China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theNine Months Ended September 30, 2021 and 2020 and
Independent 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, 2021 and 2020, the related
consolidated statements of comprehensive income for the three months ended September 30, 2021
and 2020 and for the nine months ended September 30, 2021 and 2020, 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.
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$14,102,966 thousand and NT$11,025,331 thousand, which represented
5.11% and 3.88% of the consolidated total assets as of September 30, 2021 and 2020, respectively;
and for the three months ended September 30, 2021 and 2020 and for the nine months ended
September 30, 2021 and 2020, the total revenue of these subsidiaries were NT$44,914 thousand,
NT$175,653 thousand, NT$71,470 thousand and NT$1,813,945 thousand, which represented
0.13%, 0.66%, 0.08% and 2.12% of the consolidated total revenues, respectively.
Scope of Review
Except as explained in the following paragraph, we conducted our reviews in accordance with theStatement of Auditing Standard No. 65 “Review of Financial Information Performed by the
Independent Auditor of the Entity”. A review of consolidated financial statements consists ofmaking inquiries, primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially less 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.

-1-

Basis for Qualified Conclusion
As disclosed in Notes 13 and 14 to the consolidated financial statements, the financial statements ofsome non-significant subsidiaries included in the consolidated financial statements referred to in
the first paragraph and some investments accounted for using the equity method were not reviewed.
As of September 30, 2021 and 2020, the combined total assets of these non-significant subsidiaries
were NT$20,132,953 thousand and NT$21,447,628 thousand, respectively, representing 7.30% and7.55%, respectively, of the consolidated total assets, and combined total liabilities of these
non-significant subsidiaries were NT$11,194,422 thousand and NT$11,453,273 thousand,respectively, representing 5.34% and 5.07%, respectively, of the consolidated total liabilities; forthe three months ended September 30, 2021 and 2020 and for the nine months ended September 30,
2021 and 2020, the amounts of the combined comprehensive income (loss) of these non-significant
subsidiaries were NT$4,506 thousand, NT$(126,107) thousand, NT$(228,649) thousand andNT$(481,583) thousand, respectively, representing 0.17%, 37.52%, (19.58%) and 28.41%,
respectively, of the consolidated total comprehensive income. As of September 30, 2021 and 2020,
the aforementioned investments accounted for using the equity method were NT$1,576,556
thousand and NT$2,009,318 thousand, respectively; and for the three months ended and for thenine months ended September 30, 2021 and 2020, the amounts of the Group’s share of the profit ofsuch investments accounted for using the equity method were NT$(85,146) thousand andNT$(57,013) thousand, NT$(382,599) thousand and NT$(176,235) thousand, respectively.
Qualified Conclusion
Based on our reviews, except for the adjustments, if any, as might have been determined to benecessary had the financial statements of the non-significant subsidiaries and investments
accounted for by 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, 2021 and 2020, and its consolidated financial
performance for the three months ended September 30, 2021 and 2020, and its consolidated
financial performance and its consolidated cash flows for the nine-month periods ended September
30, 2021 and 2020 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.

-2-

The engagement partners on the reviews resulting in this independent auditors’ review report are
Huang, Jui Chan and Cheng, Shiuh Ran.

Deloitte & Touche
Taipei, Taiwan
Republic of China
November 4, 2021

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, 2021
(Reviewed)
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)
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 (Note 18)

September 30, 2020
(Reviewed)
Amount%$ 36,894,146
169,479
1,390,573
2,248,631
11,917,344
2,401
616,732
58,957
8,815,952
89,956
1,053,770

13
1
1
4
3
1

$ 27,125,937
274,761
6,551,693
7,613,636
9,697,511
1,667
801,134
67,5498,788,105
89,296
861,179

10
2
3
4
3
-

$ 26,638,850
491,2715,458,047
9,505,860
8,418,269
1,537
640,205
66,991
8,048,111
79,143
1,864,090

10
2
3
3
3
1

63,257,941

23

61,872,468

22

61,212,374

22

91,180515,504
1,576,556
132,002,259
56,761,245
2,074,597
1,155,876
6,646,240
11,805,438

1
48
21
1
2
4

163,746
311,596
1,970,802
141,481,694
59,861,537
2,074,798
1,076,351
6,028,200
9,352,892

1
50
21
1
2
3

122,512388,2702,009,318
134,897,356
62,866,981
2,074,864
1,088,194
5,678,175
13,686,945

1
47
22
1
2
5

212,628,895

77

222,321,616

78

222,812,615

78$ 275,886,836

100$ 284,194,084

100$ 284,024,989

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 (Notes 4, 9 and 31)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 33)
Right-of-use assets (Notes 4, 21 and 33)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred income tax asset (Notes 4, 5 and 28)
Other non-current assets (Notes 18, 21, 31 and 33)
Total non-current assets
TOTAL

December 31, 2020
(Audited)
Amount%LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term loans (Notes 19 and 31)
Short-term bills payable (Note 19)
Financial liabilities for hedging - current (Notes 4, 21 and 31)
Contract liabilities - current (Notes 4, 5 and 23)
Notes and accounts payable (Note 31)
Notes and 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)
Bonds payable and put options of convertible bonds - current portion (Notes 4, 20 and 31)
Loans and debts - current portion (Notes 19, 31 and 33)
Other current liabilities (Note 31)$

1,932,000
8,088,882
8,129,752
3,569,360
1,354,237
128,567
8,306,257
216,6022,525,957
164,800
11,982,859
15,234,374
1,016,068

1
3
3
1
1
3
1
4
5
-

17

62,649,715

27,728,396
16,566,263
76,614,499
916,379
14,962,826
43,590960,631
13,267,766
9,735,660
590,122

10
6
28
6
5
4
-

Total non-current liabilities

161,386,132

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)
Loans and debts - non-current (Notes 19, 31 and 33)
Contract liabilities - non-current (Notes 4 and 23)
Provisions - non-current (Notes 4, 24 and 31)
Current tax liabilities - non-current (Notes 4 and 28)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 4 and 21)
Accrued pension costs (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 (accumulated deficits)
Unappropriated retained earnings (accumulated deficits)
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 4, 2021)-4-

1,952,000
8,405,330
3,271,347
1,280,033
112,5079,981,557
903,585
2,640,078
2,775,946
1,300,000
13,808,717
1,633,453

1
3
1
4
1
1
5
1

48,064,553$$

1,932,000
8,468,278
8,516,507
4,394,318
2,072,167
109,953
8,480,982
178,279
2,499,005
221,320
11,562,586
16,468,455
1,197,423

1
3
3
1
1
3
1
4
6
-

22

66,101,273

23

32,455,333
10,300,000
77,288,330
1,761,104
14,369,486
87,181
1,023,084
13,279,792
9,737,741
530,745

11
4
27
1
5
5
4
-

35,774,370
11,600,000
72,681,739
1,998,350
13,565,971
101,711
823,805
13,530,522
9,308,126
470,289

13
4
26
1
5
5
3
-

59

160,832,796

57

159,854,883

57

209,450,685

76

223,482,511

79

225,956,156

80

57,404,844
1,772,185

21
1

54,209,846
1,187,327

19-

54,209,846
1,187,327

19-

1,450,737
2,694,122(30,875)

1-(350,581)
2,543,766(30,875)

1-(2,023,555)
1,876,805(30,875)(1)
1-

63,291,013

23

57,559,483

20

55,219,548

19

3,145,138

1

3,152,090

12,849,285

1

66,436,151

24

60,711,573

21

58,068,833

20$ 275,886,836

100$ 284,194,084

100$ 284,024,989

100

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)(Reviewed, Not Audited)

For the Three Months Ended September 30
2021
2020
Amount%Amount%

For the Nine Months Ended September 30
2021
2020
Amount%Amount%REVENUE (Notes 4, 27 and 32)$ 34,474,002

100$ 26,611,698

100$ 91,674,640

100$ 85,484,350

100

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

28,907,108

84

25,408,645

95

81,606,537

89

79,395,609

93

GROSS PROFIT

5,566,894

16

1,203,053

5

10,068,103

11

6,088,741

7

OPERATING EXPENSES(Notes 4, 25 and 27)

1,581,796

5

1,560,622

6

5,345,976

6

6,669,400

8

OPERATING PROFIT (LOSS)

3,985,098

11(357,569)(1 )

4,722,127

5(580,659)(1 )

139,1931

182,503

1

389,739-545,7071(314,415)(1 )89,695-(1,608,211)(2 )19,407-(572,520)(2 )(750,676)(3 )(1,850,981)(2 )(2,367,841)(3 )(85,146)-(57,013)-(382,599)-(176,235)-(832,888)(2 )(535,491)(2 )(3,452,052)(4 )(1,978,962)(2 )3,152,210

9(893,060)(3 )

1,270,075

1(2,559,621)(3 )INCOME TAX (BENEFIT)
EXPENSE (Notes 4 and 28)

351,6901(75,767)-

171,768-(184,376)-

NET INCOME (LOSS) FOR
THE PERIOD

2,800,520

8(817,293)(3 )

1,098,307

1(2,375,245)(3 )(8,005)-(213,217)(1 )(55,461)-(224,034)-(60,447)-(11,473)-(72,433)-(85,280)-

12,386(56,066)-

44,939(179,751)(1 )

25,075(102,819)-

60,960(248,354)(Continued)

NON-OPERATING INCOME
AND EXPENSES
Other income (Note 27)
Other gains and losses (Notes
15 and 27)
Finance costs (Notes 27
and 31)
Share of the profit or 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 (loss) on hedging
instruments subject tobasis adjustment
Unrealized gain (loss) on
investments in equity
instruments at fair value
through othercomprehensive income
Income tax related to items
that will not bereclassified subsequently
to profit or loss (Note 28)-5-CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)(Reviewed, Not Audited)

For the Three Months Ended September 30
2021
2020
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)
Gain (loss) on hedging
instruments not subject tobasis adjustment (Notes 4,
21, 26 and 31)
Income tax related to items
that may be reclassified
subsequently to profit orloss (Note 28)$(13,055)-(34,560)--

838,0663

250,906

38,185(153,295)-(164,068)
660,9433(209,361)-

481,1922$2,591,159

8$(336,101)(1 )$

2,917,304(116,784)

8-$(707,937)(109,356)$

2,800,520

8$$

2,708,171(117,012)

8-$

2,591,159

8

Other comprehensive
income (loss) for theperiod, net of income
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 (LOSS) PER
SHARE (NEW TAIWANDOLLARS; Note 29)
Basic
Diluted

(1,610)-(189,870)

$
$

0.51
0.48

$

For the Nine Months Ended September 30
2021
2020
Amount%Amount%(70,055)--

1,231,041

1(43,812)
172,534-(232,713)
928,2731

69,715-679,9191$

1,168,022

1$ (1,695,326)

(2 )

(3 )
-

$

1,555,376(457,069)2(1 )$ (2,021,822)(353,423)

(2 )
(1 )

(817,293)(3 )$

1,098,307

1$ (2,375,245)

(3 )

$

(229,105)(106,996)

(1 )
-

$

1,626,126(458,104)2(1 )$ (1,341,250)(354,076)

(2 )
-

$

(336,101)(1 )$

1,168,022

1$ (1,695,326)

(2 )

$
$

(0.13)(0.13)

$

$
$

0.28
0.26

$

$
$

(0.37)(0.37)

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 4, 2021)-6-(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

Equity Attributable to Owners of the Company

Retained Earnings

BALANCE AT JANUARY 1, 2020

Share Capital

Capital Surplus

Legal Reserve

Special Reserve

UnappropriatedEarnings(Accumulated
Deficits)$ 54,209,846

$

$

$

12,967$ (1,777,225)

2,488,907

466,416

Exchange
Differences on
Translation of the
Financial
Statements ofForeign
Operations$(54,707)

Other Equity
Unrealized
Valuation Gain
(Loss) on
Financial Assets
at Fair Value
Through Other
Comprehensive
IncomeGain (Loss) on
Hedging
Instruments$$

107,262

1,143,678

Treasury Shares
Held by
Subsidiaries
$

Total

(43,372)$ 56,553,772

Non-controlling
Interests

Total Equity$

3,578,345$ 60,132,117

Issuance of employee share options by subsidiaries

-

172

-

-

-

-

-

-

-

172

52

224

Appropriation of 2019 earnings
Legal reserve
Special reserve
Capital surplus used to cover accumulated deficit-(1,297,843)(466,416)-(12,967)-

466,416
12,967
1,297,843

-

-

-

-

-

-

-

Net loss for the nine months ended September 30, 2020

-

-

-

-

(2,021,822)

-

-

-

-

(2,021,822)(353,423)(2,375,245)

Other comprehensive income (loss) for the nine months ended
September 30, 2020, net of income tax

-

-

-

-

-

(55,231)(69,127)804,930-

680,572(653)

679,919

Total comprehensive income (loss) for the nine months ended
September 30, 2020

-

-

-

-

(2,021,822)(55,231)(69,127)804,930-(1,341,250)(354,076)(1,695,326)

Disposal of treasury shares-(3,909)--(1,734)---

12,497

6,854

-

6,854

Cash dividends from subsidiaries paid to non-controlling interests

-

-

-

-

-

-

-

-

-

-

(375,036)(375,036)

BALANCE AT SEPTEMBER 30, 2020

$ 54,209,846$

1,187,327

$

-

$

-

$ (2,023,555)$(109,938)$

38,135$

1,948,608$(30,875)$ 55,219,548$

2,849,285$ 58,068,833

BALANCE AT JANUARY 1, 2021

$ 54,209,846$

1,187,327

$

-

$

-

$

$

(134,252)$

71,359$2,606,659$(30,875)$ 57,559,483$

3,152,090$ 60,711,573(350,581)

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

79,606-

79,606-

79,606

Appropriation of 2020 earnings
Capital surplus used to cover accumulated deficit-(350,581)--

350,581

-

-

-

-

-

-

-

Issuance of employee share options by the subsidiaries

-

540

-

-

-

-

-

-

-

540

126

666

Change in percentage of ownership interests in subsidiaries

-

-

-

-

(104,639)

-

-

-

-

(104,639)

575,753

471,114

Net profit (loss) for the nine months ended September 30, 2021

-

-

-

-

1,555,376

-

-

-

-

1,555,376(457,069)

1,098,307

Other comprehensive income (loss) for the nine months ended
September 30, 2021, net of income tax

-

-

-

-

-

(26,788)(58,451)

155,989-

70,750(1,035)69,715

Total comprehensive income (loss) for the nine months ended
September 30, 2021

-

-

-

-

1,555,376(26,788)(58,451)

155,989-

1,626,126(458,104)

1,168,022

Equity component of convertible bonds issued by the Company-

188,862

-

-

-

-

-

-

-

188,862-

188,862

3,194,998

746,037

-

-

-

-

-

-

-

3,941,035-

3,941,035

-

-

-

-

-

-

-

-

-

-

(124,727)(124,727)(30,875)$ 63,291,013

3,145,138$ 66,436,151

Convertible bonds converted to ordinary shares
Cash dividends from subsidiaries paid to non-controlling interests
BALANCE AT SEPTEMBER 30, 2021

$ 57,404,844$

1,772,185

$

-

$

-

$

1,450,737

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 4, 2021)-7-$(161,040)$

12,908$2,842,254$$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Nine Months Ended
September 30
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIESIncome (loss) before income tax
Adjustments for:
Depreciation expenses
Amortization expenses
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities atfair value through profit or loss
Interest income
Dividend income
Share of loss (profit) of associates and joint ventures
Loss (gain) on disposal of property, plant and equipment
Loss on disposal of investments
Loss on inventory and property, plant and equipment
Compensation costs of employee share options
Finance costs
Net gain on foreign currency exchange
Loss on sale and leaseback transactions
Recognition of provisions
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
Financial liabilities 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
Accrued pension liabilities
Other liabilities
Cash generated from operations
Interest received
Dividends received-8-$

1,270,075$ (2,559,621)

22,528,432
165,970
28,60623,898,705
152,758
5,791(13)(97,677)(11,607)382,599
1,023,694
540
850,684666
1,850,981(829,452)
342,080
4,575,939(3,538)(2,234)(242,761)(22,516)
176,235(13,466)
388,460
224
2,367,841(621,249)
4,730,275
3,533

105,643(2,301,224)(68,763)
305,753
43,362(129,676)(111,976)
31,311
1,617,657(1,142,865)(1,142,874)
670,404(2,080)5,556
29,958,207
90,811
11,607

23,905(11,749)(140,637)
867,396
110,725
663,251
1,528,637
61,595(1,073,199)(4,520,964)(16,904,416)(962,948)(2,628,167)(126,909)(33,033)
5,115,462
232,156
63,817(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Nine Months Ended
September 30
2021
2020
Interest paid
Income tax paid

$ (1,707,710)(257,444)$ (2,477,852)(191,653)

Net cash generated from operating activities

28,095,471

2,741,930

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of financial assets at amortized cost
Disposal of financial assets at amortized cost
Purchase of financial assets for hedging
Proceeds from sale of financial assets for hedging
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in prepayments for equipment
Increase in other intangible assets
Increase in restricted assets
Net cash inflow on disposal of subsidiary(2,505,043)
7,646,697(3,566,844)
8,888,275(1,635,174)
394,747(84,030)
92,839(11,860,667)(125,483)(282,691)
942(5,398,640)
1,694,234(9,667,026)(858,411)
39,076(63,471)
100,018(3,983,167)(57,715)(52,410)-(3,036,432)(18,247,512)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term debts(Decrease) increase in short-term bill payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term debts
Repayments of long-term debts
Repayments of the principal portion of lease liabilities
Proceeds of guarantee deposits received
Refunds of guarantee deposits received
Proceeds from sale and leaseback transactions
Proceeds from issuance of ordinary shares of subsidiaries
Cash dividends paid to non-controlling interests
Proceeds from disposal of treasury shares

20,000(8,088,882)
4,500,000(5,000,000)
8,023,590(10,268,775)(7,754,584)
266,221(201,638)
2,810,098
471,114(124,727)-

1,552,000
8,068,279(8,950,000)
65,830,527(43,944,169)(8,153,315)
92,983(137,738)(375,036)
6,854

Net cash (used in) generated from financing activities(15,347,583)

13,990,385

56,753(305,481)(Continued)

Net cash used in investing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES-9-CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Nine Months Ended
September 30
2021
2020
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS$

9,768,209$ (1,820,678)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD

27,125,937

28,459,528

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$ 36,894,146$ 26,638,850

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 4, 2021)- 10 -(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)(Reviewed, Not Audited)

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, 2021, December 31, 2020 and
September 30, 2020, CADF and NDF held a combined 41.58%, 44.03% and 44.03%, respectively of theCompany’s shares.

2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its subsidiaries (collectively, the “Group”) wereapproved by the board of directors and authorized for issue on November 4, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports
by Securities Issuers and 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 any material
impact on the Group’s accounting policies.
b. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
Effective Date Announced by
IASB (Note 1)

New IFRSs
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between An Investor and Its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12 “Deferred Tax related to Assets andLiabilities arising from a Single Transaction”- 11 -To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)
January 1, 2023 (Note 4)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods
beginning on or after their respective effective dates.
Note 2: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting
policies that occur on or after the beginning of the annual reporting period beginning on orafter January 1, 2023.
Note 4: Except that deferred taxes will be recognized on January 1, 2022 for temporary differences
associated with leases and decommissioning obligations, the amendments will be applied
prospectively to transactions that occur on or after January 1, 2022.
The application of new IFRSs in issue but not yet endorsed and issued into effect by the FSC would nothave any material impact on the Group’s accounting policies. As of the date the consolidated financial
statements were authorized for issue, the Group is continuously assessing the possible impact that theapplication of other standards and interpretations will have on the Group’s financial position andfinancial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESExcept 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, 2020.
Statement of Compliance
These 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 by the FSC. Disclosure information included in these interim consolidated financial statements isless than the disclosures required in a full set of annual consolidated financial statements.
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.
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, 2020.

- 12 -

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.
Lease
The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 tochange the lease payments originally due by June 30, 2022, that results in the revised consideration for thelease substantially the same as, or less than, the consideration for the lease immediately preceding thechange. There is no substantive change to other terms and conditions. The Group elects to apply thepractical expedient to rent concessions for the abovementioned lease contracts, and therefore, does notassess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction inlease payment in profit or loss in the period in which the events or conditions that trigger the concession
occurs, and makes a corresponding adjustment to the lease liability.
Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
The critical 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, 2020.

6. CASH AND CASH EQUIVALENTS

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

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

384,00218,447,813

333,677
17,690,186

102,243
12,480,737

14,887,299
3,175,032

6,980,493
2,121,581

7,147,612
6,908,258$ 36,894,146$ 27,125,937$ 26,638,850- 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,
2021

December 31,
2020

September 30,
2020

0%-1.9%0%-1.9%0%-1.90%

0.07%-0.53%
0.2%-0.41%

0.24%-2.20%
0.22%-0.55%

0.28%-2.20%
0.28%-0.65%

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

Maturity Date
September 30, 2021
December 31, 2020
September 30, 20202021.10.6-2021.11.4
2021.1.4-2021.11.1
2020.10.8-2020.12.16

Carrying
Value

Subject
Financial assets for hedging - current
Financial assets for hedging - current
Financial assets for hedging - current$ 2,228,412
7,613,636
9,505,814

Impact on other comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the nine months ended September 30, 2021
For the three months ended September 30, 2021

$ (55,461)(8,005)For the nine months ended September 30, 2021, the amount of hedge settlements recognized as
prepayments for equipment was $79,606 thousand.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
September 30,
2021

December 31,
2020

September 30,
2020$ 169,479$ 274,761$ 491,271

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Investments in Equity Instruments
September 30,
2021

December 31,
2020

September 30,
2020

63,999$ 134,042$ 100,161

27,181

29,70422,351

91,180$ 163,746$ 122,512

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

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

9. FINANCIAL ASSETS AT AMORTIZED COST
September 30,
2021

December 31,
2020

September 30,
2020$ 1,389,023
1,550$ 6,551,693-$ 5,458,047-$ 1,390,573$ 6,551,693$ 5,458,047

$

$

$

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

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

515,504

311,596388,270

The range of interest rates for time deposits with original maturities of more than 3 months wereapproximately 0.21%-1.10%, 0.21%-1.90% and 0.40%-2.75% per annum as of September 30, 2021,
December 31, 2020 and September 30, 2020, respectively.

- 15 -

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE, NET

Notes receivable

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

3,031

655

14,711

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

12,140,066(225,753)
11,914,313$ 11,917,344

9,903,008(206,152)
9,696,856$

9,697,511

8,615,272(211,714)
8,403,558$

8,418,269

The average credit period was 7 to 55 days. In determining the recoverability of a accounts receivable, theGroup considered any change in the credit quality of the receivables since the date credit was initiallygranted to the end of the reporting period, and any allowance for impairment loss was based on theestimated irrecoverable amounts determined by reference to the Group’s past default experience with thecounterparty and an analysis of the counterparty’s current financial position. The Group adopted a policy of
only dealing with entities that are rated the equivalent of investment grade or higher and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit rating information is obtained from independent rating agencies where available or, if not available,
the Group uses other publicly available financial information or its own trading records to rate its major
customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored andthe aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed and approved by the risk management committee
annually.
The Group applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9,which permits the use of lifetime expected loss allowance for all accounts receivable. The expected credit
losses on accounts receivable are estimated using a provision matrix prepared 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 aswell as the forecasted direction of economic conditions at the reporting date. As the Group’s historicalcredit loss experience does not show significantly different loss patterns for different customer segments,
the loss allowance based on the past due status is not further distinguished according to the different
segments of the Group’s customer base.
The Group writes off accounts receivable when there is information indicating that the debtor isexperiencing severe financial difficulty and there is no realistic prospect of recovery. For accounts
receivable that have been written off, the Group continues to engage in enforcement activity to attempt torecover the past due receivables. Where recoveries are made, these are recognized in profit or loss.
The following table details the loss allowance of accounts receivable based on the Group’s provision
matrix:
September 30, 2021

Expected credit loss rate

Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

0.67%

2.98%

0.95%

0.00%

89.63%

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$ 11,915,147(79,853)$

56,648(1,689)

$

6,501
(62)

$

941
-

$

160,829(144,149)$ 12,140,066(225,753)

Amortized cost

$ 11,835,294$

54,959

$

6,439

$

941

$

16,680$ 11,914,313- 16 -

December 31, 2020
Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

0.14%

0.18%

1.20%

53.78%

92.74%

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$

9,304,785(13,391)$

256,178(470)$

134,111(1,608)$5,513(2,965)$

202,421(187,718)$

9,903,008(206,152)

Amortized cost$

9,291,394$

255,708$

132,503

$

2,548

$

14,703$

9,696,856

September 30, 2020
Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

0.04%

0.38%

8.26%

67.05%

95.51%

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$

7,946,934(3,401)$

314,390(1,195)$

137,376(11,342)$

38,874(26,063)$

177,698(169,713)$

8,615,272(211,714)

Amortized cost$

7,943,533$

313,195$

126,034$

12,811

$

7,985

$

8,403,558

The movements of the loss allowance of accounts receivable were as follows:
For the Nine Months Ended
September 30
2021
2020
Balance at January 1
Add: Net remeasurement of loss allowance
Add: Amounts recovered
Less: Amounts written off
Foreign exchange gains and losses$ 206,152
28,606234(9,237)(2)$ 218,665
5,791(12,735)(7)

Balance at September 30$ 225,753$ 211,714

September 30,
2021

December 31,
2020

September 30,
2020$ 7,771,779
618,107
370,645
55,421$ 7,898,482
627,437
214,362
47,824$ 7,263,449
624,082
133,597
26,983$ 8,815,952$ 8,788,105$ 8,048,111

11. INVENTORIES, NET

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
OthersThe operating costs for the nine months ended September 30, 2021 and 2020 included losses frominventory write-downs of $279,354 thousand and $196,286 thousand, respectively. And the operating costs
for the three months ended September 30, 2021 and 2020 included (reversal of loss) losses from inventory
write-downs of $2,379 thousand and $(933) thousand, respectively.

- 17 -

12. NON-CURRENT ASSETS HELD FOR SALE
September 30,
2021

December 31,
2020

September 30,
2020$ 89,956$ 89,296$ 79,143

Aircraft held for saleTo 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 markets and the proposed sale prices were 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
Cal-Dynasty International
Cal-Asia Investment
Dynasty Aerotech International Corp.
Yestrip
Cal Park
Cal Hotel Co., Ltd.
Sabre Travel Network (Taiwan)
Mandarin Airlines

Cal-Dynasty International
Taiwan Airport Services

Note:

Taiwan Air Cargo Terminal (Note)
Taoyuan International Airport Services
Taiwan Airport Services (Note)
Global Sky Express
Tigerair Taiwan Co., Ltd. (Note)
Taiwan Aircraft Maintenance And
Engineering Co., Ltd.
Kaohsiung Catering Services, Ltd.
Dynasty Properties Co., Ltd.
Dynasty Hotel of Hawaii, Inc.
Taiwan Airport Service (Samoa)

Main Businesses and Products

Proportion of Ownership (%)
September 30,
December 31,
September 30,
2021
2020
2020

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

100

100

100

100
100

100
100

100
100

100
100
94

100
100
100
94

100
100
100
94

97

94

94

59
49
48
25
82
100

59
49
48
25
81
100

59
49
48
25
77
100

In-flight catering
Real estate management
Hotel businessAirport supporting service andinvestment

54
100
100
100

54
100
100
100

54
100
100
100

Based on the Group’s proportion of ownership.

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, 2021 and 2020 was reported according to financial statements that were notreviewed by independent auditors, except for Mandarin Airlines and Tigerair Taiwan Co., Ltd.
To strengthen the capital structure of Tigerair Taiwan Co., Ltd., the board of directors of the Company
approved the plan to issue ordinary shares for cash at $25 per share on August 6, 2020. The Company
subscribed for 47,228 thousand shares in October 2020 and 26,286 thousand shares in November 2020. The
proportion of ownership of the Group increased to 81%. Because the shares were subscribed at a percentage
different from its existing ownership percentage, the Company’s retained earnings decreased by $169,272
thousand.

- 18 -

Tigerair Taiwan Co., Ltd. planned to issue ordinary shares for cash to meet the needs for funds. The boardof directors of the Company approved the plan to issue ordinary shares for cash at $25 per share on August
5, 2021. The Company subscribed for 101,212 thousand shares in September 2021. The proportion ofownership of the Group increased to 82%. Because the shares were subscribed at a percentage different
from its existing ownership percentage, the Company’s retained earnings decreased by $54,449 thousand.
To strengthen the capital structure of Mandarin Airlines, the board of directors of the Company approved
the plan to issue ordinary shares for cash at $10 per share on August 26, 2021. The Company subscribed for
199,677 thousand shares in September 2021. The proportion of ownership of the Group increased to 97%.
Because the shares were subscribed at a percentage different from its existing ownership percentage, theCompany’s retained earnings decreased by $50,190 thousand.
The liquidation of Yestrip Co., Ltd. was completed on April 22, 2021, and the Company recognized aliquidation loss of $540 thousand.

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates
Investments in jointly controlled entities

September 30,
2021

December 31,
2020

September 30,
2020$

880,464
696,092$ 1,079,852
890,950$ 1,137,076
872,242$ 1,576,556$ 1,970,802$ 2,009,318

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

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

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

28,174
3,493
501,171
288,006

277,234
5,237
476,219
270,046

365,387
7,725
461,308
259,765

59,62051,11642,891

880,464$ 1,079,852$ 1,137,076

At the end of the reporting period, the proportion of ownership and voting rights of associates held by
the Group were as follows:

Name of Associate

Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2021
2020
2020

China Aircraft Services
Dynasty Holidays
Airport Air Cargo Terminal (Xiamen)
Airport Air Cargo Service (Xiamen)
Eastern United International Logistics(Holdings) Ltd. (Hong Kong)- 19 -

20%
20%
28%
28%

20%
20%
28%
28%

20%
20%
28%
28%

35%

35%

35%

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

China Aircraft Services
Dynasty Holidays
Airport Air Cargo Terminal(Xiamen)
Airport Air Cargo Service(Xiamen)Eastern United International
Logistics (Holdings) Ltd.
(Hong Kong)

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$ (27,075)(422)$ (12,550)(682)$ (244,985)(1,302)$ (73,782)(2,326)

5,391

5,347

29,20019,247

7,019

4,637

20,366

13,751

3,051

1,838

8,980

3,288

(1,410)$ (187,741)$ (39,822)$ (12,036)$

The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on the associates’ financial statements whichhave not been reviewed. However, the management determined that there would have been be no
significant adjustments had these investee’s financial statements been independently reviewed.
b. Investments in jointly controlled entities
The investments in jointly controlled entities were as follows:
September 30,
2021

December 31,
2020

September 30,
2020$ 533,279
121,458
33,484
7,871$ 695,959
149,353
37,7677,871$ 680,527
146,027
37,8207,868$ 696,092$ 890,950$ 872,242

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 jointly controlled
entities held by the Group was as follows:
Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2021
2020
2020
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 Taikoo Group to invest in China Pacific
Catering Services and China Pacific Laundry Services. According to the agreement, both sides have theright to make major motion vetoes on the board of directors, and therefore, the Group does not havecontrol.

- 20 -

To expand the Group’s catering business, Kaohsiung Catering entered into a joint venture agreementwith a Japanese brand company to invest in Delica International Co, Ltd., with the Japanese brandcompany having the right to make decisions on operations, and therefore, the Group does not havecontrol.
The investment (loss) gain recognized for jointly controlled entities accounted for using the equity
method was as follows:

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

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$ (60,084)(11,299)(1,727)-$ (48,653)(6,949)(1)-$ (162,680)(27,895)(4,283)-$ (120,543)(15,877)
7-$ (73,110)$ (55,603)$ (194,858)$ (136,413)

The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on the jointly controlled entities’ financial
statements which have not been reviewed. However, the management determined that there would havebeen no significant adjustments had this investee’s 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 6 and 7 (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, 2020
Additions
Disposals
Reclassification
Net exchange differences$

1,002,499(15,205)(16,972)$

16,084,063
31,375(372,712)
303(30,991)$ 272,077,692
448,356(2,873,953)
1,485,746-$

16,846,835
378,680(195,126)
22,295(3,326)$ 306,011,089
858,411(3,456,996)
1,508,344(51,289)

Balance at September 30, 2020$

970,322$

15,712,038$ 271,137,841$

17,049,358$ 304,869,559

Balance at January 1, 2020
Depreciation expenses
Disposals
Reclassification
Net exchange differences

$

-

$

(7,028,540)(368,318)
370,829
16,330$ (141,886,170)(13,546,525)
2,691,178
1,489,158-$ (11,209,408)(693,661)
188,919
5,564(1,559)$ (160,124,118)(14,608,504)
3,250,926
1,494,722
14,771

Balance at September 30, 2020

$

-

$

(7,009,699)$ (151,252,359)$ (11,710,145)$ (169,972,203)

Balance at September 30, 2020, net value$

970,322$

8,702,339$ 119,885,482$

Accumulated depreciation and impairment

5,339,213$ 134,897,356(Continued)- 21 -

Freehold Land

Buildings

FlightEquipment

OthersTotal

Cost
Balance at January 1, 2021
Additions
Disposals
Reclassification
Net exchange differences$

955,823(9,790)$15,705,635
220,425(17,311)(18,061)$ 282,007,135
866,095(44,511,895)
9,198,342-$

17,058,648
548,654(136,391)
15,754(1,907)$ 315,727,241
1,635,174(44,665,597)
9,214,096(29,758)

Balance at September 30, 2021$

946,033$

15,890,688$ 247,559,677$

17,484,758$ 281,881,156

Balance at January 1, 2021
Depreciation expenses
Disposals
Reclassification
Net exchange differences

$

-

$

(7,121,637)(367,719)
17,311
9,586$ (155,376,265)(12,648,680)
37,878,024987-$ (11,747,645)(660,556)
133,414
2,708
1,575

$ (174,245,547)(13,676,955)
38,028,749
3,695
11,161

Balance at September 30, 2021

$

-

$

(7,462,459)$ (130,145,934)$ (12,270,504)$ (149,878,897)

Balance at September 30, 2021, net value$

946,033$

8,428,229$ 117,413,743$

Accumulated depreciation and impairment

5,214,254$ 132,002,259(Concluded)
Reclassification was mainly aircraft prepayment.
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
7-20 years
10-20 years
6-8 years
3-10 years
7-12 years
3-15 years
5-12 years

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.
The Group disposed of a portion of flight equipment and recognized a loss of $950,980 thousand for thethree months ended June 30, 2021.

- 22 -

16. INVESTMENT PROPERTIES
September 30,
2021

December 31,
2020

September 30,
2020$ 2,074,597$ 2,074,798$ 2,074,864

Carrying amount
Investment properties

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to other parties. The buildings are depreciated on a straight-line basis over 55 years.
The fair values of the investment properties held by the Group were all $2,488,931 thousand as ofDecember 31, 2020 and September 30, 2020, respectively. In addition, management assessed that there wasno significant difference between the fair values on September 30, 2021 and December 31, 2020. The fairvalue valuations were performed by independent qualified professional valuers and management’s
assessment based on similar 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, 2020
Additions
Reclassification
Amortization expenses
Effects of exchange rate changes$ 2,406,163
57,717549-$

186,197-$ (1,409,668)(152,758)(6)$ 1,182,692
57,717549(152,758)(6)

Balance at September 30, 2020

$ 2,464,429$

186,197$ (1,562,432)$ 1,088,194

Balance at January 1, 2021
Additions
Reclassification
Amortization expenses
Effects of exchange rate changes$ 1,763,644
52,50824,710-$186,197
168,280-$(873,490)(165,970)(3)$ 1,076,351
220,788
24,710(165,970)(3)

Balance at September 30, 2021

$ 1,840,862$

354,477$ (1,039,463)$ 1,155,876

The above other intangible assets are amortized on a straight-line basis over 2-16 years.
In addition, the contract for the purchase of the trademark has a final payment of $83,000 thousand still
unpaid.

- 23 -

18. OTHER ASSETS
September 30,
2021

December 31,
2020

September 30,
2020$

213,088432,040
10,009398,633$

136,681348,554
11,065364,879$

278,196
1,246,722
11,710327,462$

1,053,770$

861,179$

1,864,090$

8,616,451
1,524,002
1,070,646
562,623
18,141
13,575$5,725,340
2,216,049
1,087,668
291,742
18,07814,015$

9,845,883
2,501,818
1,166,081
130,540
18,292
24,331$ 11,805,438$

9,352,892$ 13,686,945

Current
Temporary payments
Prepayments
Restricted assets
OthersNon-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
OthersThe prepayments for aircraft are comprised of prepaid deposits and capitalized interest from the purchase of
A321neo, A320neo and B777F aircraft. For details of the contract for the purchase of the aircraft, refer toNote 34.

19. BORROWINGSa. Short-term loans
September 30,
2021

December 31,
2020

September 30,
2020

Bank loans - unsecured$ 1,952,000$ 1,932,000$ 1,932,000Interest rates

0.90%-1.27%

0.92%-1.28%

0.92%-1.28%

September 30,
2021

December 31,
2020

September 30,
2020

$

-

$ 8,100,000
11,118$ 8,500,000
31,722$-$ 8,088,882$ 8,468,278

0.99%-1.00%

0.99%-1.23%

b. Short-term bills payable

Commercial paper
Less: Unamortized discount on bills payable

Annual discount rate-

- 24 -

c. Long-term borrowings

Unsecured bank loans
Secured bank loans
Commercial papers
Proceeds from issuance
Less: Unamortized discounts

September 30,
2021

December 31,
2020

September 30,
2020$ 22,399,892
37,592,547$ 23,470,696
39,584,540$ 14,114,500
40,862,328

30,460,000
29,22390,423,216
13,808,717

29,490,000
22,532
92,522,704
15,234,374

34,200,000
26,63489,150,194
16,468,455$ 76,614,499$ 77,288,330$ 72,681,739

0.83%-1.60%

0.81%-1.63%

0.81%-1.63%

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,
2021

December 31,
2020

September 30,
2020

2009.2.42032.6.30

2009.2.42032.6.30

2009.2.42032.6.30

Periods

The Company has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until September 2026, were used by the Group to guarantee the commercial
papers issued. As of September 30, 2021, December 31, 2020 and September 30, 2020, suchcommercial papers were issued at discount rates of 0.9787%-1.0907%, 1.0263%-1.1629% and1.0310%-1.1310%, 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 credit guarantee were provided by
the government. The total amount of the loans is $35,290 million, which shall be repaid within 2 years
from the date of initial drawdown. The Group can apply to the lending institution for a two-year
extension. As of September 30, 2021, the Group had made a drawdown in the amount of $23,710
million.

- 25 -

20. BONDS PAYABLE

Unsecured corporate bonds first-time issued in2016
Unsecured corporate bonds second-time issued in2016
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
Convertible bonds sixth-time issues
Convertible bonds seventh-time issues

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

-

2,350,000

2,350,000-

2,500,000

2,500,000

1,000,000

1,000,000

1,000,000

2,600,000

2,600,000

3,500,000

4,500,000

4,500,000

4,500,000

3,500,000
1,939,234
4,327,029
17,866,263

3,500,000
5,832,859
22,282,859

3,500,000
5,812,586
23,162,586

1,300,000

11,982,859

11,562,586$ 16,566,263$ 10,300,000$ 11,600,000

Conditions

Rate (%)

Less: Current portion and put option of
convertible bonds

Related issuance conditions were as follows:
Category

PeriodFive-year unsecured bonds - issued at par in May 2016;
repayable in May 2020 and 2021; 1.19% interest p.a.,payable annually
Five-year unsecured bonds - issued at par in September
2016; repayable in September 2020 and 2021; 1.08%
interest p.a., payable annually
Three-year private unsecured bonds - issued at par in May
2017; repayable on due date; interest of 1.2% p.a.,payable annually
Seven-year private unsecured bonds - issued at par in May
2017; repayable on due date; interest of 1.75% p.a.,payable annually
Three-year private unsecured bonds - issued at par in
October 2017; repayable on due date; interest of 1.14%
p.a., payable annually
Five-year private unsecured bonds - issued at par in October
2017; repayable in October 2021 and 2022; 1.45%
interest p.a., payable annually
Five-year private unsecured bonds - issued at par in
November 2018; repayable in November 2022 and 2023;
1.32% interest p.a., payable annually
Seven-year private unsecured bonds - issued at par in
November 2018; repayable in November 2024 and 2025;
1.45% interest p.a., payable annually
Five-year private unsecured bonds - issued at par in June
2019; repayable in June 2023 and 2024; 1.10% interestp.a., payable annually
Seven-year private unsecured bonds - issued at par in June
2019; repayable in June 2025 and 2026; 1.32% interestp.a., payable annually
Five-year convertible bonds - issued at discount in January
2018; repayable in lump sum upon maturity; 1.3821%
discount rate p.a.

2016.5.26-2021.5.26

Principal repayable in May 2020 and2021; interest p.a. payable annually

1.19

2016.9.27-2021.9.27

Principal repayable in September 2020
and 2021; interest p.a. payableannually
Principal repayable on due date;indicator rate; payable annually

1.08

2017.5.19-2024.5.19

Principal repayable on due date;indicator rate; payable annually

1.75

2017.10.12-2020.10.12

Principal repayable on due date;indicator rate; payable annually

1.14

2017.10.12-2022.10.12

1.45

Five-year convertible bonds-issued at discount in April
2021; repayable in lump sum upon maturity; 0.8612%
discount rate p.a.

2021.04.28-2026.04.28

Principal repayable in October 2021
and 2022; indicator rate; payableannually
Principal repayable in November 2022
and 2023; indicator rate; payableannually
Principal repayable in November 2024
and 2025; indicator rate; payableannually
Principal repayable in June 2023 and2024; indicator rate; payableannually
Principal repayable in June 2025 and2026; indicator rate; payableannually
Unless bonds are converted to sharecapital or redeemed, principal
repayable one time in January 2023;
1.3821 discount rate p.a.
Unless bonds are converted to sharecapital or redeemed, principal
repayable the time in April 2026;
0.8612 discount rate p.a.

2017.5.19-2020.5.19

2018.11.30-2023.11.30

2018.11.30-2025.11.30

2019.06.21-2024.06.21

2019.06.21-2026.06.21

2018.01.30-2023.01.30- 26 -

1.20

1.32

1.45

1.10

1.32

-

-

The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:
a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.
c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions.
d. Between April 30, 2018 and January 30, 2023 (except for the period between the former dividend date
and the date of the dividend declaration on record), holders may convert the bonds to the Company’s
ordinary shares. The initial conversion price was set at NT$13.2, which is subject to adjustment if there
is a capital injection by cash, share dividend distribution, and the proportion of cash dividends per sharein market price exceeding 1.5%. Because the Company distributed cash dividends as of July 29, 2019,the conversion price was adjusted to NT$12.6. Also a total face value of NT$4,025,700 thousand of
convertible bonds was converted into 319,500,000 ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.
Proceeds from issuance
Equity component$ 6,012,000(409,978)Liability component at the date of issuance$ 5,602,022

The Company issued the seventh issue of its unsecured convertible bonds, and the issuance conditions wereas follows:a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on April 28, 2024.
c. The Company may redeem the bonds at face value between July 28, 2021 and March 18, 2026 undercertain conditions.
d. Between July 28, 2021 and April 28, 2026 (except for the period between the former dividend date andthe date of the dividend declaration on record), holders may convert the bonds to the Company’s
ordinary shares. The initial conversion price was set at NT$19 per share, which is subject to adjustment
if there is a capital injection by cash or share dividend distribution.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component$ 4,500,000(188,862)

Liability component at the date of issuance$ 4,311,138- 27 -

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

Carrying amounts
Land
Buildings
Flight equipment
Other equipment

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

7,382,514
1,146,996
48,224,332
7,403$ 56,761,245

7,813,335
1,394,386
50,644,652
9,164$ 59,861,537

7,950,003
1,271,880
53,643,107
1,991$ 62,866,981

For the Nine Months Ended
September 30
2021
2020
Additions to right-of-use assets
Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment$ 2,661,426$ 2,113,026$$

147,161
298,035
8,396,088
9,993

363,649
589,586
8,335,550
1,213$ 8,851,277$ 9,289,998

September 30,
2021

December 31,
2020

September 30,
2020$ 2,640,078$ 13,267,766$ 2,525,957$ 13,279,792$ 2,499,005$ 13,530,522

b. Lease liabilities

Carrying amounts
Current
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,
2021

December 31,
2020

September 30,
2020

0%-1.80%0%-2.98%
0.68%-3.34%
0%-1.50%

1.09%-1.80%
0%-3.56%
0.68%-3.34%
1.06%-1.50%

0%-1.8%0%-2.98%
0.68%-3.34%
1.058%- 28 -

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
hedge. The lease information is as follows:
Maturity Date
September 30, 2021

December 31, 2020

September 30, 2020

Subject

Carrying Value

2022.2.9-2028.5.15

Financial liabilities for hedging current
Financial liabilities for hedging non-current
2022.2.9-2028.5.15 Financial liabilities for hedging current
Financial liabilities for hedging non-current
2021.4.15-2028.5.15 Financial liabilities for hedging current
Financial liabilities for hedging non-current$

8,403,826
27,728,396
8,120,445
32,455,333
8,390,296
35,774,370

Influence of comprehensive income
Recognized in
Other
Comprehensive
IncomeFor the nine months ended September 30, 2021
For the three months ended September 30, 2021
For the nine months ended September 30, 2020
For the three months ended September 30, 2020$

231,217(190,986)
1,262,985
832,399

Reclassified toIncome$501,418
188,207219,942
93,174d. China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, twenty A330-300
planes, fifteen 737-800 planes, ten A320-200 planes, two A320neo planes, four ERJ190 planes, andthree ART72-600 planes for operation, lease period are 4 to 16 years from February 2006 to July 2023.
The rental pricing method is partly a fixed amount of funds, and some of them are floating rents,
floating rents are according to benchmark ratio, the rent is revised every half year. When the lease
expires, the lease agreements have no purchase rights.
The information of refundable deposits and opening of credit letter due to rental of planes:

Refundable deposits
Credit guarantees

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

748,518
1,842,845

725,135
1,756,656

741,998
1,797,508

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, refer to Note 34. The lease includes an option to extend the lease, as it is not possible toextend the lease, the amount of the lease related to the period covered by the option is not included in
the lease liability. If the amount of the extended lease period was included in the lease liability, thelease liability would have increased by $894,584 thousand, $885,657 thousand and $882,702 thousandon September 30, 2021, December 31, 2020 and September 30, 2020, respectively.

- 29 -

Taiwan Air Cargo Terminal Co. and CAA signed a BOT contract with a land lease agreement. For
details, please refer to Note 34.
e. In September 2019, the Company signed a rental contract for six A321neo with Air Lease Corporation,
which is expected to be introduced between 2021 and 2023.
In October 2019, the Company signed a rental contract for eight A321neo with CALC Lease
Corporation, which is expected to be delivered between 2022 and 2023.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental contract for eight A320neo with ICBC
Lease Corporation, which is expected to be delivered between 2021 and 2024. As of September 30,
2021, two A320neo have been delivered.
f. In order to revitalize assets and strengthen financial structure, the Company signed a sale and leaseback
agreement for five A330-300 with CALC Lease Corporation in June 2021 and September 2021. Thoseaircraft were sold for $2,810,098 thousand and the Company recognized a loss of $342,080 thousand.
The lease term is 4 years without renewal option or right of first refusal and the annual lease payments
for each aircraft are US$4,200 thousand to US$4,823 thousand.
g. In order to revitalize assets, the Company signed a lease agreement for two 747-400F with US Cargo
Company in August 2021 and September 2021, which is expected to be delivered between October
2021 and December 2021.
h. Other lease information
The Group uses 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
2021
2020

For the Nine Months Ended
September 30
2021
2020

$
9,203
$ (2,961,296)$
22,846$ (8,889,159)$
6,994$ (3,183,943)$
19,117$ (9,581,731)

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

22. OTHER PAYABLES

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

September 30,
2021

December 31,
2020

September 30,
2020$ 2,687,129
2,393,587
1,023,532
872,152
726,684
159,529
114,160
2,004,784$ 1,948,982
1,853,717
366,589
956,956
420,194
120,550
184,3632,454,906$ 2,197,375
1,341,930
491,382
857,837
451,174
173,278
317,156
2,650,850$ 9,981,557$ 8,306,257$ 8,480,982- 30 -

23. CONTRACT LIABILITIES
September 30,
2021

December 31,
2020

September 30,
2020$ 2,691,031
1,496,695-$ 2,671,203
2,659,093
168$ 2,789,328
3,603,340-$ 4,187,726$ 5,330,464$ 6,392,668$ 3,271,347
916,379$ 3,569,360
1,761,104$ 4,394,318
1,998,350$ 4,187,726$ 5,330,464$ 6,392,668

September 30,
2021

December 31,
2020

September 30,
2020

Operating leases - aircraft$ 17,738,772$ 14,534,286$ 13,787,291

Current
Non-current

$

$

$

Frequent flyer program
Advance ticket sales
OthersCurrent
Non-current

24. PROVISIONS

2,775,946
14,962,826$ 17,738,772

164,800
14,369,486$ 14,534,286

221,320
13,565,971$ 13,787,291
Aircraft Lease
Contracts

Balance at January 1, 2020
Additional provisions recognized
Usage
Effects of exchange rate changes$ 10,371,857
4,730,275(962,948)(351,893)

Balance at September 30, 2020

$ 13,787,291

Balance at January 1, 2021
Additional provisions recognized
Usage
Effects of exchange rate changes$ 14,534,286
4,575,939(1,142,874)(228,579)

Balance at September 30, 2021

$ 17,738,772

The Company and Mandarin Airlines leased flight equipment under operating lease agreements. Under thecontracts, 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 ofengine revolution. The Company and Mandarin Airlines had existing obligations to recognize provisions
when signing a lease or during the lease term. Tigerair Taiwan Co., Ltd. also leased flight equipment underoperating lease agreements. In accordance with the contract, Tigerair had to pay the maintenance reserve
accounted for by using the actual number of flying hours.

- 31 -

25. RETIREMENT BENEFIT PLANS
Employee benefits expense in respect of the Group’s defined benefit retirement plan was calculated using
the actuarially determined pension cost discount rate as of December 31, 2020 and 2019.

Operating costs
Operating expenses

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

242,394
99,462$

222,901
91,616$$

341,856$

314,517$ 1,018,420$ 1,014,133

September 30,
2021

December 31,
2020

September 30,
2020

7,000,000$ 70,000,000$ 57,404,844

7,000,000$ 70,000,000$ 54,209,846

7,000,000$ 70,000,000$ 54,209,846

739,235
279,185$

709,999
304,134

26. EQUITY
a. Share capital
Ordinary shares

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

The Company issued the 6th domestic unsecured convertible bonds, and the holders of the convertible
bonds applied for conversion in the amount of $4,025,700 thousand for the six months ended September
30, 2021. The number of ordinary shares exchanged was 319,500,000 and entitled to have theirregistration changed after the issuance of new shares.
b. Capital surplus

Issuance of shares in excess of par value andconversion premium
Retirement of treasury shares
Employee share options expired
Long-term investments
Bonds payable - equity component
Others

September 30,
2021

December 31,
2020

September 30,
2020

$

$

$

746,037
540
323,766
701,842$ 1,772,185

146,351
33,513
11,747
119,134
409,978
466,604$ 1,187,327

146,351
33,513
11,747
119,134
409,978
466,604$ 1,187,327

The capital surplus from share issued in excess of par (including additional paid-in capital from theconverted convertible bonds) may be used to offset deficits; in addition, when the Group has no deficit,
such capital surplus may be distributed as cash dividends or transferred to capital (but limited to acertain percentage of the Group’s paid-in capital on a yearly basis).

- 32 -

The capital surplus arising from long-term investments, employee share options and the distribution of
cash dividends to treasury share held by subsidiaries may not be used for other purposes but to offset
deficits. The capital surplus arising from share options for employees and convertible bonds cannot be
used.
c. Appropriation of earnings and dividend policy
Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”),
where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes,
offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting
aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining
profit together with any undistributed retained earnings shall be used by the Company’s board of
directors as the basis for proposing a distribution plan, which is to distribute dividends and bonus noless than 50% of the remaining profit and undistributed retained earnings. The dividends and bonus
mentioned above can be distributed in the form of new shares or cash, and the cash dividends should be
no less than 30% of the total dividends.
Under the Company Act, if surplus earnings are distributed in the form of new shares, the distributionof shares shall be approved in the meeting of the board of directors; if such earnings are distributed in
the form of cash, the cash distribution shall be authorized after a resolution has been adopted by amajority vote at a meeting of the board of directors attended by two-thirds of the total number of
directors; and in addition, a report of such distribution shall be submitted to the shareholders’ meeting.
If the Group has no loss, according to laws and regulations, the Group can distribute its capital reserve,in whole or in part, by issuing new shares or cash based on financial, business and management
considerations. If such surplus earnings is distributed in the form of new shares, it shall be approved bya meeting of the board of directors; if such surplus earning is distributed in the form of cash, it shall beauthorized after a resolution has been adopted by a majority vote at a meeting of the board of directors
attended by two-thirds of the total number of directors; and in addition thereto a report of such
distribution shall be submitted to the shareholders’ meeting.
Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”) basedon the amended Company Act, where the Company made profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws andregulations, and then any remaining profit together with any undistributed retained earnings shall be
used by the Company’s board of directors as the basis for proposing a distribution plan with due
consideration of any future aircraft acquisition plans and fund demands, which should be resolved in theshareholders’ meeting for the distribution of dividends and bonuses to shareholders by cash or shares(cash dividends cannot be less than 30% of total dividends distributed). However, if the Company’s
profit before tax in a fiscal year after deductions for the abovementioned items is not sufficient forearnings distribution, retained earnings can be used as a supplement for the deficiency.
The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thefollowing year.
1) Offsetting deficit in 2019
On June 23, 2020, the offsetting of deficit in 2019 was resolved and recognized in the shareholders’meeting. The deficit included a net loss of $1,199,798 thousand and negative adjustment of otherretained earnings of $577,427 thousand; thus, the remaining amount of accumulated deficit was$1,777,225 thousand. The deficit was offset by the legal reserve of $466,416 thousand, the special
reserve of $12,967 thousand and the capital reserve of $1,297,843 thousand.

- 33 -

2) Offsetting deficit in 2020
On August 12, 2021, the offsetting of deficit in 2020 was resolved and recognized in theshareholders’ meeting. The deficit included a net income of $140,000 thousand and negative
adjustment of other retained earnings of $490,581 thousand; thus, the remaining amount ofaccumulated deficit was $350,581 thousand. The deficit was offset by the capital reserve of$350,581 thousand.
d. Other equity items
The movements of other equity items were as follows:
Exchange
Differences on
Translation of
the Financial
Statements ofForeign
Operations

Unrealized
Gain (Loss) on
Financial
Assets at Fair
Value Through
Other
Comprehensive
IncomeGain (Loss) on
Hedging
Instruments

Total

Balance on January 1, 2020
Exchange differences on translation of the financial statements offoreign operations
Gain on hedging instruments
Cumulative loss on changes in fair value of hedging instruments
reclassified to profit or loss
Unrealized loss on financial assets at fair value through othercomprehensive income
Effects of income tax
Other comprehensive income recognized in the period$$

107,262$ 1,143,678$ 1,196,233(68,728)--

1,185,753(68,728)
1,185,753--(179,589)(179,589)

13,497(55,231)(85,280)
16,153(69,127)(201,234)
804,930(85,280)(171,584)
680,572

Balance on September 30, 2020$

(109,938)$

38,135$ 1,948,608$ 1,876,805

Balance on January 1, 2021
Exchange differences on translation of the financial statements offoreign operations
Gain on hedging instruments
Cumulative loss on changes in fair value of hedging instruments
reclassified to profit or loss
Unrealized loss on financial assets at fair value through othercomprehensive income
Effects of income tax
Other comprehensive income recognized in the period
Transferred to hedged items$(134,252)$

71,359$ 2,606,659$ 2,543,766(33,157)--

687,829(33,157)
687,829--(492,844)(492,844)

6,369(26,788)-(72,433)
13,982(58,451)-(38,996)
155,989
79,606(72,433)(18,645)
70,75079,606

Balance on September 30, 2021$

12,908$ 2,842,254$ 2,694,122(54,707)(161,040)$

e. Non-controlling interests
For the Nine Months Ended
September 30
2021
2020
Beginning balance
Share in loss for the year
Exchange differences on translating the financial statements offoreign operations
Loss on hedging instruments
Cumulative gain on changes in fair value of hedging instruments
reclassified to profit or loss
Effects of income tax- 34 -$ 3,152,090(457,069)$ 3,578,345(353,423)(1,403)(325)(1,327)
(855)

785
(92)
(1,035)

1,698
(169)
(653)
(Continued)

For the Nine Months Ended
September 30
2021
2020
Change in subsidiaries’ equity
Share options held by the employees of subsidiaries
Dividends paid by subsidiaries$

Ending balance$ 3,145,138

575,753
126(124,727)$

52(375,036)$ 2,849,285(Concluded)

f. Treasury shares
Treasury shares are the Company’s shares held by its subsidiaries as of September 30, 2021 and 2020
and are as follows:(In Thousands of Shares)

Period of Treasury Shares

Number of
Shares,Beginningof Year

Reduction
Duringthe Year

Number of
Shares,Endof Year

2,075
2,889

(814)

2,075
2,075

For the nine months ended September 30, 2021
For the nine months ended September 30, 2020

Subsidiary

Shares(In Thousands)

Carrying
AmountMarket Value

2,075$ 35,684$ 35,684

2,075$ 24,999$ 24,999

2,075$ 17,178$ 17,178

September 30, 2021
Mandarin Airlines
December 31, 2020
Mandarin Airlines
September 30, 2020
Mandarin Airlines

The above acquisitions by subsidiaries of the Company’s shares in previous years was due toinvestment planning.
The shares of the Company held by its subsidiaries were treated as treasury shares. The subsidiaries can
exercise shareholders’ right on these treasury shares, except for the right to subscribe for theCompany’s new shares and voting rights.
Dynasty Aerotech International Corp. sold a total of 814 thousand shares of the Company between
January 1, 2020 and September 30, 2020. The disposal price was $6,854 thousand.

- 35 -

27. NET INCOME
a. Revenue

Passenger
Cargo
OthersFor the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

$

1,189,331
31,247,067
2,037,604$ 34,474,002$

3,241,277
21,508,899
1,861,522$ 26,611,698

4,569,176
81,309,658
5,795,806$ 23,482,646
56,046,312
5,955,392$ 91,674,640$ 85,484,350

b. Other income

Interest income
Dividend income
OthersFor the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

$

22,988
11,607
104,598$ 139,193$

62,65015,099104,754$ 182,503

97,677
11,607
280,455$ 242,761
22,516
280,430$ 389,739$ 545,707

c. Other gains and losses

Gain (loss) on disposal ofproperty, plant andequipment
Loss arising from sale andleaseback transactions
Gain (loss) on financial assets
mandatorily classified as at
FVTPL
Loss on disposal of investments
Net foreign exchange (losses)
gains
OthersFor the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

6,586

$ (1,023,694)(202,383)-(342,080)

-

238
-

304
-

13
(540)

2,234
-

(17,152)(61,279)

161,378(78,573)(19,211)(222,699)

212,336(208,629)

89,695$ (1,608,211)$(33,839)(314,415)- 36 -$$$$

13,466

19,407

d. Finance costs

Interest expense
Bonds payable
Bank loans
Interest on lease liabilities

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

37,978
162,900
371,642$

99,399193,212458,065$$

572,520$

750,676$ 1,850,981$ 2,367,841

187,102552,150
1,111,729$

242,546
715,996
1,409,299

Capitalization rate

0.55%-1.11%

0.78%-1.55%

0.55%-1.11%

0.71%-1.92%

Capitalization interest

$

$

$

$

11,61918,55930,73564,708e. Depreciation and amortization expenses

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
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

4,107,786
2,977,451
66
56,769$4,835,632
3,041,624
67
47,201$ 13,676,955
8,851,277
200
165,970$ 14,608,504
9,289,998
203
152,758$

7,142,072$

7,924,524$ 22,694,402$ 24,051,463$

6,899,689
185,614$

7,649,024
228,299$ 21,700,767
827,665$ 22,858,093
1,040,612$

7,085,303$

7,877,323$ 22,528,432$ 23,898,705

$

3,010
53,759$3,561
43,640$9,032
156,938$

10,647142,111$56,769$47,201$

165,970$

152,758- 37 -

f. Employment benefits expense

Post-employment benefits
Defined contribution plans
Defined benefit plans

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
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

126,607341,856$

153,738
314,517$

387,783
1,018,420$

437,6201,014,133$

468,463$468,255$

1,406,203$

1,451,753$

4,847,369
1,158,472$

4,534,209
852,518$ 13,538,648
3,743,412$ 13,599,526
3,267,290$

6,005,841$

5,386,727$ 17,282,060$ 16,866,816$

5,346,128
1,128,176$

4,823,825
1,031,157$ 15,336,479
3,351,784$ 14,827,517
3,491,052$

6,474,304$

5,854,982$ 18,688,263$ 18,318,569

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. For the three months
ended September 30, 2021 and for the nine months ended September 30, 2021, the estimatedcompensation of employees was both $53,321 thousand. For the three months ended September 30,
2020 and for the nine months September 30, 2020, the Company has experienced a deficit and,
therefore, no compensation of employees was estimated.
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.
Information on the compensation of employees and remuneration of directors and supervisors resolvedby the Company’s board of directors is available at the Market Observation Post System website of the
Taiwan Stock Exchange.

- 38 -

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
2021
2020

For the Nine Months Ended
September 30
2021
2020

$ 766,443-$ 120,086
199$ 847,840
7,785$ 445,896(22,123)(414,753)(196,052)(683,857)(608,149)$ 351,690$ (75,767)$ 171,768$ (184,376)

b. Income tax recognized in other comprehensive income
For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

$

Deferred tax
Recognized in othercomprehensive income
Translation of foreign
operations
Fair value changes offinancial assets at
FVTOCI
Fair value revaluation ofhedging instruments forcash flow hedging
Total income tax recognized inother comprehensive income

211

$

$

3,548

6,369

$

13,497

10,783

2,295

13,982

16,15339,577(124,972)(39,088)(201,403)

50,571$ (119,129)$ (18,737)$ (171,753)

c. Income tax assessment
Income tax returns of the Company through 2018 have been examined by the tax authorities. And theincome tax returns of the rest of the Company’s subsidiaries through 2019 have been examined by the
tax authorities.

29. EARNINGS (LOSS) PER SHARE
For the Three Months Ended
September 30
2021
2020
Basic earnings (loss) per share
Diluted earnings (loss) per share

$
$

0.51
0.48

- 39 -$ (0.13)$ (0.13)

For the Nine Months Ended
September 30
2021
2020
$
$

0.28
0.26

$ (0.37)$ (0.37)

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

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$ 2,917,304(707,937)$ 1,555,376$ (2,021,822)-

60,635-(707,937)$ 1,616,011$ (2,021,822)

5,724,826

5,418,910

5,540,441

5,418,640

3,100
407,116-

3,100
591,501-

6,135,042

5,418,910

6,135,042

5,418,640$

16,615$ 2,933,919$

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

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Groupassumed the entire amount of the compensation or bonuses would be settled in shares and the resulting
potential shares were included in the weighted average number of shares outstanding used in thecomputation of diluted earnings (loss) per share, if the effect is dilutive. Such dilutive effect of the potential
shares was included in the computation of diluted earnings (loss) per share until the number of shares to be
distributed to employees is resolved in the following year.

30. CAPITAL MANAGEMENT
The goal, policies and procedures as well as the composition of the Group’s capital management are thesame as those stated in Note 31 to the Group’s consolidated financial statements for the year ended
December 31, 2020.

- 40 -

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 these consolidated financial statements as approximating
their fair values.
September 30, 2021
Carrying
AmountFair Value

December 31, 2020
Carrying
AmountFair Value

September 30, 2020
Carrying
AmountFair Value

Financial liabilities
Bonds payable$ 17,866,263$ 19,076,962$ 22,282,859$ 22,459,685$ 23,162,586$ 23,145,514

Lease liabilities and long-term debts are floating-rate financial liabilities, so their carrying amounts are
their fair values. Fair values of bond payable trading in OTC and 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, 2021
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

169,479

$

-

$

-

$

169,479

$

-

$

-

$

27,181
63,999$27,181
63,999

$

-

$

-

$

91,180$91,180Financial assets for hedging$ 2,228,412

$

-

$

20,219$ 2,248,631

Financial liabilities for hedging$ 36,132,222

$

1,080

$

424

$ 36,133,726

Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign- 41 -

December 31, 2020
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

274,761

$

-

$

-

$

274,761

$

-

$

-

$

29,704
134,042$

29,704
134,042

$

-

$

-

$

163,746$

163,746

Financial assets for hedging$ 7,613,636

$

-

$

-

$ 7,613,636

Financial liabilities for hedging$ 40,575,778

$

9,307

$

-

$ 40,585,085

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

September 30, 2020
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

491,271

$

-

$

-

$

491,271

$

-

$

-

$

22,351
100,161$

22,351
100,161

$

-

$

-

$

122,512$122,512Financial assets for hedging$ 9,505,814

$

44

$

2

$ 9,505,860

Financial liabilities for hedging$ 44,164,666$

92,968$33,243$ 44,290,877

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
Derivative

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

5) Valuation techniques and inputs applied for Level 3 fair value measurement
The fair values of fuel options are determined using option pricing models where the significant
unobservable inputs are the implied fluctuation. Changes in the implied fluctuations used inisolation would result in an increase or decrease in the fair value of the fuel options.

- 42 -

The domestic unlisted equity investment is based on the comparative company valuation to estimate
the fair value. The main assumptions are based on the multiplier of the market price of thecomparable listed company and the net value per share, which have considered the liquidity
discount. The higher the multiplier or the lower the liquidity discount, the higher the fair value ofthe relevant financial instruments.
The multiplier and liquidity discount of Level 3 financial instruments were as follows:

Multiplier

Liquidity
Discount

0.79-16.32
0.79-16.32
0.80-21.22

80%
80%
80%

Derivative
Instruments

EquityInstruments

Balance at January 1, 2021
Recognized in other comprehensive income$

11,463$ 163,746(72,566)

Balance at September 30, 2021$

11,463$

Balance at January 1, 2020
Recognized in other comprehensive income

$

5,524
(38,765)$ 209,221(86,709)

Balance at September 30, 2020

$ (33,241)$ 122,512

September 30, 2021
December 31, 2020
September 30, 2020
The movements of Level 3 financial instruments were as follows:

91,180Because 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,
2021

December 31,
2020

September 30,
2020

$

$

$

Financial assets
Financial assets at FVTPL
Financial assets for hedging
Financial assets at amortized cost (Note 1)
Financial assets at FVTOCI

169,479
2,248,631
52,998,119
91,180274,761
7,613,636
45,898,091
163,746

491,971
9,505,860
42,853,509
122,512Financial liabilities
Financial liabilities at FVTPL
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

36,133,726
155,822,412

40,585,085
165,458,441

44,290,877
153,646,499

Note 1: The balances include financial assets measured at amortized cost, which comprise cash andcash equivalents, time deposits with original maturities of more than 3 months, notes andaccounts receivable, accounts receivable - related parties, other receivables, refundable
deposits and other restricted financial assets.
- 43 -

Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term loans, short-term notes payable, notes and accounts payable, accounts payable related parties, other payables, bonds payable and long-term loans, lease liabilities, provisions,parts of other current liabilities, parts of other noncurrent liabilities and guarantee deposits.
d. Financial risk management objectives and policies
The Group has risk management and hedging strategies to respond to changes in the economic andfinancial environment and in the fuel market. To reduce the financial risks from changes in interest,
exchange rates and in fuel prices, the Group has its operating costs stay within a specified range byusing appropriate financial hedging instruments and hedging percentages in accordance with the“Processing Program of Derivative Financial Instrument Transactions” approved by the Group’s
shareholders to reduce the impact of market price changes on earnings. These risks include market risk(including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
In addition, the Group has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. This committee informs theGroup of global economic and financial conditions, controls the entire financial risk resulting fromchanges in the financial environment and fuel prices, and develops the strategy and response to avoid
financial risk with the assistance of financial risk experts to effect risk management.
1) Market risk
The Group is primarily exposed to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group entered into derivative financial instruments to manage its exposure toforeign currency risk and interest rate risk.
The Group enters into forward contracts, foreign currency option contracts, and interest swap
contracts with fair values that are highly negatively correlated to the fair values of hedged items andevaluates the hedging effectiveness of these instruments periodically.
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. The following details the Group’s sensitivity
to increase and decrease in New Taiwan dollars (the functional currency) against the relevant
foreign currencies. U.S. dollars increase/decrease one dollar against New Taiwan dollars used
when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in foreign exchange rates. The
sensitivity analysis included only outstanding foreign currency denominated monetary items
and foreign currency forward contracts designated as cash flow hedges, and adjusts theirtranslation at the end of the reporting period for U.S. dollars increase/decrease one dollar against
New Taiwan dollars change in foreign currency rates.
When New Taiwan dollars increased by one dollar against U.S. dollars and all other variables
were held constant, there would be an increase in pre-tax profit and an increase in pre-tax othercomprehensive income for the nine months ended September 30, 2021 of $165,618 thousand
and $1,212,126 thousand, respectively, and an decrease in pre-tax loss and increase in pre-tax
other comprehensive income for the nine months ended September 30, 2020 of $330,226
thousand and $1,069,139 thousand, respectively.
- 44 -

The Group’s hedging strategy is to enter into foreign exchange forward contracts to avoid
exchange rate exposure of its foreign currency denominated receipts and payments and to
manage exchange rate exposure of its aircraft prepayments in the next year. Those transactions
are designated as cash flow hedges. When forecasted purchases actually take place, basis
adjustments are made to the initial carrying amounts of hedged items.
For the hedges of highly probable aircraft prepayments, as the critical terms (i.e. the notionalamount, useful life and underlying asset) of the foreign exchange forward contracts and theircorresponding hedged items are the same, the Group performs a qualitative assessment of theeffectiveness, and it is expected that the value of the foreign exchange forward contracts and thevalue of the corresponding hedged items will systematically change in the opposite direction in
response to movements in the underlying exchange rates.
The following table summarizes the information relating to the hedges of foreign currency risk.
Please refer to Note 21 for rental contract for hedging.
September 30, 2021
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts

Currency

NTD/USD

Notional
AmountMaturity

Forward Rate

NT$42,503/
US$1,4862021.10.62021.11.9

28.5-28.9

Line Item in
Balance Sheet

Financial assets forhedging - current/
liabilities for hedging current

Carrying AmountAsset
Liability

$

-

$

1,080

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity which belongs to each hedging items (aircraft rentals in U.S. dollars) was $(1,080)
thousand.
December 31, 2020
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aviation fuel - forward
exchange contracts

Notional
AmountMaturity

Forward Rate

NTD/USD

NT$127,906/
US$4,371

2021.1.82021.11.9

28.5-29.7

NTD/USD

NT$142,045/
US$5,000

2021.1.292021.5.28

29.9-29.8

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

$

-

$

-

3,513

5,794

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals and aviation fuel in U.S. dollars) was $(3,513)
thousand and $(5,794) thousand, respectively.
September 30, 2020
Notional
AmountMaturity

Forward Rate

NTD/USD

NT$212,144/
US$7,126

2020.10.72021.10.6

28.88-30.28

Aviation fuel - forward
exchange contracts

NTD/USD

NT$319,767/
US$11,000

2020.10.302021.5.28

29.38-30.02

Aircraft prepayments forward exchange
contracts

NTD/USD

NT$3,052,326/
US$105,000

2020.11.42020.12.4

29.48-30.5

Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts

Currency- 45 -

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

44

$

4,879

-

6,958

-

81,131

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity which belongs to each hedging items (aircraft rentals, aviation fuel and aircraft
prepayments in U.S. dollar) was $(4,835) thousand, $(6,958) thousand and $(81,131) thousand,respectively.
For the nine months ended September 30, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelNote:

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

2,432
5,794

$ (4,144)(6,844)$8,226$ (10,988)(Note)

Increase in operating costs or foreign exchange loss.

For the three months ended September 30, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelNote:

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

405
-

$

(356)
-

$

405

$

(356)

(Note)

Increase in operating costs or foreign exchange loss.

For the nine months ended September 30, 2020
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments
Maintenance cost$

- 46 -

AmountReclassified toProfit and Lossand theAdjusted Line
Item

3,618
3,203
(62,823)-$ (7,286)(8,050)5$ (56,002)$ (15,331)(Note)

Note:

Increase in operating costs or foreign exchange loss.

For the three months ended September 30, 2020
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments
Long-term prepayments
Maintenance cost

Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

(318)
59
(52,006)(150)-$ (3,333)(5,950)5$ (52,415)$ (9,278)(Note)

Increase in operating costs or foreign exchange loss.

b) Interest rate risk
The Group was exposed to interest rate risk because entities in the Group borrowed funds atboth fixed and floating interest rates. The risk is managed by the Group by maintaining anappropriate mix of fixed and floating rate borrowings and using interest rate swap contracts andforward interest rate 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
Financial liabilities
Cash flow interest rate risk
Financial liabilities

September 30,
2021

December 31,
2020

September 30,
2020$ 60,769,474$ 68,883,667$ 73,848,215

101,512,073

112,324,305

109,059,037

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 one yard
(25 basis points) increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
Had interest rates increased by one yard (25 basis points) and all other variables been held
constant, the Group’s pretax profit for the nine months ended September 30, 2021 would havedecreased by $190,335 thousand.

- 47 -

Had interest rates increased by one yard (25 basis points) and all other variables been held
constant, the Group’s pretax loss for the nine months ended September 30, 2020 would haveincreased by $204,486 thousand.
c) Other price risk
The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel options contract to hedge against adverse risks on fuel price changes.
September 30, 2021
Hedging Instrument

Currency

Cash flow hedges - fueloptions

USD

Notional
Amount
NT$11,463

Maturity
2021.12.312022.6.30

ForwardRate
US$65US$99

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets forhedging - current/
liabilities forhedging - current$ 20,219$

424

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity which belongs to each hedging item (fuel payments) was$11,463 thousand.
December 31, 2020
Hedging Instrument

Currency

Cash flow hedges - fueloptions

USD

Notional
AmountMaturity

ForwardRate

Line Item in
Balance Sheet

Carrying AmountAsset
Liability---

Financial assets forhedging - current/
liabilities forhedging - current

$

-

$

-

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity which belongs to each hedging item (fuel payments) was $0
thousand.
September 30, 2020
Notional
AmountHedging Instrument

Currency

Cash flow hedges - fueloptions

USD

NT$10,714

Cash flow hedges - fuelswap contract

USD

NT$22,527

ForwardRate

Line Item in
Balance Sheet

2020.12.31

US$55US$68.05

2020.12.31

US$67.48

Financial assets forhedging - current/
liabilities forhedging - current
Financial assets forhedging - current/
liabilities forhedging - current

Maturity

Carrying AmountAsset
Liability$2$ 10,716-

22,527

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity which belongs to each hedging item (fuel payments) was$(33,241) thousand.
For the nine months ended September 30, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedges - fuel options$ 11,463- 48 -

AmountReclassified toProfit and Lossand theAdjusted Line
Item
$

1,629

(Note)

Note:

Decreasing in operating costs.

For the three months ended September 30, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedges - fuel options
Note:

$

710

AmountReclassified toProfit and Lossand theAdjusted Line
Item
$

2,472

(Note)

Decreasing in operating costs.

For the nine months ended September 30, 2020

Comprehensive Income
Cash flow hedges - fuel options
Cash flow hedges - fuel swap contract

Note:

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

$ (16,238)(22,527)$ (26,720)-$ (38,765)$ (26,720)

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

(Note)

Increasing in operating costs.

For the three months ended September 30, 2020

Comprehensive Income
Cash flow hedges - fuel options
Cash flow hedges - fuel swap contract

Note:

Increasing in operating costs.

- 49 -$

8,927(2,852)$ (5,525)
-

$

6,075

$ (5.525)(Note)

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Nine Months Ended September 30
2021
2020
Other
Other
CompreComprehensive
hensive
Pre-tax Profit
IncomePre-tax Profit
IncomeIncrease
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
Fuel price increase 5%
Fuel price decrease 5%

$

1,040
(1,040)

$

573
(573)

$

622
(622)

$

1,624
(5,537)2) Credit risk
The goal, policies and procedure of credit risk management are same as the consolidated financial
statements for the year ended December 31, 2020. Related illustration can be referred to in Note 32.
3) Liquidity risk
Except for the following, the objectives, policies and procedures of liquidity risk management aresame as the consolidated financial statements for the year ended December 31, 2020. Related
illustration can be referred to in Note 32.
Unused Bank
Loan Limit(Unsecured)
The Group (China Airlines, Ltd., Mandarin Airlines and Tigerair Taiwan Co.,Ltd.)

$ 34,043,895

Liquidity and interest risk rate table
The following table shows the remaining contractual maturity analysis of the Group’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Group may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.
Bank loans with a repayment on demand clause are 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.

- 50 -

September 30, 2021
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

2.3213

Less than 1Year$

1.04122.91200.8872

3,383,178

1 to 5 Years

Over 5 Years$$

9,320,267

7,124,893

16,712,067
11,559,260
1,458,515

63,586,972
26,837,567
16,713,244

14,010,034
310,856-$ 33,113,020$ 116,458,050$ 21,445,783

Less than 1Year

1 to 5 Years

Over 5 Years$$

December 31, 2020
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

1.1128$1.62693.04922.4622

3,494,299

9,770,964

7,982,767

26,195,346
9,249,609
12,531,511

60,977,026
32,978,809
9,303,608

17,175,894
1,815,449
1,280,778$ 51,470,765$ 113,030,407$ 28,254,888

Less than 1Year

1 to 5 Years

Over 5 Years

3,347,633$ 10,262,311$

27,816,081
10,039,917
11,938,111

41,208,946
36,035,514
8,412,218

32,420,708
2,687,815
3,331,924$ 53,141,742$ 95,918,989$ 45,629,041

September 30, 2020
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

2.3229$0.94303.04970.9674- 51 -

7,188,594

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.
Unless otherwise stated, the transactions between the merged company and other business related 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
China Pacific Catering Services
China Pacific Laundry Services
Nordam Asia Ltd.
Delica International Co., Ltd.
China Aviation Development Foundation
Others

Associate
Associate
Associate
Associate
Associate
Joint venture investment
Joint venture investment
Joint venture investment
Joint venture investment
Director of the Company and major shareholder
Director, key management personnel, chairman,
general manager of the Group, spouse andsecond-degree relative

b. Operating income

Account
Items

For the Three Months Ended
September 30
Related Party Type
2021
2020

Other income Major shareholdersof the Company
Associate
Joint venture
investment

For the Nine Months Ended
September 30
2021
2020

$

2,040

$

1

$ 10,075

$

5,097

$
$

4,959

$
$

10
4,415

$
56
$ 14,554$
122$ 17,604

c. Purchases of goods

Related Party Type
Major shareholders of theCompany
Associate
Joint venture investment

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$
$
$

$
$
$

4,714
143,994
51,472- 52 -$$$

105,438
67,76023,286
350,512160,833$$$

11,418328,418
443,479

d. Accounts receivable - related parties (generated by operations)
September 30,
2021

Related Party Type
Major shareholders of the Company
Joint venture investment

December 31,
2020

September 30,
2020

$

718
1,683

$

1,667

$

1,537

$

2,401

$

1,667

$

1,537

The receivables are not guaranteed, and there is no allowance for doubtful accounts related to accounts
receivable - related parties. The payment periods of such accounts were within 30 to 90 days, and there
are no overdue payments.
e. Accounts payable - related parties (generated by operations)
September 30,
2021

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

December 31,
2020

1,657
59,73851,112$$ 112,507

September 30,
2020

52,18776,380$$ 128,567

41,63068,323$ 109,953

The remaining balance of notes and accounts payable - related parties will be paid in cash if they are notsecured.
f. Lease arrangements (operating leases)
Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots, and the Company paid the rental based on
usage hours. For the nine months ended September 30, 2021 and 2020, the Company paid rentals of$23,286 thousand and $11,418 thousand, respectively; for the three months ended September 30, 2021
and 2020, the Company paid rentals of $4,714 thousand and $0 thousand, respectively.
g. Endorsements and assurances
September 30, 2021
Authorized
AmountAmount Used

December 31, 2020
Authorized
AmountAmount Used

September 30, 2020
Authorized
AmountAmount Used

$ 3,850,000
2,671,771$ 1,663,320
259,894$ 3,850,000
2,656,591$ 1,892,540
265,062$ 3,850,000
2,718,372$ 1,914,690
464,095

2,000,000

1,400,000

2,000,000

1,336,000

2,000,000

1,301,327

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

h. Compensation of key management personnel

Short-term employee benefits
Post-employment benefits

For the Three Months Ended
September 30
2021
2020

For the Nine Months Ended
September 30
2021
2020

$

11,459
516

$

7,926
657

$

30,126
41,654$23,977
1,822$

11,975

$

8,583

$

71,780$25,799- 53 -

The remuneration of directors and key executives was determined by the remuneration committee withregard to the performance of individuals and market trends.

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

Property, plant and equipment
Right-of-use asset
Restricted assets

September 30,
2021

December 31,
2020

September 30,
2020$ 32,399,027
56,761,245
572,632$ 34,170,076
59,861,537
302,807$ 35,211,100
62,866,981
193,471$ 89,732,904$ 94,334,420$ 98,271,552

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESThe Group had commitments and contingent liabilities (except for those mentioned in other notes) as
follows:
a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of transfer of the chartered operation rights from CAA to TACT. TACT filed an
application for a 10-year extension of the COP for the cargo terminals in the Taiwan Taoyuan
International Airport and Kaohsiung International Airport and received the approval from the Taoyuan
Airport Corporation and CAA in July 2013 and July 2015, respectively.
However, TACT filed an arbitration in 2012 to revise the total amount of expenditure to $6,840,000
thousand.
As of September 30, 2020, TACT had signed the following construction contracts with unrelatedparties:

Client NameContract Title

CECI Engineering
Consultant, Inc., Taiwan
Bin Li Construction Co.,
Ltd., Taiwan
Trade-Van Information
Services Co.

Cargo Terminal Expansion Construction Consultant
Contract
Cargo Terminal Expansion and Enhancement
Construction
TACT warehouse management system integrated
revision contract

Contract
Amount (VAT
Included)$ 552,285
275,000
30,000

As of September 30, 2021, the accumulated payments of construction in process for consultant service
and construction equipment were $26,609 thousand (VAT included) and $222,726 thousand (VAT
included), respectively. The amounts were recognized as construction in progress.
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.
- 54 -TACT should pay royalties to Taoyuan Airport Corporation and the CAA during the charteredoperation period. The calculation is based on annual sales (including operating and non-operating
revenue but excluding the rental revenue from specific districts), and Taoyuan Airport Corporation and
the CAA have the option to adjust the royalty rates every 3 years starting from the date of transfer of thechartered operation rights on the basis of actual revenue and expenditures. The current royalty rate is
6%.
b. CAL Park Co., Ltd. (“CAL Park”) signed “Taiwan Taoyuan International Airport Aviation Operation
Center (including Airport Hotel) Construction Operating Contract” with the CAA on September 20,
2006. However, on November 1, 2010, the Taoyuan Airport Corporation took over the CAA’s rights on
this contract from the CAA. The contract is effective for 50 years (consisting of the development stage
and operating period) from the contract date. Three years before contract expiry date, CAL Park has thefirst option to renew the contract with a 20-year extension.
CAL Park’s business scope includes providing business and other operating space related to civil airtransport, hotels, aviation service and related industries adhered to the base and essential services law
and approved by the Taoyuan Airport Corporation.
CAL Park should pay land rentals on the date of the registration of surface rights. The rental rates forthe development stage differ from those for the operation period. The rental rates should follow Article
No. 2 of the “Regulations for Favorable Rentals Regarding Public Land Lease and Superficies inInfrastructure Projects,” which states that rental calculation in the development stage should include theland value added tax plus the necessary maintenance fee; in the operation period, rentals are 60% of theamount based on the National Building Land Rental Standard plus land value tax, value-added tax andthe necessary maintenance fees.
During the 50 years beginning from the initial operation date of CAL Park to the end of the construction
period, CAL Park should pay royalties based on the operating revenue estimated in the financial plan of
its investment execution proposal. If the sales and business tax declared and filed by a business entity
for a single year exceeds 10% of the operating revenue as estimated in the financial plan in its
investment execution proposal, CAL Park should pay additional royalties at 10% of this excess.
CAL Park should submit the asset transfer plan within five years before the expiry date of the charteredoperation period, begin the negotiation of the asset transfer contract, and complete the assignment nolater than three years before the expiry date of the chartered period. If CAA decides not to keep thebuilding and equipment on the base area, CAL Park should remove all related building and equipment
within three months after the expiry date.
c. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery periods of the eleven aircraft are from 2024 to 2026. As of September
30, 2021, the list price had been paid in the amount of US$32,578 thousand (recognized as prepayments
for aircraft). In October 2019, the Company signed a contract with International Aero Engines
Company to purchase four backup engines of A321neo. The total list price of the four engines is
US$60,289 thousand, for details please refer to Note 21.

- 55 -

d. In July and August 2019, the Company signed a contract with the Boeing Company to purchase three
777F aircraft and exercised the option to purchase three 777F aircraft. The total list price of the six
aircraft is US$2,282,012 thousand, and the expected delivery periods are from 2020 to 2023. As of
September 30, 2021, three out of the six aircraft has been delivered, the total list price of the remaining
three aircraft is US$1,172,357 thousand, and the list price has been paid in the amount of US$234,471
thousand (recognized as prepayments for aircraft).
e. In September 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 periods of the seven aircraft are from 2025 to 2027. As of September
30, 2021, the list price of the seven aircraft had been paid in the amount of US$18,549 thousand(recognized as prepayments for aircraft). In addition, in December 2019, Tigerair Taiwan Co., Ltd.
signed a contract with International Aero Engines Company to purchase two backup engines ofA320neo aircraft. The total list price of the two engines is US$27,345 thousand. As of September 30,
2021, the list price had been paid in the amount of US$2,988 thousand (recognized as prepayments foraircraft), for details please refer to Note 21.

35. IMPACT OF COVID-19
Since the outbreak of the COVID-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have not removed their travel restrictions.
Because the number of inbound and outbound passengers has decreased significantly, the Group adjusts the
proportion between passenger aircraft and cargo aircraft used in operations to comply with thegovernment’s epidemic prevention policy and cater to market demand. The Company reduces the frequencyof passenger air services that have been severely affected, uses the passenger aircraft to support the cargoflight arrangement and expands the function of all-cargo aircraft to maximize the opportunities from air
cargo business. Since March 2020, cargo has become the main source of revenue for the Group.
The Group continues to adjust the response measures according to the situation. In addition, to ensure theadequate liquidity, the Group also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Group’s policies to control spending include suspension of non-urgent capital expenditures, reduction inand postponement of payments.
Also, the Group received several relief measures such as government subsidy for operation and reduction
on rent. For the nine months ended September 30, 2021, because of the COVID-19 pandemic, the Group
received subsidy of $1,019,223 thousand for the airport landing fees and parking fees, etc. The subsidy for
housing and land rental, and salary and interest expenses of $844,554 thousand was recognized as otherincome or deduction from other expenses. The Group has obtained relief loan from the government. Refer
to Note 19 for details on the amount of loan and its allocation.
The Group cooperates in contact tracing efforts, expands screening tests and fulfils other requirements tocooperate with the Central Epidemic Command Center. The Group has properly responded to and flexibly
adjusted its flight schedules. Currently, the operation is mainly based on cargo flights, and passenger flights
will be adjusted according to the status of crews’ dispatch.

- 56 -

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currency ofentities in the Group and the exchange rates between foreign currencies and respective functional currencies
were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:(In Thousands of Foreign Currencies)
September 30, 2021
Foreign
Currencies

Exchange Rate

Carrying
Amount778,458
19,749455,8443,845,893
599,672

27.8552
32.3625
3.57780.24904.3066$ 21,684,068
639,136
1,630,927
957,665
2,582,565

2,157,688
4,912
69,5594,341,156
109,383

27.8552
32.3625
3.57780.24904.3066

60,102,740
158,955
248,869
1,080,992
471,074

Exchange Rate

Carrying
Amount702,507
18,250344,577
3,475,525
560,252

28.4091
34.8432
3.66030.27504.3440$ 19,957,598
635,899
1,261,257
955,769
2,433,737

2,208,214
6,513
73,825
3,725,514
144,37628.4091
34.8432
3.66030.27504.344062,733,383
226,949
270,223
1,024,509
627,168

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB
December 31, 2020
Foreign
Currencies
Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

- 57 -

September 30, 2020
Foreign
Currencies

Exchange Rate

Carrying
Amount702,459
17,096
307,3213,950,045
460,200

29.0698
34.12973.74810.27504.2644$ 20,420,314
583,488
1,151,878
1,086,281
1,962,475

2,224,950
8,058
84,5842,803,819
135,52029.0698
34.12973.74810.27504.264464,678,772
275,018
317,033
771,064
577,912Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

For the three months ended September 30, 2021 and 2020, net foreign exchange gains (losses) were$(17,152) thousand and $161,378 thousand, respectively, and for the nine months ended September 30,
2021 and 2020, net foreign exchange gains (losses) were $(19,211) thousand and $212,336 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. SEPARATELY DISCLOSED ITEMS
a. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided: 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: None
5) Acquisitions of individual real estate at costs or price of at least NT$300 million or 20% of thepaid-in capital: None
6) Disposals of individual real estate at cost or prices of at least NT$300 million or 20% of the paid-in
capital: None
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 4 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 5 (attached)- 58 -

9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 6 (attached)10) Trading in derivative instruments (Notes 7 and 31)
b. Investments in mainland China: Table 7 (attached)c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 8 (attached)d. Information of major shareholders: Table 9 (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 policy applied for reportable segments are
consistent with the policies aforementioned in Note 4.
For the nine months ended September 30, 2021 and 2020, financial information of segments is listed below:
For the Nine Months Ended September 30, 2021
Air
Adjustments
Transportation
Othersand Write-offs
Total
Operating revenue$ 88,752,596$

5,469,501$(2,547,457)

Operation profit and loss
Interest revenue
Investment income accounted for using
the equity method
Revenue
Financial costs
Expenses$$(268,245)$(62,431)

5,052,803$

4,722,127
97,677(382,599)
445,413(1,850,981)(1,761,562)

Gain before income tax
Identifiable assets
Investments accounted for using theequity method
Assets$ 91,674,640$$ 182,480,080$ 14,621,616$(6,263,595)

1,270,075$ 190,838,101
1,576,556
83,472,179

Total assets$ 275,886,836- 59 -

For the Nine Months Ended September 30, 2020
Air
Adjustments
Transportation
Othersand Write-offs
Total
Operating revenue$ 82,786,966$

5,377,233$(2,679,849)

Operation profit and loss
Interest revenue
Investment income accounted for using
the equity method
Revenue
Financial costs
Expenses$$(498,247)$(63,682)(18,730)$(580,659)
242,761(176,235)
492,920(2,367,841)(170,567)

Loss before income tax
Identifiable assets
Investments accounted for using theequity method
Assets$ 85,484,350$$ 190,748,755$ 15,288,594$(6,198,148)(2,559,621)$ 199,839,201
2,009,318
82,176,470

Total assets$ 284,024,989- 60 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(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 PeriodY$ 100,000

EndingBalance$

97,493

ActualBorrowingAmount$97,493

Interest Rate
(%)

2.25

Nature ofFinancing

Short-term
financingfacility isnecessary

Note 1:

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

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

- 61 -

Business
Transaction
AmountReasons for
Short-term
Financing$Operatingcycle capital
expenditure-

Allowance for
Impairment
Loss
$

-

Collateral
Item

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 141,318$ 282,636

Note

TABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENTS/GUARANTEES PROVIDEDFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Counterparty
Endorsement/
Guarantee
Provider

No.

0

Name

China Airlines
Cal Park(the “Company”) Tigerair Taiwan Ltd.
Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Nature of Relationship100% subsidiary
82.27% subsidiary by direct
and indirect holdings
100% subsidiary

Limits on EachCounter party’s
Maximum
Endorsement/
Balance for the Ending Balance
Guarantee
PeriodAmounts(Note 1)

ActualBorrowingAmount$ 12,658,202
12,658,202$ 3,850,000
2,671,771$ 3,850,000
2,604,791$ 1,663,320
259,894

12,658,202

2,000,000

2,000,000

1,400,000

Note 1:

Based on the Group’s guidelines, the maximum amount of guarantee to an individual counterparty is up to 20% of the Group’s shareholders’ equity.

Note 2:

Based on the Group’s guidelines, the allowable aggregate amount of collateral guarantee is up to 50% of shareholders the Group’s’ equity.

- 62 -

Ratio ofAccumulated
Value ofAmount ofCollaterals
Collateral toProperty, Plant, Net Equity ofor Equipment
the Latest
Financial
Statement (%)$

Maximum
Collateral/
Guarantee
Amounts
Allowable(Note 2)Endorsement/ Endorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Given by Parent
Given byGiven on Behalf
on Behalf of
Subsidiaries on of Companies in
Subsidiaries Behalf of Parent Mainland China

-

6.08
4.12

$ 31,645,506
31,645,506

Yes
Yes

No
No

No
No

-

3.16

31,645,506

Yes

No

No

TABLE 3

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELDSEPTEMBER 30, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name

Marketable Securities Type and Issuer/Name

Relationshipwith theHoldingCompany

China Airlines (the “Company”) Shares
Everest Investment Holdings Ltd. - common shares-

Everest Investment Holdings Ltd. - preferred shares-

Chung Hua Express Co.

-

Jardine Air Terminal Services
The Grand Hi Lai Hotel-

Mandarin Airlines

Cal-Asia Investment

SharesChina Airlines

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

Financial Statement AccountFinancial assets at fair value through other comprehensive
income - non-current
Financial assets at fair value through other comprehensive
income - non-current
Financial assets at fair value through other comprehensive
income - non-current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current

Parent company Financial assets at fair value through other comprehensive
income - non-current

September 30, 2021
Percentage ofCarrying
Ownership
Amount(%)

Shares/Units

1,359,368$

49,452

13.59

135,937

4,945-

1,100,000

27,181

12,000,000
4,021

-

2,074,628

35,684Market Valueor Net Asset
Value

$

54,398Note

Note 1

-

-

11.00

27,181

-

15.00
0.02

-

-

-

35,684--

Financial assets at fair value through profit or loss - current
Financial assets at fair value through other comprehensive
income - non-current

-

9,601

2.59
5.45

9,601

Note 2
Note 2

Beneficiary certificatesFranklin Templeton SinoAm Money Market FundFSITC Money Market Fund-

Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current

730,686
308,094

7,634
55,499-7,634
55,499-

SharesTransAsia Airways-

Financial assets at fair value through profit or loss - current

2,277,786---

Dynasty Aerotech International
Corp.

Beneficiary certificates
Taishin 1699 Money Market Fund-

Financial assets at fair value through profit or loss - current

349,523

4,778

-

4,778

-

Kaohsiung Catering Services

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

Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current

5,407,832
1,106,807

86,437
15,131-86,437
15,131-Government bondPhilippines government bond-Financial assets at amortized cost - current

1,550

-

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Tiger Taiwan Co., Ltd.

-

0.40

1,550 Not applicable(Continued)- 63 -

Note 1: The subsidiary’s net asset value was $54,398 thousand, which included ordinary shares and preference shares as of September 30, 2021.
Note 2: The Company does not issue shares because it is a limited company.
Note 3: The table only listed financial assets that are IFRS 9 regulated.
(Concluded)- 64 -TABLE 4

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, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.

Mandarin Airlines

Related Party

Nature of Relationship

Purchase/
Sale

Amount% ofTotal$ 553,919
157,276
148,552
794,083
268,972
273,533
310,112

0.74
0.21
0.20
1.06
0.36
0.37
0.42

Taiwan Air Cargo Terminal
Cal Park
China Pacific Catering Services
Taoyuan International Airport Service
Dynasty Aerotech International Corp.
Mandarin Airlines
Eastern United International Logistics(Holdings) Ltd.
Global Sky Express

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

Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase

SubsidiarySale(144,496)

Tigerair Taiwan Co., Ltd.

Same parent company

Purchase

146,436- 65 -

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

Abnormal Transaction
Payment Terms
30 days
2 months
90 days
40 days
2 months
2 months
2 months

Unit Price--$ (72,641)(48,915)(213,209)(53,404)(143,775)(49,609)(4.32)(2.91)(12.69)(3.18)(1.25)(2.95)-(0.17) 15 days

-

-

8,040

0.07

-

5.85

-

-

(7,076)(14.27)-

1 months$

Note

TABLE 5

CHINA AIRLINES, LTD. AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALSEPTEMBER 30, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Overdue
Company Name

Related Party

Nature of RelationshipEnding Balance

Turnover Rate

Mandarin Airlines

China Airlines

Parent company$ 143,775

NoteTaoyuan International Airport Service

China Airlines

Parent company

213,209

3.75

Note:

Amount$Account receivable and revenue were not directly correlated because of the particular industry characteristics, and therefore, the turnover rate was not applicable.

- 66 -

Action Taken

Amounts Received
in Subsequent
Period--$ 117,938--

128,789

Allowance for
Bad Debts$-

TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(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

Location

Main Businesses and Products

Taoyuan, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan
Los Angeles, U.S.A.

Real estate lease and international trade
Air transportation and maintenance of aircraft
Air cargo and storage
A holding company, real estate and hotel
services
China Pacific Catering Services
Taoyuan, Taiwan
In-flight catering
Taoyuan International Airport Services Taoyuan, Taiwan
Airport services
Cal-Asia Investment
Territory of the British Virgin Islands General investment
Sabre Travel Network (Taiwan)
Taipei, Taiwan
Sale and maintenance of hardware andsoftware
China Aircraft Service
Hong Kong International Airport
Airport services
Taiwan Airport Services
Taipei, Taiwan
Airport services
Kaohsiung Catering Services
Kaohsiung, Taiwan
In-flight catering
Cal Hotel Co., Ltd
Taoyuan, Taiwan
Hotel business
China Pacific Laundry Services
Taoyuan, Taiwan
Cleaning and leasing of the towel of airlines,
hotels, restaurants and health clubs
Dynasty Aerotech International Corp. Taoyuan, Taiwan
Cleaning of aircraft and maintenance ofmachine and equipment
Yestrip
Taipei, Taiwan
Travel businessDynasty Holidays
Tokyo, Japan
Travel business
Global Sky Express
Taipei, Taiwan
Forwarding and storage of air cargo
Tigerair Taiwan Co., Ltd.
Taipei, Taiwan
Air transportation and maintenance of aircraft
Taiwan Aircraft Maintenance andTaoyuan, Taiwan
Aircraft maintenanceEngineering Co., Ltd.
NORDAM Asia Ltd.
Taoyuan, Taiwan
Composite repair and manufacturing business

Investment Amount
September 30, December 31,
2021
2020

Balance as of September 30, 2021
Number ofPercentage ofCarrying
SharesOwnership
AmountNet Income(Loss) of theInvestee$

1,500,000
4,039,140
1,350,000
US$ 26,145$

1,500,000
2,042,368
1,350,000
US$ 26,145

150,000,000
387,831,234
135,000,000
2,614,500

100.0096.96
54.00
100.00$439,110147,000
US$
7,172
52,200439,110147,000
US$
7,172
52,20043,911,000
34,300,000
7,172,346
13,021,042

51.00
49.00
100.0093.93

533,279
492,251
496,005
193,849(318,980)(225,381)
37,142(41,556)

HK$HK$

58,00012,289383,846
465,000
137,500

28,400,000
20,626,644
21,494,637
46,500,000
13,750,000

20.00
47.35
53.67
100.0055.00

28,174
138,810443,738
329,831
121,458(1,224,926)(128,192)(102,372)(74,985)(50,718)(244,985)(60,699)(64,464) Note 5(75,523) Note 4(27,895)-

77,27077,270100.00131,569

33,28133,312 Note 426,265
20,4002,500
3,109,907
1,350,000

160
250,000
313,631,656
135,000,000

100.00
20.00
25.00
78.41
100.003,493
6,979
3,450,745
594,253(6,512)
5,145(1,638,738)(105,557)- Note 4(1,302)
1,286(1,245,666) Note 4(105,539)-

37,97537,975

3,797,500

49.00

33,484(8,741)(4,283)-

154,330
11,658154,330
11,65815,433,000
469,755

3.86
1.08

169,802
3,157(1,638,738)(128,192)(63,227)(1,381)-58,00012,289383,846
465,000
137,500
77,270

JPY

8,000
2,500
5,640,197
1,350,000

JPY$

1,636,211
2,202,180
1,601,425
1,170,834

Investment
Income (Loss)

7,734 $
(1,119,850)
363,895
4,911

Note

39,593 Note 4(1,053,294) Notes 1 and 4
196,492
5,787 Note 2(162,680)(110,437)
37,142(39,034)

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

59,62025,656

8,980

Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

US$

5,877

-

100.00394,269

24,22024,220 Note 3

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,871

-

Kaohsiung Catering Services Delica International Co., Ltd

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- 67 ----TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESINVESTMENTS IN MAINLAND CHINAFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars in Thousands, Unless Stated Otherwise)

China Airlines

Investee Company Name

Main Businesses andProducts

Accumulated
Outflow of
Total Amount
Investment Investmentof Paid-in
Typefrom Taiwan
Capitalas ofJanuary 1, 2021

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

Forwarding and storage $ 1,095,952
of air cargo(RMB 254,480)

Indirect(Note 1)

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

Forwarding and storage
60,293of air cargo(RMB 14,000)

Indirect(Note 1)

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,314,485
maintenance services (US$ 83,090)

Indirect(Note 1)

Taikoo Spirit Aerospace
Systems (Jinjang)Composite material

Indirect(Note 1)

324,875(US$ 11,663)$
116,601 $(US$4,186)

Investment Flows

Outflow

Accumulated
Outflow ofInvestment
from Taiwan
as of
September 30,
2021

Inflow--(US$54,246
1,947)

59,922
2,151)

-

(US$

-

(US$

17,716636)$

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

$248,485 (US$8,920)$607,076 (Note 3)$37,974,608 (Note 4)

Accumulated
InwardRemittance ofEarnings as of
September 30,
2021$
116,601 $109,576(US$4,186) (RMB 25,290)

14.00

$
13,859 $251,560 $(RMB 3,541) (RMB 58,413) (US$98,511
3,537)(Note 2)

-

14.00

(US$

54,24675,243
1,947) (RMB 17,366)

9,832
144,158
2,431) (RMB 33,474) (US$43,469
1,561)(Note 2)

59,922
2,151)

2.59

-

(US$

5.45

(US$

17,716636)

9,601
2,229) (US$-Investment Amounts
Authorized by Investment Commission,
MOEA

Investment
Gain (Loss)

Carrying
Amountas of
September 30,
2021

-

-

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2021

Net Income(Loss) of
the Investee% Ownershipof Direct orIndirect
Investment

(RMB

(RMB

-

9,931
357)

(Continued)- 68 -

Taiwan Airport Services

Investee Company

Accumulated
Outward
Remittance forMain Businesses andMethod ofPaid-in Capital
Investment
Products
Investment
from Taiwan asof January 1,
2021

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

Forwarding and storage $ 1,095,952
of air cargo(RMB 254,480)

Indirect(Note 5)$111,932 $(US$
4,018)

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

Forwarding and storage
60,293of air cargo(RMB 14,000)

Indirect(Note 5)

(US$

Remittance of Funds

Outward53,6701,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan
as of
September 30,
2021

Inward

-

$

-

-

14

53,67075,243
1,927) (RMB 17,366)

14

(US$

Investment Amounts Authorized by
Investment Commission, MOEA

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

$165,602 (US$5,945)$165,602 (US$5,945)$175,895 (Note 6)% Ownershipof Direct orIndirect
Investment$
111,932 $109,576(US$4,018) (RMB 25,290)-

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2021

Net Income(Loss) of theInvestee

Investment
Income (Loss)

Accumulated
Carrying
Repatriation ofAmount as ofInvestment
September 30, Income as of
2021
September 30,
2021$
15,341 $249,611 $
126,494(RMB 3,541) (RMB 57,960) (US$4,541)(RMB

10,534
143,848
2,431) (RMB 33,401) (US$58,2682,092)

Note 1: The Company invested in Cal-Asia Investment, which, in turn, invested in a company located in mainland China.
Note 2: As of September 30, 2021, the inward remittance of earnings amounted to US$3,536,561 and US$1,560,538.
Note 3: The amounts 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 in return, invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are translated at period-end rates and those of gains (losses), at the average of the period-end rates of refer for the reporting period.
(Concluded)- 69 -TABLE 8

CHINA AIRLINES, LTD. AND SUBSIDIARIES
BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(In Thousands of New Taiwan Dollars)Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account0

China Airlines, Ltd.

Mandarin Airlines
Global Sky Express
Taoyuan International Airport Service
Dynasty Aerotech International Corp.
Taiwan Air Cargo Terminal
Cal Park
Taoyuan International Airport Service
Mandarin Airlines

a
a
a
a
a
a
a
a

Air transportation cost
Cargo revenue
Terminal and landing cost
Terminal and landing cost
Other operating cost
Other operating costAccounts payable - related parties
Accounts payable - related parties

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

2

Mandarin Airlines

China Airlines, Ltd.
China Airlines, Ltd.

3

Taoyuan International Airport Services

4

Amount(Note 2)

Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets$ 248,951
142,800
794,083
268,972
553,919
157,276
213,209
143,775

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

0.27
0.16
0.87
0.29
0.60
0.17
0.08
0.05

Sales revenue

553,919

The same as ordinary transactions

0.60

b
b

Passenger revenue
Accounts receivable - related parties

248,951
143,775

The same as ordinary transactions
The same as ordinary transactions

0.27
0.05

China Airlines, Ltd.
China Airlines, Ltd.

bb

Airport service revenue
Accounts receivable - related parties

794,083
213,209

The same as ordinary transactions
The same as ordinary transactions

0.87
0.08

Dynasty Aerotech International Corp.

China Airlines, Ltd.

b

Operating revenue

268,972

The same as ordinary transactions

0.29

5

Cal Park

China Airlines, Ltd.

b

Operating revenue

157,276

The same as ordinary transactions

0.17

6

Global Sky Express

China Airlines, Ltd.

b

Operating cost

142,800

The same as ordinary transactions

0.16

Note 1: Three categories of business relationships between China Airlines, Ltd. and its subsidiaries were 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 more than $100,000 thousand.

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CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION OF MAJOR STOCKHOLDERS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

SharesNumber ofPercentage ofSharesOwnership (%)

Name of Major Shareholder

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

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

32.53
9.05

Note 1: The table presents information provided by the Taiwan Depository & Clearing
Corporation on shareholders holding greater than 5% of the Company’s ordinary sharesthat have completed the process of dematerialized registration and delivery as of the lastbusiness day for the current quarter. Number of shares in the consolidated financial report
may differ from actual number of dematerialized securities that have completed theprocess of registration and delivery due to different basis of computation.
Note 2: If the shareholders transferred shares for trust, the accounts are disclosed separately by
the principal who opened a trust account for the subcontractor. Insiders’ shares ofshareholders who held more than 10% of shares based on the laws and regulations of
securities transaction include those held by the shareholders plus the shares for trust while
the shareholders have controlling interest over trusted property. For the shareholder’srights in filing information of insiders, please refer to the Market Observation Post
System website.

- 71 -