,767$ 114,878,055$

4,934,075$ 128,531,750(Concluded)
Reclassification is mainly resulted from the transfer of prepayments for equipment.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of theassets as follows:
Buildings
Main buildings
Others
Machinery equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersAssets leased to others
Flight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

45-55 years
10-25 years
25 years
3-13 years
3-15 years
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

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 recognizedimpairment losses of $498,352 thousand for the nine months ended September 30, 2023. The fair value wasdetermined with reference to factors such as the condition of the flight 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.

- 23 -

16. INVESTMENT PROPERTIES
September 30,
2023

December 31,
2022

September 30,
2022$ 2,071,842$ 2,072,012$ 2,074,332

Carrying amount
Investment properties

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to others. The buildings are depreciated on a straight-line basis over 55 years.
The fair values of the investment properties held by the Group were $3,137,644 thousand, $2,488,931
thousand and $2,488,931 thousand as of September 30, 2023, December 31, 2022 and September 30, 2022.
The fair value valuations were performed by independent qualified professional valuers, and the future
income evaluated by management was based on market transactions.
All of the Group’s investment properties were held under freehold interests.

17. OTHER INTANGIBLE ASSETS
Computer
Software Cost

Others

Accumulated
Amortization

Net Value

Balance at January 1, 2022
Additions
Reclassification
Amortization expense
Disposals
Effects of exchange rate changes$ 1,880,049
57,069(43,630)(4,029)-$168,280-$ (1,039,337)
55,258(167,959)
4,029
13$ 1,008,992
57,069
11,628(167,959)
13

Balance at September 30, 2022

$ 1,889,459$

168,280$ (1,147,996)$

909,743

Balance at January 1, 2023
Additions
Reclassification
Amortization expense
Disposals
Effects of exchange rate changes$ 1,913,404
113,432(44,094)(3,517)-$

168,280-$ (1,198,264)
46,923(166,293)
3,517
3

$

883,420
113,432
2,829(166,293)
3

Balance at September 30, 2023

$ 1,979,225$

168,280$ (1,314,114)$

833,391

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

- 24 -

18. OTHER ASSETS
September 30,
2023

December 31,
2022

September 30,
2022$

611,116
903,658
13,905535,814$243,064
991,200
13,336349,312$

156,490623,866
11,139423,292$

2,064,493$

1,596,912$

1,214,787

Current
Temporary payments
Prepayments
Restricted assets
OthersNon-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
Others$ 23,466,176
1,321,508
830,849
768,299
14,633
21,975$ 18,445,099
4,127,308
888,831
689,124
14,797
18,059$ 16,302,107
1,910,022
967,251
680,634
18,033
848,496$ 26,423,440$ 24,183,218$ 20,726,543

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
September 30,
2023

December 31,
2022

September 30,
2022

Bank loans - unsecured$$

835,000$ 1,782,000Interest rates

1.81%-1.93%

1.39%-1.90%

1.25%-1.55%

September 30,
2023

December 31,
2022

September 30,
2022

285,000

b. Short-term bills payable

Commercial paper$ 30,000

Annual discount rate

1.92%

- 25 -$-$-

c. Long-term borrowings

Unsecured bank loans
Secured bank loans
Commercial papers
Proceeds from issue
Less: Unamortized discountSeptember 30,
2023

December 31,
2022

September 30,
2022$

6,913,802
39,298,922$ 21,730,551
35,978,893$ 19,943,552
34,698,235

16,480,000
42,26962,650,455
19,332,783

20,670,000
44,87878,334,566
13,225,516

20,720,000
30,62675,331,161
12,849,453$ 43,317,672$ 65,109,050$ 62,481,708

1.14%-2.16%

0.90%-2.02%

0.90%-1.73%

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:
September 30,
2023

December 31,
2022

September 30,
2022

2009.2.42035.8.25

2009.2.42034.10.12

2009.2.42032.6.30

Periods

The Group has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until August 2030, were used by the Group to guarantee the commercial paperissued. As of September 30, 2023, December 31, 2022 and September 30, 2022, such commercial
papers were issued at discount rates of 1.9730%-2.1730%, 1.683%-1.9013% and 1.4398%-1.5335%,
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 operation, and the fund along with subsidized interest rates were
provided by the government. The total amount of the loan is $35,480 million, which shall be repaid
within 2 years to 4 years from the date of initial drawdown. As of September 30, 2023, the Group had
made a drawdown in the amount of $34,800 million and repaid $28,170 million of the drawdown.

- 26 -

20. BONDS PAYABLE

Unsecured corporate bonds first-time issued in2017
Unsecured corporate bonds second-time issued in2017
Unsecured corporate bonds first-time issued in2018
Unsecured corporate bonds first-time issued in2019
Unsecured corporate bonds first-time issued in
2023
Convertible bonds seventh-time issued

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

Less: Current portion and put option of
convertible bonds$

1,000,000

1,000,000

1,000,000--

1,300,000

3,275,000

3,275,000

4,500,000

2,375,000

3,500,000

3,500,000

2,650,000
1,574,414
10,874,414

2,224,674
9,999,674

2,219,852
12,519,852

4,924,414

2,350,000

3,650,000

5,950,000$

7,649,674$

8,869,852

Related issuance conditions were as follows:
Category

PeriodSeven-year private unsecured bonds - issued at parin May 2017; repayable on due date; interest of
1.75% p.a., payable annually
Five-year private unsecured bonds - issued at parin October 2017; repayable in October 2021 and2022; 1.45% interest p.a., payable annually
Five-year private unsecured bonds - issued at parin November 2018; repayable in November
2022 and 2023; 1.32% interest p.a., payableannually
Seven-year private unsecured bonds - issued at parin November 2018; repayable in November
2024 and 2025; 1.45% interest p.a., payableannually
Five-year private unsecured bonds - issued at par
in June 2019; repayable in June 2023 and 2024;
1.10% interest p.a., payable annually
Seven-year private unsecured bonds - issued at par
in June 2019; repayable in June 2025 and 2026;
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 discount inApril 2021; repayable in lump sum uponmaturity; 0.8612% discount rate p.a.

2017.05.19-2024.05.19

Principal repayable on due date;indicator rate; payable annually

1.75

2017.10.12-2022.10.12

Principal repayable in October of2021 and 2022; indicator rate;
payable annuallyPrincipal repayable in November of2022 and 2023; indicator rate;
payable annually

1.45

2018.11.30-2025.11.30

Principal repayable in November of2024 and 2025; indicator rate;
payable annually

1.45

2019.06.21-2024.06.21

Principal repayable in June of 2023
and 2024; indicator rate; payableannually
Principal repayable in June of 2025
and 2026; indicator rate; payableannually
Principal repayable in May of 2027
and 2028; indicator rate; payableannually
Unless bonds are converted to sharecapital or redeemed, principal
repayable one time in April 2026;
0.8612 discount rate p.a.

1.10

2018.11.30-2023.11.30

2019.06.21-2026.06.21

2023.05.22-2028.05.22

2021.04.28-2026.04.28

Conditions

Rate (%)

1.32

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.

- 27 -

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, which is subject toadjustment if there is a capital injection by cash or share dividend distribution. Because theCompany distributed cash dividends on July 16, 2023, the conversion price was adjusted to NT$18.
As of September 30, 2023, a total face value of NT$2,890,600 thousand of convertible bonds wasconverted into 153,954 thousand ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component waspresented in equity under the heading of capital surplus - options. The effective interest rate of theliability component was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component
Liability component at the date of issuanceInterest charged at an effective interest rate
Convertible bonds converted into ordinary shares
Liability component at December 31, 2022
Interest charged at an effective interest rate
Convertible bonds converted into ordinary shares$ 4,500,000(188,862)
4,311,138
45,648(2,132,112)
2,224,674
13,371(663,631)

Liability component at September 30, 2023

$ 1,574,414

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 September 30, 2023, $2,650 million
had been issued.

21. LEASE AGREEMENTS
a. Right-of-use assets

Carrying amountLand
Buildings
Flight equipment
Other equipment

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

5,585,991
3,479,115
42,512,611
16,447$ 51,594,164- 28 -

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

5,778,327
2,744,285
49,640,657
5,321$ 58,168,590

For the Nine Months Ended
September 30
2023
2022
Additions to right-of-use assets$

3,201,747$ 12,259,750$

307,220565,6219,454,465
2,953$

144,477
320,865
9,271,132897$ 10,330,259$

9,737,371

September 30,
2023

December 31,
2022

September 30,
2022$ 3,327,439$ 15,995,856$ 3,027,890$ 15,439,535$ 2,978,850$ 15,574,735

Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipmentb. Lease liabilities

Carrying amountCurrent
Non-current

Ranges of discount rates for lease liabilities (including leases denominated in USD designated as
hedging instruments):

Land
Buildings
Flight equipment
Other equipment

September 30,
2023

December 31,
2022

September 30,
2022

0%-1.80%
0%-4.65%
0.68%-5.19%
0%-1.65%0%-1.80%
0%-4.65%
0.68%-3.34%
0%-1.43%0%-2.00%
0%-3.35%
0.68%-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

Subject

Carrying
Value

September 30, 2023

2024.3.14-2034.12.13

December 31, 2022

2023.2.7-2034.12.13

September 30, 2022

2022.11.18-2034.6.29

Financial liabilities for hedging - current
Financial liabilities for hedging - non-current
Financial liabilities for hedging - current
Financial liabilities for hedging - non-current
Financial liabilities for hedging - current
Financial liabilities for hedging - non-current$ 9,523,934
26,778,003
9,817,440
32,183,170
10,006,169
32,840,372- 29 -

Influence of comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the nine months ended September 30, 2023
For the three months ended September 30, 2023
For the nine months ended September 30, 2022
For the three months ended September 30, 2022

$ (1,639,436)(1,159,829)(5,699,011)(2,697,053)

Reclassified toIncome$(190,886)(111,420)
244,231(3,003)d. Material leasing activities and terms
China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, sixteen A330-300
planes, twelve 737-800 planes, ten A321neo planes, nine A320-200 planes, five A320neo planes, andthree 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, and the rent is revised every half year. When the lease
expires, the lessee does not have purchase rights.
The information of refundable deposits and letter of credit due to rental of planes:

Refundable deposits
Credit guarantees

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

396,134
2,239,462

553,3212,085,941

388,836
1,915,152

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, for the details for the lease agreement, refer to Note 34. The lease includes an option toextend the lease, as there is no reasonable certainty 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 extendedlease period is included in the lease liability, the lease liability would have increased by $918,508
thousand, $909,342 thousand and $906,307 thousand on September 30, 2023, December 31, 2022 andSeptember 30, 2022, respectively.
Taiwan Air Cargo Terminal Co. and Civil Aeronautics Administration signed a BOT contract with aland lease agreement. For details, 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 2024. As of September 30, 2023,
four A321neo have been delivered.
In addition, to expand the aviation network and enhance the competitiveness of medium and long-haul
network, the Company’s board of directors resolved to introduced two A350-900 aircraft on June 15,
2023.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental contract for eight A320neo with ICBC
Lease Corporation, which is expected to be introduced between 2021 and 2024. As of September 30,
2023, five A320neo have been delivered.
The Group also signed related aircraft purchase agreement, refer to Note 34 for details.

- 30 -

f. Aircraft leases
In order to revitalize assets, the Group 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 leases
agreement, these two cargo aircraft were sold to lcelandic owner Air Atlanta lcelandic 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.
Finance lease receivables
September 30,
2023

December 31,
2022

September 30,
2022

Undiscounted lease payments$-$

Less: Unearned finance income$ 278,023
303,298
581,321(38,787)-

Net investment in leases presented as financelease receivables$ 542,534

$

-

$

-

Current
Non-current$ 248,726$ 293,808

$
$

-

$
$

-

Year 1
Year 2The 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 use operating lease agreement for investment properties, refer to Note 16.

Short-term leases andlow-value asset leases
Total cash outflow for leases

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$
29,467$ (4,035,737)$
69,851$ (11,471,181)$
22,999$ (3,610,175)$
73,354$ (9,846,621)

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

- 31 -

22. OTHER PAYABLES

Fuel costs
Short-term employee benefits
Repair expenses
Ground service expenses
Terminal surcharges
Commission expenses
Finance costs
Others

September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

5,144,397
4,515,852
2,148,165
967,396
745,834
220,262
194,637
3,168,970

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

3,837,408
3,313,778
1,456,019
698,692
859,153
61,571132,191
2,640,300$ 17,105,513$ 15,207,259$ 12,999,112

September 30,
2023

December 31,
2022

September 30,
2022

$

$

3,185,357
15,505,203-$

3,108,360
6,460,394
42,158$ 27,687,065$ 18,690,560$

9,610,912$ 25,481,877
2,205,188$ 17,409,654
1,280,906$

8,507,579
1,103,333$ 27,687,065$ 18,690,560$

9,610,912

September 30,
2023

December 31,
2022

September 30,
2022

Leases - aircraft$ 20,596,551$ 20,962,933$ 21,371,499

Current
Non-current

$

$

$

23. CONTRACT LIABILITIESFrequent flyer program
Advance ticket sales
OthersCurrent
Non-current

2,690,092
24,992,447
4,526

24. PROVISIONS

3,623,645
16,972,906$ 20,596,551

3,691,812
17,271,121$ 20,962,933

3,597,866
17,773,633$ 21,371,499
Aircraft Lease
Contracts

Balance at January 1, 2022
Additional provisions recognized
Usage
Effects of foreign currency exchange differences$ 18,654,223
3,994,333(3,157,305)
1,880,248

Balance at September 30, 2022

$ 21,371,499(Continued)- 32 -

Aircraft Lease
Contracts
Balance at January 1, 2023
Additional provisions recognized
Usage
Effects of foreign currency exchange differences$ 20,962,933
4,448,248(5,514,127)
699,497

Balance at September 30, 2023

$ 20,596,551(Concluded)

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.

25. RETIREMENT BENEFIT PLANS
Employee benefits expense in respect of the Group’s defined retirement benefit plan was calculated using
the actuarially determined pension cost discount rates as of December 31, 2022 and 2021.

Operating costs
Operating expenses

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$ 220,537
92,152$ 234,370
86,515$ 661,369
264,426$ 691,530
261,487$ 312,689$ 320,885$ 925,795$ 953,017

September 30,
2023

December 31,
2022

September 30,
2022

7,000,000$ 70,000,000$ 60,511,130

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

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

26. EQUITY
a. Share capital
Ordinary shares

Number of shares authorized (in thousands ofshares)Amount of shares authorized
Amount of shares issued

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 $679,400 thousand and $1,178,600 thousand,respectively, for the nine months ended September 30, 2023 and 2022. The number of ordinary sharesexchanged were 37,576 thousand and 72,313 thousand, respectively, and completed the registration of
the change in equity after the issuance of new shares.

- 33 -

b. Capital surplus
September 30,
2023

December 31,
2022

September 30,
2022$ 2,380,307
2,680$ 2,092,431
1,725$ 2,092,431
1,725

958,063929,535

929,548476,711547

547

67,54596,07396,060$ 3,885,306$ 3,120,311$ 3,120,311

May be used to offset a deficit, distributed
as cash dividends, or transferred to sharecapital (1)Issuance of convertible bonds in excess of parvalue and conversion 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 deficit; when the Company has no deficit, such capitalsurplus may be distributed as cash dividends or transferred to share capital (limited to a certain
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 incapital surplus of subsidiaries accounted for using the equity method.
c. Appropriation of earnings and dividend policy
Under the Company Act, where the Company makes a profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws andregulations, and then any remaining profit together with any undistributed retained earnings shall be
used by the Company’s board of directors as the basis for proposing a distribution plan, which is to
distribute dividends and bonus no less than 50% of the remaining profit and undistributed retained
earnings. The dividends and bonuses 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; and in addition, a report of such distribution shall be
submitted to the shareholders’ meeting. If the Company has no losses, according to laws andregulations, the Company can distribute its capital reserve, in whole or in part, by issuing new shares orcash based on financial, business and management considerations. If such capital reserve is distributedin the form of new shares, it shall be resolved by a meeting of the shareholders; if such capital reserve isdistributed 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; and 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.
- 34 -

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:
Appropriationof Earnings
Legal reserve
Cash dividends$

Dividends Per
Share (NT$)

925,385
5,000,000$0.83145736

2) Appropriation of earnings in 2022
The appropriation of earnings in 2022 which was resolved and recognized in the shareholders’meeting on May 31, 2023 is as follows:
Appropriationof Earnings
Legal reserve
Special reserve
Cash dividends$

Dividends Per
Share (NT$)

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

d. Other equity items
The movement of other equity items is as follows:
Exchange
Differences on
the Translationof the Financial
Statements ofForeign
Operations

Unrealized
Gain (Loss) on
Financial
Assets at
FVTOCI

Gain (Loss) on
Hedging
Instruments

Total

Balance on January 1, 2022
Exchange differences on translation of the financial statements offoreign 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 fair value throughother comprehensive income
Effects of income tax
Other comprehensive income (loss) recognized in the period
Transferred to initial carrying amount of hedged items$$(5,512)$ 2,839,419$ 2,713,828

191,970--

191,970--(5,260,899)(5,260,899)--(340,365)(340,365)(37,567)
154,403
-

2,698
1,315
4,013
-

1,115,822(4,485,442)
223,370

2,698
1,079,570(4,327,026)
223,370

Balance on September 30, 2022$

34,324$(1,499)$ (1,422,653)$ (1,389,828)

Balance on January 1, 2023
Exchange differences on translation of the financial statements offoreign 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 fair value throughother comprehensive income
Effects of income tax
Other comprehensive income (loss) recognized in the period
Transferred to initial carrying amount of hedged items$(4,298)$40,918$$

Balance on September 30, 2023$

- 35 -(120,079)(570,995)(534,375)

72,559--72,559

--(1,480,357)(1,480,357)--

211,506

211,506(14,489)
58,070-12,573(3,687)8,886-

305,013(963,838)
215,709

12,573286,837(896,882)
215,70949,804$ (1,319,124)$ (1,215,548)

53,772$

e. Non-controlling interests
For the Nine Months Ended
September 30
2023
2022
Beginning balance
Net income (loss) attributable to non-controlling interests
Exchange differences on translation of the financial statements offoreign entities
Cumulative (loss) gain on changes in fair value of hedging
instruments
Cumulative gain (loss) arising on changes in fair value ofhedging instruments reclassified to profit or loss
Effects of income tax
Outstanding share options held by employees of subsidiaries
Change in equity in subsidiaries
Dividends paid by subsidiaries
OthersEnding balance$ 2,453,241
504,695$ 3,161,445(476,830)

123

4,407

(1,111)(1,533)

1,119
(2)
129
5,227
164,355(253,800)
-

3,773
(448)
6,199
(202,650)2$ 2,873,847$ 2,488,166

f. Treasury shares
Treasury shares are the Company’s shares held by its subsidiaries as of the reporting date and are as
follows:(In Thousands of Shares)

Period of Treasury Shares
For the nine months ended September 30, 2023
For the nine months ended September 30, 2022

Subsidiary

Number of
Shares,Beginningof Year

Reduction
Duringthe Year

Number of
Shares,End of Year

2,075
2,075

-

2,075
2,075

Shares(In Thousands)

Carrying
AmountMarket Value

2,075$ 43,982$ 43,982

2,075$ 39,418$ 39,418

2,075$ 40,766$ 40,766

September 30, 2023
Mandarin Airlines
December 31, 2022
Mandarin Airlines
September 30, 2022
Mandarin Airlines- 36 -

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.

27. NET INCOME
a. Revenue
For the Three Months Ended
September 30
2023
2022
Passenger
Cargo
OthersFor the Nine Months Ended
September 30
2023
2022

$ 31,352,095
13,100,959
3,228,472$

7,104,062
28,387,825
2,205,873$ 86,623,870
42,429,298
8,513,363$ 12,280,795
92,808,065
6,694,417$ 47,681,526$ 37,697,760$ 137,566,531$ 111,783,277

b. Other income

Interest income
Dividend income
OthersFor the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

490,723
7,867
82,311$

168,447
471,623$ 1,323,296
14,840280,359$$

580,901$

640,070$ 1,618,495$ 1,173,156

307,186850
865,120c. Other gains and losses

Gain on disposal of property,
plant and equipment
Gain on sale of non-current
assets held for sale
Gain on financial assets
mandatorily classified as at
FVTPL
Impairment reversed (loss)
recognized on aircraft
equipment
Gain on disposal of investments
Net foreign exchange gain
(loss)
OthersFor the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$ 225,215$$

12,86999,708$16,747-

116,676-

116,676

444

178

1,190

384

90,169-(1,641)-(498,352)
2,523(1,641)-

362,716(78,177)

259,989(170,366)

698,909(196,457)

464,940(223,062)$ 600,367$ 217,705$ 107,521$ 374,044- 37 -

d. Finance costs

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 orloss

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

$

39,801
236,696358,946$

17

40,015
199,225
394,302106,286
786,291
1,115,432$

121,669
636,257
1,085,930

1,568

501

2,743

$

635,460$

635,110$ 2,008,510$ 1,846,599

Capitalization interest$

109,531$63,548$$

Capitalization rate

1.97%-2.06%

1.39%-1.45%

279,156

1.64%-2.06%

105,911

0.85%-1.45%

e. Depreciation and amortization expense

Property, plant, equipment
Right-of-use assets
Investment properties
Intangible assets
Depreciation and amortization
expenses
An analysis of depreciation byfunction
Operating costs
Operating expenses

An analysis of amortization byfunction
Operating costs
Operating expenses

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

4,211,265
3,396,587
56
55,891$

4,281,599
3,327,109
66
55,847$ 12,865,413
10,330,259
170
166,293$ 12,647,293
9,737,371
199
167,959$

7,663,799$

7,664,621$ 23,362,135$ 22,552,822$

7,201,028
406,880$

7,316,903
291,871$ 21,988,639
1,207,203$ 21,540,482
844,381$7,607,908$

7,608,774$ 23,195,842$ 22,384,863

$

1,445
54,446$

1,274
54,573$

4,228
162,065$

3,860
164,099$

55,891$

55,847$

166,293$

167,959- 38 -

f. Employee benefits expense

Post-employment benefits
Defined contribution plan
Defined benefit plan

Other employee benefits
Salary expenses
Personnel service expenses

An analysis of employee
benefits expense by function
Operating costs
Operating expenses

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

143,768
312,689$

124,656
320,885$

417,362925,795$

382,600
953,017$456,457$

445,541$

1,343,157$

1,335,617$

5,762,176
1,732,951$

4,260,709
1,190,492$ 17,027,364
5,076,182$ 14,750,859
3,823,181$

7,495,127$

5,451,201$ 22,103,546$ 18,574,040$

6,618,603
1,332,981$

4,837,842
1,058,900$ 19,290,673
4,156,030$ 16,450,483
3,459,174$

7,951,584$

5,896,742$ 23,446,703$ 19,909,657

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 nine months ended September 30, 2023 and 2022, the compensation of employees were
estimated at $251,569 thousand and $149,767 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 andremuneration of directors and the amounts recognized in the consolidated financial statements for theyears 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.

- 39 -

28. INCOME TAX
a. Income tax expense recognized in profit or loss
The major components of tax expense (benefit) were as follows:

Current tax
Current year
Adjustments for prior periods
Deferred tax
Current year
Income tax expense (benefit)
recognized in profit or loss

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

284,285-$ 1,017,565-$ 2,043,465
24,171(410,953)

658,187(1,367,343)(126,668)$ 1,675,752

66,392
247$

531,385$

598,024$$700,293b. Income tax recognized in other comprehensive income
For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

$

Deferred tax
Recognized in othercomprehensive income
Translation of foreign
operations
Fair value changes offinancial assets at
FVTOCI
Fair value change of hedging
instruments for cash flow
hedging
Total income tax recognizedin other comprehensive
income$(13,714)$(17,716)(14,489)$(37,567)

(120)

(358)

(3,687)1,315

208,730

575,680

305,011

1,115,374

286,835$ 1,079,122

194,896$557,606$

c. Income tax assessment
The income tax returns of the Company and its subsidiaries through 2021 have been examined by the
tax authorities.

- 40 -

29. EARNINGS PER SHARE
For the Three Months Ended
September 30
2023
2022
Basic earnings per share
Diluted earnings per share

$
$

0.38
0.37

$
$

0.02
0.02

For the Nine Months Ended
September 30
2023
2022
$
$

1.15
1.12

$
$

0.60
0.59

Net income for the period
Earnings used in the computationof basic earnings per share
Effect of potentially dilutive
ordinary shares:
Interest on convertible bonds(after tax)
Earnings used in the computationof diluted earnings per share$ 2,298,287$

125,956$ 6,897,568$ 3,618,450-

13,074

16,628125,956$ 6,910,642$ 3,635,078

6,042,559

6,011,463

6,022,536

5,991,331

11,866
95,529

7,622-

13,299114,522

11,399141,966

6,149,954

6,019,085

6,150,357

6,144,696

3,361$ 2,301,648$

In thousands of shares
Weighted average number ofordinary shares in computationof basic earnings per share
Effect of potentially dilutive
ordinary shares:
Compensation of employees orbonuses issued to employees
Convertible bonds
Weighted average number ofordinary shares used in thecomputation of diluted earnings
per share

The Group may settle compensation or bonuses paid to employees in cash or shares; therefore, the Groupassumes that 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 MANAGEMENT
The goals, policies and procedures as well as the composition of the Group’s capital management are thesame as those stated in Note 30 to the Group’s consolidated financial statements for the year ended
December 31, 2022.

- 41 -

31. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments not measured 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.
September 30, 2023
Carrying
AmountFair Value

December 31, 2022
Carrying
AmountFair Value

September 30, 2022
Carrying
AmountFair Value

Financial liabilities
Bonds payable$ 10,874,414$ 11,200,683$

9,999,674$ 10,313,545$ 12,519,852$ 12,895,470

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).
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).
September 30, 2023
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

161,333

$

-

$

-

$

161,333

$

-

$

-

$

35,263
100,465$

35,263
100,465

$

-

$

-

$

135,728$

135,728

Financial assets for hedging

$

-

$

164,953$

90,119$255,072

Financial liabilities for hedging$ 36,301,937

$

-

$

4,108

$ 36,306,045

Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign- 42 -

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
Unlisted shares - domestic
Unlisted shares - foreign

September 30, 2022
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

131,292

$

-

$

-

$

131,292

$

-

$

-

$

38,07832,819$38,07832,819

$

-

$

-

$

70,897$70,897

Financial assets for hedging$ 1,523,810$

28,689$19,720$ 1,572,219

Financial liabilities for hedging$ 42,846,541

$

8,767

$

164,600$ 43,019,908

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

There were no transfers between Levels 1 and 2 in the current period.
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 the derivatives. The
estimates and assumptions that the Group used to determine thefair values are identical to those used in the pricing 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 and swap are determined using option pricing
models where the significant unobservable inputs are implied fluctuations. Changes in the implied
fluctuations used in isolation would result in an increase or decrease in the fair value of currency
options and fuel options and swap.

- 43 -

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:

Multiplier

Liquidity
Discount

0.33-12.39
0.39-12.39
0.74-14.31

80%
80%
80%

Derivative
Instruments

EquityInstruments

Balance at January 1, 2023
Recognized in other comprehensive income$ (16,761)
102,772$ 123,033
12,695

Balance at September 30, 2023$

86,011$ 135,728

Balance at January 1, 2022
Recognized in other comprehensive income

$

6,124
(151,004)$

67,884
3,013

Balance at September 30, 2022

$ (144,880)$

70,897

September 30, 2023
December 31, 2022
September 30, 2022

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.
c. Categories of financial instruments
September 30,
2023

December 31,
2022

September 30,
2022

$

$

$

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

161,333
255,072
57,000,927

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

131,292
1,572,219
53,837,136

135,728

123,033

70,89736,306,045
133,600,200

42,174,061
147,815,221

43,019,908
144,758,086

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

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 receivables, otherreceivables, refundable deposits, restricted financial assets and other financial assets.

- 44 -

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,
which include foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
In addition, the Company has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. The 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 rate 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.
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 and foreign currency
option contracts designated as cash flow hedges, and adjusts their translation 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 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 pre-tax othercomprehensive income for the nine months ended September 30, 2023 of $183,855 thousand
and $1,036,360 thousand, respectively, and an decrease in pre-tax profit and increase in pre-tax
other comprehensive income for the nine months ended September 30, 2022 of $105,082
thousand and $1,236,941 thousand, respectively.

- 45 -

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
occur, 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 option contracts and foreignexchange forward contracts and their corresponding hedged items are the same, the Group
performs a qualitative assessment of the effectiveness, and it is expected that the value of theforeign currency option contracts and foreign exchange forward contracts and the value of thecorresponding hedged items will systematically change 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.
September 30, 2023
Hedging Instruments
Cash flow hedge
Aircraft prepayment forward exchange
contracts

Currency

NTD/USD

Notional
Amount

NTD2,870,968/
USD89,000

Maturity

Forward Rate

2023.10.30
2024.7.31

29.292-31.489

Line Item in
Balance Sheet

Financial assets forhedging - current/
liabilities for hedging current

Carrying AmountAsset
Liability$ 160,480$-

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft prepayments in U.S. dollars) was $160,480 thousand.
December 31, 2022
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aircraft prepayment 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/
USD108,000

2023.1.192023.6.30

29.5-31.9

Currency

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

-

$

4,935

198

110,563

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals and aircraft prepayments in U.S. dollars) was$(105,826) thousand.
September 30, 2022
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aircraft prepayment forward exchange
contracts

Notional
AmountMaturity

NTD/USD

NTD204,407/
USD6,725

2022.10.272023.8.25

27.6-30.7

NTD/USD

NTD1,841,270/
USD58,000

2022.10.72023.6.15

29.5-31.8

Currency

Forward RateLine Item in
Balance Sheet

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

Carrying AmountAsset
Liability$

12,097

16,592

$

-

2,148

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $26,541 thousand.

- 46 -

For the nine months ended September 30, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

$

AmountReclassified to(Loss) Profit
and theAdjusted Line
Item

198
210,081$(5,797)-$ 210,279$(5,797)(Note)

Increase in operating costs or foreign exchange loss.

For the nine months ended September 30, 2023, the amount of hedging instrument settlements
recognized as aircraft prepayments were $(56,026) thousand.
For the three months ended September 30, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

$

AmountReclassified to(Loss) Profit
and theAdjusted LineItem

(1,467)126,025$(3,200)-$ 124,558$(3,200)(Note)

Increase in operating costs or foreign exchange loss.

For the nine months ended September 30, 2022
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

AmountReclassified to(Loss) Profit
and theAdjusted Line
Item$

12,546
15,529$ (16,904)-$

28,075$ (16,904)(Note)

Increase in operating costs or foreign exchange loss.

For the nine months ended September 30, 2022, the amount of hedging instrument settlements
recognized as aircraft prepayments were $(1,086) thousand.
- 47 -

For the three months ended September 30, 2022
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

AmountReclassified to(Loss) Profit
and theAdjusted Line
Item

$

(397)
14,432$ (13,281)-$

14,035$ (13,281)(Note)

Increase in operating costs or foreign exchange loss.

b) Interest rate risk
The Group enters into interest rate swap contracts to hedge against the risks of changes ininterest rates on long-term borrowings. The Group was exposed to interest rate risk because
entities in the Group borrowed funds at both fixed and floating interest rates. The risk ismanaged by the Group by maintaining an appropriate mix of fixed and floating rate borrowings
and using interest rate swap contracts.
The carrying amounts of the Group’s financial liabilities with exposure to interest rates at theend of the reporting period were as follows:

Fair value interest rate risk
Cash flow interest rate risk

September 30,
2023

December 31,
2022

September 30,
2022$ 55,417,575
74,047,527$ 59,825,679
89,811,596$ 63,974,480
87,058,658

Sensitivity analysis
The sensitivity analysis below was 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 25 basis
points increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
If interest rates had been 25 basis points higher and all other variables were held constant, theGroup’s pre-tax profit for the nine months ended September 30, 2023 would have decreased by$138,839 thousand. If interest rates had been 25 basis points higher and all other variables were
held constant, the Group’s pre-tax profit for the nine months ended September 30, 2022 would
have decreased by $163,235 thousand.

- 48 -

The following tables summarize the information relating to the hedges for interest rate risk.
September 30, 2023
Hedging Instrument
Cash flow hedge
Interest expenses onlong-term
borrowings interest rate swaps

Currency

NTD

Notional
Amount

NTD900,000

Maturity

ForwardRate

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

2027.4.12027.5.24

1.39%1.58%

Financial assets forhedging - current/
liabilities forhedging non-current$ 4,473$-

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (interest expense on long-term borrowings) was $4,473 thousand.
December 31, 2022
Hedging Instrument
Cash flow hedge
Interest expenses onlong-term
borrowings interest rate swaps

Currency

NTD

Notional
Amount

NTD900,000

Maturity

ForwardRate

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

2027.4.12027.5.24

1.39%1.58%

Financial assets forhedging - current/
liabilities forhedging non-current$-$ 6,932

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.
September 30, 2022
Hedging Instrument
Cash flow hedge
Interest expenses onlong-term
borrowings interest rate swaps

Currency

NTD

Notional
Amount

NTD900,000

Maturity

ForwardRate

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

2027.4.12027.5.24

1.39%1.58%

Financial assets forhedging - current/
liabilities forhedging non-current$-$ 6,619

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (interest expense on long-term borrowings) was $(6,619)
thousand.
For the nine months ended September 30, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Interest expenses on long-term borrowings
Note:

Increase in financial costs or other losses.

- 49 -$ 11,406

AmountReclassified to(Loss) Profit
and theAdjusted Line
Item

$

(500)

(Note)

For the three months ended September 30, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Interest expenses on long-term borrowings
Note:

$

AmountReclassified to(Loss) Profit
and theAdjusted Line
Item

7,067

$

(16)

(Note)

Increase in financial costs or other losses.

For the nine months ended September 30, 2022

Comprehensive Income
Cash flow hedge
Interest expenses on long-term borrowings
Note:

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted LineItem

$ (6,619)$ (2,743)

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted LineItem

$ (2,268)$ (1,568)(Note)

Increase in financial costs or other losses.

For the three months ended September 30, 2022

Comprehensive Income
Cash flow hedge
Interest expenses on long-term borrowings
Note:(Note)

Increase in financial costs or other loss.

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 contract to hedge against adverse risks on fuel price changes.
September 30, 2023
Hedging Instrument

Currency

Notional
AmountMaturity

ForwardRate

Cash flow hedges - aviationfuel - fuel options

USD

NTD44,600

2023.12.312024.6.30

USD60USD103

Cash flow hedges - aviationfuel - swap

USD

NTD41,411

2023.12.312024.6.30

USD78USD81- 50 -

Line Item in
Balance Sheet
Financial assets forhedging - current/
liabilities for hedging- current
Financial assets forhedging - current/
liabilities for hedging- current

Carrying AmountAsset
Liability$

48,631

41,488

$

4,031

77

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$86,011 thousand.
December 31, 2022
Hedging Instrument

Currency

Notional
AmountMaturity

ForwardRate

Cash flow hedges - aviationfuel - fuel options

USD

NTD7,094

2023.3.312023.12.31

USD60USD148

Cash flow hedges - aviationfuel - swap

USD

NTD9,667

2023.3.31

USD96

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

38,997-$46,091

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.
September 30, 2022
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
Amount
NTD144,880

Maturity

ForwardRate

2022.12.312023.9.30

USD60USD177

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

19,720$ 164,600

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$(144,880) thousand.
For the nine months ended September 30, 2023

Comprehensive Income
Cash flow hedges - fuel options
Note:

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted LineItem

$ 102,773$ (15,442)

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted Line
Item

(Note)

Increasing in operating costs.

For the three months ended September 30, 2023

Comprehensive Income
Cash flow hedges - fuel options
Note:$ 110,575

Decreasing in operating costs.

- 51 -$(1,796)(Note)

For the nine months ended September 30, 2022

Comprehensive Income
Cash flow hedges - fuel options
Note:

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted LineItem

$ (151,004)$ 112,008

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeAmountReclassified to(Loss) Profit
and theAdjusted Line
Item

(Note)

Increasing in operating costs.

For the three months ended September 30, 2022

Comprehensive Income
Cash flow hedges - fuel options
Note:$ (178,674)$(2,993)(Note)

Decreasing in operating costs.

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Nine Months Ended September 30
2023
2022
Other
Other
Pre-tax Profit
Comprehensive
Pre-tax Profit
Comprehensive
Increase
Income Increase
Increase
Income Increase(Decrease)(Decrease)(Decrease)(Decrease)
Fuel price increase of 5%
Fuel price decrease of 5%$ 2,928-$ (4,301)
4,301$ 1,375(3,854)$ 7,244(7,244)2) Credit risk
The objective, policies and procedure of credit risk management are the same as the consolidated
financial statements for the year ended December 31, 2022. Refer to Note 31.

- 52 -

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.)

$ 35,164,389

Liquidity and interest rate risk 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.
September 30, 2023
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

2.7946

Less than
1 Year1 to 5 Years

Over 5 Years

4,701,551$ 10,002,213$

21,108,932
14,071,998
5,067,034

31,020,287
31,290,679
6,028,035

13,284,530
11,101,767-$ 44,949,515$ 78,341,214$ 33,239,245$

2.01852.84891.3115- 53 -

8,852,948

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

Less than
1 Year

2.5047$4,001,479

1.57942.83901.0465

1 to 5 Years

Over 5 Years$$

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

Less than
1 Year1 to 5 Years

Over 5 Years$$

September 30, 2022
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

2.5457$1.36252.4194
1.11553,260,971

8,649,596

8,845,938

15,673,125
10,934,404
3,789,665

53,355,406
29,245,145
8,968,799

10,154,623
6,229,188-$ 33,658,165$ 100,218,946$ 25,229,749

32. TRANSACTIONS WITH RELATED PARTIESThe 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 the 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 relationships
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- 54 -

Associate (became not related party in March
2022)
Associate
Associate
Associate
Associate (completed the dissolution andliquidation procedures in June 2023)(Continued)

Related Party Name

Relationship with the Company

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.
China Aviation Development Foundation
OthersJoint venture
Joint venture
Joint venture
Joint venture
Director of the Company and major shareholder
Director, key management personnel, chairman,
general manager of the Group, spouse andsecond-degree relatives(Concluded)b. Operating income

Account
Items

For the Three Months Ended
September 30
Related Party Type
2023
2022

Other income Major shareholdersof the Company
Joint venture

$

5,147

$

$ 14,211For the Nine Months Ended
September 30
2023
2022

1,646

$ 13,235$

5,614$ 11,303$ 45,125$ 35,310

c. Purchases

Related Party Type
Major shareholders of theCompany
Associate
Joint venture

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$
$
$

$
28,912$ 200,455$ 1,838,417

11,36258,379688,320

$
$
$

3,418
93,251
187,518$$$

11,701
308,816
348,713d. Accounts receivable - related parties (generated by operations)

Related Party Type

September 30,
2023

Major shareholders of the Company
Joint venture

December 31,
2022

September 30,
2022

$

1,901
14,849

$

1,045
3,804

$

625
3,731

$

16,750

$

4,849

$

4,356

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.

- 55 -

e. Accounts payable - related parties (generated by operations)
September 30,
2023

Related Party Type
Major shareholders of the Company
Associates
Joint venture$

December 31,
2022

3,965
20,318642,253$$ 666,536

September 30,
2022

2,421
39,491
275,898$$ 317,810

1,039
34,754
184,047$ 219,840

The remaining balance of accounts payable - related parties will be paid in cash if they are not secured.
f. Lease arrangements
Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots, and the Company paid the rental based on
usage hours. For the nine months ended September 30, 2023 and 2022, the Company paid rentals of$28,912 thousand and $11,701 thousand, respectively; for the three months ended September 30, 2023
and 2022, the Company paid rentals of $11,362 thousand and $3,418 thousand, respectively.
g. Endorsements and guarantees
September 30, 2023
Authorized
ActualAmountAmount Used

December 31, 2022
Authorized
ActualAmountAmount Used

September 30, 2022
Authorized
ActualAmountAmount Used

$ 3,850,000
3,016,516$ 1,225,080
300,974$ 3,850,000
2,868,466$ 1,444,200
286,202$ 3,850,000
2,968,635$ 1,444,200
296,1972,000,000

1,697,750

2,000,000

1,517,000

2,000,000

1,517,000

The Company
Cal Park
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

h. Remuneration of key management personnel
The compensation to directors and other key management personnel were as follows:

Short-term employee benefits
Post-employment benefits

For the Three Months Ended
September 30
2023
2022

For the Nine Months Ended
September 30
2023
2022

$

15,18914,770$11,811
198$

51,062
16,246$47,211
13,368$29,959$12,009$67,308$60,579The remuneration of directors and key executives, as determined by the remuneration committee, isbased on the performance of individuals and market trends.

- 56 -

33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were pledged or mortgaged as collateral for long-term bank loans, lease liabilities andbusiness transactions:

Property, plant and equipment
Restricted assets

September 30,
2023

December 31,
2022

September 30,
2022$ 42,297,747
782,204$ 36,711,923
765,059$ 30,047,303
691,773$ 43,079,951$ 37,476,982$ 30,739,076

The above restricted assets included pledged time deposits and demand deposits which were madeaccording to loan agreements.

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESIn addition to those disclosed in the other notes, significant commitments and contingent liabilities of theGroup at September 30, 2023 were as follows:a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administration (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of the 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 at Taiwan Taoyuan International
Airport and Kaohsiung International Airport and received approval from Taoyuan Airport Corporation
and CAA in July 2013 and July 2015, respectively.
However, TACT filed an arbitration in 2012 to revise the total amount of expenditure to $6,840,000
thousand. As of September 30, 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 to continue tooperate - steel structure rust removal and painting of athree-dimensional parking lot, mechanical and electricalpipeline renewal, and exterior wall painting projectContract
Amount(VAT Included)$ 77,770

As of September 30, 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.
- 57 -

b. CAL Park Co., Ltd. (“CAL Park”) signed “Taiwan Taoyuan International Airport Aviation Operation
Center (including Airport Hotel) Construction Operating Contract” with the CAA on September 20,
2006. However, on November 1, 2010, the Taoyuan Airport Corporation took over the CAA’s rights on
this contract from the CAA. The contract is effective for 50 years (consisting of the development stage
and operating period) from the contract date. Three years before contract expiry date, CAL Park has thefirst option to renew the contract once with a 20-year extension.
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.
CAL Park should pay land rentals on the date of the registration of surface rights. The rental rates forthe development stage differ from those for the operation period. The rental rates should follow Article
No. 2 of the “Regulations for Favorable Rentals Regarding Public Land Lease and Superficies inInfrastructure Projects”, which states that rental calculation in the development stage should include theland value added tax plus the necessary maintenance fee; in the operation period, rentals are 60% of theamount based on the National Building Land Rental Standard plus land value tax, value-added tax andthe necessary maintenance fee.
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 assignation nolater than three years before the expiry date of the chartered period. If CAA decides not to keep thebuilding and equipment on the base area, CAL Park should remove all related building and equipment
within three months after the expiry date.
c. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery period of the eleven aircraft ranges from 2024 to 2026. As of
September 30, 2023, the list price has been paid in the amount of US$75,867 thousand (recognized as
prepayments for aircraft). In October 2019, the Company signed a contract with International AeroEngines Company to purchase four backup engines of A321neo. The total list price of the four backup
engines is US$60,289 thousand. As of September 30, 2023, two out of the four backup engines havebeen delivered. 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$3,914,818 thousand.
As of September 30, 2023, seven out of the ten aircraft have been delivered. The total list price of theremaining three aircraft is US$1,224,675 thousand, and the list price has been paid in the amount of
US$244,935 thousand (recognized as prepayments for aircraft).

- 58 -

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
September 30, 2023, the list price has been paid in the amount of US$388,337 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
September 30, 2023, the list price has been paid in the amount of US$21,138 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 September 30, 2023, one out of the two
backup engines has been delivered, and the other engine was expected to be delivered in 2025. The
Group also signed related aircraft lease agreement, please refer to Note 21.
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 ATR-600 aircraft. The total list priceof the contract is approximately US$69,000 thousand. The expected delivery periods are from 2023 to2024. On May 30, 2023, the board of directors of Mandarin Airlines approved the activation of theoriginal 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 September 30, 2023, the list price has been paid in the amount of
US$11,830 thousand (recognized as prepayments for aircraft).

35. IMPACT OF COVID-19
For the nine months ended September 30, 2022, because of the COVID-19 pandemic, the Group received
subsidies of $936,141 thousand, for airport landing fees and parking fees, etc. The subsidies for housing
and land rental, and salary and interest expenses were $692,160 thousand. These subsidies were recognizedas other income or deduction from other expenses. The Group has not received such subsidies since 2023.
The Group has obtained relief loan from the government. Refer to Note 19 for details on the amount of loan
and its allocation.

- 59 -

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currencies 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:
September 30, 2023
Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
Amount1,111,171
22,264
293,4033,661,381
537,550

32.2581
33.8983
4.12370.21604.4150$ 35,844,241
754,723
1,209,910
790,880
2,373,288

2,052,676
10,762
85,6705,361,680
119,961

32.2581
33.8983
4.12370.21604.415066,215,369
364,802353,279
1,158,134
529,627

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
December 31, 2022
Foreign
Currencies(In Thousands)
Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

- 60 -

September 30, 2022
Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
Amount

1,073,683
34,955
279,602
5,159,772
421,82531.7460
31.1526
4.04530.21954.4583$ 34,085,183
1,088,930
1,131,078
1,132,348
1,880,631

2,270,267
6,091
47,0622,584,753
101,177

31.7460
31.1526
4.04530.21954.458372,071,972
189,757
190,381567,242451,078

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

For the three months ended September 30, 2023 and 2022, the Group’s net foreign exchange gains were$362,716 thousand and $259,989 thousand, respectively, and for the nine months ended September 30,
2023 and 2022, the Group’s net foreign exchange gains were $698,909 thousand and $464,940 thousand,respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign
currency due to the variety of the foreign currency transactions and functional currencies of the entities in
the Group.

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 estate at costs of at least NT$300 million or 20% of the paid-in
capital: None
6) Disposals of individual real estate 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)- 61 -

8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 6 (attached)9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 7 (attached)10) Trading in derivative instruments (Note 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 INFORMATIONThe 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 operating segment reporting in the
consolidated financial statements, the reportable segment of the Group and its subsidiaries comprises theflight and the non-flight business departments. The accounting policies applied for reportable segments are
consistent with the policies aforementioned in Note 4.
For the nine months ended September 30, 2023 and 2022, financial information of reportable segments islisted below:
For the Nine Months Ended September 30, 2023
Adjustments
AirandTransportation
OthersEliminations
Total
Operating revenue$ 134,410,042$

7,599,801$(4,443,312)

Operating profit and loss
Interest income
Investment income (loss) accounted forusing the equity method
Revenue
Finance costs
Expenses$$

702,073$(50,617)

8,422,327$

9,073,783
1,323,296
286,726
1,097,529(2,008,510)(694,809)

Profit before income tax
Identifiable assets
Investments accounted for using theequity method
Assets$ 137,566,531$$ 174,025,154$ 13,849,467$(5,676,865)

9,078,015$ 182,197,756
1,740,531
106,883,392

Total assets$ 290,821,679- 62 -

For the Nine Months Ended September 30, 2022
Adjustments
AirandTransportation
OthersEliminations
Total
Operating revenue$ 108,769,786$

6,492,770$(3,479,279)

Operating profit and loss
Interest income
Investment income (loss) accounted forusing the equity method
Revenue
Finance costs
Expenses$$

36,841$(52,011)4,264,129$

4,248,959
307,186(107,647)
1,463,075(1,846,599)(223,061)

Profit before income tax
Identifiable assets
Investments accounted for using theequity method
Assets$ 111,783,277$$ 177,722,422$ 14,611,892$(5,984,072)

3,841,913$ 186,350,242
1,470,236
95,662,888

Total assets$ 283,483,366- 63 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 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

ActualBorrowingAmountInterest Rate
(%)

Yes

$ 112,903$ 112,903$ 112,903

2.25

Nature ofFinancing

Short-term
financingfacility isnecessaryBusiness
Transaction
AmountReasons for
Short-term
Financing$Operatingturnivercapitalexpenditure

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 Company is up to 40% of the Company’s net worth, as stated in its latest financial statements.

Note 2:The maximum amount of loans provided to an individual counterparty by the Company is up to 20% of the Company’s net worth as stated in its latest financial statements.

- 64 --

Allowance for
Impairment
Loss
$

-

Collateral
Item

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 165,132$ 330,265

NoteTABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENTS/GUARANTEES PROVIDEDFOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 Ltd.

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Relationship100% owned subsidiary
78.89% owned subsidiary bydirect and indirect
shareholdings
100% owned subsidiary

Limits onEndorsement/
Guaranteed
During Each
Party
(Note 1)

Maximum
AmountEndorsed/
Guarantee atthe End of the
PeriodOutstanding
Endorsement/
Guarantee atthe End of the
PeriodRatio ofAccumulatedAggregate
Endorsement/ Endorsement/ Endorsement/
AmountEndorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Actual AmountEndorsed/
Guarantee to
Guarantee
Given by Parent
Given byGiven on Behalf
Borrowed
Guaranteed by
Net Equity in
Limit
on Behalf of
Subsidiaries on of Companies in
Collateral
Latest Financial(Note 2)
Subsidiaries Behalf of Parent Mainland China
Statement (%)$ 14,917,028
14,917,028$ 3,850,000
3,016,516$ 3,850,000
3,016,516$ 1,225,080
300,974

14,917,028

2,000,000

2,000,000

1,697,750

$

-

5.16
4.04

$ 37,292,570
37,292,570

Yes
Yes

No
No

No
No

-

2.68

37,292,570

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.

- 65 -TABLE 3

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELDSEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name

Marketable Securities Type and Issuer/Name

China Airlines (the “Company”) Shares
Everest 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

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

Relationshipwith theHoldingCompany-

Financial Statement AccountSeptember 30, 2023
Percentage ofCarrying
Ownership
Amount(%)

Number of
Shares/Units

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

Parent company Financial assets at FVTOCI - non-current$

19,3971,940
35,263
-

13.59
11.00
4.00
-

2,074,628

43,982-Market Valueor Net Asset
Value

$

Note

21,33735,263-Note 1--

43,982-

79,1282.59
5.45

79,128Note 2
Note 2-Financial assets at FVTPL - current
Financial assets at FVTOCI - non-current

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

144,216
1,228,652
1,143,589

26,33313,01418,908-26,33313,01418,908-

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

51,27051,808-51,27051,808-Note 1: The subsidiary’s net asset value was $21,337 thousand, which included ordinary shares and preference shares as of September 30, 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.

- 66 -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 CAPITALSEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name

China Airlines(the “Company”)

Type and Name ofMarketable Securities(Note 1)
Tigerair Taiwan Ltd.

Financial Statement
Account

Counterparty(Note 2)

Investments accounted for Tigerair Taiwan Ltd.
using the equity method

Relationship(Note 2)
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.

- 67 -$-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 NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.
(“China Airlines”)

Related Party

Nature of Relationship

Purchase/
Sale

Amount% of
Total

Note/Account Payable or
Receivable% ofPayment Terms Ending Balance
Total

Abnormal Transaction
Payment Terms

Dynasty Aerotech International Corp.
Cal Park
Mandarin Airlines
Taiwan Air Cargo Terminal
Taoyuan International Airport Service
Taiwan Airport Services
Eastern United International Logistics(Holdings) Ltd.
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Kaohsiung Catering Service, Ltd.
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
Cal Hotel Co., Ltd.

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Equity-method investee

Purchase
Purchase
Sales
Purchase
Purchase
Purchase
Purchase$ 271,844
173,692(846,297)
366,688799,719
141,800
196,641

0.26
0.16(0.70)
0.34
0.75
0.13
0.18

2 months
2 months
2 months
30 days
40 days
40 days
2 months

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

Purchase
Purchase
Purchase
Purchase
Sales
Purchase

1,610,941
123,042
104,433
203,649(263,898)
249,068

1.51
0.12
0.10
0.19
(0.22)
0.23

Subsidiary

Purchase

137,410Tigerair Taiwan Ltd.

Taoyuan International Airport Services

Same parent company

Purchase

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Same parent company
Same parent company

Purchase
Purchase

Unit Price--$ (49,859)
91,889(37,189)(259,030)(37,109)(19,779)(2.38)
0.91(1.77)(12.36)(1.77)(0.94)-

90 days
90 days
90 days
90 days
1 month
1 month--(606,126)(30,129)(5,998)(51,504)
30,192(35,831)(28.92)(1.44)(0.29)(2.46)
0.30(1.71)-

0.13

2 months--(26,615)(1.27)-

153,737

2.38

40 days--(83,079)(9.46)-

211,676
198,199

5.48
5.13

1 month
1 month

--(2,382)(0.39)-- 68 -$Note

TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALSEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Overdue
Company Name

Related Party

Nature of RelationshipEnding Balance

Turnover Rate

Taoyuan International Airport Service

China Airlines

Parent company$ 259,030

4.56

China Pacific Catering Services

China Airlines

Parent company

606,126

4.99- 69 -

Amount$Action Taken

Amounts Received
in Subsequent
Period--$ 110,398--

201,122

Allowance for
Impairment Loss$-TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company

China Airlines, Ltd.

Investee Company

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
Dynasty Aerotech International Corp.
Global Sky Express
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance andEngineering Co., Ltd.
NORDAM Asia Ltd.

Location

Main Businesses and Products

Taoyuan, Taiwan
Real estate lease and international trade
Taipei, Taiwan
Air transportation and maintenance of aircraft
Taoyuan, Taiwan
Air cargo and storage
Los Angeles, U.S.A.
A holding company, real estate and hotel services
Taoyuan, Taiwan
In-flight catering
Taoyuan, Taiwan
Airport services
Territory of the British Virgin Islands General investment
Taipei, Taiwan
Sale and maintenance of hardware and software
Taipei, Taiwan
Airport services
Kaohsiung, Taiwan
In-flight catering
Taoyuan, Taiwan
Hotel businessTaoyuan, Taiwan
Cleaning and leasing of the towel of airlines,
hotels, restaurants and health clubs
Taoyuan, Taiwan
Cleaning of aircraft and maintenance of machineand equipment
Taipei, Taiwan
Forwarding and storage of air cargo
Taipei, Taiwan
Air transportation and maintenance of aircraft
Taoyuan, Taiwan
Aircraft maintenanceOriginal Investment Amount
September 30, December 31,
2023
2022

As of September 30, 2023
Number ofPercentage ofCarrying
SharesOwnership
AmountNet Income(Loss) of theInvestee

Share of Profit(Loss)$

1,500,000
4,039,140
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,20012,289383,846
465,000
137,500

151,546,405
387,831,234
108,000,000
2,614,500
43,911,000
34,300,000
47,016,200
13,021,042
20,626,644
21,494,637
33,480,000
13,750,000

100.0096.96
54.00
100.0051.00
49.00
100.00
93.93
47.35
53.67
100.0055.00$$

77,27077,27077,270100.00123,998

16,682

16,655 Note 42,500
6,240,018
1,350,000

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

250,000
337,624,477
70,000,000

25.00
75.19
100.006,289
2,818,978394,507

2,531
1,343,077(56,815)633
1,038,785 Note 4(56,815)1,500,000
4,039,140
1,080,000
US$ 26,145
439,100
147,000
US$
7,172
52,20012,289383,846
465,000
137,500$$

1,771,636
1,785,086
1,346,644
1,472,000
706,521483,702662,088
227,411
109,950
402,932
309,058
100,823

14,622584,465
277,427
40,858506,468
120,766
24,50044,157
14,976
103,954
4,451
14,798Note 4
Notes 1 and 4
Note 4Note 2
Note 5Note 4-

Taoyuan, Taiwan

Composite repair and manufacturing business

37,97537,975

3,797,500

49.00

2,471

(34,134)(16,726)-

183,846
11,658154,330
11,658

16,613,624
469,755

3.70
1.08

138,7142,501

1,343,077
14,976

51,117
161

-

305

-

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Taipei, Taiwan
Taipei, Taiwan

Air transportation and maintenance of aircraft
Airport services

Cal-Asia Investment

Eastern United International Logistics

Hong Kong

Forwarding and storage of air cargo

HK$

3,329

HK$

3,329

1,050,000

35.00

57,518872

Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

US$

5,877

-

100.00458,620

4,073

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,534

-

Kaohsiung Catering Services Delica International Co., Ltd.

43,182565,705
149,723
40,314258,299
59,17524,50041,476
7,091
53,444
4,110
8,139

Note

Note 1:Adopted the treasury share method in recognizing investment income or loss.

Note 2:

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.

10,200- 70 -

17,877 Note 3--

TABLE 8

CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION ON INVESTMENTS IN MAINLAND CHINAFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars in Thousands, Unless Stated Otherwise)

China Airlines

Investee Company Name

Remittance of Funds

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

Outward

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

Forwarding and storage $ 1,123,532
of air cargo(RMB 254,480)

Indirect(Note 1)$135,031 $(US$4,186)

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

Forwarding and storage
61,810of air cargo(RMB 14,000)

Indirect(Note 1)

62,821
1,947)-(US$

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,680,323
maintenance services (US$ 83,090)

Indirect(Note 1)

69,3942,151)-(US$

Taikoo Spirit Aerospace
Systems (Jinjang)Composite material

Indirect(Note 1)

20,516
636)

-

(US$

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2023$
287,762(US$
8,920)(US$

376,226
11,663)

Investment Amounts
Authorized by Investment Commission,
MOEA$

694,833(Note 3)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof
September 30,
2023

-

$

-

% Ownershipof Direct orIndirect
Investment

Net Income(Loss) of
the Investee

Accumulated
Carrying
Repatriation ofAmountInvestment
as ofIncome as of
September 30,
September 30,
2023
2023

Investment
Gain (Loss)$
135,031 $73,063(US$
4,186) (RMB 16,629)

14.00

62,82160,885
1,947) (RMB 13,857)

14.00

(US$

69,3942,151)

-

2.59

-

(US$

20,516
636)

-

5.45

-

(US$

-

-

-

$
10,041 $257,157 $
114,083(RMB 2,328) (RMB 58,246) (US$3,537)(Note 2)

(RMB

8,313
150,757
1,940) (RMB 34,146) (US$-50,3401,561)(Note 2)-

79,128(RMB 17,923) (US$11,500357)

Upper Limit on the Amount of
Investments Stipulated by theInvestment Commission, MOEA
$ 46,475,392(Note 4)
(Continued)- 71 -

Taiwan Airport Services

Investee Company

Remittance of Funds

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

Outward

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

Forwarding and storage $ 1,123,532
of air cargo(RMB 254,480)

Indirect(Note 5)$
129,624 $(US$4,018)

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

Forwarding and storage
61,810of air cargo(RMB 14,000)

Indirect(Note 5)

(US$

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2023

Investment Amounts Authorized by
Investment Commission, MOEA$
191,778(US$5,945)$
191,778(US$5,945)

Inward-62,153
1,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan
as of
September 30,
2023

$

-

-

Net Income(Loss) of theInvestee% Ownershipof Direct orIndirect
Investment$
129,624 $
73,063(US$
4,018) (RMB 16,629)

14

62,15360,885
1,927) (RMB 13,857)

14

(US$

Investment
Income (Loss)

Accumulated
Carrying
Repatriation ofAmount as ofInvestment
September 30, Income as of2023
September 30,
2023$
10,041 $281,963 $
146,489(RMB 2,328) (RMB 63,865) (US$4,541)(RMB

8,313
175,790
1,940) (RMB 39,817) (US$67,4782,092)

Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA$

139,324(Note 4)Note 1: The Company invested in CAL-Asia Investment, which invested in a company located in mainland China.
Note 2: As of September 30, 2023, the inward remittance of earnings amounted to US$3,536,561 and US$1,560,538.
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, referring to Reuters for the reporting period.
(Concluded)- 72 -TABLE 9

CHINA AIRLINES, LTD. AND SUBSIDIARIES
BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE NINE MONTHS ENDED SEPTEMBER 30, 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.

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

a
a
a
a
a
a
a
a
a
a
a

Other operating cost
Airport service cost
Passenger service costs
Air freight revenue
Other operating revenue
Airport service cost
Airport service cost
Other operating cost
Other operating costAccounts payable - related parties
Operating cost

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

2

Mandarin Airlines

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

3

Taoyuan International Airport Services

4

Amount(Note 2)

Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets$ 137,410
141,800
203,649
797,631
263,898
799,719
271,844366,688
173,692
259,030
249,068

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

0.10
0.10
0.15
0.58
0.19
0.58
0.20
0.27
0.13
0.09
0.18

Sales revenue

366,688

The same as ordinary transactions

0.27

b
c
c

Air freight costs
Airport service cost
Operating expense

797,631
198,199
211,676

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

0.58
0.14
0.15

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

bbc

Airport service revenue
Accounts receivable - related parties
Airport service revenue

799,719
259,030
153,737

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

0.58
0.09
0.11

Dynasty Aerotech International Corp.

China Airlines, Ltd.

b

Operating revenue

271,844

The same as ordinary transactions

0.20

5

Cal Park

China Airlines, Ltd.

b

Operating revenue

173,692

The same as ordinary transactions

0.13

6

Kaohsiung Catering Services

China Airlines, Ltd.

b

Operating revenue

203,649

The same as ordinary transactions

0.15

7

Tigerair Taiwan Co., Ltd.

China Airlines, Ltd.
Mandarin Airlines
Taoyuan International Airport ServicebccOperating expense
Operating revenue
Airport service cost

263,898
211,676
153,737

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

0.19
0.15
0.11

8

Taiwan Airport Services

China Airlines, Ltd.
Mandarin AirlinesbcOperating revenue
Operating revenue

141,800
198,199

The same as ordinary transactions
The same as ordinary transactions

0.10
0.14
(Continued)- 73 -

Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement AccountAmount(Note 2)

Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets

9

Cal Hotel Co., Ltd.

China Airlines, Ltd.

b

Operating revenue$ 137,410

The same as ordinary transactions

0.10

10

Taiwan Aircraft Maintenance andEngineering Co., Ltd.

China Airlines, Ltd.

b

Operating revenue

249,068

The same as ordinary transactions

0.18

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)- 74 -TABLE 10

CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION OF MAJOR STOCKHOLDERSSEPTEMBER 30, 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, refer to Market Observation Post System.

- 75 -