China Airlines, Ltd.
Financial Statements for theYears Ended December 31, 2023 and 2022 andIndependent Auditors’ ReportINDEPENDENT AUDITORS’ REPORTThe Board of Directors and Shareholders
China Airlines, Ltd.
OpinionWe have audited the accompanying financial statements of China Airlines, Ltd. (the “Company”),
which comprise the balance sheets as of December 31, 2023 and 2022, and the statements ofcomprehensive income, changes in equity and cash flows for the years then ended, and notes to thefinancial statements, including material accounting policy information (collectively referred to as
the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as of December 31, 2023 and 2022, and its financial
performance and its cash flows for the years then ended in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Financial Statement Audit
and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the
Republic of China. Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are independentof the Company in accordance with The Norm of Professional Ethics for Certified Public
Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities inaccordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for the year ended December 31, 2023. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter in the audit of the Company’s financial statements is stated below:
Passenger Revenue Recognition
In accordance with IFRS 15 “Revenue from Contracts with Customers”, passenger sales areaccounted for as contract liabilities before relevant transportation services were provided. After
providing the related services, contract liabilities are reclassified to passenger revenue. For the year
ended December 31, 2023, passenger revenue was NT$99,058,956 thousand. Refer to Notes 4 and
25 to the accompanying financial statements for related detailed information.

-1-

Since relevant sales can only be recognized as passenger revenue when passengers actuallyboarded, the risk that revenue recorded in the wrong period may arise from complex information
technology system involved in the process; therefore, we identified passenger revenue recognition
as a key audit matter.
The main audit procedures that we performed included the following:1.

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

2.

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

3.

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

Other Matter - Audited by Other Independent Auditors
The financial statements of some investments accounted for using the equity method in Note 12
were audited by other independent auditors, and our audit opinion is based solely on the reports ofother auditors. As of December 31, 2023 and 2022, the aforementioned investments accounted forusing the equity method amounted to NT$3,179,818 thousand and NT$725,747 thousand,representing 1.20% and 0.27% of the total assets, respectively. For the years ended December 31,
2023 and 2022, the combined share of profit (loss) and other comprehensive income (loss) of
subsidiaries, associates and joint ventures accounted for using the equity method amounted to
NT$1,399,769 thousand and NT$(2,230,169) thousand, representing 23.14% and 761.22% of thetotal comprehensive income, respectively.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, and for such internal control as management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including the audit committee, are responsible for overseeing theCompany’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with the Standards on Auditing of the Republic of China will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
-2-

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:1.

Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

2.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.

3.

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

4.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the financial statements or,if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditors’ report. However, future events orconditions may cause the Company to cease to continue as a going concern.

5.

Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.

6.

Obtain sufficient and appropriate audit evidence regarding the financial information of entities
or business activities within the Company to express an opinion on the financial statements.
We are responsible for the direction, supervision and performance of the audit. We remainsolely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements for the year ended December
31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

-3-

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

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

Notice to Readers
The accompanying financial statements are intended only to present the financial position,
financial performance and cash flows in accordance with accounting principles and practices
generally accepted in the Republic of China and not those of any other jurisdictions. The standards,
procedures and practices to audit such financial statements are those generally applied in the
Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying financial
statements have been translated into English from the original Chinese version prepared and usedin the Republic of China. If there is any conflict between the English version and the original
Chinese version or any difference in the interpretation of the two versions, the Chinese-language
independent auditors’ report and financial statements shall prevail.

-4-CHINA AIRLINES, LTD.
BALANCE SHEETSDECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

2023
Amount%2022
Amount%$ 20,385,668
3,086,923
10,353,943
9,023,469
172,826
265,955
567,882
10,476,961
1,290,581
964,572

8
1
4
3
4
1
-

$ 27,492,827
4,764,601
4,031,662
10,529,664
130,678
709,962
10,568,039
1,308,812

10
2
2
4
4
-

56,588,780

21

59,536,245

22

60,425
12,901,558
110,932,284
45,569,832
2,047,448
584,756
6,204,550
187,901
29,888,872

5
42
17
1
3
11

64,0289,950,532
114,770,352
52,637,480
2,047,448
654,596
6,055,811
22,375,706

4
43
20
1
2
8

208,377,626

79

208,555,953

78$ 264,966,406

100$ 268,092,198

100

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 29)
Financial assets at amortized cost - current (Notes 4, 8 and 29)
Financial assets for hedging - current (Notes 4, 6 and 29)
Notes and accounts receivable, net (Notes 4, 9 and 29)
Notes and accounts receivable - related parties (Notes 29 and 30)
Finance lease receivables - current (Notes 4, 19 and 29)
Other receivables (Notes 4 and 29)
Inventories (Notes 4 and 10)
Non-current assets held for sale (Notes 4, 5 and 11)
Other current assets (Note 16)
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 7 and 29)
Investments accounted for using the equity method (Notes 4 and 12)
Property, plant and equipment (Notes 4, 5, 13 and 31)
Right-of-use assets (Notes 4 and 19)
Investment properties (Notes 4 and 14)
Other intangible assets (Notes 4 and 15)
Deferred tax assets (Notes 4 and 26)
Finance lease receivables - non-current (Notes 4, 19 and 29)
Other non-current assets (Notes 16, 19, 29 and 31)
Total non-current assets
TOTAL

LIABILITIES AND EQUITYCURRENT LIABILITIESFinancial liabilities for hedging - current (Notes 4, 19 and 29)
Notes and accounts payable (Note 29)
Accounts payable - related parties (Note 30)
Other payables (Notes 20 and 25)
Current tax liabilities
Lease liabilities - current (Notes 4, 19 and 29)
Contract liabilities current (Notes 4 and 21)
Provisions - current (Notes 4 and 22)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 18, 24 and 29)
Current portion of long-term borrowings (Notes 17, 29 and 31)
Other current liabilities

9,983,761
1,109,292
730,428
13,265,783
359,261
1,185,177
15,257,687
3,490,653
2,350,000
11,733,508
2,815,333

4
5
1
6
1
1
4
1

30

62,280,883

23

26,099,758
4,925,000
40,455,119
2,964,299
16,292,125
35,285
10,789,864
8,604,132
537,746

10
2
16
1
6
4
3
-

32,190,102
7,649,674
56,751,142
1,280,906
16,927,949
8,259
10,428,091
8,348,163
2,226,828

12
3
21
1
6
4
3
1

Total non-current liabilities

110,703,328

42

135,811,114

51

Total liabilities

190,375,291

72

198,091,997

74

60,513,407
3,887,046

23
1

60,135,374
3,120,311

22
1

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

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

3
3-

74,591,115

28

70,000,201

26$ 264,966,406

100$ 268,092,198

100

Total current liabilities
NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 4, 19 and 29)
Bonds payable - non-current (Notes 4, 18, 24 and 29)
Long-term borrowings (Notes 17, 29 and 31)
Contract liabilities - non-current (Notes 4 and 21)
Provisions - non-current (Notes 4 and 22)
Deferred tax liabilities (Notes 4 and 26)
Lease liabilities - non-current (Notes 4, 19 and 29)
Net defined benefit liabilities - non-current (Notes 4, 5 and 23)
Other non-current liabilities

EQUITY (Notes 18 and 24)
Share capital
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated retained earnings
Total retained earnings
Other equity
Treasury shares
Total equity
TOTAL

The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ audit report dated March 8, 2024)-5-$8,886,485
1,049,762
1,297,950
14,977,536
212,883
1,351,737
23,107,378
2,591,751
4,723,814
17,297,086
4,175,581

3
6
9
1
2
7
2

79,671,963$

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

2023
Amount%2022
Amount%OPERATING REVENUE (Notes 4, 25 and 30)$ 161,675,533

100$ 141,069,849

100

OPERATING COSTS (Notes 4, 10, 25 and 30)

144,040,004

89

128,089,348

91

GROSS PROFIT

17,635,529

11

12,980,501

9

OPERATING EXPENSES (Notes 4, 25 and 30)

11,041,166

7

7,063,461

5

PROFIT FROM OPERATIONS

6,594,363

4

5,917,040

4

1,872,180(888,612)(2,242,776)

1
(1)
(1)

1,307,531
1,824,894(2,220,960)

1
1
(1)

2,720,299

2(2,939,603)(2)

1,461,091

1(2,028,138)(1)

PROFIT BEFORE INCOME TAX

8,055,454

5

3,888,902

3

INCOME TAX EXPENSE (Notes 4 and 26)

1,236,902

1

1,029,399

1

NET PROFIT FOR THE YEAR

6,818,552

4

2,859,503

2(354,851)-(144,906)-(3,603)

-

8,570

-

(322,908)-

28,890-(200,784)-

219,689-

64,543-(67,750)-

NON-OPERATING INCOME AND EXPENSES
Other income (Note 25)
Other gains and losses (Notes 11, 12, 13 and 25)
Finance costs (Notes 25 and 29)
Share of profit or loss of subsidiaries, associates andjoint ventures (Note 12)
Total non-operating income and expenses

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Gain (loss) on hedging instruments subject tobasis adjustment (Notes 4, 24 and 29)
Unrealized gain (loss) on investments in equity
instruments at fair value through othercomprehensive income (Notes 4 and 24)
Remeasurement of defined benefit plans (Notes 4
and 23)
Share of the other comprehensive income (loss) of
subsidiaries, associates and joint ventures
accounted for using the equity method (Notes 4
and 24)
Income tax related to items that will not bereclassified subsequently to profit or loss
(Note 26)

(Continued)-6-

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

2023
AmountItems that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of thefinancial statements of foreign operations(Notes 4 and 24)
Share of the other comprehensive income (loss) of
subsidiaries, associates and joint ventures
accounted for using the equity method (Notes 4
and 24)Gain (loss) on hedging instruments not subject tobasis adjustment (Notes 4, 24 and 29)
Income tax related to items that may bereclassified subsequently to profit or loss
(Note 26)$

Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR$EARNINGS PER SHARE (NEW TAIWANDOLLARS; Note 27)
Basic
Diluted2022
Amount%(7,093)-(4,555)

141,415

-

-

2,814

-

73,486-(4,141,144)(3)(13,278)-

799,9471(769,043)-(3,152,475)(2)

6,049,509

4(292,972)

-

$
$

1.13
1.11

$

%

$

$
$

0.48
0.47

The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ audit report dated March 8, 2024)-7-(Concluded)

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

Retained Earnings
Share Capital

Capital Surplus

Legal Reserve

Special Reserve$ 59,412,243$ 2,694,529$$

Basis adjustment to gain (loss) on hedging instruments--

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

Changes in capital surplus from dividends distributed tosubsidiaries

BALANCE AT JANUARY 1, 2022-

$ 9,253,848

-

-

-

-

925,385
-

-

-

1,725

-

Net profit for the year ended December 31, 2022--

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

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

100,687---(5,000,000)

-

-

-

-

1,725

2,859,503

-

-

-

-

2,859,503-

196,415

115,781

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

3,055,918

115,781

46,430(3,511,101)-(292,972)

424,050

-

-

-

-

-

-

-

1,147,181

-

7

-

-

-

-

-

-

-

7

60,135,374

3,120,311

925,385-

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

70,000,201

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

168,844-

168,844

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

305,592-

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

-

-

-

-

(2,772,207)

Changes in capital surplus from dividends distributed tosubsidiaries

-

955

-

-

-

-

-

-

-

955

Changes in percentage of ownership interests in subsidiaries-

452,110

-

-

-

-

-

-

-

452,110Issuance of employee share options by the subsidiaries-

24,055

-

-

-

-

-

-

-

24,055

Net profit for the year ended December 31, 2023

-

-

-

-

6,818,552

-

-

-

-

6,818,552

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

-

-

-

-

(444,560)(8,667)(18,192)(297,624)-(769,043)

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

-

-

-

-

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

6,049,509

378,033

289,615

-

-

-

-

-

-

-

667,648$ 60,513,407$ 3,887,046$ 1,230,977

534,375$ 9,146,199(30,875)$ 74,591,115

Convertible bonds converted to ordinary shares
BALANCE AT DECEMBER 31, 2023

(5,512)$ 2,839,419--(925,385)(5,000,000)

-

-

-

-

-

-

-

-

-

723,131$

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

22,726$(699,775)$

Total Equity

100,687

BALANCE AT DECEMBER 31, 2022

(120,079)

Treasury Shares$ 74,043,573

Others$Gain (Loss) on
Hedging
Instruments(30,875)

Convertible bonds converted to ordinary shares-

UnappropriatedEarnings

Exchange
Differences on
Translation of the
Financial
Statements ofForeign Operations

Other Equity
Unrealized Gain
(Loss) on Financial
Assets at Fair
Value Through
Other
Comprehensive
Income$CHINA AIRLINES, LTD.
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

2023
CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax
Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Interest income
Dividend income
Share of (profit) loss of subsidiaries, associates and joint ventures
Gain on disposal of property, plant and equipment
Loss (gain) on disposal of non-current assets held for saleImpairment loss recognized on flight equipment
Loss on inventory and property, plant and equipment
Net loss on foreign currency exchange
Finance costs
Recognition of provisions
OthersChanges in operating assets and liabilities
Notes and accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Notes and accounts payable
Accounts payable - related parties
Other payables
Contract liabilities
Provisions
Other current liabilities
Defined benefit liabilities
Other liabilities
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid$

8,055,454

2022$

3,888,902

27,060,561
181,471(1,570,722)(14,713)(2,720,299)(499,881)
2,364
1,901,450
2,935,395
165,071
2,242,776
5,802,208
167,647

26,756,562
181,662
38,474(566,465)(11,723)
2,939,603(19,911)(558,477)
1,641
675,274
1,580,216
2,220,960
4,958,429
84,406

1,368,112(42,148)
197,567(2,289,037)
330,904(60,142)
567,522
4,099,997
9,533,084(7,260,306)
1,281,209(66,939)(1,335,573)
50,033,032
1,500,007
378,493(2,565,292)(1,453,729)

2,515,841(76,204)(168,077)(2,504,030)(913,115)
209,251(3,409)692,575
12,486,227(3,690,602)
660,685
17,864
72,38451,468,943
564,084
317,263(2,361,441)(4,402,059)

Net cash generated from operating activities

47,892,511

45,586,790

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost
Proceeds from sale of financial assets at amortized cost
Purchase of financial assets for hedging
Proceeds from sale of financial assets for hedging(17,155,191)
18,700,767(16,276,122)
9,497,256(4,793,951)
11,923,194(9,535,604)
9,063,037(Continued)-9-CHINA AIRLINES, LTD.
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)2023
Acquisition of investments accounted for using the equity method
Net cash inflow on disposal of investments accounted for using theequity method
Proceeds from capital reduction of subsidiaries
Proceeds from disposal of non-current assets held for sale
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in finance lease receivables
Decrease in finance lease receivables
Increase in prepayments for equipment
Payments for other intangible assets
Decrease (increase) in restricted assets$(599,821)

2022
$

-

2,523
270,000
1,077,006(1,643,552)
2,437,633(188,607)
198,035(786,163)
336,001(25,849,974)(131,597)
14,159679,951(2,269,028)
25,141(323,121)
472,380(24,361,989)(70,281)(28,902)(30,097,647)(19,219,173)

2,650,000(2,350,000)
12,000,000(22,732,445)(11,622,941)
127,095(293,205)(2,772,207)(2,525,200)
4,231,761(20,902,756)(10,194,631)
58,477(61,488)(5,000,000)(24,993,703)(34,393,837)

91,680(394,070)

NET DECREASE IN CASH AND CASH EQUIVALENTS(7,107,159)(8,420,290)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

27,492,827

35,913,117

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

$ 20,385,668$ 27,492,827

Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of the principal portion of lease liabilities
Proceeds of guarantee deposits received
Refund of guarantee deposits received
Dividends paid
Net cash used in financing activities
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIESThe accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ audit report dated March 8, 2024)- 10 -(Concluded)

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

1. GENERAL INFORMATION
China Airlines, Ltd. (the “Company”) was founded in 1959 and its shares have been listed on the Taiwan
Stock Exchange since February 26, 1993. The Company is primarily involved in (a) air transport services
for passengers, cargo and mail; (b) ground services and routine aircraft maintenance; (c) major maintenanceof flight equipment; (d) communications and data processing services to other airlines; (e) the sale ofaircraft parts, equipment and the entire aircraft; and (f) leasing of aircraft.
The major shareholders of the Company are China Aviation Development Foundation (CADF) andNational Development Fund (NDF), Executive Yuan. As of December 31, 2023 and 2022, CADF and NDF
jointly held a combined 39.43% and 39.69%, respectively of the Company’s shares. For the years ended
December 31, 2023 and 2022, the average number of employees of the Company was 11,038 and 10,794,
respectively.

2. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the Company’s board of directors on March 8, 2024.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS
a. Initial application of the amendments to the International Financial Reporting Standards (IFRS),International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)(collectively, the “IFRS Accounting Standards”) endorsed and issued into effect by the Financial
Supervisory Commission (FSC)
The application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did nothave material impact on the Company’s accounting policies.
b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024

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

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

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

- 11 -

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

New, Amended and Revised Standards and Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 Comparative Information”
Amendments to IAS 21 “Lack of Exchangeability”

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

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATIONStatement of Compliance
The financial reports have been prepared in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers and related regulations.
Basis of Preparation
The financial statements have been prepared on the historical cost basis except for financial instruments
which are measured at fair value and net defined benefit liabilities which are measured at the present valueof the defined benefit obligation less the fair value of plan assets.
The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and- 12 -

c. Level 3 inputs are unobservable inputs for an asset or liability.
When preparing these parent company only financial statements, the Company used the equity method toaccount for its investments in subsidiaries, associates and joint ventures. In order for the amounts of the net
profit for the year, other comprehensive income for the year and total equity in the parent company only
financial statements to be the same with the amounts attributable to the owners of the Company in its
consolidated financial statements, adjustments arising from the differences in accounting treatments
between the parent company only basis and the consolidated basis were made to investments accounted forusing the equity method, the share of profit or loss of subsidiaries, associates and joint ventures, the shareof other comprehensive income of subsidiaries, associates and joint ventures and the related equity items, as
appropriate, in these parent company only financial statements.
Classification of Current and Non-current Assets and Liabilities
Current assets include:a. Assets held primarily for the purpose of trading;b. Assets expected to be realized within 12 months after the reporting period; andc. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period.
Current liabilities include:a. Liabilities held primarily for the purpose of trading;b. Liabilities due to be settled within 12 months after the reporting period; andc. Liabilities for which the Company does not have an unconditional right to defer settlement for at least
12 months after the reporting period.
Assets and liabilities that are not classified as current are classified as non-current.
Foreign Currencies
In preparing the Company’s financial reports, transactions in currencies other than the Company’sfunctional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the datesof the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Exchange differences on monetary items arising from settlement ortranslation are recognized in profit or loss in the period in which they arise except for exchange differenceson:a. Foreign currency borrowings relating to assets under construction for future productive use, which areincluded in the cost of those assets when they are regarded as an adjustment to interest costs on thoseforeign currency borrowings; andb. Transactions entered into in order to hedge certain foreign currency risks.

- 13 -

Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at
the rates prevailing at the date when the fair value is determined. Exchange differences arising from theretranslation of non-monetary items are included in profit or loss for the period except for exchange
differences arising from the retranslation of non-monetary items in respect of which gains and losses arerecognized directly in other comprehensive income, in which case, the exchange differences are also
recognized directly in other comprehensive income.
Non-monetary item denominated in a foreign currency and measured at historical cost is stated at thereporting currency as originally translated from the foreign currency.
For the purposes of presenting financial reports, the assets and liabilities of the Company’s foreign
operations are translated into New Taiwan dollars using exchange rates prevailing at the end of eachreporting period. Income and expense items are translated at the average exchange rates for the period. The
resulting currency translation differences are recognized in other comprehensive income.
On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect ofthat operation attributable to the owners of the Company are reclassified to profit or loss.
Inventories
Inventories are primarily expendable and nonexpendable parts and materials, supplies used in operations
and items for in-flight sale and are stated at the lower of cost or net realizable value. The costs ofinventories sold or consumed are determined using the weighted-average method.
Non-current Assets Held for Sale
Non-current assets are classified as held-for-sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the non-current asset is available for immediate sale in its present condition.
To meet the criteria for the sale being highly probable, the appropriate level of management must be
committed to the sale, and the sale should be expected to qualify for recognition as a completed sale within
one year from the date of classification.
Non-current assets classified as held-for-sale are measured at the lower of their previous carrying amountand fair value less costs to sell. Such assets classified as held for sale are not depreciated.
Investments Accounted for Using the Equity Method
The Company uses the equity method to account for its investments in subsidiaries, associates and joint
ventures.
a. Investment in subsidiaries
A subsidiary is an entity (including a structured entity) that is controlled by the Company.
Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted
therefore to recognize the Company’s share of the profit or loss and other comprehensive income of thesubsidiary. The Company also recognizes the change in Company’s share of the other equity of thesubsidiary.
Changes in the Company’s ownership interests in a subsidiary that do not result in the Company losing
control of the subsidiaries are accounted for as equity transactions. The Company recognizes directly inequity any difference between the carrying amounts of the investment and the fair value of theconsideration paid or received.

- 14 -

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which
includes any carrying amount of the investment accounted for using the equity method and long-term
interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company
continues recognizing its share of further losses, if any.
Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable
assets and liabilities of a subsidiary that constitutes a business at the date of acquisition is recognized as
goodwill, which is included within the carrying amount of the investment and is not amortized. Any
excess of the Company’s share of the net fair value of the identifiable assets and liabilities of a
subsidiary that constitutes a business over the cost of acquisition is recognized immediately in profit orloss.
The Company assesses its investment for any impairment by comparing the carrying amount with theestimated recoverable amount as assessed based on the investee’s financial statements as a whole.
Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If therecoverable amount of the investment subsequently increases, the Company recognizes a reversal of theimpairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount thatwould have been recognized (net of amortization) had no impairment loss been recognized in prioryears. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.
When the Company loses control of a subsidiary, it recognizes the investment retained in the former
subsidiary at its fair value at the date when control is lost. The difference between the fair value of theretained investment plus any consideration received and the carrying amount of the previous investment
at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, theCompany accounts for all amounts previously recognized in other comprehensive income in relation tothat subsidiary on the same basis as would be required had the Company directly disposed of the related
assets or liabilities.
Profit or loss resulting from downstream transactions is eliminated in full only in the parent company
only financial statements. Profit and loss resulting from upstream transactions and transactions between
subsidiaries is recognized only in the parent company only financial statements and only to the extent ofinterests in the subsidiaries that are not related to the Company.
b. Investments in associates and joint ventures
An associate is an entity over which the Company has significant influence and which is neither asubsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby theCompany and other parties that have joint control of the arrangement and the rights to the net assets of
the arrangement.
The Company uses the equity method to account for its investments in associates and joint ventures.
Under the equity method, investments in an associate and a joint venture are initially recognized at costand adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive
income of the associate and joint venture. The Company also recognizes the changes in the Company’s
share of equity of associates and joint ventures attributable to the Company.
Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable
assets and liabilities of an associate and a joint venture recognized at the date of acquisition isrecognized as goodwill, which is included within the carrying amount of the investment and is notamortized. Any excess of the Company’s share of the net fair value of the identifiable assets andliabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.
When the Company subscribes for additional new shares of an associate and a joint venture at apercentage different from its existing ownership percentage, the resulting carrying amount of theinvestment differs from the amount of the Company’s proportionate interest in the associate and joint
venture. The Company records such a difference as an adjustment to investments with the- 15 -

corresponding amount charged or credited to capital surplus. If the Company’s ownership interest is
reduced due to it additional subscription of the new shares of the associate and joint venture, theproportionate amount of the gains or losses previously recognized in other comprehensive income inrelation to that associate and joint venture is reclassified to profit or loss on the same basis as would be
required had the investee directly disposed of the related assets or liabilities. When the adjustment
should be debited to capital surplus, but the capital surplus recognized from investments accounted forusing the equity method is insufficient, the shortage is debited to retained earnings.
When the Company’s share of losses of an associate and a joint venture equals or exceeds its interest inthat associate and joint venture (which includes any carrying amount of the investment accounted forusing the equity method and long-term interests that, in substance, form part of the Company’s net
investment in the associate and joint venture), the Company discontinues recognizing its share offurther loss. Additional losses and liabilities are recognized only to the extent that the Company has
incurred legal obligations, or constructive obligations, or made payments on behalf of that associate andjoint venture.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single
asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is
not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognized to the extent that the recoverable amount of theinvestment subsequently increases.
The Company discontinues the use of the equity method from the date on which its investment ceases tobe an associate and a joint venture. Any retained investment is measured at fair value at that date andthe fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The
difference between the previous carrying amount of the associate and joint venture attributable to theretained interest and its fair value is included in the determination of the gain or loss on disposal of theassociate and joint venture. The Company accounts for all amounts previously recognized in othercomprehensive income in relation to that associate and joint venture on the same basis as would be
required had that associate directly disposed of the related assets or liabilities.
When the Company transacts with its associate and joint venture, profits and losses resulting from thetransactions with the associate and joint venture are recognized in the Company’s financial statements
only to the extent of interests in the associate and the joint venture that are not related to the Company.
Property, Plant and Equipment
Property, plant and equipment are tangible items that are held for use in the production or supply of goods
or services, for rental to others, or for administrative purposes and are expected to be used for more than
one period. The cost of an item of property, plant and equipment shall be recognized as an asset if, and only
if, it is probable that future economic benefits associated with the item will flow to the Company; the costof the item can be measured reliably. Property, plant and equipment are stated at cost less recognizedaccumulated depreciation and recognized accumulated impairment loss.
Freehold land is not depreciated.
Depreciation is recognized using the straight-line method. Each significant part is depreciated separately.
The estimated useful lives, residual values and depreciation methods are reviewed at the end of eachreporting period. The impact of any changes in accounting estimates is accounted for on a prospective basis
under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.

- 16 -

Investment Properties
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment
properties also include land held for a currently undetermined future use.
Investment properties are initially measured at cost, including transaction costs. Subsequent to initialrecognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss.
On derecognition of an investment property, the difference between the net disposal proceeds and thecarrying amount of the asset is included in profit or loss.
Intangible Assets
Intangible assets with finite useful lives that are acquired separately are initially measured at cost andsubsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, andamortization methods are reviewed at the end of each reporting period. The residual value of an intangible
asset with a finite useful life shall be assumed to be zero unless the Company expects to dispose of theintangible asset before the end of its economic life. The impact of any changes in accounting estimates isaccounted for on a prospective basis under IAS 8 “Accounting Policies, Changes in Accounting Estimatesand Errors”.
Impairment of Property, Plant and Equipment, Right-of-use Asset, Investment Properties andIntangible Assets Other Than Goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its property, plant andequipment, right-of-use asset, investment properties and intangible assets, excluding goodwill, to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets
are allocated to the individual cash-generating units on a reasonable and consistent basis; otherwise,
corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistentbasis of allocation.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to sell and value in use.
When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or
cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of
the carrying amount that would have been determined had no impairment loss been recognized on the asset
or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.
Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to thecontractual provisions of the instruments, with the resulting impairment loss recognized in profit or loss.

- 17 -

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issuance of financial assets and financial liabilities (other thanfinancial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of thefinancial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss included in the initially recognized amount of financial assets or financial
liabilities.
a. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade datebasis. All regular way purchases or sales of financial assets are buy or sell of financial assets in the
period set by regulation or market convention.
1) Measurement categories
Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.
a) Financial assets at FVTPL
Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified
or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include
investments in equity instruments which are not designated as at FVTOCI.
Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement
gains or losses on such financial assets are recognized in profit or loss. Fair value is determinedin the manner described in Note 29.
b) Financial assets at amortized cost
Financial assets that meet the following conditions are subsequently measured at amortized
cost:
i. The financial assets are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; andii. The contractual terms of the financial assets give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, financial assets at amortized cost, including cash and cash
equivalents, trade receivables, other receivables and other financial assets, are measured atamortized cost, which equals the gross carrying amount determined using the effective interest
method less any impairment loss. Exchange differences are recognized in profit or loss.
Interest income is calculated by applying the effective interest rate to the gross carrying amountof a financial asset.
Cash equivalents include time deposits with original maturities within 3 months from the date ofacquisition, which are highly liquid, readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. These cash equivalents are held for the
purpose of meeting short-term cash commitments.

- 18 -

c) Investments in equity instruments at FVTOCI
On initial recognition, the Company may make an irrevocable election to designate investmentsin equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if an equity
investment is held for trading or if it is contingent consideration recognized by an acquirer in abusiness combination.
Investments in equity instruments at FVTOCI are subsequently measured at fair value withgains and losses arising from changes in fair value recognized in other comprehensive income
and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit orloss on disposal of the equity investments; instead, they will be transferred to retained earnings.
Dividends on these investments in equity instruments are recognized in profit or loss when the
Company’s right to receive the dividends is established, unless the dividends clearly represent a
recovery of part of the cost of an investment.
2) Impairment of financial assets
The Company recognizes a loss allowance for expected credit losses on financial assets at
amortized cost (including trade receivables and finance lease receivables).
The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables,
finance lease receivables and other receivables. For all other financial instruments, the Company
recognizes lifetime ECLs when there has been a significant increase in credit risk since initialrecognition. If, on the other hand, the credit risk on a financial instrument has not increased
significantly since initial recognition, the Company measures the loss allowance for that financial
instrument at an amount equal to 12-month ECLs.
Expected credit losses reflect the weighted average of credit losses with the respective risks of a
default occurring as the weights. Lifetime ECLs represents the expected credit losses that will result
from all possible default events over the expected life of a financial instrument. In contrast,
12-month ECLs represents the portion of lifetime ECLs that is expected to result from default
events on a financial instrument that are possible within 12 months after the reporting date.
The impairment loss of all financial assets is recognized in profit or loss by a reduction in theircarrying amounts through a loss allowance account, except for investments in debt instruments thatare measured at FVTOCI, for which the loss allowance is recognized in other comprehensive
income and the carrying amounts of such financial assets are not reduced.
3) Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows fromthe asset expire or when it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another party.
On derecognition of a financial asset at amortized cost in its entirety, the difference between theasset’s carrying amount and the sum of the consideration received and receivable is recognized in
profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, thedifference between the asset’s carrying amount and the sum of the consideration received andreceivable is recognized in profit or loss, and the cumulative gain or loss which had been recognizedin other comprehensive income is transferred directly to retained earnings, without recycling
through profit or loss.

- 19 -

b. Equity instruments
Equity instruments issued by the Company are classified as equity in accordance with the substance ofthe contractual arrangements and the definitions of an equity instrument.
Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue
costs.
The repurchase of the Company’s own equity instruments is recognized in and deducted directly fromequity, and its carrying amounts are calculated based on weighted average by share types. No gain orloss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own
equity instruments.
c. Financial liabilities
1) Subsequent measurement
Except for derivative financial instruments, all financial liabilities are measured at amortized costusing the effective interest method.
2) Derecognition of financial liabilities
The difference between the carrying amount of a financial liability derecognized and theconsideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss.
d. Convertible bonds
The component parts of compound instruments (i.e. convertible bonds) issued by the Company areclassified separately as financial liabilities and equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equity instrument.
On initial recognition, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recorded as a liability on anamortized cost basis using the effective interest method until extinguished upon conversion or upon the
instrument’s maturity date. Any embedded derivative liability is measured at fair value.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and includedin equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion
option classified as equity will remain in equity until the conversion option is exercised, in which case,the balance recognized in equity will be transferred to capital surplus - share premiums. When theconversion option remains unexercised at maturity, the balance recognized in equity will be transferred
to capital surplus - share premiums.
Transaction costs that relate to the issuance of the convertible notes are allocated to the liability andequity components in proportion to the allocation of the gross proceeds. Transaction costs relating to
the equity component are recognized directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component.
e. Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest
rate, foreign exchange rate and fuel price risks, including foreign exchange forward contracts, interest
rate swaps, currency options and fuel options and swaps.

- 20 -

Derivatives are initially recognized at fair value at the date on which the derivative contracts are enteredinto and are subsequently remeasured to their fair value at the end of each reporting period. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated andeffective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends
on the nature of the hedging relationship. When the fair value of a derivative financial instrument is
positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial
instrument is negative, the derivative is recognized as a financial liability.
Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of
IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid
contract. Derivatives embedded in non-derivative host contracts that are not financial assets within thescope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet thedefinition of a derivative, their risks and characteristics are not closely related to those of the hostcontracts, and the host contracts are not measured at FVTPL.
Hedge Accounting
The Company designates certain hedging instruments, which include derivatives and non-derivatives inrespect of foreign currency risk, as cash flow hedges. When entering into hedging transactions, theCompany has prepared official documents that describe the hedging relationship between hedging
instruments and items which have been hedged, the objective of risk management, the hedging strategy, andthe way to evaluate the effectiveness of the hedging instrument.
The effective portion of gains and losses on derivatives that are designated and qualify as cash flow hedges
is recognized in other comprehensive income. The gains or losses relating to the ineffective portion arerecognized immediately in profit or loss.
The associated gains or losses that were recognized in other comprehensive income are reclassified fromequity to profit or loss as reclassification adjustments in the line items relating to the hedged item in thesame period in which the hedged item affects profit or loss. If a hedge of a forecasted transaction
subsequently results in the recognition of a non-financial asset or a non-financial liability, the associatedgains and losses that were recognized in other comprehensive income are removed from equity andincluded in the initial cost of the non-financial asset or non-financial liability.
The Company discontinues hedge accounting only when the hedging relationship ceases to meet thequalifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised.
The cumulative gain or loss on the hedging instrument that has been previously recognized in othercomprehensive income from the period (in which the hedge was effective) remains separately in equity
until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, thegains or losses accumulated in equity are recognized immediately in profit or loss.
Provisions
The Company recognizes provisions when the Company has a present obligation (legal or constructive
obligation) arising from past events, the payment for the obligation is probable, and the expenditure forsettling the obligation can be reliably estimated.
The amount recognized as a provision is measured at the best estimate of the expenditure required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured at the estimate of the cash flows to settle thepresent obligation, its carrying amount is the present value of those cash flows. When the aircraft lease
contracts of the Company expire and will be returned to lessor, the Company will assess if there are existingobligations and if a provision is required to be recognized when signing the lease contract.

- 21 -

Revenue Recognition
The Company recognizes revenue by applying the following steps:






Identifying the contract with the customer;
Identifying the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; andRecognize revenue when the Company satisfies a performance obligation.

Shipping service revenue
Passenger and cargo revenue are recognized as revenue when the passengers and goods are actually carried.
When the tickets are sold, due to the fact that the fulfillment of performance obligations of the shipment
have not been met, the relevant amount of revenue is initially recorded as contract liabilities until
passengers actually board.
Leasing
At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.
The Company as lessee
The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date ofa lease, except for short-term leases and low-value asset leases accounted for applying a recognition
exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.
Right-of-use assets are initially measured at cost, which comprises the initial measurement of leaseliabilities adjusted for lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives
received. Right-of-use assets are subsequently measured at cost less accumulated depreciation andimpairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets arepresented on a separate line in the balance sheets.
Right-of-use assets are depreciated using the straight-line method from the commencement dates to theearlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if
leases transfer ownership of the underlying assets to the Company by the end of the lease terms or if thecosts of right-of-use assets reflect that the Company will exercise a purchase option, the Company
depreciates the right-of-use assets from the commencement dates to the end of the useful lives of theunderlying assets.
Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed
payments, in-substance fixed payments, variable lease payments which depend on an index or a rate,
residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to
exercise that option, and payments of penalties for terminating a lease if the lease term reflects suchtermination, less any lease incentives payable. The lease payments are discounted using the interest rate
implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, thelessee’s incremental borrowing rate will be used.

- 22 -

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, withinterest expense recognized over the lease terms. When there is a change in a lease term, a change in theamounts expected to be payable under a residual value guarantee, a change in the assessment of an option topurchase an underlying asset, or a change in future lease payments resulting from a change in an index or arate used to determine those payments, the Company remeasures the lease liabilities with a corresponding
adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced
to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities arepresented on a separate line in the balance sheets.
The Company negotiates with the lessor for rent concessions as a direct consequence of Covid-19 to change
the lease payments originally due by June 30, 2022, which results in the revised consideration for the lease
substantially less than the consideration for the lease immediately preceding the change. There is no
substantive change to other terms and conditions. The Company elects to apply the practical expedient to allof these rent concessions for the abovementioned lease contracts, and therefore, does not assess whether therent concessions are lease modifications. Instead, the Company recognizes the reduction in lease payment
in profit or loss in the period in which the events or conditions that trigger the concession occurs and makesa corresponding adjustment to the lease liability.
Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.
For sale and leaseback transactions, if the transfer of an asset satisfies the requirements of IFRS 15 to beaccounted for as a sale, the Company recognizes only the amount of any gain or loss which relates to therights transferred to the buyer-lessor, and adjusts the off-market terms to measure the sale proceeds at fairvalue. If the transfer does not satisfy the requirements of IFRS 15 to be accounted for as a sale, it isaccounted for as a financing transaction.
Employee Benefits
a. Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related services.
b. Retirement benefits
Payments to the defined contribution retirement benefit plan are recognized as expenses whenemployees have rendered services entitling them to the contributions.
Defined benefit costs (including service cost, net interest and remeasurement) under defined retirement
benefit plan are determined using the projected unit credit method. Service cost (including current
service cost and past service cost) and net interest on the net defined benefit liabilities (assets) arerecognized as employee benefits expense in the period in which they occur. Remeasurement,
comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized inother comprehensive income in the period in which it occurs. Remeasurement recognized in othercomprehensive income is reflected immediately in retained earnings and will not be reclassified to
profit or loss.
Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined
benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds
from the plans or reductions in future contributions to the plans.

- 23 -

Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets areadded to the cost of those assets, until such time as the assets are substantially ready for their intended use
or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period
in which they are incurred.
Government Grants
Government grants are not recognized until there is reasonable assurance that the Company will comply
with the conditions attached to them and that the grants will be received.
Government grants related to income are recognized in profit or loss on a systematic basis over the periods
in which the Company recognizes as expenses the related costs that the grants intend to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Company with no future related costs are recognizedin profit or loss in the period in which they are received.
The benefit of a government loan received at a below-market rate of interest is treated as a government
grant measured as the difference between the proceeds received and the fair value of the loan based onprevailing market interest rates.
Frequent Flyer Programs
The Company has a “Dynasty Flyer Program” through which program members can convert accumulated
mileage to a cabin upgrade, free tickets and other member rewards.
A portion of passenger revenue attributable to the rewards for the frequent flyer program is deferred. The
Company recognizes this deferred revenue as revenue only when the Company has fulfilled its obligations
on the granting of rewards or when the period for converting the mileage to rewards has expired.
Taxation
Income tax expense represents the sum of the current tax and deferred tax.
a. Current tax
The current tax liabilities are based on current taxable profit. Since part of the income and expenses aretaxable or deductible in other periods, or in accordance with the relevant tax laws are taxable ordeductible, current taxable profit differs from net profit reported in the statements of comprehensive
income. The Company’s current tax liabilities are calculated by the tax rate was legislated or
substantially legislated at the balance sheet date.
According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided
for in the year the shareholders approve the retain earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

- 24 -

b. Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets andliabilities in the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax
credits for purchases of machinery, equipment and technology, research and development expenditures,and personnel training expenditures to the extent that it is probable that taxable profit will be available
against which those deductible temporary differences can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates and interests in joint ventures, except where the Company is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not reversein the foreseeable future. Deferred tax assets arising from deductible temporary differences associatedwith such investments and interests are only recognized to the extent that it is probable that there will be
sufficient taxable profit against which to utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all orpart of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at theend of each reporting period and recognized to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period inwhich the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that havebeen enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which theCompany expects, at the end of the reporting period, to recover or settle the carrying amount of its
assets and liabilities.
c. Current and deferred taxes for the year
Current and deferred taxes are recognized in profit or loss, except when they relate to items that arerecognized in other comprehensive income or directly in equity, in which case, the current and deferredtaxes are also recognized in other comprehensive income or directly in equity, respectively.
Maintenance and Overhaul Costs
Routine maintenance costs are recognized in profit or loss in the period in which they are incurred.
The overhaul costs of an owned or leased aircraft that meet the criteria for fixed asset capitalization are
capitalized as replacements for aircraft and engines and are depreciated on a straight line basis over the
expected annual overhaul cycle.

5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
In the application of the Company’s accounting policies as disclosed in Note 4, management is required tomake judgments, estimations and assumptions on the carrying amounts of assets and liabilities that are notreadily apparent from other source. The estimates and associated assumptions are based on historicalexperience assumptions and other factors that are consider relevant. Actual results may differ from theseestimates.

- 25 -

Key Sources of Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of thereporting period that have a significant risk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next financial year are discussed below.
Defined Benefit Obligations
The present value of defined benefit obligations at the end of the reporting period is calculated using
actuarial assumptions. Those assumptions, which are based on management’s judgments and estimates,
comprise the discount rate and expected return on plan assets. Changes in actuarial assumptions may have amaterial impact on the amount of defined benefit obligations.
Useful Lives of Property, Plant and Equipment - Flight Equipment
Flight equipment is measured at cost less residual value and are depreciated on a straight-line basis overtheir estimated useful lives. The estimated useful lives and residual values are evaluated based on the
Company’s historical experience and current usage condition in the aviation industry.
Because of the change in fleet planning to match the economic benefits with the useful lives, on March 8,
2024, the Company’s board of directors resolved to modify the estimated useful lives of eight B747-400F
freighters from 24 years to 22 years and the estimated useful lives of two 80C2 engines from 8 years to 6
years, effective on May 1, 2024. It is estimated that the depreciation expense in 2024 will increase by $679
million.

6. CASH AND CASH EQUIVALENTS
December 31
2023
Cash on hand and revolving funds
Checking accounts and demand deposits
Cash equivalents
Time deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

$

2022

63,051
4,747,741$

45,097
4,898,695

10,400,000
5,174,876

17,572,393
4,976,642$ 20,385,668$ 27,492,827

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

Bank balanceTime deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds- 26 -

2023

2022

1.00%-1.90%
1.35%-5.90%
1.32%-5.78%

0.33%-1.00%
1.27%-4.95%
1.15%-4.70%

The Company designated some deposits denominated in USD and repurchase agreements collateralized bybonds denominated in USD as hedging instruments to avoid exchange rate fluctuations on final paymentsof aircraft orders and prepayments for equipment and applied cash flow hedge accounting to hedge its
foreign exchange exposure. The contract information is as follows:
Maturity Date
December 31, 2023
December 31, 2022

2024.1.5-2024.2.7
2023.1.3-2023.1.18

Subject

Carrying Value

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

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

$ (449,744)(40,217)

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

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Investments in Equity Instruments
December 31
2023

2022

$ 37,640$ 22,900

22,785

41,128$ 60,425$ 64,028

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 Company’s strategy of holding these investments for long-term purposes.

8. FINANCIAL ASSETS AT AMORTIZED COST
December 31
2023

2022

$ 3,086,923$ 4,764,601

Current
Time deposits with original maturities of more than 3 months- 27 -

The ranges of interest rates for time deposits with original maturities of more than 3 months were1.33%-5.89% and 0.45%-5.05% per annum as of December 31, 2023 and 2022, respectively.

9. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE, NET
December 31
2023
Notes receivable$

175,8242022$

71,848

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

9,073,475(225,830)
8,847,645

10,688,166(230,350)
10,457,816

9,023,469$ 10,529,664

The average credit period was 7 to 55 days. In determining the recoverability of a accounts receivable, theCompany considered any change in the credit quality of the receivable since the date credit was initiallygranted to the end of the reporting period, and any allowance for impairment loss was based on theestimated irrecoverable amounts determined by reference to the Company’s past default experience with thecounterparty and an analysis of the counterparty’s current financial position. The Company adopted apolicy of only dealing with entities that are rated the equivalent of investment grade or higher and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit rating information is obtained from independent rating agencies where available or, if not available,
the Company uses other publicly available financial information or its own trading records to rate its major
customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored
and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit
exposure is controlled by counterparty limits that are reviewed and approved by the risk management
committee annually.
The Company applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9,which permits the use of lifetime expected loss allowance for all account receivables. The expected credit
losses on accounts receivable are estimated using a provision matrix by reference to past default experience
with the debtors and an analysis of the debtors’ current financial position, adjusted for general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as theforecasted direction of economic conditions at the reporting date. As the Company’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the loss
allowance based on the past due status is not further distinguished according to the different segments of theCompany’s customer base.
The Company 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 Company continues to engage in enforcement activity to attempt
to recover the past due receivables. Where recoveries are made, these are recognized in profit or loss.

- 28 -

The following table details the loss allowance of account receivables based on the Company’s provision
matrix.
December 31, 2023
Not Past Due

1 to 30 Days
Past Due

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

0.95%

14.72%

52.36%

100.00%100.00%

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$

8,866,351(84,082)$

69,196(10,186)$

13,362(6,996)$

9,648(9,648)$114,918(114,918)$

9,073,475(225,830)

Amortized cost$

8,782,269$

59,010

$

6,366

$

-

$

-

$

8,847,645

December 31, 2022

Expected credit loss rate

Not Past Due

1 to 30 Days
Past Due

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

1.07%

5.22%

46.64%

46.42%

99.14%

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$ 10,527,938(112,215)$

41,208(2,151)$

3,317(1,547)

$

517
(240)

$

115,186(114,197)$ 10,688,166(230,350)

Amortized cost

$ 10,415,723$

39,057

$

1,770

$

277

$

989

$ 10,457,816

The movements of the loss allowance of accounts receivables were as follows:
For the Year Ended December 31
2023
2022
Balance at January 1
Add: Net remeasurement of loss allowance
Add: Amounts recovered
Less: Amounts written off$ 230,350
35(4,555)$ 204,481
38,474208(12,813)

Balance at December 31$ 225,830$ 230,350

10. INVENTORIES, NET
December 31
2023
Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services$

9,428,795
659,584
388,582$ 10,476,961

2022$

9,645,991
620,680
301,368$ 10,568,039

The operating costs for the years ended December 31, 2023 and 2022 included losses from inventory
write-downs of $1,171,779 thousand and $243,088 thousand, respectively.

- 29 -

11. NON-CURRENT ASSETS HELD FOR SALE
December 31
2023
Aircraft held for sale2022

$ 1,290,581$-

To enhance its competitiveness, the Company plans to introduce new aircraft and retire old aircraft
according to a planned schedule. Such aircraft, classified as non-current assets held for sale, had an original
carrying amount which was higher than the expected sale price and which was recognized as an impairment
loss, and would be continuously assessed whether there are further impairments in subsequent periods.
However, the actual loss shall be identified by the actual sale price. The Company recognized an
impairment loss of $979,459 thousand for the year ended December 31, 2023.

The fair value measurement is classified as Level 3, and the fair value was determined according to similartransactions of the related market, and the proposed sale prices were based on the current status of theaircraft.
The Company disposed of the aircraft held for sale for the year ended December 31, 2023 and 2022, andrecognized a loss of $2,364 thousand and gain of $558,477 thousand, respectively.

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
December 31
2023
Investments in subsidiaries
Investments in associates
Investments in joint ventures2022$ 12,032,238
869,320$

9,390,430
560,102$ 12,901,558$

9,950,532

a. Investment in subsidiaries
December 31
2023
Tigerair Taiwan
Cal Park
Mandarin Airlines
Cal-Dynasty International
Taiwan Air Cargo Terminal
Taoyuan International Airport Services
Cal-Asia Investment
Sabre Travel Network (Taiwan)
Cal Hotel
Taiwan Airport Services
Dynasty Aerotech International
Taiwan Aircraft Maintenance and Engineering
Global Sky Express
Kaohsiung Catering Services- 30 -$

2022

3,179,817
1,786,823
1,664,600
1,418,175
1,376,778
414,674
622,487
237,347
340,162
65,256
124,583
377,137
6,421
417,978$725,747
1,728,454
1,196,733
1,359,724
1,790,921
424,527
617,106
185,935
304,948
102,745
144,523
451,3228,256
349,489$ 12,032,238$

9,390,430

At the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by
the Company were as follows:
December 31

Tigerair Taiwan
Taiwan Air Cargo Terminal
Cal Park
Mandarin Airlines
Cal-Dynasty International
Taoyuan International Airport Services
Cal-Asia Investment
Sabre Travel Network (Taiwan)
Taiwan Airport Services
Cal Hotel
Dynasty Aerotech International
Taiwan Aircraft Maintenance and Engineering
Global Sky Express
Kaohsiung Catering Services

2023

2022

75%
54%
100%
97%
100%
49%
100%
94%
47%
100%
100%
100%
25%
54%

78%
54%
100%
97%
100%
49%
100%
94%
47%
100%
100%
100%
25%
54%

The Company has control over Taoyuan International Airport Service, Taiwan Airport Service andGlobal Sky Express despite its ownership of less than 50%. Therefore, they were listed as subsidiaries.
On February 13, 2023, the board of directors of Tigerair Taiwan Co., Ltd. resolved to issue 36,000
thousand ordinary shares for cash to strengthen its capital structure. On March 9, 2023, the board of
directors of the Company approved the subscription plan at $25 per share. In April 2023, the Company
subscribed for 23,993 thousand shares. The proportion of ownership of the Group decreased to 81%.
Because the shares were subscribed at a percentage different from its existing ownership percentage, theCompany’s capital surplus increased by $85,930 thousand. In addition, Tigerair Taiwan Co., Ltd.
reserves 15% of the total of issuances for employees to subscribe to in accordance with article 267, item
1 of the Company Act. Therefore, the Company’s capital surplus increased by $24,055 thousand.
In addition, Tigerair Taiwan Co., Ltd. applied for a listing on the Taiwan Innovation Board of the
Taiwan Stock Exchange on December 21, 2022. The board of directors of the Taiwan Stock Exchange
approved the listing application on February 21, 2023, and it was reported to the competent authority.
To cooperate with the public underwriting before the initial listing on the Taiwan Innovation Board, theboard of directors of Tigerair Taiwan Co., Ltd. approved the issuance of 13,000 thousand ordinary
shares for cash on May 5, 2023, and the issuance was approved by the competent authority in July 2023.
In addition, due to relevant regulations, the Group did not participate in ordinary shares for cash, andthus the Group's comprehensive subscribing percentage dropped to 79%. Because the shares weresubscribed at a percentage different from its existing ownership percentage, the Company’s capitalsurplus increased by $366,180 thousand.
Taiwan Air Cargo Terminal carried out a capital reduction to return investment to shareholders by$500,000 thousand. The reduction date was in August 2023. After capital deduction, the proportion ofownership in the Company remained unchanged.
In June 2023, Cal Park made up a gain of $28,896 thousand by capital increase out of retained earnings;
the proportion of ownership of the Company remained unchanged.
In November 2022, Taiwan Aircraft Maintenance and Engineering Co., Ltd. made up a loss of$140,000 thousand by capital reduction; the proportion of ownership of the Company remained
unchanged.

- 31 -

In December 2022, Cal Hotel Co., Ltd. made up a loss of $130,200 thousand by capital reduction; theproportion of ownership of the Company remained unchanged.
The share of profit or loss of subsidiaries accounted for using the equity method was as follows:
For the Year Ended December 31
2023
2022
Share of profit (loss)$ 2,355,442$ (2,798,672)

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

2022

Unlisted companies
Dynasty Holidays

$

-

$

-

At the end of the reporting period, the proportion of ownership and voting rights in associates held by
the Company were as follows:
December 31

Dynasty Holidays

2023

2022

-

20%

The share of profit or loss of associates accounted for using the equity method was as follows:
For the Year Ended December 31
2023
2022
Dynasty Holidays

$

-

$

-

China Aircraft Services issued ordinary shares to meet the needs for funds in March 2022. The
Company did not participate in the subscription, so the proportion of ownership of the Company
decreased from 20% to 4% and the Company lost significant influence over China Aircraft Services.
Therefore, the investment in China Aircraft Services which was initially classified as investments
accounted for using the equity method was reclassified as financial assets at fair value through othercomprehensive income since March 2022.
Dynasty Holidays was classified as associate accounted for using the equity method. On May 31, 2022,
the provisional shareholders’ meeting was held, and the shareholders resolved to dissolve Dynasty
Holidays, and the liquidation process has completed in June 2023. The Company has gained theliquidation income by $2,523 thousand.

- 32 -

c. Investments in joint ventures
The investments in joint ventures were as follows:
December 31

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

2023

2022

$ 767,615
101,705-$ 448,222
92,68419,196$ 869,320$ 560,102

At the end of the reporting period, the proportion of ownership and voting rights in joint ventures heldby the Company was as follows:
December 31

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

2023

2022

51%
55%
49%

51%
55%
49%

The Company entered into a joint venture agreement with Taikoo Company 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 Company does not havecontrol.
NORDAM Asia was classified as associate accounted for using the equity method. On October 27,
2023, the provisional shareholders’ meeting was held and the shareholders resolved to dissolve
NORDAM Asia, and the liquidation process is in progress.
The share of profit or loss of joint ventures accounted for using the equity method was as follows:
December 31

China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia

2023

2022

$ 371,539
12,514(19,196)$ (104,360)(26,931)(9,640)$ 364,857$ (140,931)

The Company’s shares of other comprehensive income of subsidiaries, associates and joint ventures
were $(205,339) thousand and $222,503 thousand for the years ended 2023 and 2022, respectively.
Except for NORDAM Asia, the investments accounted for using the equity method and the share of
profit or loss and other comprehensive income of subsidiaries, associates, and joint ventures were basedon these investees’ financial statements which have been audited. However, the management of theCompany determines that it shall have no material effect if the financial statements are not audited.
For information on the major businesses and products and the locations of registration for the major
business offices of the above entities, refer to Table 7 (names, locations, and related information of
investees on which the Company exercises significant influence) and Table 8 investment in mainland
China following the notes to the financial statements.

- 33 -

13. PROPERTY, PLANT AND EQUIPMENT
Freehold Land

Buildings

FlightEquipment

OthersTotal

Cost
Balance at January 1, 2022
Additions
Disposals
Reclassification$

181,593-$

7,263,207
46,652(23,947)-$ 241,050,331
1,539,855(2,770,427)
9,821,276$

6,795,722
682,521(184,034)(6,573)$ 255,290,853
2,269,028(2,978,408)
9,814,703

Balance at December 31, 2022$

181,593$

7,285,912$ 249,641,035$

7,287,636$ 264,396,176

Balance at January 1, 2022
Depreciation expense
Disposals
Reclassification
Impairment losses recognized

$

-

$

(4,048,982)(185,841)
23,947-$ (130,157,456)(14,980,619)
2,453,503
3,315,902(1,641)$(5,909,867)(318,546)
183,886(110)-$ (140,116,305)(15,485,006)
2,661,336
3,315,792(1,641)

Balance at December 31, 2022

$

-

$

(4,210,876)$ (139,370,311)$(6,044,637)$ (149,625,824)

Balance at December 31, 2022, net value$

181,593$3,075,036$ 110,270,724$

1,242,999$ 114,770,352

Balance at January 1, 2023
Additions
Disposals
Reclassification$

181,593-$

7,285,912
72,412(1,143)731$ 249,641,035
1,316,191(22,809,087)(6,818,886)$

7,287,636
254,949(407,960)
16,013$ 264,396,176
1,643,552(23,218,190)(6,802,142)

Balance at December 31, 2023$

181,593$

7,357,912$ 221,329,253$

7,150,638$ 236,019,396

Balance at January 1, 2023
Depreciation expense
Disposals
Reclassification
Impairment losses recognized

$

-

$

(4,210,876)(185,577)
1,144-$ (139,370,311)(14,873,312)
20,438,662
19,996,072(921,991)$(6,044,637)(323,892)
407,51294-$ (149,625,824)(15,382,781)
20,847,318
19,996,166(921,991)

Balance at December 31, 2023

$

-

$

(4,395,309)$ (114,730,880)$(5,960,923)$ (125,087,112)

Balance at December 31, 2023, net value$

181,593$2,962,603$ 106,598,373$

1,189,715$ 110,932,284

Accumulated depreciationand impairment

Cost

Accumulated depreciationand impairment

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

45-55 years
10-25 years
25 years
3-13 years
3-15 years
5 years
3-5 years
3-5 years(Continued)- 34 -

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

18-25 years
10-13 years
12-20 years
6-8 years
3-7 years
8-12 years
3-15 years
5-12 years(Concluded)

To replace aging aircraft and revitalize the fleet, the Company’s board of directors resolved the sale of fiveand two 747-400F aircraft on May 10, 2023 and August 9, 2023 respectively.
Considering the changes in model mix and phase-out plans, the Company used the fair value (Level 3)
deducting transaction costs as the recoverable amount of some flight equipment and the Company
recognized impairment losses of $921,991 thousand and $1,641 thousand for the years ended December 31,
2023 and 2022, respectively. The fair value was determined with reference to factors such as the conditionof the flight equipment and possible market estimates.
Refer to Note 31 for the carrying amounts of flight equipment pledged by the Company.
Based on the particularity of risk in the aviation industry, all of the Company’s assets such as aircraft, realestate, and movable property are adequately insured to diversify the potential risk related to operations.

14. INVESTMENT PROPERTIES
December 31

Carrying amount
Investment properties

2023

2022

$ 2,047,448$ 2,047,448

The investment properties held by the Company were land located in Nankan, which were leased to others.
The fair value of the investment properties held by the Company were $3,105,185 thousand and $2,456,472
thousand as of December 31, 2023 and 2022, respectively. The fair value valuation was performed byindependent qualified professional valuers, and the future income evaluated by management was based onmarket transactions. All of the Company’s investment properties were held under freehold interest.

15. OTHER INTANGIBLE ASSETS
Computer
Software Costs

Accumulated
Amortization

Net Value

Balance at January 1, 2022
Additions
Amortization expense
Reclassification$ 1,613,794
70,281(48,334)$(859,445)(181,662)
59,962$754,349
70,281(181,662)
11,628

Balance at December 31, 2022

$ 1,635,741$(981,145)$

654,596(Continued)- 35 -

Computer
Software Costs

Accumulated
Amortization

Net Value

Balance at January 1, 2023
Additions
Amortization expense
Reclassification$ 1,635,741
131,597(85,245)$(981,145)(181,471)
65,279$654,596
131,597(181,471)(19,967)

Balance at December 31, 2023

$ 1,682,093$ (1,097,337)$

584,756(Concluded)

The above items of other intangible assets are amortized on a straight-line basis over 2-10 years.

16. OTHER ASSETS
December 31
2023

2022

Current
Temporary payments
Prepayments
Others$128,081481,688354,803$

68,140926,426
314,246$964,572$

1,308,812

Non-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted Assets
Other financial assets$ 26,931,965
2,495,267
401,393
48,432
11,815$ 17,879,206
4,009,828
409,277
62,598
14,797$ 29,888,872$ 22,375,706

The prepayments for aircraft comprised the prepaid deposits and capitalized interest from the purchase of
A321neo, B777F, B787-9 and B787-10 aircraft. For details of the contract for the purchase of the aircraft,refer to Note 32.

- 36 -

17. BORROWINGS
Long-term Borrowings
December 31

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

2023

2022

4,000,000
37,592,590$ 18,550,000
29,579,243

16,200,000
40,38557,752,205
17,297,086

20,400,000
44,593
68,484,650
11,733,508$ 40,455,119$ 56,751,142

1.74%-2.15%

1.29%-1.90%$

Less: Current portion

Interest rates
Secured bank loans are secured by flight equipment, refer to Note 31.

Bank loans (denominated in New Taiwan dollars) are repayable quarterly, semiannually or in lump sum
upon maturity. The related information is summarized as follows:
December 31

Periods

2023

2022

2016/10/182035/12/14

2016/10/182034/10/12

The Company has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until September 2026, were used by the Company to guarantee commercial paperissued. As of December 31, 2023 and 2022, such commercial papers were issued at discount rates of
1.994%-2.0477% and 1.6830%-1.9013%, respectively.
In accordance with the “Regulations on Relief and Revitalization Measures for Industries and Enterprises
Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry of Transportation andCommunications and the “Operational Guides on Relief Loan Guarantees for Ailing Aviation Industry
Affected by Severe Pneumonia with Novel Pathogens”, the Company applied for a special loan project tomaintain its operation, and the fund along with subsidized interest rates were provided by the government.
The total amount of the loans is $29,350 million, which shall be repaid within 2 years and 4 years from thedate of initial drawdown. As of December 31, 2023, the Company had made a drawdown in the amount of$29,350 million and repaid $25,350 million of the drawdown.

- 37 -

18. BONDS PAYABLE
December 31

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

2023

2022

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

Rate
(%)

Related issuance conditions were as follows:

Category

PeriodConditions

Seven-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.75% p.a., payable annually
Five-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2022 and 2023; 1.32% interestp.a., payable annually
Seven-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2024 and 2025; 1.45% interestp.a., payable annually
Five-year private unsecured bonds - issued at
par in June 2019; repayable in June 2023
and 2024; 1.10% interest p.a., payableannually
Seven-year private unsecured bonds - issued at
par in June 2019; repayable in June 2025
and 2026; 1.32% interest p.a., payableannually
Five-year private unsecured bonds - issued at
par in May 2023; repayable in May 2027
and 2028; 1.90% interest p.a., payableannually
Five-year convertible bonds - issued at
discount in April 2021; repayable in lumpsum upon maturity; 0.8612% discount ratep.a.

2017.05.192024.05.19

Principal repayable on due
date; indicator rate;
payable annuallyPrincipal repayable inNovember of 2022 and2023; indicator rate;
payable annuallyPrincipal repayable inNovember of 2024 and2025; indicator rate;
payable annuallyPrincipal repayable in June of2023 and 2024; indicatorrate; payable annually

1.75

2019.06.212026.06.21

Principal repayable in June of2025 and 2026; indicatorrate; payable annually

1.32

2023.05.222028.05.22

Principal repayable in May of2027 and 2028; indicatorrate; payable annually

1.90

2021.04.282026.04.28

Unless bonds are converted toshare capital or redeemed,principal repayable one
time in April of 2026;
0.8612% discount rate p.a.

-

2018.11.302023.11.30

2018.11.302025.11.30

2019.06.212024.06.21

1.32

1.45

1.10

a. The Company issued the seventh issue of its unsecured convertible bonds, and the issuance conditions
were as follows:
1) The holders may demand a lump-sum payment for the bonds upon maturity.
2) The holders can request that the Company repurchase their bonds at face value on the third
anniversary of the offering date. The holders can exercise the right to sell on April 28, 2024.
- 38 -

3) The Company may redeem the bonds at face value between July 28, 2021 and March 18, 2026
under certain conditions.
4) Between July 28, 2021 and April 28, 2026 (except for the period between the former dividend date
and the date of the dividend declaration on record), holders may convert their bonds into theCompany’s ordinary shares. The initial conversion price was set at NT$19, which is subject toadjustment if there is a capital injection by cash or share dividend distribution. Because theCompany distributed cash dividends on July 16, 2023, the conversion price was adjusted to NT$18.
As of December 31, 2023, a total face value of NT$2,894,700 thousand of convertible bonds wasconverted into 154,182 thousand ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component waspresented in equity under the heading of capital surplus - options. The effective interest rate of theliability component was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component
Liability component at the date of issuanceInterest charged at an effective interest rate
Convertible bonds converted into ordinary shares
Liability component at December 31, 2022
Interest charged at an effective interest rate
Convertible bonds converted into ordinary shares$ 4,500,000(188,862)
4,311,138
45,648(2,132,112)
2,224,674
16,788(667,648)

Liability component at December 31, 2023

$ 1,573,814

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

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

3,210,220
7,062,389
35,290,060
7,163$ 45,569,832- 39 -

2022$

3,265,435
6,290,368
43,074,156
7,521$ 52,637,480

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

4,900,695$ 13,305,582$

189,197758,619
10,727,839
2,125

$

$ 11,677,780

183,088
350,840
10,737,107
521$ 11,271,556

b. Lease liabilities
December 31

Carrying amountCurrent
Non-current

2023

2022

$ 1,351,737$ 10,789,864$ 1,185,177$ 10,428,091

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

Land
Buildings
Flight equipment
Other equipment

2023

2022

0%-1.65%0%-4.65%
0.68%-5.73%
0%-1.34%0%-1.65%0%-4.65%
0.68%-3.16%
0%-1.34%c. Financial instruments under hedge accounting
The Company specifies a part of aircraft leases denominated in USD as hedging instruments to avoid
exchange rate fluctuations in passenger revenue and applies the accounting treatment of cash flow
hedging. The lease information is as follows:
Maturity Date
December 31, 2023

December 31, 2022

Subject

2024.5.1-2034.12.31 Financial liabilities for hedging current
Financial liabilities for hedging non-current
2023.2.7-2034.12.31 Financial liabilities for hedging current
Financial liabilities for hedging non-current- 40 -

Carrying Value$

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

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

127,327(4,111,327)

Reclassified toIncome$(329,884)
114,759

d. Material leasing activities and terms
China Airlines leased ten 777-300ER planes, fifteen A330-300 planes, ten 737-800 planes and ten
A321neo planes for operation, lease period are 4 to 16 years from February 2007 to December 2034.
The rental pricing method is partly a fixed amount of funds, and some of them are floating rents,
floating rents are according to benchmark ratio, the rent is revised every half year. When the lease
expires, the lease does not have purchase rights.
The information of refundable deposits and opening of credit letter due to rental of planes:
December 31
2023
Refundable deposits
Credit guarantees$

121,846
1,537,903

2022$

270,494
1,658,337

e. Lease agreement signed but not yet delivered
In October 2019, the Company signed a rental contract for eight A321neo with CALC Lease
Corporation, which is expected to be introduced between 2022 and 2025. As of December 31, 2023,
four A321neo have been delivered.
In November 2023, the Company signed a rental contract for one A350-900 with lease corporation,
which was delivered to Taiwan on December 30, 2023 and underwent painting and maintenance
operations at Engineering and Maintenance Organization immediately. The first rental payment was
expected to be paid in March 2024 when the aircraft turns into operation.
The Company also signed related aircraft purchase agreement, please refer to Note 32 for details.
f. Aircraft leases
In order to revitalize assets, the Company signed a lease agreement for two 747-400F aircraft with US
Cargo Company in August 2021 and September 2021, respectively. The lease commencement dates
were July 15, 2022 and October 10, 2022, respectively. Due to early termination of the leaseagreements, these two cargo aircraft were sold to Icelandic owner Air Atlanta Icelandic in August 2023.
One of the cargo aircraft was sold on a finance lease basis, and ownership can only be obtained after thepayment is paid in accordance with the 24-installment payment schedule.

- 41 -

Finance lease receivables
For the Year Ended December 31
2023
2022
Undiscounted lease payments
Year 1
Year 2$

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

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

The Company measures the loss allowance for finance lease receivables at an amount equal to lifetime
ECLs. As of the date of balance sheet, no finance lease receivable was past due. The Company has notrecognized a loss allowance for finance lease receivables after taking into consideration the historicaldefault experience and the future prospects of the industries in which the lessees operate, together withthe value of collateral held over these finance lease receivables.
g. Other lease information
The Company uses operating lease agreement for investment properties, refer to Note 14.
For the Year Ended December 31
2023
2022
Short-term leases and low-value asset leases
Total cash outflow for leases$
58,523$ (12,980,436)$
67,335$ (11,573,192)

The Company 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 leases.

20. OTHER PAYABLES
December 31
2023
Short-term employee benefits
Fuel costs
Repair expenses
Ground service expenses
Terminal surcharges
Commission expenses
Finance cost
Others$4,882,140
4,477,752
1,800,550
814,676
689,430
277,089
156,502
1,879,397$ 14,977,536- 42 -

2022$

3,765,372
4,560,607
1,379,132
781,071
901,498
85,14098,736
1,694,227$ 13,265,783

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

Current
Non-current

2022

3,915,165
22,156,512$

3,179,874
13,358,719$ 26,071,677$ 16,538,593$ 23,107,378
2,964,299$ 15,257,687
1,280,906$ 26,071,677$ 16,538,593

22. PROVISIONS
December 31
2023

2022

Leases - aircraft$ 18,883,876$ 20,418,602

Current
Non-current$$

2,591,751
16,292,125$ 18,883,876

3,490,653
16,927,949$ 20,418,602

The Company leased flight equipment under operating lease agreements. Under the contracts, when theleases expire and the equipment is returned to the lessor, the flight equipment has to be repaired according
to the expected years of use, number of flight hours, flight cycles and the number of engine revolution. The
Company had existing obligations to recognize provisions when signing a lease or during the lease term.
Aircraft Lease
Contracts
Balance at January 1, 2022
Additional provisions recognized
Usage
Effect of foreign currency exchange differences$ 17,808,700
4,958,429(3,690,602)
1,342,075

Balance at December 31, 2022

$ 20,418,602

Balance at January 1, 2023
Additional provisions recognized
Usage
Effect of foreign currency exchange differences$ 20,418,602
5,802,208(7,260,306)(76,628)

Balance at December 31, 2023

$ 18,883,876- 43 -

23. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
b. Defined benefit plans
The defined benefit plans adopted by the Company in accordance with the Labor Standards Law isoperated by the government of the ROC. Pension benefits are calculated on the basis of the length ofservice and average monthly salaries of the 6 months before retirement. The Company contributeamounts equal to 15% of total monthly salaries and wages to a pension fund administered by thepension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in thecommittee’s name. Before the end of each year, the Company assesses the balance in the pension fund.
If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees
who conform to retirement requirements in the next year, the Company is required to fund thedifference in one appropriation that should be made before the end of March of the next year. The
pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); theCompany has no right to influence the investment policy and strategy.
The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as
follows:
December 31
2023

2022

Present value of defined benefit obligation
Fair value of plan assets$ 16,349,379(7,745,247)$ 15,802,396(7,454,233)

Net defined benefit liabilities$$

8,604,132

8,348,163

Movements in net defined benefit liabilities were as follows:

Balance at January 1, 2022
Service cost
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial gain - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)$ 14,958,292$ (6,599,103)$

1,079,984
98,312
1,178,296(43,772)(43,772)

1,079,984
54,5401,134,524-(506,426)(506,426)(773,074)
1,250,610
477,536(677,109)(506,426)(982,041)
677,109(773,074)
1,250,610(28,890)(982,041)(Continued)- 44 -

8,359,189

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)

Direct payment to employees
Exchange differences on foreign plans

$

$

-

$

(161,579)
26,960

Balance at December 31, 2022

$ 15,802,396$ (7,454,233)$

8,348,163

Balance at January 1, 2023
Service cost
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
Direct payment to employees
Exchange differences on foreign plans$ 15,802,396$ (7,454,233)$

8,348,163

1,018,015
194,678
1,212,693(92,238)(92,238)

1,018,015
102,440
1,120,455-(66,553)(66,553)

118,258
271,203389,461(894,672)(160,721)
222(66,553)(1,026,895)
894,672-

118,258
271,203322,908(1,026,895)(160,721)
222

Balance at December 31, 2023

$ 16,349,379$ (7,745,247)(161,579)
26,960$8,604,132(Concluded)

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to thefollowing risks:
1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. However, in accordance with relevant regulations, the return generated byplan assets should not be below the interest rate for a two-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of thedefined benefit obligation; however, this will be partially offset by an increase in the return on theplan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated using the future salariesof plan participants. As such, an increase in the salaries of the plan participants will increase thepresent value of the defined benefit obligation.
The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as
follows:
December 31

Discount rate
Expected rate of salary increase- 45 -

2023

2022

1.19%
1.00%

1.28%
1.00%

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

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

2023

2022

$ (317,990)$ 317,990$ (306,026)$ 321,327$ 635,979$ (604,180)$ 627,353$ (596,751)

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

2022

Expected contributions to the plan for the next year

$ 891,625$ 862,222

Average duration of the defined benefit obligation

8.1 years

8.4 years

24. EQUITY
a. Share capital
Ordinary shares
December 31

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

2023

2022

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

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

The Company issued the 6th and the 7th domestic unsecured convertible bonds, and the holders of theconvertible bonds applied for conversion in the amount of $683,500 thousand and $1,178,600 thousand
for the years ended December 31, 2023 and 2022. The number of ordinary shares exchanged were37,803 thousand and 72,313 thousand, respectively, and completed the registration of the change inequity after the issuance of new shares.

- 46 -

b. Capital surplus
December 31
2023

2022

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

476,712547

67,387

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

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

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit,
such capital surplus may be distributed as cash dividends or transferred to share capital (limited to acertain percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries
resulting from equity transactions other than actual disposals or acquisitions or from changes incapital surplus of subsidiaries accounted for using the equity method.
c. Appropriation of earnings and dividend policy
The board of directors of the Company proposed to amend the Company Act on January 10, 2024, andthe amendments are subject to the resolution in the shareholders’ meeting to be held on May 30, 2024.
Under the dividend policy as set forth in the amended Company Act, where the Company made a profit
in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years,
setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve inaccordance with the laws and regulations, and then any remaining profit together with any undistributed
retained earnings shall be used by the Company’s board of directors as the basis for proposing a
distribution plan. The profit can be distributed in the form of new shares or cash, and the cash dividends
should be no less than 30% of the total dividends.
Under the Company Act before the amendments, where the Company made a profit in a fiscal year, theprofit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal
reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with thelaws and regulations. Then, if any remaining profit together with any undistributed retained earnings, it
shall be used by the Company’s board of directors as the basis for proposing a distribution plan that
dividends and bonus shall be no less than 50% of the remaining profit and undistributed retained
earnings. The dividends and bonus mentioned above can be distributed in the form of new shares or
cash, and the cash dividends should be no less than 30% of the total dividends. If surplus earnings are
distributed in the form of new shares, the distribution of shares shall be resolved in the shareholders’meeting; if such earnings are distributed in the form of cash, the cash distribution shall be authorized
after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by
two-thirds of the total number of directors; in addition, a report of such distribution shall be submitted
to the shareholders’ meeting. If the Company has no loss, according to laws and regulations, the- 47 -

Company can distribute its capital reserve, in whole or in part, by issuing new shares or cash based on
financial, business and management considerations. If such capital reserve is distributed in the form of
new shares, it shall be resolved by a meeting of the shareholders; if such capital reserve is distributed in
the form of cash, it shall be authorized after a resolution has been adopted by a majority vote at a
meeting of the board of directors attended by two-thirds of the total number of directors; in addition
thereto a report of such distribution shall be submitted to the shareholders’ meeting.
The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thefollowing year.
1) Appropriation of earnings in 2021
The appropriation of earnings in 2021 which was resolved and recognized in the shareholders’meeting on May 26, 2022 is as follows:
Appropriationof Earnings
Legal reserve
Cash dividends$

925,385
5,000,000

Dividends Per
Share (NT$)
0.83145736

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

Dividends Per
Share (NT$)

305,592
534,375
2,772,207

0.4602191

Gain (Loss) on
Hedging
Instruments

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

141,415--

141,415--(4,086,411)(4,086,411)--(199,639)

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

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI$(199,639)(Continued)- 48 -

Exchange
Differences on
the Translationof the Financial
Statements ofForeign
Operations
Unrealized gain (loss) on financial
assets at FVTOCI
Share of other comprehensive
income (loss) of associates andjoint ventures accounted forusing the equity method
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transferred to initial carrying
amount of hedged items$-

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI

$

8,570

Gain (Loss) on
Hedging
Instruments

$

-

Total

$

8,570

2,649
(28,283)

46,386(8,526)

165
774,784

49,200737,975

115,781

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

100,687

100,687

Balance at December 31, 2022$

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

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

Balance at December 31, 2023$

(7,093)--(7,093)--(621,571)(621,571)--

340,206

340,206-(3,603)-(3,603)(2,993)
1,419(14,551)(38)(1,562)(14,697)(19,106)(13,316)(8,667)(18,192)(297,624)(324,483)--

168,844

168,844(12,965)$

22,726$(699,775)$(690,014)(Concluded)- 49 -

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

Period of Treasury Shares

Number of
Shares,Beginning ofYear

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

Name of Subsidiary

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

Reduction
During theYear-

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

Carrying
AmountMarket Value

2,075$ 44,916$ 44,916

2,075$ 39,418$ 39,418

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

The above acquisitions by subsidiaries of the Company’s shares in previous years was due toinvestment planning. The shares of the Company held by its subsidiaries were treated as treasury shares.
The subsidiaries can exercise shareholders’ right on these treasury shares, except for the right tosubscribe for the Company’s new shares and voting rights.

25. NET INCOME
a. Revenue
For the Year Ended December 31
2023
2022
Passenger
Cargo
Others- 50 -$ 99,058,956
56,851,792
5,764,785$ 20,479,214
115,864,041
4,726,594$ 161,675,533$ 141,069,849

b. Other income
For the Year Ended December 31
2023
2022
Interest income
Dividend income
Others$ 1,570,722
14,713286,745$566,465
11,723
729,343$ 1,872,180$ 1,307,531

In 2002, CAA terminated the lease of six aircraft with the Company on a unilateral basis, which arose
several litigation between the Company and CAA. Because the aircraft leases were terminated inadvance, the agreement had turned from financial lease to operating lease, which caused the situation of
overpaid rental owing from the differential of the calculation basis. Therefore, in 2016, the Company
sued CAA for an approximate amount of $1,200 million. The Company lost the case in the first andsecond instances, and won the part of the case after remanding in the third instance.
The Supreme Court dismissed the appeal and affirmed the conviction that CAA should pay back theprincipal amount with interest.
CAA has paid the abovementioned amount in October 2022. The Company recognized the amount of$288 million as other income - others in 2022.
c. Other gains and losses
For the Year Ended December 31
2023
2022
Gain on disposal of property, plant and equipment
Net foreign exchange gain
Impairment loss recognized on flight equipment
Gain on disposal of investments(Loss) gain on disposal of non-current assets held for sale
Others$499,881
832,999(1,901,450)
2,523(2,364)(320,201)$(888,612)$

19,911
1,517,582(1,641)
558,477(269,435)$ 1,824,894

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

144,279
799,010
1,298,972$

156,189
749,735
1,311,226

515

3,810

$ 2,242,776$ 2,220,960

Capitalization interest$$

Capitalization rate

1.64%-2.06%- 51 -

392,969

176,264

0.81%-1.58%

e. Depreciation and amortization expenses
For the Year Ended December 31
2023
2022
Property, plant and equipment
Right-of-use assets
Intangible assets

An analysis of depreciation by function
Operating costs
Operating expenses

An analysis of amortization by function
Operating expenses$ 15,382,781
11,677,780
181,471$ 15,485,006
11,271,556
181,662$ 27,242,032$ 26,938,224$ 26,034,269
1,026,292$ 26,150,203
606,359$ 27,060,561$ 26,756,562$$

181,471

181,662f. Employee benefits expense
For the Year Ended December 31
2023
2022
Post-employment benefits
Defined contribution plan
Defined benefit plan

Other employee benefits
Salary expenses
Labor and health insurance expenses
Personnel service expenses

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

355,652
1,120,455$

331,703
1,134,524$

1,476,107$

1,466,227$ 16,837,377
1,280,125
4,864,852$ 14,493,508
1,236,490
3,268,895$ 22,982,354$ 18,998,893$ 19,887,973
4,570,488$ 16,538,596
3,926,524$ 24,458,461$ 20,465,120

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. When the Company has an accumulated deficit, theCompany shall set aside some amounts to offset the deficit in advance. For the year ended December 31,
2023 and 2022, the estimated amount of compensation of employees were $249,138 thousand and$120,275 thousand.
Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date that the annual financial statements are authorized for issue are adjusted
in the year that the compensation and remuneration are recognized. If there is a change in the proposed
amounts after the annual financial statements are authorized for issue, the differences are recorded as achange in the accounting estimate.
- 52 -

There was no difference between the actual appropriated amounts of compensation of employees andthe amounts recognized in the financial statements for the years ended December 31, 2022 and 2021.
Information on the compensation of employees resolved by the Company’s board of directors isavailable at the Market Observation Post System website of the Taiwan Stock Exchange.

26. INCOME TAX
a. Income tax recognized in profit or loss
Major components of income tax expense are as follows:
For the Year Ended December 31
2023
2022
Current tax
In respect of the current year
Adjustments for prior year
Deferred tax
In respect of the current year
Adjustments for prior year
Income tax expense recognized in profit or loss

$ 1,307,597(247)$ 1,908,649
24,169(276,611)
206,163(889,534)(13,885)$ 1,236,902$ 1,029,399

A reconciliation of accounting profit and income tax expense is as follows:
For the Year Ended December 31
2023
2022
Profit before tax from continuing operations$ 8,055,454$ 3,888,902

Income tax expense calculated at the statutory rate
Effects of adjustments to income tax:
Nondeductible expenses in determining taxable income
Tax-exempt income
Overseas income tax expense
Unrecognized deductible temporary differences
Adjustments for prior years’ tax
Adjustments for prior years’ deferred tax$ 1,611,091$

11,508(528,544)
15,600(78,669)(247)
206,163621,251(372,693)
48,128(55,351)
24,169(13,885)

Income tax expense recognized in profit or loss

$ 1,236,902$ 1,029,399- 53 -

777,780

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

$

1,419

$

28,283(14,697)
64,581(38)

774,784(5,778)(8,526)

51,265$ 732,197

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive Income

Closing
Balance$$

Total income tax recognized in other comprehensive income$c. Deferred tax assets and liabilities
For the year ended December 31, 2023

Opening
Balance
Deferred tax assets
Temporary differences
Defined benefit obligations
Frequent flyer programs
Maintenance reserve
Allowance for impairment
loss of inventories
Unrealized foreign exchange
lossesOthers$ 1,682,495
650,350
2,396,129(12,419)
140,848
240,645

64,581-$ 1,734,657
791,198
2,636,774

294,857

197,653-

492,510340,127
691,853(340,127)(129,126)(13,316)

549,411$ 6,204,550$ 6,055,811$

97,474$51,265

$

8,259

$

27,025
1$-$

27,025
8,260

$

8,259

$

27,026$-$35,285

Deferred tax liabilities
Temporary differences
Unrealized foreign exchange
gains
Others- 54 -

For the year ended December 31, 2022

Opening
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive Income$$

Closing
Balance

Deferred tax assets
Temporary differences
Defined benefit obligations
Frequent flyer programs
Maintenance reserve
Allowance for impairment
loss of inventories
Unrealized foreign exchange
lossesOthers$ 1,698,141
583,272
2,288,073(9,868)67,078108,056(5,778)-$ 1,682,495
650,350
2,396,129

280,131

14,726-294,857

384,687

340,127
324,677(17,511)340,127
691,853$ 5,234,304$

844,796$(23,289)$ 6,055,811$

58,623
763,745$(58,623)-$(755,486)

$

8,259

$

822,368$(58,623)$(755,486)

$

8,259

Deferred tax liabilities
Temporary differences
Unrealized foreign exchange
gains
Others

Deductible temporary differences for which no deferred tax assets have been recognized in the balance
sheets were as follows:
December 31

Other temporary differences

2023

2022

$ 5,700,000$ 6,200,000

d. As of December 31, 2023, the Company has no unused loss carryforwards.
e. Income tax assessments
The income tax returns of the Company through 2021 have been examined by the tax authorities.

- 55 -

27. EARNINGS PER SHARE
For the Year Ended December 31
2023
2022
Basic earnings per share (NT$ per share)
Diluted earnings per share (NT$ per share)

$
$

1.13
1.11

$
$

0.48
0.47

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

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

16,466

21,415

Earnings used in the computation of diluted earnings per share$ 6,835,018$ 2,880,918

6,029,240

5,996,406

108,167
12,580137,708
9,155

6,149,987

6,143,269

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

The Company may settle the compensation of employees in cash or shares, therefore, the Company
assumes that the entire amount of the compensation will be settled in shares, and the resulting potential
shares will be included in the weighted average number of shares outstanding used in the computation ofdiluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in
the computation of diluted earnings per share until the number of shares to be distributed to employees isresolved in the following year.

28. CAPITAL MANAGEMENTThe Company manages its capital to ensure that it will be able to continue as a going concern while
maximizing the return to shareholders through the optimization of the debt and equity balance. The capital
structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equityof the Company (comprising issued capital, reserves, retained earnings and other equity items).
To support operating activities and purchase of aircraft, the Company needs to maintain sufficient capital.
Therefore, the goal of capital management is to ensure that financial resources and operating plan is able tosupport the future working capital, capital expenditures, debt repayment, dividend payments and otherneeds in the next 12 months.

- 56 -

29. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments not measured at fair value
December 31
2023
Carrying
Amount2022
Carrying
AmountFair Value

Fair Value

Financial liabilities
Bonds payable$

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

9,999,674$ 10,313,545

Lease liabilities and long-term borrowings are floating-rate financial liabilities, so their carrying
amounts are their fair values. Fair values of bonds payable trading in OTC are based on quoted market
prices (Level 1).
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 foran asset or liability that are not based on observable market data (unobservable inputs).
December 31, 2023
Level 1
Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign

Level 2

Level 3

Total

$

-

$

-

$

22,78537,640$22,78537,640

$

-

$

-

$

60,425$60,425

Financial assets for hedging$ 10,307,692$

40,796$

5,455$ 10,353,943

Financial liabilities for hedging$ 34,860,884$

47,878$77,481$ 34,986,243- 57 -

December 31, 2022
Level 1
Financial assets at FVTOCI
Investments in equity instruments
Unlisted shares - domestic
Unlisted shares - foreign

Level 2

Level 3

Total

$

-

$

-

$

41,12822,900$41,12822,900

$

-

$

-

$

64,028$64,028Financial assets for hedging$ 3,987,730

$

4,935

$

38,997$ 4,031,662

Financial liabilities for hedging$ 42,000,610$

117,495$

55,758$ 42,173,863

There were no transfers between Level 1 and 2 in the current period.
4) Valuation techniques and inputs applied for Level 2 fair value measurement
Financial Instruments
Derivatives

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 Company
used to determine the fair values are identical to those used in
the pricing of financial instruments for market participants.

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

December 31, 2023
December 31, 2022

- 58 -

Multiplier

Liquidity
Discount

0.82-12.24
0.79-10.39

80%
80%

Derivative
Instruments

EquityInstruments

Balance at January 1, 2023
Recognized in other comprehensive income$ (16,761)(55,265)$ 64,028(3,603)

Balance at December 31, 2023

$ (72,026)$ 60,425

Balance at January 1, 2022
Recognized in other comprehensive income

$

6,124
(22,885)$ 55,458
8,570

Balance at December 31, 2022

$ (16,761)$ 64,028

Because some financial instruments and nonfinancial instruments may not have their fair values
disclosed, the total fair value disclosed herein is not the total value of the Company’s collective
instruments.
c. Categories of financial instruments
December 31
2023

2022

Financial assets
Financial assets for hedging
Financial assets at amortized cost (Note 1)
Financial assets at FVTOCI - investments in equity instruments$ 10,353,943
34,152,264
60,425$4,031,662
44,114,404
64,028Financial liabilities
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

34,986,243
116,053,175

42,173,863
126,090,173

Note 1: The balances include financial assets measured at amortized cost, which comprise cash andcash equivalents, time deposits with original maturities of more than 3 months, notes andaccounts receivable, accounts receivable - related parties, finance lease receivables, otherreceivables, refundable deposits, restricted assets and other financial assets.
Note 2: The balance include financial liabilities measured at amortized cost, which comprise notes andaccounts payable, accounts payable - related parties, other payables, bonds payable, long-termborrowings, lease liabilities, provisions, parts of other current liabilities, parts of othernon-current liabilities and guarantee deposits.
d. Financial risk management objectives and policies
The Company 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 Company has its operating costs stay within a specified range byusing appropriate financial hedging instruments and hedging percentages in accordance with the“Processing Program of Derivative Financial Instrument Transactions” approved by the Company’s
shareholders to reduce the impact of market price on earnings. These risks include market risk(including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

- 59 -

In addition, the Company has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. This committee informs theCompany 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 Company is primarily exposed to the financial risks of changes in foreign currency exchange
rates and interest rates. The Company entered into derivative financial instruments to manage its
exposure to foreign currency risk and interest rate risk. The Company enters into foreign exchange
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 and evaluates the hedging
effectiveness of these instruments periodically.
a) Foreign currency risk
The Company enters into foreign currency option contracts to hedge against the risks of changes
in related exchange rates, and enters into foreign exchange forward contracts to hedge against
the risks on changes in foreign-currency assets, liabilities and commitments in the related
exchange rates.
Sensitivity analysis
The Company was mainly exposed to the U.S. dollar.
An increase/decrease in U.S. dollars one dollar against New Taiwan dollars when reporting
foreign currency risk internally to key management personnel represents management’s
assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis
included only outstanding foreign currency denominated monetary items, and adjusts theirtranslation at the end of the reporting period for U.S. dollars increase/decrease by one dollar
against New Taiwan dollars in foreign currency rates. When New Taiwan dollars increased one
dollar against U.S. dollars and all other variables were held constant, there would be a decreasein pre-tax profit and an increase in pre-tax other comprehensive income for the year ended
December 31, 2023 of $17,542 thousand and $681,979 thousand, respectively, and a decrease in
pre-tax profit and an increase in pre-tax other comprehensive income for the year ended
December 31, 2022 of $254,789 thousand and $1,131,220 thousand, respectively.
The Company’s hedging strategy is to enter into foreign exchange forward contracts and foreign
currency options to avoid exchange rate exposure of its foreign currency denominated receipts
and payments and to manage exchange rate exposure of its aircraft prepayments in next year,
and managing the mix of U.S. dollar revenue and U.S. dollar lease expenses those transactions
are designated as cash flow hedges. When forecasted purchases actually take place, basis
adjustments are made to the initial carrying amounts of hedged items.
For the hedges of highly probable aircraft prepayments, as the critical terms (i.e., the notionalamount, useful life and underlying asset) of the foreign currency options contracts and foreignexchange forward contracts and their corresponding hedged items are the same, the Company
performs a qualitative assessment of the effectiveness, and it is expected that the value of theforeign currency options and foreign exchange forward contracts and the value of thecorresponding hedged items will systematically change in the opposite direction in response to
movements in the underlying exchange rates.

- 60 -

The following table summarizes the information relating to the hedges of foreign currency risk.
Refer to Note 19 for aircraft rental contracts for hedging.
December 31, 2023
Hedging Instruments
Cash flow hedge
Aircraft prepayment forward exchange
contracts

Currency

NTD/USD

Notional
AmountMaturity

Forward Rate

NTD3,569,231/
USD116,000

2024.1.312024.10.31

29.37-31.581

Line Item in
Balance Sheet

Financial assets for hedging current/liabilities forhedging - current

Carrying AmountAsset
Liability$

40,796$42,370

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft prepayment in U.S. dollars) was $(1,574) thousand.
For the year ended December 31, 2023
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft prepayments$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

94,893$-For the year ended December 31, 2023, the amount of hedging instrument settlements
recognized as an increase of aircraft prepayments were $9,161 thousand.
December 31, 2022
Hedging Instruments
Cash flow hedge
Aircraft prepayment forward exchange
contracts

Currency

NTD/USD

Notional
Amount

NTD3,312,883/
USD108,000

Maturity

2023.1.192023.6.30

Forward Rate

29.5-31.9

Line Item in
Balance Sheet

Financial assets for hedging current/liabilities forhedging - current

Carrying AmountAsset
Liability

$

4,935

$ 110,563

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft prepayment in U.S. dollars) was $(105,628) thousand.
For the year ended December 31, 2022

Comprehensive Income

Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeCash flow hedge
Aircraft prepayments$ (104,689)

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

-

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

- 61 -

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

Fair value interest rate risk
Cash flow interest rate risk

2023

2022

$ 44,509,698
69,893,806$ 52,000,283
80,097,918

Sensitivity analysis
The sensitivity analysis below was determined based on the Company’s exposure to interest
rates for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. 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 Company’s pre-tax profit for the years ended December 31, 2023 and 2022 would
have decreased by $174,735 thousand and $200,245 thousand, respectively.
The following tables summarize the information relating to the hedges for interest rate risk.
December 31, 2023
Hedging Instruments
Cash flow hedge
Interest expense on
long-term borrowings interest rate swaps

Note:

Currency

NTD

Notional
Amount

NTD900,000

Maturity

Forward Rate

2027.4.12027.5.24

1.39-1.58

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

-

$

5,508

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

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

- 62 -

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

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

1,424

$

(516)

(Note)

Increase in finance costs or other losses.

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

Note:

Currency

NTD

Notional
Amount

NTD900,000

Maturity

Forward Rate

2027.4.12027.5.24

1.39-1.58

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

$

-

$

6,932

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

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

Comprehensive Income

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

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

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

Increase in finance costs or other losses.

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

Currency

Notional
AmountMaturity

Forward Rate

Cash flow hedges
Aviation fuel - fueloptions

USD

NTD7,553

2024.3.312024.9.30

USD60USD102.50

Aviation fuel - swap

USD

NTD64,472

2024.3.312024.12.31

USD74.04USD87.50- 63 -

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

4,036

$ 11,590

1,419

65,891

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$(72,026) thousand.
For the year ended December 31, 2022

Comprehensive Income

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

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

Cash flow hedge
Fuel options
Note:(Note)

Increase in operating costs.

December 31, 2022
Hedging Instrument

Currency

Notional
AmountMaturity

Forward Rate

Cash flow hedges
Aviation fuel - fueloptions

USD

NTD7,094

2023.3.312023.12.31

USD60USD148

Aviation fuel - swap

USD

NTD9,667

2023.3.31

USD96

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

9,667

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$(16,761) thousand.
For the year ended December 31, 2023

Comprehensive Income
Cash flow hedge
Fuel options
Note:

Increase in operating costs.

- 64 -

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

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

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Year Ended December 31
2023
2022
Other
Other
Comprehensive
Comprehensive
Pre-tax Profit
IncomePre-tax Profit
IncomeIncrease
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
Fuel price increase 5%
Fuel price decrease 5%$980(1,435)$

3,601(3,601)$

3,624(7,066)

$

838
(838)

2) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in a financial loss to the Company. The Company’s credit risk primarily comes from accounts
receivable generated from operating activities, bank deposits generated from investing activities,
fixed income investments and other financial instruments. Operation related credit risk and financial
credit risk are managed separately.
Operation - related credit risk
The Company has established procedures to manage operation related credit risk to maintain thequality of accounts receivable.
To assess the risk of individual customers, the Company consider into the financial condition of thecustomers, the credit rating agency rating, the Company’s internal credit rating, transaction history
and current economic conditions and many other factors that may affect the repayment. Sometimes,
the Company uses certain credit enhancement tools to reduce the credit risk of specific customers.
Since the customers of the aviation industry are dispersed and non-related, the credit risk
concentration is not critical.
Financial credit risk
Credit risk on bank deposits, fixed income investments and other financial instruments aremeasured and monitored by the Company’s finance department. The Company’s counterparties andother parties are well-performing banks and financial institutions, corporations, and government
agencies, and so the risk of counterparties failing to discharge an obligation is low; therefore, there
is no significant credit risk.
Endorsements given by the Company on behalf of its subsidiaries can be found in Note 30(g).
3) Liquidity risk
The objective of the Company’s management of liquidity is to maintain cash and cash equivalents
sufficient for operating purposes, marketable securities with high liquidity and loan commitmentsthat are sufficient to ensure that the Company has adequate financial flexibility.

- 65 -

Liquidity and interest risk rate table
The following table shows the remaining contractual maturity analysis of the Company’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Company may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.
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 Company’s liquidity analysis for its derivative financial
instruments is also shown in the following table. The table was based on the undiscounted
contractual net cash inflows and outflows on derivative instruments that settle on a net basis, andthe undiscounted gross cash inflows and outflows on those derivatives that require gross settlement.
When the amount payable or receivable is not fixed, the amount disclosed has been determined byreference to the projected interest rates as illustrated by yield curves at the end of the reporting
period.
December 31, 2023
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

0.9045Less than 1Year

1 to 5 Years

Over 5 Years

$

$

$

2.00933.06861.3105

935,660

3,741,952

9,343,859

18,457,514
15,014,436
4,850,264

27,756,417
30,633,991
4,989,543

13,783,067
10,022,879-$ 39,257,874$ 67,121,903$ 33,149,805

Less than 1Year

1 to 5 Years

Over 5 Years

$

$

$

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

1.82491.56092.83901.04651,240,819

3,437,298

9,359,610

12,802,497
11,025,984
2,454,645

47,991,005
27,455,159
7,729,726

9,796,542
7,480,222-$ 27,523,945$ 86,613,188$ 26,636,374- 66 -

Loan commitments
December 31

Undrawn bank loan commitments (unsecured)

2023

2022

$ 30,082,707$ 22,455,000

30. TRANSACTIONS WITH RELATED PARTIES
Besides information disclosed elsewhere in the other notes, details of transactions between the Company
and other related parties are as follows:a. Related party name and relationship
Related Party Name

Relationship with the Company

Taiwan Aircargo Terminal Company
Taoyuan International Airport Service Co., Ltd.
Sabre Travel Network (Taiwan), Ltd.
Taiwan Airport Service Co., Ltd.
Taiwan Airport Service (Samoa)
Dynasty Aerotech International Corp.
Global Sky Express
Mandarin Airlines
CAL Park
CAL Hotel Co., Ltd.
CAL-Asia Investment
CAL-Dynasty International Inc.
Tigerair Taiwan Co., Ltd.
Taiwan Aircraft Maintenance and Engineering Co., Ltd.
Kaohsiung Catering Services
China Aircraft Service

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

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

Delica International Co., Ltd.
China Aviation Development Foundation (CADF)
Others- 67 -

b. Operating income

Account Items
Other income

Related Party Type
Subsidiary
Major shareholder of the Company
Joint venture

For the Year Ended December 31
2023
2022
$ 1,638,162$
18,553$50,999$$$837,092
9,131
46,801c. Purchases
For the Year Ended December 31
2023
2022

Related Party Type
Subsidiary
Major shareholder of the Company
Associate
Joint venture$ 3,317,572$
40,705$ 266,826$ 2,558,012$ 2,845,455$
18,972$ 415,611$ 665,802

d. Accounts receivable - related parties (generated by operations)
December 31
Related Party Type

2023

Subsidiary
Major shareholder of the Company
Joint venture

2022

$

156,650
2,210
13,966$

125,829
1,045
3,804

$

172,826$

130,678

The receivables are not guaranteed, and there is no allowance for doubtful accounts related to accounts
receivable - related parties. The payment periods of such accounts were within 30 to 90 days, and there
are no overdue payments.
e. Accounts payable - related parties (generated by operations)
December 31
Related Party Type

2023

Subsidiary
Major shareholder of the Company
Associate
Joint venture

$

2022

627,136
5,100
19,980645,734$

412,618
2,421
39,491
275,898$ 1,297,950$

730,428

The remaining balance of accounts payable - related parties will be paid in cash if they are not secured.
f. Lease arrangements (operating leases)
The Company rented out planes to Mandarin Airlines under an operating lease contract. The monthly
rental received is based on flight hours. For the years ended December 31, 2023 and 2022, the rentals
received amounted to $$873,998 thousand and $323,448 thousand, respectively.

- 68 -

Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots. The Company paid the rental based on
usage hours. For the years ended December 31, 2023 and 2022, the Company paid rentals of $40,705
thousand and $18,972 thousand, respectively.
In March 2010, the Company signed a yearly renewable operating lease agreement to use the Operatingand Aviation Headquarters building of the Taiwan Taoyuan International Airport with CAL Park. For
the years ended December 31, 2023 and 2022, the Company paid rentals of $231,514 thousand and$231,288 thousand, respectively.
g. Endorsements and guarantees
December 31
2023

2022

AmountEndorsed

AmountUtilized

AmountEndorsed

289,059
1,225,080$ 2,868,466
3,850,000

1,675,500

2,000,000

AmountUtilized

The Company
Tigerair Taiwan
CAL Park
Taiwan Air Craft Maintenanceand Engineering Co., Ltd$ 2,877,292
3,400,000
2,000,000$$

286,2021,444,200
1,517,000

h. Remuneration of key management personnel
For the Year Ended December 31
2023
2022
Short-term employee benefits
Post-employment benefits$

62,766
16,982$

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

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

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

Property, plant and equipment
Restricted Assets- 69 -

2023

2022$ 43,277,793
48,432$ 30,892,531
62,660$ 43,326,225$ 30,955,191

32. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESIn addition to those disclosed in the other notes, significant commitments and contingent liabilities of theCompany at December 31, 2023 were as follows:a. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,672,763 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery periods of the eleven aircraft are from 2024 to 2026. As of December
31, 2023, the list price had been paid in the amount of US$84,820 thousand (recognized as prepayments
for aircraft). In October 2019, the Company signed a contract with International Aero Engines
Company to purchase four backup engines of A321neo. The total list price of the four engines is
US$60,289 thousand. As of December 31, 2023, two backup engine has been delivered, for details
please refer to Note 19.
b. In July and August 2019, the Company signed a contract with Boeing Company to purchase three 777F
aircraft and exercised the option to purchase three 777F aircraft. In January 2022, the Company signed
an additional contract with Boeing Company to purchase another four 777F aircraft. The expected
delivery periods are from 2023 to 2024. The total list price of the ten aircraft is US$3,905,142 thousand.
As of December 31, 2023, seven out of ten aircraft have been delivered. The total list price of theremaining three aircraft is US$1,223,689 thousand, and the list price has been paid in the amount of
US$244,738 thousand (recognized as prepayments for aircraft).
c. On September 28, 2022, the Company signed a contract with the Boeing Company to purchase sixteen
787-9 aircraft and the option to purchase eight 787-9 aircraft. On May 23 and June 20, 2023, theCompany exercised the option to purchase eight aircraft, six 787-9 aircraft transfer to 787-10,
twenty-four aircraft (include eighteen 787-9 aircraft and six 787-10 aircraft) of the total list price areapproximately US$9,246,181 thousand. The expected delivery periods are from 2025 to 2028. As of
December 31, 2023, the list price has been paid in the amount of US$512,698 thousand (recognized as
prepayments for aircraft).

33. IMPACT OF COVID-19
For the years ended December 31, 2022, because of the COVID-19 pandemic, the Company received
subsidies of $1,072,259 thousand, for airport landing fees and parking fees, etc. The subsidies for housing
and land rental, and salary and interest expense were $590,729 thousand. These subsidies were recognizedas other income or deductions from other expenses. The Company has not received such subsidies since2023.
The Company has obtained relief loan from the government. Refer to Note 17 for details on the amount ofloan and its allocation.

- 70 -

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currencies of theCompany, and the exchange rates between foreign currencies and respective functional currencies weredisclosed. The significant assets and liabilities denominated in foreign currencies were as follows:
December 31, 2023
Foreign
Currency(In Thousands)

Exchange Rate

Carrying
Amount955,758
20,145
290,8652,634,833
411,286

30.7692
34.0136
3.93240.21734.3290$ 29,407,918
685,202
1,143,798
572,549
1,780,457

1,736,196
9,519
72,5594,159,738
97,65030.7692
34.0136
3.93240.21734.329053,421,352
323,772
285,330
903,911422,725

Exchange Rate

Carrying
Amount993,035
41,723
300,543
4,249,561
470,306

30.6748
32.7869
3.93860.23174.4131$ 30,461,150
1,367,968
1,183,719
984,623
2,075,507

1,977,467
6,849
48,231
2,989,197
107,880

30.6748
32.7869
3.93860.23174.413160,658,405
224,557
189,963692,597
476,085

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

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

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

For the years ended December 31, 2023 and 2022, the Company’s net foreign exchange gains were$832,999 thousand and $1,517,582 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.

- 71 -

35. ADDITIONAL DISCLOSURESa. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided to others: Table 1 (attached).
2) Endorsements/guarantees provided: Table 2 (attached).
3) Marketable securities held: Table 3 (attached).
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: Table 4 (attached).
5) Acquisitions of individual real estates at costs of at least NT$100 million or 20% of the paid-in
capital: None.
6) Disposals of individual real estates at prices of at least NT$100 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 5 (attached).
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 6 (attached).
9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 7 (attached).
10) Trading in derivative instruments: Notes 6 and 29.
b. Information on investments in mainland China: Table 8 (attached).
c. Information of major shareholders: Table 9 (attached).

36. SEGMENT INFORMATIONThe Company mainly engages in air transportation services for passengers, cargo and others. The major
revenue-generating asset is its aircraft fleet, which is jointly used for passenger and cargo services. Thus,
the Company’s sole reportable segment is flight segment. For the disclosure of operating segment in the
consolidated financial statements, the reportable segment of the Group comprises flight and non-flightbusiness departments. The related information of reportable segment has been disclosed in the consolidated
financial statements.

- 72 -TABLE 1

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

Lender1

Cal-Dynasty International

Borrower

Financial
Statement
Account

Dynasty Hotel of Notes receivable
Hawaii, Inc.

RelatedParty

HighestBalance for
the PeriodEndingBalance

ActualAmountBorrowed

Interest Rate(%)

Y

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

2.25

Nature ofFinancing

Short-term
financingfacility isnecessary

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

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

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

- 73 -

Business
Transaction
AmountReasons for
Short-term
Financing$Operatingturnovercapitalexpenditure-

Allowance for
Impairment
Loss
$

-

Collateral
Item

-

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 157,511$ 315,022

NoteTABLE 2

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

Endorsee/Guarantee
Endorsor/
Guarantor

No.

0

Name

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

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

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

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

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

14,918,223

2,000,000

2,000,000

1,675,500

$

-

4.56
3.86

$ 37,295,558
37,295,558

Yes
Yes

No
No

No
No

-

2.68

37,295,558

Yes

No

No

Note 1:

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

Note 2:

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

- 74 -TABLE 3

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

Holding Company Name

Type and Name of Marketable Securities

China Airlines (“Parent company”)

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

Mandarin Airlines

Cal-Asia Investment

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Kaohsiung Catering Services

SharesChina Airlines

Relationshipwith the Holding
Company-

Financial Statement AccountNumber of
Shares/Units

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

Note

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

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

13.59
11.00
4.00
-

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

Parent company Financial assets at FVTOCI - non-current

2,074,628

44,916-44,916--43,5572.59
5.45

43,557Note 2
Note 2-

12,99235,08335,076---51,431
51,978-

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

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

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

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

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

12,99235,08335,076

SharesTransAsia Airways-

Financial assets at FVTPL - current

2,277,786-

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

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

3,163,289
3,728,020

51,431
51,978Note 1: The subsidiary’s net asset value was $37,640 thousand, which included ordinary shares and preference shares as of December 31, 2023.
Note 2: The company does not issue shares because it is a limited company.
Note 3: The table only lists financial assets that are in accordance with IFRS 9.

- 75 -

0.4-

TABLE 4

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

Company Name

China Airlines(the “Company”)

Type and Name ofMarketable Securities(Note 1)

Financial Statement
Account

Counterparty(Note 2)

Relationship(Note 2)Tigerair Taiwan Co., Ltd. Investments accounted for Tigerair Taiwan Co., Ltd. Subsidiary
using the equity method

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

Acquisition
Shares/Units
Amount(In Thousands)

-

-

$

-

Shares/Units(In Thousands)-

DisposalCarrying
AmountAmountGain on
Disposal

$

$

-

$

-

-

Ending Balance
Shares/Units
Amount(In Thousands)-

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

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

Note 3:

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

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

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

- 76 -$-TABLE 5

CHINA AIRLINES, LTD. AND SUBSIDIARIESTOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE YEAR ENDED DECEMBER 31, 2023
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.
(“China Airlines”)

Related Party

Relationship

Purchase/
Sale

% of
Total

Payment Terms

Unit Price

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

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

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

$Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase

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

Purchase
Purchase
Purchase
Purchase
Purchase

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

0.20
0.18
0.12
1.55
0.10

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Same parent company
Same parent company

Purchase
Purchase

211,676
275,018

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

Same parent company
Same parent company

Purchase
Purchase

Cal Hotel

Same parent company

Purchase

Mandarin Airlines

CAL Park$

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

- 77 -

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

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

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

1 month

-

-

-

-

-

90 days
2 months
90 days
90 days
90 days

-

4.13
5.37

1 month
1 month

225,883
101,5272.50
1.12

114,392

30.13

$

-

Note

TABLE 6

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

Overdue
Company Name

China Pacific Catering Services
Taoyuan International Airport Service
China Airlines

Related Party

China Airlines
China Airlines
Mandarin Airlines

Relationship

Parent company
Parent company
SubsidiaryEnding Balance

Turnover Rate

$ 616,262
282,023
111,348

5.14
4.39
11.42

- 78 -

Amount$Action Taken--

Amounts Received
in Subsequent
Period$ 416,987
281,896111,289

Allowance for
Impairment Loss$-TABLE 7

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

Original Investment Amount
Investor Company

Investee Company

Location

Main Business and Product

CAL Park
Mandarin Airlines
Taiwan Air Cargo Terminal
Cal-Dynasty International
China Pacific Catering Services
Taoyuan International Airport Services
CAL-Asia Investment
Sabre Travel Network (Taiwan)
Taiwan Airport Services
Kaohsiung Catering Services
Cal Hotel Co., Ltd.
China Pacific Laundry Services

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

Dynasty Aerotech International Corp.

Taoyuan, Taiwan

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

Taipei, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan

Real estate lease and international trade
Air transportation and maintenance of aircraft
Air cargo and storage
A holding company, real estate and hotel services
In-flight catering
Airport services
General investment
Sale and maintenance of hardware and software
Airport services
In-flight catering
Hotel business
Cleaning and leasing of the towel of airlines, hotels,
restaurants and health clubs
Cleaning of aircraft and maintenance of machine andequipment
Forwarding and storage of air cargo
Air transportation and maintenance of aircraft
Aircraft maintenanceTaoyuan, Taiwan

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

CAL-Asia Investment

China Airlines, Ltd.

December 31,
2023

December 31,
2022

$

$

$

$

77,27077,27077,270100.00124,583

19,06019,041 Note 42,500
6,240,018
1,350,000

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

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

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

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

Composite repair and manufacturing business

37,97537,975

3,797,500

49.00

-

(26,080)(19,196)-

Taipei, Taiwan
Taipei, Taiwan

Air transportation and maintenance of aircraft
Airport services

183,846
11,658154,330
11,658

16,613,624
469,755

3.70
1.08

156,471
1,484

1,826,847
38,96569,017420-

Eastern United International Logistics

Hong Kong

Forwarding and storage of air cargo

HK$

3,329

HK$

3,329

1,050,000

35.00

49,03011,055

4,390-

Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

US$

5,877

-

100.00406,02123,082

22,691 Note 3

Kaohsiung Catering
Services

Delica International Co., Ltd.

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,630

188

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.

- 79 -

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

100.0096.96
54.00
100.0051.00
49.00
100.00
93.93
47.35
53.67
100.0055.00

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

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

Share of profit(Loss)

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

10,200$Net Income(Loss) of theInvestee

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

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

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

96

Note 4
Notes 1 and 4
Note 4
Notes 2 and 4
Note 5Note 4--TABLE 8

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

China Airlines

Investee Company

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

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

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

Indirect(Note 1)

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

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

Indirect(Note 1)

Taikoo (Xiamen) Landing
Gear Services

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

Indirect(Note 1)

Taikoo Spirit Aerospace
Systems (Jinjiang)

Composite material

Indirect(Note 1)

358,864(US$ 11,663)

Remittance of Funds

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

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

66,191
2,151)

-

(US$

-

(US$

19,569636)

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

Investment Amount
Authorized by the Investment
Commission, MOEA

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

$274,481(US$8,920)$664,951(Note 3)

$46,487,322(Note 4)

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

Net Income(Loss) of
the Investee

Carrying
Amount as ofDecember 31,
2023

Investment
Gain (Loss)

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2023

-

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

14.00

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

-

14.00

(US$

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

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

-

2.59

-

(US$

-

5.45

-

(US$

19,569
636)

-

-

-

68,5632,228)(Note 2)-43,557(RMB 10,062) (US$21,998715)(Continued)- 80 -

Taiwan Airport Services

Investee Company

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

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

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

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

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

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

Indirect(Note 5)

(US$

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

Remittance of Funds

Outward

Inward-59,285
1,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2023

$

-

-

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

14.00

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

14.00

(US$

Investment
Gain (Loss)

Carrying
Amount as ofDecember 31,
2023

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

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

Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA
$82,690(Note 4)Note 1: The Company invested in CAL-Asia Investment, which invested in a company located in mainland China.
Note 2: As of December 31, 2023, the inward remittance of earnings amounted to US$4,251,192 and US$2,228,304.
Note 3: The amount comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.
Note 4: The limit stated in the Investment Commission’s regulation “The Review Principle of Investment or Technical Cooperation in Mainland China” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.
Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are converted at period-end rates and the gains (losses) are converted at the average of the period-end rates for the reporting period.
(Concluded)- 81 -TABLE 9

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

SharesNumber ofPercentage ofSharesOwnership (%)

Name of Major Shareholder

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

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

30.85
8.58

Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository &Clearing Corporation based on the number of ordinary shares and preference shares held byshareholders with ownership of 5% or greater, that have been issued without physical registration(including treasury shares) by the Company as of the last business day for the current quarter. The
share capital in the consolidated financial statements may differ from the actual number of shares thathave been issued without physical registration because of different preparation basis.
Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by theindividual truster who opened the trust account. For shareholders who declare insider shareholdings
with ownership greater than 10% in accordance with the Security and Exchange Act, theshareholdings include shares held by shareholders and those delivered to the trust over whichshareholders have rights to determine the use of trust property. For information relating to insider
shareholding declaration, please refer to Market Observation Post System.

- 82 -