China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theNine Months Ended September 30, 2022 and 2021 andIndependent Auditors’ Review ReportINDEPENDENT AUDITORS’ REVIEW REPORTThe Board of Directors and the Shareholders
China Airlines, Ltd.
Introduction
We have reviewed the accompanying consolidated balance sheets of China Airlines, Ltd. and its
subsidiaries (collectively, the “Group”) as of September 30, 2022 and 2021, the related
consolidated statements of comprehensive income for the three months ended September 30, 2022
and 2021 and for the nine months ended September 30, 2022 and 2021, the consolidated statementsof changes in equity and cash flows for the nine months then ended, and the related notes to theconsolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”). Management is responsible forthe preparation and fair presentation of the consolidated financial statements in accordance with theRegulations Governing the Preparation of Financial Reports by Securities Issuers and International
Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the
Financial Supervisory Commission of the Republic of China. Our responsibility is to express a
conclusion on the consolidated financial statements based on our reviews.
We did not review the financial statements of some subsidiaries included in the consolidated
financial statements of the Group, but such statements were reviewed by other auditors. Our
conclusion, insofar as it relates to the amounts included in the consolidated financial statements forthese subsidiaries, is based solely on the report of other auditors. The total assets of thesesubsidiaries were NT$14,412,306 thousand and NT$14,102,966 thousand, representing 5.08% and5.11% of the consolidated total assets as of September 30, 2022 and 2021, respectively; and for thethree months ended September 30, 2022 and 2021 and for the nine months ended September 30,
2022 and 2021, the total revenue of these subsidiaries were NT$15,012 thousand, NT$44,914
thousand, NT$51,840 thousand and NT$71,470 thousand, representing 0.04%, 0.13%, 0.05% and0.08% of the consolidated total revenue, respectively.
Scope of Review
Except as explained in the following paragraph, we conducted our reviews in accordance with theStatement of Auditing Standard No. 65 “Review of Financial Information Performed by the
Independent Auditor of the Entity”. A review of consolidated financial statements consists ofmaking inquiries, primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially less in scope than an
audit and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.

-1-

Basis for Qualified Conclusion
As disclosed in Notes 13 and 14 to the consolidated financial statements, the financial statements ofsome non-significant subsidiaries and investments accounted for using the equity method were notreviewed. As of September 30, 2022 and 2021, the combined total assets of these non-significant
subsidiaries were NT$21,404,409 thousand and NT$20,132,953 thousand, respectively,
representing 7.55% and 7.30%, respectively, of the consolidated total assets, and the combined
total liabilities of these non-significant subsidiaries were NT$12,216,657 thousand andNT$11,194,422 thousand, respectively, representing 5.78% and 5.34%, respectively, of theconsolidated total liabilities; for the three months ended September 30, 2022 and 2021 and for thenine months ended September 30, 2022 and 2021, the amounts of the combined comprehensive
income (loss) of these non-significant subsidiaries were NT$64,439 thousand, NT$4,506 thousand,
NT$97,660 thousand and NT$(228,649) thousand, respectively, representing (3.03%), 0.17%,(8.28%) and (19.58%), respectively, of the consolidated total comprehensive income. As of
September 30, 2022 and 2021, the aforementioned investments accounted for using the equity
method were NT$1,470,236 thousand and NT$1,576,556 thousand, respectively; for the threemonths ended September 30, 2022 and 2021 and for the nine months ended September 30, 2022
and 2021, the amounts of the Group’s share of the profit of such investments accounted for using
the equity method were NT$(23,593) thousand, NT$(85,146) thousand, NT$(107,647) thousand
and NT$(382,599) thousand, respectively.
Qualified Conclusion
Based on our reviews, except for the adjustments, if any, as might have been determined to benecessary had the financial statements of the non-significant subsidiaries and investments
accounted for using the equity method as described in the preceding paragraph been reviewed,
nothing has come to our attention that caused us to believe that the accompanying consolidated
financial statements do not present fairly, in all material respects, the consolidated financial
position of the Group as of September 30, 2022 and 2021, and its consolidated financial
performance for the three months ended September 30, 2022 and 2021, and its consolidated
financial performance and its consolidated cash flows for the nine months ended September 30,
2022 and 2021 in accordance with the Regulations Governing the Preparation of Financial Reports
by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

-2-

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

Deloitte & Touche
Taipei, Taiwan
Republic of China
November 9, 2022

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

-3-

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

September 30, 2022
(Reviewed)
Amount%ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 31)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 31)
Financial assets at amortized cost - current (Notes 4, 9 and 31)
Financial assets for hedging - current (Notes 4, 6 and 31)
Notes and accounts receivable, net (Notes 4, 5, 10 and 31)
Notes and accounts receivable - related parties (Notes 31 and 32)
Other receivables (Note 31)
Current tax assets (Notes 4 and 28)
Inventories, net (Notes 4 and 11)
Non-current assets held for sale (Notes 4, 5 and 12)
Other current assets (Note 18)

September 30, 2021
(Reviewed)
Amount%$ 37,623,078
131,292
1,349,341
1,572,219
11,864,041
4,356
1,074,266
22,900
10,228,901
116,213
1,214,787

13
1
1
4
4
-

$ 45,269,866
155,780
13,028,521
3,563,319
13,473,493
2,348
752,764
59,3418,814,975
36,719692,464

15
5
1
5
3
-

$ 36,894,146
169,479
1,390,573
2,248,631
11,917,344
2,401
616,732
58,957
8,815,952
89,956
1,053,770

13
1
1
4
3
1

65,201,394

23

85,849,590

29

63,257,941

23

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

1
44
21
1
3
7

67,88470,596
1,555,016
129,632,046
56,061,967
2,074,531
1,008,992
6,930,97811,469,481

1
44
19
1
2
4

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

1
48
21
1
2
4

218,281,972

77

208,871,491

71

212,628,895

77$ 283,483,366

100$ 294,721,081

100$ 275,886,836

100

Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 31)
Financial assets at amortized cost (Notes 4, 9 and 31)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 33)
Right-of-use assets (Notes 4, 21 and 33)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred tax asset (Notes 4, 5 and 28)
Other non-current assets (Notes 18, 21, 31 and 33)
Total non-current assets
TOTAL

December 31, 2021
(Audited)
Amount%LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term borrowings (Notes 19 and 31)
Financial liabilities for hedging - current (Notes 4, 21 and 31)
Contract liabilities - current (Notes 4, 5 and 23)
Notes and accounts payable (Note 31)
Accounts payable - related parties (Notes 31 and 32)
Other payables (Notes 22 and 31)
Current tax liabilities (Notes 4 and 28)
Lease liabilities - current (Notes 4 and 21)
Provisions - current (Notes 4, 24 and 31)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 20 and 31)
Current portion of long-term borrowings (Notes 19, 31 and 33)
Other current liabilities (Note 31)$

1,932,000
8,438,097
3,868,712
1,115,600
130,572
14,661,347
3,054,287
2,533,452
3,247,236
2,525,000
9,324,318
2,408,484

1
3
1
5
1
1
1
1
3
1

22

53,239,105

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

12
3
22
6
6
3
1

Total non-current liabilities

149,951,525

Total liabilities

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

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

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 9, 2022)-4-

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

1
4
3
5
1
1
1
5
1

61,336,395$$

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

1
3
1
4
1
1
5
1

18

48,064,553

17

27,839,847
11,125,026
85,069,285
635,633
15,406,987
1,021,553
12,758,050
9,814,737605,840

10
4
29
5
1
4
3
-

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

10
6
28
6
5
4
-

53

164,276,958

56

161,386,132

59

211,287,920

75

217,516,063

74

209,450,685

76

60,135,374
3,120,311

21
1

59,412,243
2,694,529

20
1

57,404,844
1,772,185

21
1925,385
6,946,913
7,872,298(1,389,828)(30,875)

3
3
(1)
-

9,253,848
9,253,848
2,713,828(30,875)331-1,450,737
1,450,737
2,694,122(30,875)

1-

69,707,280

24

74,043,573

25

63,291,013

23

2,488,166

1

3,161,445

1

3,145,138

1

72,195,446

25

77,205,018

26

66,436,151

24$ 283,483,366

100$ 294,721,081

100$ 275,886,836

100

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

For the Three Months Ended September 30
2022
2021
Amount%Amount%OPERATING REVENUE(Notes 4, 27 and 32)

37,697,760

100

34,474,002

100$ 111,783,277

100

91,674,640

100

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

36,017,635

96

28,907,108

84

101,906,124

91

81,606,537

89

GROSS PROFIT

1,680,125

4

5,566,894

16

9,877,153

9

10,068,103

11

OPERATING EXPENSES(Notes 4, 25 and 27)

2,017,350

5

1,581,796

5

5,628,194

5

5,345,976

6

OPERATING PROFIT (LOSS)(337,225)(1 )

3,985,098

11

4,248,959

4

4,722,1275

640,0702

139,1931

1,173,156

1

389,739-

217,7051(314,415)(1 )

374,044-(1,608,211)(2 )(635,110)(2 )(572,520)(2 )(1,846,599)(1 )(1,850,981)(2 )(23,593)-(85,146)-(107,647)-(382,599)-

199,0721(832,888)(2 )(407,046)-(3,452,052)(4 )PROFIT (LOSS) BEFOREINCOME TAX(138,153)-

3,152,210

9

3,841,913

4

1,270,075

1

INCOME TAX EXPENSE(BENEFIT) (Notes 4 and 28)(126,668)-

351,6901

700,2931

171,768-

NET INCOME (LOSS) FOR
THE PERIOD(11,485)-

2,800,520

8

3,141,620

3

1,098,307

1

109,670-(8,005)-245,064-(55,461)

-

6,182

-

(60,447)

-

2,698

-

(72,433)-(358)
115,494-

12,386(56,066)-(52,131)
195,631-

25,075(102,819)(Continued)

NON-OPERATING INCOME
AND EXPENSES
Other income (Note 27)
Other gains and losses(Notes 13, 15, 21 and 27)
Finance costs (Notes 27
and 31)
Share of the profit of associates
and joint ventures (Note 14)
Total non-operating
income and expenses

OTHER COMPREHENSIVEINCOME (LOSS)
Items that will not bereclassified subsequently to
profit or loss:
Gain (loss) on hedging
instruments subject tobasis adjustment
Unrealized gain (loss) on
investments in equity
instruments at fair value
through othercomprehensive income
Income tax related to items
that will not bereclassified subsequently
to profit or loss (Note 28)$$

For the Nine Months Ended September 30
2022
2021
Amount%Amount%-5-$

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

For the Three Months Ended September 30
2022
2021
Amount%Amount%Items that may be reclassified
subsequently to profit orloss:
Exchange differences ontranslation of the financial
statements of foreign
operations (Notes 4
and 26)
Gain (loss) on hedging
instruments not subject tobasis adjustment (Notes 4,
21, 26 and 31)
Income tax related to items
that may be reclassified
subsequently to profit orloss (Note 28)$(1,610)-196,377-(8 )(189,870)-(5,844,088)

557,964(2,230,442)

2(6 )38,185(153,295)-(2,114,948)(6 )(209,361)-$(2,126,433)

(6 )

$

2,591,159

8$

125,956(137,441)-$

2,917,304(116,784)$(11,485)-$$(1,989,661)(136,772)

(5 )
(1 )

$

(2,126,433)(6 )Other comprehensive
income (loss) for theperiod, net of income
tax
TOTAL COMPREHENSIVEINCOME (LOSS) FOR THE
PERIODNET INCOME (LOSS)ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests

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

EARNINGS PER SHARE (NEWTAIWAN DOLLARS;
Note 29)
Basic
Diluted89,986-(2,878,392)

$
$

0.02
0.02

$

For the Nine Months Ended September 30
2022
2021
Amount%Amount%(34,560)-(5 )

250,906-

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

1(4 )(43,812)
172,534-(4,320,827)(4 )69,715-$(1,179,207)

(1 )

$

1,168,022

1

8
-

$

3,618,450(476,830)

3-$

1,555,376(457,069)2(1 )2,800,520

8$

3,141,620

3$

1,098,307

1$

2,708,171(117,012)

8-$(708,576)(470,631)

(1 )
-

$

1,626,126(458,104)

2
(1 )

$

2,591,159

8$(1,179,207)

(1 )

$

1,168,022

1

$
$

0.51
0.48

$

$
$

0.60
0.59

$

$
$

0.28
0.26

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 9, 2022)-6-(Concluded)

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

BALANCE AT JANUARY 1, 2021

Share Capital

Capital Surplus

Equity Attributable to Owners of the Company
Other Equity
Unrealized Gain
Exchange(Loss) on
Retained Earnings
Differences on
Financial Assets
UnappropriatedTranslation of theat Fair Value
Earnings
FinancialThrough Other(AccumulatedStatements ofComprehensive
Legal Reserve
Deficits)
Foreign Operations
Income$ 54,209,846$$

1,187,327-$(350,581)$(134,252)$

71,359Gain (Loss) on
Hedging
Instruments$

2,606,659

Treasury Shares
Held by
Subsidiaries
$

Total

(30,875)$ 57,559,483

Non-controlling
Interests

Total Equity$

3,152,090$ 60,711,573

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

79,606-

79,606-

79,606

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

350,581

-

-

-

-

-

-

-

Issuance of employee share options by the subsidiaries

-

540

-

-

-

-

-

-

540

126

666

Change in percentage of ownership interests in subsidiaries

-

-

-

(104,639)

-

-

-

-

(104,639)

575,753

471,114

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

-

-

-

1,555,376

-

-

-

-

1,555,376(457,069)

1,098,307

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

-

-

-

-

(26,788)(58,451)

155,989-

70,750(1,035)69,715

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

-

-

-

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

155,989-

1,626,126(458,104)

1,168,022

Equity component of convertible bonds issued by the Company-

188,862

-

-

-

-

-

-

188,862-

188,862

3,194,998

746,037

-

-

-

-

-

-

3,941,035-

3,941,035

-

-

-

-

-

-

-

-

-

(124,727)(124,727)

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

$ 57,404,844$

1,772,185$-$

1,450,737$(161,040)$

12,908$2,842,254$(30,875)$ 63,291,013$

3,145,138$ 66,436,151

BALANCE AT JANUARY 1, 2022

$ 59,412,243$

2,694,529$-$

9,253,848$(120,079)$(5,512)$

2,839,419$(30,875)$ 74,043,573$

3,161,445$ 77,205,018

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

223,370-

223,370-

223,370

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

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

-

-

-

-

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

Changes in capital surplus from dividends distributed to subsidiaries

-

1,725

-

-

-

-

-

-

1,725

-

1,725

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

-

-

-

3,618,450

-

-

-

-

3,618,450(476,830)

3,141,620

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

-

-

-

-

154,403

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

6,199(4,320,827)

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

-

-

-

3,618,450

154,403

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

723,131424,050

-

-

-

-

-

-

1,147,181-

1,147,181

Cash dividends from subsidiaries paid to non-controlling interests

-

-

-

-

-

-

-

-

-

(202,650)(202,650)

Others

-

7

-

-

-

-

-

-

7

2

9

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

2,488,166$ 72,195,446

Convertible bonds converted to ordinary shares

BALANCE AT SEPTEMBER 30, 2022

$ 60,135,374$

3,120,311$

925,385$

6,946,913

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 9, 2022)-7-$

34,324$$$

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

For the Nine Months Ended
September 30
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax
Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets at fair value
through profit or loss
Interest income
Dividend income
Share of loss of associates and joint ventures(Gain) loss on disposal of property, plant and equipment
Gain on disposal of non-current assets held for sale
Loss on disposal of investments
Loss on inventory and property, plant and equipment
Impairment loss recognized on property, plant, equipment
Compensation costs of employee share options
Finance costs
Net loss (gain) on foreign currency exchange
Loss on sale and leaseback transactions
Recognition of provisions
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
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 non-current liabilities
Cash generated from operations
Interest received-8-$

3,841,913$

1,270,075

22,384,863
167,959
28,85522,528,432
165,970
28,606(384)(307,186)(850)
107,647(16,747)(116,676)
611,103
1,641
1,846,599
1,381,550
3,994,333(9,569)(13)(97,677)(11,607)382,599
1,023,694
540
850,684666
1,850,981(829,452)
342,080
4,575,939(3,538)24,872
1,865,559
124,367(235,940)(1,997,163)(547,155)
67,963(45,818)(1,902,600)
5,106,567(3,157,305)
280,455(249,828)
27,84733,276,872
232,858

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

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

For the Nine Months Ended
September 30
2022
2021
Dividends received
Interest paid
Income tax paid$

850
(1,835,719)(4,629,711)$

11,607(1,707,710)(257,444)

Net cash generated from operating activities

27,045,150

28,095,471

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost
Proceeds from disposal of financial assets at amortized cost
Purchase of financial assets for hedging
Proceeds from disposal of financial assets for hedging
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 prepayments for equipment
Payments for intangible assets
Increase in restricted assets
Net cash inflow on disposal of subsidiary(8,985,310)
20,545,777(5,342,055)
7,603,306
130,144(1,965,232)
23,755(102,395)
212,490(15,093,029)(123,469)(69,100)-(2,505,043)
7,646,697(3,566,844)
8,888,275(1,635,174)
394,747(84,030)
92,839(11,860,667)(125,483)(282,691)
942(3,165,118)(3,036,432)(150,000)(200)
2,559,673(21,622,115)(8,687,337)
75,421(8,703)(4,998,275)(202,650)
920,000(8,088,882)
4,500,000(5,000,000)
8,023,590(10,268,775)(7,754,584)
266,221(201,638)
2,810,098
471,114(124,727)-(33,034,177)(15,347,583)(Continued)

Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease (increase) in short-term borrowings
Decrease in short-term bills payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refund of guarantee deposits received
Proceeds from sale and leaseback transactions
Proceeds from issuance of ordinary shares of subsidiaries
Cash dividends
Cash dividends paid to non-controlling interests
OthersNet cash used in financing activities-9-CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands of New Taiwan Dollars)(Reviewed, Not Audited)

For the Nine Months Ended
September 30
2022
2021
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES$

1,507,357$

56,753NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS(7,646,788)

9,768,209

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD45,269,866

27,125,937

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$ 37,623,078$ 36,894,146

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated November 9, 2022)- 10 -(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)(Reviewed, Not Audited)

1. GENERAL INFORMATION
China Airlines, Ltd. (the “Company”) was founded in 1959 and its shares have been listed on the Taiwan
Stock Exchange since February 26, 1993. The Company is primarily involved in (a) air transport services
for passengers, cargo and mail; (b) ground services and routine aircraft maintenance; (c) major maintenanceof flight equipment; (d) communications and data processing services to other airlines; (e) the sale ofaircraft parts and aviation equipment; and (f) leasing of aircraft.
The major shareholders of the Company are China Aviation Development Foundation (“CADF”) andNational Development Fund (“NDF”), Executive Yuan. As of September 30, 2022, December 31, 2021 and
September 30, 2021, CADF and NDF held a combined 39.69%, 40.17% and 41.58%, respectively of theCompany’s shares.

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its subsidiaries (collectively referred to as the“Group”) were approved by the Company’s board of directors on November 9, 2022.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the International Financial Reporting Standards (IFRS),International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)(collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission(FSC)
The application of the IFRSs endorsed and issued into effect by the FSC did not have material impact
on the Group’s accounting policies.
b. The IFRSs endorsed by the FSC for application starting from 2023
Effective Date Announced by
IASB (Note 1)

New IFRSs
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12 “Deferred Tax related to Assets andLiabilities arising from a Single Transaction”

January 1, 2023 (Note 1)
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.
Note 2: The amendments are applicable to changes in accounting estimates and changes in accounting
policies that occur on or after the beginning of the annual reporting period beginning on orafter January 1, 2023.

- 11 -

Note 3: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences
associated with leases and decommissioning obligations, the amendments will be applied
prospectively to transactions that occur on or after January 1, 2022.
As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact of the application of other standards and interpretations on
the Group’s financial position and financial performance and will disclose the relevant impact when theassessment is completed.
c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
Effective Date Announced by
IASB (Note 1)

New IFRSs
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between An Investor and Its Associate or Joint Venture”
Amendments to IFRS 16 “Leases Liability in a Sale and leaseback”
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 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”

To be determined by IASB
January 1, 2024 (Note 2)
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

Note 1: Unless stated otherwise, the above IFRSs are effective for annual reporting periods beginningon or after their respective effective dates.
Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback
transactions entered into after the date of initial application of IFRS 16.
As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact of the application of other standards and interpretations on
the Group’s financial position and financial performance and will disclose the relevant impact when theassessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESExcept for the policies listed below, the accounting policies adopted for these consolidated financial
statements are the same as those of for the consolidated financial statements for the year ended December
31, 2021.
Statement of Compliance
These consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” asendorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated
financial statements is less than the disclosure information required in a complete set of annual consolidated
financial statements.

- 12 -

Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments which are measured at fair value and net defined benefit liabilities which are measured at thepresent value of the defined benefit obligation less the fair value of plan assets.
The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); andc. Level 3 inputs are unobservable inputs for an asset or liability.
Basis of Consolidation
The consolidated financial statements reporting principles are the same as those in the consolidated
financial statements for the year ended December 31, 2021.
Employee Benefits
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determinedpension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since thattime and for significant plan amendments, settlements, or other significant one-off events.
Income Tax
Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income
taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income thetax rate that would be applicable to expected total annual earnings.
Lease
The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 tochange the lease payments originally due by June 30, 2022, that results in the revised consideration for thelease substantially the same as, or less than, the consideration for the lease immediately preceding thechange. There is no substantive change to other terms and conditions. The Group elects to apply thepractical expedient to rent concessions for the abovementioned lease contracts, and therefore, does notassess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction inlease payment in profit or loss in the period in which the events or conditions that trigger the concession
occurs, and makes a corresponding adjustment to the lease liability.
Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
The critical accounting judgments and key sources of estimation uncertainty for these interim consolidated
financial statements are the same as those applied for the consolidated financial statements for the year
ended December 31, 2021.

- 13 -

6. CASH AND CASH EQUIVALENTS

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

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

696,7138,640,786

294,026
28,507,427

384,00218,447,813

26,535,852
1,749,727

11,347,326
5,121,087

14,887,299
3,175,032$ 37,623,078$ 45,269,866$ 36,894,146

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

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

September 30,
2022

December 31,
2021

September 30,
2021

0%-3%

0%-1.9%0%-1.9%0.1%-4.05%
0.23%-3.05%

0.07%-0.41%
0.2%-0.45%

0.07%-0.53%
0.2%-0.41%

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

Maturity Date
September 30, 2022
December 31, 2021
September 30, 2021

2022.10.4-2022.10.6
2022.2.7-2022.2.14
2021.10.6-2021.11.4

Subject
Financial assets for hedging - current
Financial assets for hedging - current
Financial assets for hedging - current

CarryingValue$ 1,523,810
3,545,706
2,228,412

Impact on other comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the nine months ended September 30, 2022
For the three months ended September 30, 2022
For the nine months ended September 30, 2021
For the three months ended September 30, 2021

$ 229,535
95,238(55,461)(8,005)For the nine months ended September 30, 2022 and 2021, the amount of hedge instrument settlements
recognized as prepayments for equipment were $224,456 thousand and $79,606 thousand, respectively.

- 14 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
September 30,
2022

December 31,
2021

September 30,
2021$ 131,292$ 155,780$ 169,479

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Investments in Equity Instruments
September 30,
2022

December 31,
2021

September 30,
2021$ 32,819$ 39,080$ 63,999

38,07828,804

27,181$ 70,897$ 67,884$ 91,180

Non-current
Foreign investments
Unlisted shares
Domestic investments
Unlisted shares

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

9. FINANCIAL ASSETS AT AMORTIZED COST
September 30,
2022

December 31,
2021

September 30,
2021$

1,348,790
551$ 13,027,969
552$

1,389,023
1,550$

1,349,341$ 13,028,521$

1,390,573$

244,997$$

515,504

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

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

- 15 -

70,596

The range of interest rates for time deposits with original maturities of more than 3 months wereapproximately 0.21%-1.35%, 0.21%-1.05% and 0.21%-1.10% per annum as of September 30, 2022,
December 31, 2021 and September 30, 2021, respectively.

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE, NET

Notes receivable

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

15,132

1,547

3,031

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

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

13,707,506(235,560)
13,471,946

12,140,066(225,753)
11,914,313$ 11,864,041$ 13,473,493$ 11,917,344

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

- 16 -

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

0.88%

5.04%

46.45%-

99.14%

Total

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

176,864(8,915)

$

816
(379)

$

-

$

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

Amortized cost

$ 11,679,216$

167,949

$

437

$

-

$

1,307

$ 11,848,909

Not Past Due

1 to 30 Days
Past Due

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

0.56%

6.79%

20.75%

99.92%

99.99%

December 31, 2021

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$ 13,481,446(75,114)$61,988(4,211)$9,884(2,051)$

2,499(2,497)$

151,689(151,687)$ 13,707,506(235,560)

Amortized cost

$ 13,406,332$

57,777

$

7,833

$

2

$

2

$ 13,471,946

Not Past Due

1 to 30 Days
Past Due

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

0.67%

2.98%

0.95%

0.00%

89.63%

September 30, 2021

Expected credit loss rate

Total

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

56,648(1,689)

$

6,501
(62)

$

941
-

$

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

Amortized cost

$ 11,835,294$

54,959

$

6,439

$

941

$

16,680$ 11,914,313

The movements of the loss allowance of accounts receivable were as follows:
For the Nine Months Ended
September 30
2022
2021
Balance at January 1
Add: Net remeasurement of loss allowance
Add: Amounts recovered
Less: Amounts written off
Foreign exchange gains and losses$ 235,560
28,855
190
(215)
21

$ 206,152
28,606234(9,237)(2)

Balance at September 30$ 264,411$ 225,753- 17 -

11. INVENTORIES, NET

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

September 30,
2022

December 31,
2021

September 30,
2021$

9,091,971
631,756
412,943
92,231$

7,603,809
621,181534,073
55,912$7,771,779
618,107
370,645
55,421$ 10,228,901$

8,814,975$

8,815,952

The operating costs recognized for the nine months ended September 30, 2022 and 2021 included losses
from inventory write-downs of $246,648 thousand and $279,354 thousand, respectively. And the operating
costs recognized for the three months ended September 30, 2022 and 2021 included losses from inventory
write-downs of $84,598 thousand and $2,379 thousand, respectively.

12. NON-CURRENT ASSETS HELD FOR SALE
September 30,
2022
Aircraft held for sale$ 116,213

December 31,
2021$

September 30,
2021

36,719$89,956

To enhance its competitiveness, the Company plans to introduce new aircraft and retire old aircraft
according to a planned schedule. Such aircraft, classified as non-current assets held for sale, had an original
carrying amount which was higher than the expected sale price and which was recognized as an impairment
loss, and would be continuously assessed whether there are further impairments in subsequent periods.
However, the actual loss shall be identified by the actual sale price.
The fair value measurement is classified as Level 3, and the fair value was determined according to similartransactions of the related markets and the proposed sale prices were based on the current status of theaircraft.

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

Investor Company
China Airlines, Ltd.

Investee Company
Tigerair Taiwan Co., Ltd. (Note)
Taiwan Aircraft Maintenance And
Engineering Co., Ltd.
Cal-Dynasty International
Cal-Asia Investment
Dynasty Aerotech International
Corp.
Cal Park
Cal Hotel Co., Ltd.
Sabre Travel Network (Taiwan)
Mandarin Airlines
Taiwan Air Cargo Terminal (Note)
Kaohsiung Catering Service, Ltd.
Taoyuan International Airport
Services
Taiwan Airport Services (Note)
Global Sky Express

Main Businesses and Products

Proportion of Ownership (%)
September 30,
December 31,
September 30,
2022
2021
2021

Air transportation
Aircraft maintenance

82
100

82
100

82
100

A holding company, real estate and hotel
services
General investing
Cleaning of aircraft and maintenance ofmachine and equipment
Real estate leasing and international trade
Hotel business
Sale and maintenance of hardware andsoftware
Air transportation and maintenance of
aircraft
Air cargo and storage
In-flight catering
Airport services

100

100

100

100
100

100
100

100
100

100
100
94

100
100
94

100
100
94

97

97

97

59
54
49

59
54
49

59
54
49

Airport services
Forwarding and storage of air cargo

48
25

48
25

48
25

(Continued)- 18 -

Investor Company
Cal-Dynasty International
Taiwan Airport Services

Investee Company
Dynasty Properties Co., Ltd.
Dynasty Hotel of Hawaii, Inc.
Taiwan Airport Service (Samoa)

Main Businesses and Products

Proportion of Ownership (%)
September 30,
December 31,
September 30,
2022
2021
2021

Real estate management
Hotel businessAirport supporting service and investing

100
100
100

100
100
100

100
100
100

(Concluded)
Note:

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

The Company has control over Taoyuan International Airport Service, Taiwan Airport Service and Global
Sky Express despite its ownership of less than 50% and for the other subsidiaries, the Company had control
and more than 50% of their voting shares. The above financial information of the subsidiaries for the ninemonths ended September 30, 2022 and 2021 was reported according to financial statements that were notreviewed by independent auditors, except for Mandarin Airlines and Tigerair Taiwan Co., Ltd.
Tigerair Taiwan Co., Ltd. planned to issue ordinary shares for cash to meet the needs for funds. The boardof directors of the Company approved the plan to issue ordinary shares for cash at $25 per share on August
5, 2021. The Company subscribed for 101,212 thousand shares in September 2021. The proportion ofownership of the Group increased to 82%. Because the shares were subscribed at a percentage different
from its existing ownership percentage, the Company’s retained earnings decreased by $54,449 thousand.
To strengthen the capital structure of Mandarin Airlines, the board of directors of the Company approved
the plan to issue ordinary shares for cash at $10 per share on August 26, 2021. The Company subscribed for
199,677 thousand shares in September 2021. The proportion of ownership of the Group increased to 97%.
Because the shares were subscribed at a percentage different from its existing ownership percentage, theCompany’s retained earnings decreased by $50,190 thousand.
The liquidation of Yestrip Co., Ltd. was completed on April 22, 2021, and the Company recognized aliquidation loss of $540 thousand.

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates
Investments in joint ventures

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

939,668
530,568$ 1,470,236- 19 -

864,178
690,838$ 1,555,016

880,464
696,092$ 1,576,556

a. Investments in associates
The investments in associates were as follows:
September 30,
2022

December 31,
2021

September 30,
2021

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

543,010
332,439$

513,059
298,971$

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

64,21952,14859,620$ 939,668$ 864,178$ 880,464

At the end of the reporting period, the proportion of ownership and voting rights of associates held by
the Group were as follows:
Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2022
2021
2021

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

20%
28%
28%

20%
20%
28%
28%

20%
20%
28%
28%

35%

35%

35%

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

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

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

$

$

-

$ (27,075)
(422)

-

$ (244,985)(1,302)

4,245

5,391

16,51929,200

5,611

7,019

25,48520,366

3,704

3,051

10,6198,980

13,560$ (12,036)

52,623$ (187,741)$

The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on the associates’ financial statements whichhave not been reviewed. However, the management determined that there would have been be no
significant adjustments had these investee’s financial statements been independently reviewed.

- 20 -

China Aircraft Services issued ordinary shares to meet the needs for funds in March 2022. The Group
did not participate in the subscription, so the proportion of ownership of the Group decreased from 20%
to 4% and the Group lost significant influence over China Aircraft Services. Therefore, the investment
in China Aircraft Services which was initially classified as investments accounted for using the equity
method was reclassified as financial assets at fair value through other comprehensive income since
March 2022.
Dynasty Holidays was classified as associate accounted for using the equity method. On May 31, 2022,
the provisional shareholders’ meeting was held and the shareholders resolved to dissolve Dynasty
Holidays and the liquidation process is in progress in accordance with Japanese regulations.
b. Investments in joint ventures
The investments in joint ventures were as follows:
September 30,
2022

December 31,
2021

September 30,
2021$ 416,852
91,977
13,864
7,875$ 533,251
120,876
28,836
7,875$ 533,279
121,458
33,4847,871$ 530,568$ 690,838$ 696,092

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

At the end of the reporting period, the proportion of ownership and voting rights in joint ventures heldby the Group were as follows:
Proportion of Ownership and Voting Rights
September 30,
December 31,
September 30,
2022
2021
2021
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

51%
55%
49%
51%

51%
55%
49%
51%

51%
55%
49%
51%

The Group entered into a joint venture agreement with Taikoo Group to invest in China Pacific
Catering Services and China Pacific Laundry Services. According to the agreement, both sides have theright to make major motion vetoes on the board of directors, and therefore, the Group does not havecontrol.
To expand the Group’s catering business, Kaohsiung Catering entered into a joint venture agreementwith a Japanese brand company to invest in Delica International Co, Ltd., with the Japanese brandcompany having the right to make decisions on operations, and therefore, the Group does not havecontrol.

- 21 -

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

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

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$ (24,127)(6,248)(6,778)-$ (60,084)(11,299)(1,727)-$ (116,399)(28,900)(14,971)-$ (162,680)(27,895)(4,283)-$ (37,153)$ (73,110)$ (160,270)$ (194,858)

The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on these investees’ financial statements whichwere not independently reviewed. However, the management determined that there would have been no
significant adjustments had these investees’ financial statements been independently reviewed.
For information on the major businesses and products and the locations of registration for the major
business offices of the above entities, refer to Tables 6 and 7 (names, locations, and related informationof investees on which the Company exercises significant influence and investment in mainland China)
following the notes to the consolidated financial statements.

15. PROPERTY, PLANT AND EQUIPMENT
Freehold Land

Buildings

FlightEquipment

OthersTotal

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

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

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

Balance at September 30, 2021$

946,033$

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

17,484,758$ 281,881,156

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

$

-

$

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

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

Balance at September 30, 2021

$

-

$

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

Balance at September 30, 2021, net value$

946,033$

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

5,214,254$ 132,002,259

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

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

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

Balance at September 30, 2022$

1,014,801$

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

18,193,130

Accumulated depreciation and impairment

Cost$ 286,279,490(Continued)- 22 -

Freehold Land

Buildings

FlightEquipment

Others

Total

Accumulated depreciation and impairment
Balance at January 1, 2022
Depreciation expenses
Disposals
Reclassification
Net exchange differences

$

-

$

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

Balance at September 30, 2022

$

-

$

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

Balance at September 30, 2022, net value$

1,014,801$

8,089,250$ 111,741,206$$ 126,107,320

5,262,063(Concluded)
Reclassification is mainly resulted from the transfer of prepayments for equipment.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of theassets as follows:
Buildings
Main buildings
Others
Machinery equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersAssets leased to others
Flight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

45-55 years
10-25 years
25 years
3-13 years
3-15 years
5 years
3-5 years
3-5 years
15-25 years
7-20 years
10-20 years
6-8 years
3-10 years
7-12 years
3-15 years
5-12 years

Refer to Note 33 for the carrying amounts of property, plant and equipment and leased asset pledged by theGroup.
Based on the particularity of risk in the aviation industry, all of the Group’s assets such as aircraft, realestate, and movable property are adequately insured to diversify the potential risk related to operations.
The Group disposed of a portion of flight equipment and recognized a loss of $950,980 thousand for thethree months ended June 30, 2021.

16. INVESTMENT PROPERTIES

Carrying amount
Investment properties

September 30,
2022

December 31,
2021

September 30,
2021$ 2,074,332$ 2,074,531$ 2,074,597- 23 -

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to others. The buildings are depreciated on a straight-line basis over 55 years.
The fair values of the investment properties held by the Group were all $2,488,931 thousand as of
September 30, 2022, December 31, 2021 and September 30, 2021, respectively. The fair value valuations
were performed by independent qualified professional valuers, and the future income evaluated bymanagement was based on market transactions.
All of the Group’s investment properties were held under freehold interests.

17. OTHER INTANGIBLE ASSETS
Computer
Software Cost

Accumulated
Amortization

OthersNet Value

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

Balance at September 30, 2021

$ 1,840,862$

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

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

Balance at September 30, 2022

$ 1,889,459$

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

909,743

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

18. OTHER ASSETS
September 30,
2022

December 31,
2021

September 30,
2021$

156,490623,866
11,139423,292$

138,688327,140
9,562
217,074$

213,088432,040
10,009398,633$

1,214,787$

692,464$

1,053,770(Continued)

Current
Temporary payments
Prepayments
Restricted assets
Others- 24 -

September 30,
2022

December 31,
2021

September 30,
2021$ 16,302,107
1,910,022
967,251
680,634
18,033
848,496$$$ 20,726,543$ 11,469,481

Non-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
Others8,624,307
1,249,389
1,000,457
568,247
18,4978,584

8,616,451
1,524,002
1,070,646
562,623
18,141
13,575$ 11,805,438(Concluded)

The prepayments for aircraft are comprised of prepaid deposits and capitalized interest from the purchase of
A321neo, A320neo and B777F aircraft. For details of the contract for the purchase of the aircraft, refer toNote 34.

19. BORROWINGSa. Short-term borrowings
September 30,
2022

December 31,
2021

September 30,
2021

Bank loans - unsecured$ 1,782,000$ 1,932,000$ 1,952,000Interest rates

1.25%-1.55%

0.90%-1.26%

0.90%-1.27%

September 30,
2022

December 31,
2021

September 30,
2021$ 19,943,552
34,698,235$ 33,248,892
35,721,925$ 22,399,892
37,592,547

20,720,000
30,62675,331,161
12,849,453

25,450,000
27,214
94,393,603
9,324,318

30,460,000
29,22390,423,216
13,808,717$ 62,481,708$ 85,069,285$ 76,614,499

0.90%-1.73%

0.81%-1.22%

0.83%-1.60%

b. Long-term borrowings

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

Interest rates

Secured bank loans are secured by flight equipment, buildings, and other equipment, refer to Note 33.

- 25 -

Bank loans (denominated in New Taiwan dollars) are repayable quarterly, semiannually or in lump sum
upon maturity. The related information is summarized as follows:
September 30,
2022

December 31,
2021

September 30,
2021

2009.2.42032.6.30

2009.2.42032.6.30

2009.2.42032.6.30

Periods

The Group has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until September 2026, were used by the Group to guarantee the commercial
paper issued. As of September 30, 2022, December 31, 2021 and September 30, 2021, such commercial
papers were issued at discount rates of 1.4398%-1.5335%, 0.985%-1.097% and 0.9787%-1.0907%,
respectively.
In accordance with the “Regulations on Relief and Revitalization Measures for Industries andEnterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry ofTransportation and Communications and the “Operational Guides on Relief Loan Guarantees for Ailing
Aviation Industry Affected by Severe Pneumonia with Novel Pathogens”, the Group applied for a
special loan project to maintain its operation, and the fund along with subsidized interest rates wasprovided by the government. The total amount of the loan is $35,480 million, which shall be repaid
within 2 years to 4 years from the date of initial drawdown. As of September 30, 2021, the Group had
made a drawdown in the amount of $34,800 million and repaid $11,830 million of the drawdown.

20. BONDS PAYABLE

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

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

Less: Current portion and put option of
convertible bonds$- 26 -

1,000,000

1,000,000

1,000,000

1,300,000

1,300,000

2,600,000

4,500,000

4,500,000

4,500,000

3,500,000
2,219,852
12,519,852

3,500,000
379,284
2,970,742
13,650,026

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

3,650,000

2,525,000

1,300,000

8,869,852$ 11,125,026$ 16,566,263

Related issuance conditions were as follows:
Category

PeriodConditions

Rate (%)

Three-year private unsecured bonds - issued at par in
May 2017; repayable on due date; interest of 1.2%
p.a., payable annually
Seven-year private unsecured bonds - issued at par in
May 2017; repayable on due date; interest of 1.75%
p.a., payable annually
Three-year private unsecured bonds - issued at par in
October 2017; repayable on due date; interest of
1.14% p.a., payable annually
Five-year private unsecured bonds - issued at par in
October 2017; repayable in October 2021 and2022; 1.45% interest p.a., payable annually
Five-year private unsecured bonds - issued at par in
November 2018; repayable in November 2022 and2023; 1.32% interest p.a., payable annually
Seven-year private unsecured bonds - issued at par in
November 2018; repayable in November 2024 and2025; 1.45% interest p.a., payable annually
Five-year private unsecured bonds - issued at par inJune 2019; repayable in June 2023 and 2024;
1.10% interest p.a., payable annually
Seven-year private unsecured bonds - issued at par inJune 2019; repayable in June 2025 and 2026;
1.32% interest p.a., payable annually
Five-year convertible bonds - issued at discount inJanuary 2018; repayable in lump sum uponmaturity; 1.3821% discount rate p.a.

2017.5.19-2020.5.19

Principal repayable on due date;indicator rate; payable annually

1.20

2017.5.19-2024.5.19

Principal repayable on due date;indicator rate; payable annually

1.75

2017.10.12-2020.10.12

Principal repayable on due date;indicator rate; payable annually

1.14

2017.10.12-2022.10.12

1.45

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

2021.04.28-2026.04.28

Principal repayable in October
2021 and 2022; indicator rate;
payable annuallyPrincipal repayable in November
2022 and 2023; indicator rate;
payable annuallyPrincipal repayable in November
2024 and 2025; indicator rate;
payable annuallyPrincipal repayable in June 2023
and 2024; indicator rate; payableannually
Principal repayable in June 2025
and 2026; indicator rate; payableannually
Unless bonds are converted toshare capital or redeemed,principal repayable one time inJanuary 2023; 1.3821 discountrate p.a.
Unless bonds are converted toshare capital or redeemed,principal repayable one time in
April 2026; 0.8612 discount rate
p.a.

2018.11.30-2023.11.30

2018.11.30-2025.11.30

2019.06.21-2024.06.21

2019.06.21-2026.06.21

2018.01.30-2023.01.30

1.32

1.45

1.10

1.32

-

-

The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:
a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.
c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions. The Company resolved to exercise the right of redemption on January 14,2022. The reference date of redemption of the bonds was March 9, 2022 and the actual face value ofredemption was $200 thousand.
d. Between April 30, 2018 and January 30, 2023 (except for the period between the former dividend date
and the date of the dividend declaration on record), holders may convert the bonds to the Company’s
ordinary shares. The initial conversion price was set at NT$13.2, which is subject to adjustment if there
is a capital injection by cash, share dividend distribution, and the proportion of cash dividends per sharein market price exceeding 1.5%. Because the Company distributed cash dividends as of July 29, 2019,the conversion price was adjusted to NT$12.6. As of the reference date of redemption of the bonds
which was on March 9, 2022, a total face value of NT$5,999,800 thousand of convertible bonds wasconverted into 476,174 thousand ordinary shares of the Company.

- 27 -

The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.
Proceeds from issuance
Equity component$ 6,012,000(409,978)Liability component at the date of issuance$ 5,602,022

The Company issued the seventh issue of its unsecured convertible bonds, and the issuance conditions wereas follows:a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on April 28, 2024.
c. The Company may redeem the bonds at face value between July 28, 2021 and March 18, 2026 undercertain conditions.
d. Between July 28, 2021 and April 28, 2026 (except for the period between the former dividend date andthe date of the dividend declaration on record), holders may convert the bonds to the Company’s
ordinary shares. The initial conversion price was set at NT$19 per share, which is subject to adjustment
if there is a capital injection by cash or share dividend distribution. Because the Company distributed
cash dividends on July 12, 2022, the conversion price was adjusted to $18.3. As of September 30, 2022,
a total face value of NT$2,211,200 thousand of convertible bonds was converted into 116,379 thousand
ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component$ 4,500,000(188,862)

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

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

Carrying amounts
Land
Buildings
Flight equipment
Other equipment

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

5,778,327
2,744,285
49,640,657
5,321$ 58,168,590- 28 -

6,064,760
2,289,375
47,701,558
6,274$ 56,061,967

6,102,246
2,427,264
48,224,332
7,403$ 56,761,245

For the Nine Months Ended
September 30
2022
2021
Additions to right-of-use assets
Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment$ 12,259,750$

2,661,426$

144,477
320,865
9,271,132
897$

119,727
325,469
8,396,088
9,993$

9,737,371$

8,851,277

b. Lease liabilities

Carrying amounts
Current
Non-current

September 30,
2022

December 31,
2021

September 30,
2021$ 2,978,850$ 15,574,735$ 2,533,452$ 12,758,050$ 2,640,078$ 13,267,766

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

Land
Buildings
Flight equipment
Other equipment

September 30,
2022

December 31,
2021

September 30,
2021

0%-2.00%
0%-3.35%
0.68%-3.34%
0%-1.43%

0.81%-2.00%
0%-2.98%
0.68%-3.34%
0%-1.43%

0%-1.80%0%-2.98%
0.68%-3.34%
0%-1.50%c. Financial liabilities under hedge accounting
The Group specifies a part of aircraft leases denominated in USD as hedging instruments to avoid
exchange rate fluctuations in passenger revenue and applies the accounting treatment of cash flow
hedge. The lease information is as follows:
Maturity Date
September 30, 2022

December 31, 2021

September 2021

Subject

2022.11.18-2034.6.29 Financial liabilities for hedging current
Financial liabilities for hedging non-current
2022.2.9-2033.12.12 Financial liabilities for hedging current
Financial liabilities for hedging non-current
2022.2.9-2028.5.15 Financial liabilities for hedging current
Financial liabilities for hedging non-current- 29 -

Carrying Value$ 10,006,169
32,840,372
8,434,893
27,839,847
8,403,826
27,728,396

Influence of comprehensive income
Recognized in
Other
Comprehensive
IncomeFor the nine months ended September 30, 2022
For the three months ended September 30, 2022
For the nine months ended September 30, 2021
For the three months ended September 30, 2021

$ (5,699,011)(2,697,053)
231,217(190,986)

Reclassified toIncome$244,231(3,003)
501,418
188,207d. Material leasing activities and terms
China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, nineteen
A330-300 planes, twelve 737-800 planes, eight A321neo planes, ten A320-200 planes, four A320neo
planes, one ERJ190 planes, and three ART72-600 planes for operation, lease period are 4 to 16 years
from February 2007 to June 2034. The rental pricing method is partly a fixed amount of funds, andsome of them are floating rents, floating rents are according to benchmark ratio, the rent is revised
every half year. When the lease expires, the lessee does not have purchase rights.
The information of refundable deposits and letter of credit due to rental of planes:

Refundable deposits
Credit guarantees

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

388,836
1,915,152

682,376
1,699,376

748,518
1,842,845

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, for the details for the lease agreement, please refer to Note 34. The lease includes an option
to extend the lease, as it is not possible to extend the lease, the amount of the lease related to the period
covered by the option is not included in the lease liability. If the amount of the extended lease period is
included in the lease liability, the lease liability would have increased by $906,307 thousand, $897,264
thousand and $894,584 thousand on September 30, 2022, December 31, 2021 and September 30, 2021,
respectively.
Taiwan Air Cargo Terminal Co. and CAA signed a BOT contract with a land lease agreement. For
details, please refer to Note 34.
e. Lease agreement signed but not yet delivered
In October 2019, the Company signed a rental contract for eight A321neo with CALC Lease
Corporation, which is expected to be introduced between 2022 and 2024. As of September 30, 2022,
two A321neo have been delivered.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental contract for eight A320neo with ICBC
Lease Corporation, which is expected to be introduced between 2021 and 2024. As of September 30,
2022, four A320neo have been delivered.
The Group also signed related aircraft purchase agreement, please refer to Note 34 for details.

- 30 -

f. Sale and leaseback
In order to revitalize assets and strengthen financial structure, the Company signed a sale and leaseback
agreement for five A330-300 with CALC Lease Corporation in June 2021 and September 2021. Thoseaircraft were sold for $2,810,098 thousand and the Company recognized a loss of $342,080 thousand.
The lease term is 4 years without renewal option or right of first refusal and the annual lease payments
for each aircraft are US$4,200 thousand to US$4,823 thousand.
g. Aircraft leases
In order to revitalize assets, the Company signed a lease agreement for two 747-400F with US Cargo
Company in August 2021 and September 2021. One of them had been leased on July 15, 2022.
h. Other lease information
The Group use operating lease agreement for investment properties, refer to Note 16.

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

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$
22,999$ (3,610,175)$
73,354$ (9,846,621)$
9,203$ (2,961,296)$
22,846$ (8,889,159)

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

22. OTHER PAYABLES

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

September 30,
2022

December 31,
2021

September 30,
2021

$

$

3,049,812
5,848,866
1,580,899
716,531
778,546
83,250149,2962,454,147$

2,393,587
2,687,129
1,023,532
726,684
872,152
159,529
114,160
2,004,784$ 14,661,347$

9,981,557

3,837,408
3,313,778
1,456,019
859,153
698,692
132,191
61,5712,640,300$ 12,999,112- 31 -

23. CONTRACT LIABILITIES
September 30,
2022

December 31,
2021

September 30,
2021$ 3,108,360
6,460,394
42,158$ 2,810,482
1,693,863-$ 2,691,031
1,496,695-$ 9,610,912$ 4,504,345$ 4,187,726$ 8,507,579
1,103,333$ 3,868,712
635,633$ 3,271,347
916,379$ 9,610,912$ 4,504,345$ 4,187,726

September 30,
2022

December 31,
2021

September 30,
2021

Operating leases - aircraft$ 21,371,499$ 18,654,223$ 17,738,772

Current
Non-current

$

$

$

Frequent flyer program
Advance ticket sales
OthersCurrent
Non-current

24. PROVISIONS

3,597,866
17,773,633$ 21,371,499

3,247,236
15,406,987$ 18,654,223

2,775,946
14,962,826$ 17,738,772
Aircraft Lease
Contracts

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

Balance at September 30, 2021

$ 17,738,772

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

Balance at September 30, 2022

$ 21,371,499

The Group leased flight equipment under operating lease agreements. Under the contracts, when the leases
expire and the equipment is returned to the lessor, the flight equipment has to be repaired according to the
expected years of use, number of flight hours, flight cycles and the number of engine revolution. The Group
had existing obligations to recognize provisions when signing a lease or during the lease term. Tigerair
Taiwan Co., Ltd. also leased flight equipment under operating lease agreements. In accordance with thecontract, Tigerair had to pay the maintenance reserve monthly accounted for by using the actual number offlight hours.

- 32 -

25. RETIREMENT BENEFIT PLANS
Employee benefits expense in respect of the Group’s defined benefit retirement plan was calculated using
the actuarially determined pension cost discount rate as of December 31, 2021 and 2020.

Operating costs
Operating expenses

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

234,370
86,515$242,394
99,462$

691,530
261,487$$

320,885$

341,856$

953,017$ 1,018,420

September 30,
2022

December 31,
2021

September 30,
2021

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

7,000,000$ 70,000,000$ 59,412,243

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

739,235
279,185

26. EQUITY
a. Share capital
Ordinary shares

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

The Company issued the 6th and the 7th domestic unsecured convertible bonds, and the holders of theconvertible bonds applied for conversion in the amount of $1,178,600 thousand and $3,154,200
thousand, respectively, for the nine months ended September 30, 2022 and 2021. The number ofordinary shares exchanged was 72,313 thousand and 250,333 thousand, respectively, and completed theregistration of the change in equity after the issuance of new shares.
b. Capital surplus
September 30,
2022

December 31,
2021

September 30,
2021$ 2,092,431
1,725$ 1,668,381-$

929,548869,932

May be used to offset a deficit, distributed
as cash dividends, or transferred to sharecapital (1)Issuance of convertible bonds in excess of parvalue and conversion premium
Dividend distributed to subsidiaries
Expired equity component of convertiblebonds- 33 -

746,037
701,842(Continued)

September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

May only be used to offset a deficit (2)Long-term investments

547

540

540

May not be used for any purpose
Equity component of convertible bonds

96,060155,676$ 3,120,311$ 2,694,529

323,766$ 1,772,185(Concluded)1) Such capital surplus may be used to offset a deficit; when the Company has no deficit, such capitalsurplus may be distributed as cash dividends or transferred to share capital (limited to a certain
percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries
resulting from equity transactions other than actual disposals or acquisitions or from changes incapital surplus of subsidiaries accounted for using the equity method.
c. Appropriation of earnings and dividend policy
Under the Company Act, where the Company made a profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws andregulations, and then any remaining profit together with any undistributed retained earnings shall be
used by the Company’s board of directors as the basis for proposing a distribution plan, which is to
distribute dividends and bonus no less than 50% of the remaining profit and undistributed retained
earnings. The dividends and 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 approved in the meeting of theboard of directors; if such earnings are distributed in the form of cash, the cash distribution shall beauthorized after a resolution has been adopted by a majority vote at a meeting of the board of directors
attended by two-thirds of the total number of directors; and in addition, a report of such distribution
shall be submitted to the shareholders’ meeting. If the Company has no loss, according to laws andregulations, the Group can distribute its capital reserve, in whole or in part, by issuing new shares orcash based on financial, business and management considerations. If such surplus earnings is distributedin the form of new shares, it shall be approved by a meeting of the board of directors; if such surplus
earning is distributed in the form of cash, it shall be authorized after a resolution has been adopted by amajority vote at a meeting of the board of directors attended by two-thirds of the total number of
directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’meeting.
The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thecurrent year.
1) Offsetting deficit in 2020
On August 12, 2021, the offsetting of deficit in 2020 was resolved and recognized in theshareholders’ meeting. The deficit included a net income of $140,000 thousand and negative
adjustment of other retained earnings of $490,581 thousand; thus, the remaining amount ofaccumulated deficit was $350,581 thousand. The deficit was offset by the capital reserve of$350,581 thousand.
- 34 -

2) Appropriation of earnings in 2021
The appropriation of earnings in 2021 which was resolved and recognized in the shareholders’meeting on May 26, 2022 is as follows:

Legal reserve
Cash dividends

Appropriationof Earnings

Dividends Per
Share (NT$)$$
0.83145736

925,385
5,000,000

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

Unrealized
Gain (Loss) on
Financial
Assets at
FVTOCI

Gain (Loss) on
Hedging
Instruments

Total

Balance on January 1, 2021
Exchange differences on the translation 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 fair value throughother comprehensive income
Effects of income tax
Other comprehensive income (loss) recognized in the period
Transferred to initial carrying amount of hedged items$$

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

687,829

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

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

Balance on September 30, 2021$

(161,040)$

12,908$ 2,842,254$ 2,694,122

Balance on January 1, 2022
Exchange differences on the translation of the financial
statements of foreign operations
Cumulative gain (loss) on change in fair value of hedging
instruments
Cumulative gain (loss) on changes in fair value of hedging
instruments reclassified to profit or loss
Unrealized gain (loss) on financial assets at fair value throughother comprehensive income
Effects of income tax
Other comprehensive income (loss) recognized in the period
Transferred to initial carrying amount of hedged items$(120,079)$(5,512)$ 2,839,419$ 2,713,828

191,970--

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

2,698
1,315
4,013
-

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

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

Balance on September 30, 2022$

(1,499)$ (1,422,653)$ (1,389,828)- 35 -(134,252)

34,324$

e. Non-controlling interests
For the Nine Months Ended
September 30
2022
2021
Beginning balance
Net (loss) income attributable to non-controlling interests
Exchange differences on translating the financial statements offoreign entities
Cumulative gain (loss) on changes in fair value of hedging
instruments
Cumulative gain on changes in fair value of hedging instruments
reclassified to profit or loss
Effects of income tax$ 3,161,445(476,830)$ 3,152,090(457,069)

4,407(1,403)(1,533)

(325)

3,773
(448)
6,199
(202,650)
2

785
(92)
(1,035)575,753
126(124,727)-$ 2,488,166$ 3,145,138

Change in subsidiaries’ equity
Share options held by the employees of subsidiaries
Dividends paid by subsidiaries
OthersEnding balance
f. Treasury shares

Treasury shares are the Company’s shares held by its subsidiaries as of the reporting date and are as
follows:(In Thousands of Shares)
Number of
Shares,Beginningof YearFor the nine months ended September 30, 2022
For the nine months ended September 30, 2021

Subsidiary

Reduction
Duringthe Year

2,075
2,075

-

Number of
Shares,Endof Year
2,075
2,075

Shares(In Thousands)

Carrying
AmountMarket Value

2,075$ 40,766$ 40,766

2,075$ 57,156$ 57,156

2,075$ 35,684$ 35,684

September 30, 2022
Mandarin Airlines
December 31, 2021
Mandarin Airlines
September 30, 2021
Mandarin Airlines- 36 -

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

27. NET INCOME
a. Revenue
For the Three Months Ended
September 30
2022
2021
Passenger
Cargo
Others$7,104,062
28,387,825
2,205,873$$ 37,697,760

For the Nine Months Ended
September 30
2022
2021

1,189,331
31,247,067
2,037,604$ 12,280,795
92,808,065
6,694,417$

4,569,176
81,309,658
5,795,806$ 34,474,002$ 111,783,277$ 91,674,640

b. Other income

Interest income
Dividend income
OthersFor the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

168,447
471,623$

22,988
11,607
104,598$

307,186850
865,120$

97,677
11,607
280,455$

640,070$

139,193$ 1,173,156$

389,739

In 2002, CAA terminated the leasing of six aircraft with the Company on a unilateral basis, which arosefrom several litigation between the Company and CAA. Because the aircraft leases were terminated inadvance, the property of aircraft leasing from financial lease turns to operating lease. The accounting
basis is different between these which caused the situation of overpaid rental. Therefore, in 2016, theCompany sued CAA for an approximate amount of $1,200 million. The Company lost the case in thefirst and second instances, and won the part of the case after remanding in the third instance.
Supreme court dismissed the appeal and affirmed the conviction that CAA should pay back theprincipal amount with interest.
CAA had paid the abovementioned payment in October 2022. As of September 30, 2022, the Company
recognized $282 million.

- 37 -

c. Other gains and losses

Gain (loss) on disposal ofproperty, plant andequipment
Gain on sale of non-current
assets held for sale
Loss arising from sale andleaseback transactions
Gain on financial assets
mandatorily classified as at
FVTPL
Impairment loss recognized on
aircraft equipment
Loss on disposal of investments
Net foreign exchange gains(losses)
OthersFor the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

$

$

12,869$(33,839)

16,747$ (1,023,694)

116,676-

116,676--(202,383)-(342,080)

178

238

384

13

(1,641)--(1,641)-(540)

259,989(170,366)(17,152)(61,279)

464,940(223,062)(19,211)(222,699)

374,044$ (1,608,211)

217,705$(314,415)$

d. Finance costs

Interest expense
Bonds payable
Bank loans
Interest on lease liabilities
Loss arising from derivatives
designated as hedging
instruments in cash flow
hedge accounting
relationships reclassified
from equity to profit orloss

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

$

40,015
199,225
394,302

$

1,568
$

635,110$

37,978
162,900
371,642

121,669
636,257
1,085,930$

187,102552,150
1,111,729

-

2,743

-

572,520$ 1,846,599$ 1,850,981

Capitalization rate

1.39%-1.45%

0.55%-1.11%

0.85%-1.45%

0.55%-1.11%

Capitalization interest

$

$

$

$

63,548- 38 -

11,619105,91130,735

e. Depreciation and amortization expenses

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

An analysis of amortization byfunction
Operating costs
Operating expenses

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

4,281,599
3,327,109
66
55,847$

4,107,786
2,977,451
66
56,769$ 12,647,293
9,737,371
199
167,959$ 13,676,955
8,851,277
200
165,970$7,664,621$

7,142,072$ 22,552,822$ 22,694,402$

7,316,903
291,871$6,899,689
185,614$ 21,540,482
844,381$ 21,700,767
827,665$

7,608,774$

7,085,303$ 22,384,863$ 22,528,432

$

1,274
54,573$3,010
53,759$3,860
164,099$

9,032
156,938$

55,847$56,769$167,959$

165,970

f. Employment benefits expense

Post-employment benefits
Defined contribution plan
Defined benefit plan

Other employee benefits
Salary expenses
Personnel service expenses

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

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

124,656
320,885$

126,607341,856$

382,600
953,017$

387,783
1,018,420$

445,541$

468,463$

1,335,617$

1,406,203$

4,260,709
1,190,492$

4,847,369
1,158,472$ 14,750,859
3,823,181$ 13,538,648
3,743,412$

5,451,201$

6,005,841$ 18,574,040$ 17,282,060$

4,837,842
1,058,900$

5,346,128
1,128,176$ 16,450,483
3,459,174$ 15,336,479
3,351,784$

5,896,742$

6,474,304$ 19,909,657$ 18,688,263- 39 -

According to the Company’s articles, the Company accrues compensation of employees at rates of noless than 3% of the net profit before income tax and compensation of employees. When the Company
has an accumulated deficit, the Company shall set aside some amounts to offset the deficit in advance.
For the nine months ended September 30, 2022 and 2021, the estimated compensation of employees
was $149,767 thousand and $53,321 thousand, respectively.
Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date that the annual consolidated financial statements are authorized for issue
are adjusted in the year that the compensation and remuneration are recognized. If there is a change inthe proposed amounts after the annual consolidated financial statements are authorized for issue, thedifferences are recorded as a change in the accounting estimate.
Information on the compensation of employees resolved by the Company’s board of directors isavailable at the Market Observation Post System website of the Taiwan Stock Exchange.

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

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

For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

766,443-$ 2,043,465
24,171(414,753)(1,367,343)

284,285-$(410,953)$(126,668)$

351,690$

700,293$

847,840
7,785(683,857)$

171,768

b. Income tax recognized in other comprehensive income
For the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$

$

Deferred tax
Recognized in othercomprehensive income
Translation of foreign
operations
Fair value changes offinancial assets at
FVTOCI
Fair value change of hedging
instruments for cash flow
hedging
Total income tax recognized inother comprehensive income$(17,716)$

211(37,567)

$

6,369

(358)

10,783

1,315

13,982575,680

39,577

1,115,374(39,088)

50,571$ 1,079,122

557,606- 40 -$$(18,737)

c. Income tax assessments
The income tax returns of the Company and its subsidiaries through 2019 have been examined by the
tax authorities.

29. EARNINGS PER SHARE
For the Three Months Ended
September 30
2022
2021
Basic earnings (loss) per share
Diluted earnings (loss) per share
Earnings (loss) used in thecomputation of basic earnings(loss) per share
Effect of potentially dilutive
ordinary shares:
Interest on convertible bonds(after tax)
Earnings (loss) used in thecomputation of diluted earnings(loss) per share

$
$

$

$

0.02
0.02

$
$

0.51
0.48

For the Nine Months Ended
September 30
2022
2021
$
$

0.60
0.59

$
$

0.28
0.26

125,956$ 2,917,304$ 3,618,450$ 1,555,376-

16,615

16,62860,635125,956$ 2,933,919$ 3,635,078$ 1,616,011

6,011,463

5,724,826

5,991,331

5,540,441

7,622
-

3,100
407,116

11,399141,966

3,100
591,501

6,019,085

6,135,042

6,144,696

6,135,042

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

The Group may settle compensation or bonuses paid to employees in cash or shares; therefore, the Groupassumes that the entire amount of the compensation or bonuses will be settled in shares and the resulting
potential shares will be included in the weighted average number of shares outstanding used in thecomputation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential
shares was included in the computation of diluted earnings per share until the number of shares to be
distributed to employees is resolved in the following year.

- 41 -

30. CAPITAL MANAGEMENT
The goal, policies and procedures as well as the composition of the Group’s capital management are thesame as those stated in Note 30 to the Group’s consolidated financial statements for the year ended
December 31, 2021.

31. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments not measured at fair value
Except as detailed in the following table, the management considers the carrying amounts of financial
assets and financial liabilities recognized in the financial statements as approximating their fair values.
September 30, 2022
Carrying
AmountFair Value

December 31, 2021
Carrying
AmountFair Value

September 30, 2021
Carrying
AmountFair Value

Financial liabilities
Bonds payable$ 12,519,852$ 12,895,470$ 13,650,026$ 14,557,830$ 17,866,263$ 19,076,962

Lease liabilities and long-term borrowings are floating-rate financial liabilities, so their carrying
amounts are their fair values. Fair values of bond payable trading in OTC are based on quoted market
prices (Level 1).
b. Fair value of financial instruments measured at fair value on a recurring basis
The following table provides an analysis of financial instruments that are measured subsequent to initialrecognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value isobservable:
1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;2) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) orindirectly (i.e. derived from prices); and3) Level 3 fair value measurements are those derived from valuation techniques that include inputs forthe asset or liability that are not based on observable market data (unobservable inputs).
September 30, 2022
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

131,292

$

-

$

-

$

131,292

$

-

$

-

$

38,07832,819$38,07832,819

$

-

$

-

$

70,897$70,897

Financial assets for hedging$ 1,523,810$

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

Financial liabilities for hedging$ 42,846,541

$

8,767

$

164,600$ 43,019,908

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

December 31, 2021
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

155,780

$

-

$

-

$

155,780

$

-

$

-

$

28,80439,080$28,80439,080

$

-

$

-

$

67,884$67,884

Financial assets for hedging$ 3,545,706

$

-

$

17,613$ 3,563,319

Financial liabilities for hedging$ 36,274,740

$

449

$

2,755

$ 36,277,944

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

September 30, 2021
Level 1
Financial assets at FVTPL
Domestic money market funds

Level 2

Level 3

Total$

169,479

$

-

$

-

$

169,479

$

-

$

-

$

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

$

-

$

-

$

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

$

-

$

20,219$ 2,248,631

Financial liabilities for hedging$ 36,132,222

$

1,080

$

424

$ 36,133,726

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

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

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

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

- 43 -

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

September 30, 2022
December 31, 2021
September 30, 2021

Multiplier

Liquidity
Discount

0.74-14.31
0.74-14.31
0.79-16.32

80%
80%
80%

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

EquityInstruments

Balance at January 1, 2022
Recognized in other comprehensive income

$

6,124
(151,004)$

67,884
3,013

Balance at September 30, 2022

$ (144,880)$

70,897

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

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

Balance at September 30, 2021$

11,463$

91,180Because some financial instruments and nonfinancial instruments may not have their fair values
disclosed, the total fair value disclosed herein is not the total value of the Group’s collective
instruments.
c. Categories of financial instruments
September 30,
2022

December 31,
2021

September 30,
2021

$

$

$

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

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

155,780
3,563,319
74,194,351

169,479
2,248,631
52,998,119

70,89767,884

91,18043,019,908
144,758,086

36,277,944
160,383,305

36,133,726
155,822,412

Financial liabilities
Financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)- 44 -

Note 1: The balances include financial assets measured at amortized cost, which comprise cash andcash equivalents, time deposits with original maturities of more than 3 months, notes andaccounts receivable, accounts receivable - related parties, other receivables, refundable
deposits and other restricted financial assets.
Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term borrowings, short-term bills payable, notes and accounts payable, accounts payable- related parties, other payables, bonds payable, long-term borrowings, lease liabilities,
provisions, parts of other current liabilities, parts of other non-current liabilities and guarantee
deposits.
d. Financial risk management objectives and policies
The Group has risk management and hedging strategies to respond to changes in the economic andfinancial environment and in the fuel market. To reduce the financial risks from changes in interest,
exchange rates and in fuel prices, the Group has its operating costs stay within a specified range byusing appropriate financial hedging instruments and hedging percentages in accordance with the“Processing Program of Derivative Financial Instrument Transactions” approved by the Group’s
shareholders to reduce the impact of market price changes on earnings. These risks include market risk(including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
In addition, the Group has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. This committee informs theGroup of global economic and financial conditions, controls the entire financial risk resulting fromchanges in the financial environment and fuel prices, and develops the strategy and response to avoid
financial risk with the assistance of financial risk experts to effect risk management.
1) Market risk
The Group is primarily exposed to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group entered into derivative financial instruments to manage its exposure toforeign currency risk and interest rate risk. The Group enters into foreign exchange forward
contracts, foreign currency option contracts, and interest rate swap contracts with fair values that arehighly negatively correlated to the fair values of hedged items and evaluates the hedging
effectiveness of these instruments periodically.
a) Foreign currency risk
The Group enters into foreign currency option contracts to hedge against the risks on change in
related exchange rates, enters into forward contracts to hedge against the risks on changes inforeign-currency assets, liabilities and commitments in the related exchange rates.
Sensitivity analysis
The Group was mainly exposed to the U.S. dollar.
An increase/decrease in U.S. dollars one dollar against New Taiwan dollars when reporting
foreign currency risk internally to key management personnel represents management’s
assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis
included only outstanding foreign currency denominated monetary items and foreign currency
option contracts designated as cash flow hedges, and adjusts their translation at the end of thereporting period for U.S. dollars increase/decrease by one dollar against New Taiwan dollars inforeign currency rates.

- 45 -

When New Taiwan dollars increased one dollar against U.S. dollars and all other variables were
held constant, there would be a decrease in pre-tax profit and an increase in pre-tax othercomprehensive income for the nine months ended September 30, 2022 of $105,082 thousand
and $1,236,941 thousand, respectively, and an increase in pre-tax profit and increase in pre-tax
other comprehensive income for the nine months ended September 30, 2021 of $165,618
thousand and $1,212,126 thousand, respectively.
The Group’s hedging strategy is to enter into foreign exchange forward contracts and foreign
currency option contracts to avoid exchange rate exposure of its foreign currency denominatedreceipts and payments and to manage exchange rate exposure of its aircraft prepayments in thenext year. Those transactions are designated as cash flow hedges. When forecasted purchases
actually take place, basis adjustments are made to the initial carrying amounts of hedged items.
For the hedges of highly probable aircraft prepayments, as the critical terms (i.e., the notionalamount, useful life and underlying asset) of the foreign currency option contracts and foreignexchange forward contracts and their corresponding hedged items are the same, the Group
performs a qualitative assessment of the effectiveness, and it is expected that the value of theforeign currency option contracts and foreign exchange forward contracts and the value of thecorresponding hedged items will systematically change in the opposite direction in response to
movements in the underlying exchange rates.
The following table summarizes the information relating to the hedges of foreign currency risk.
Please refer to Note 21 for rental contract for hedging.
September 30, 2022
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aircraft prepayment forward exchange
contracts

Notional
AmountMaturity

NTD/USD

NTD204,407/
USD6,725

2022.10.272023.8.25

27.6-30.7

NTD/USD

NTD1,841,270/
USD58,000

2022.10.72023.6.15

29.5-31.8

Currency

Forward Rate

Line-Item in
Balance Sheet

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

Carrying AmountAsset
Liability$ 12,097$

16,592-

2,148

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $26,541 thousand.
December 31, 2021
Hedging Instruments
Cash flow hedge
Aircraft prepayment forward exchange
contracts

Currency

NTD/USD

Notional
AmountMaturity

Forward Rate

NTD215,651/
USD7,785

2022.4.292022.12.23

27.6-27.9

Line-Item in
Balance Sheet

Financial assets forhedging - current/
liabilities for hedging current

Carrying AmountAsset
Liability

$

-

$

449

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $(449) thousand.
September 30, 2021
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts

Currency

NTD/USD

Notional
AmountMaturity

NTD42,503/
USD1,4862021.10.62021.11.9- 46 -

Forward Rate

28.5-28.9

Line-Item in
Balance Sheet

Financial assets forhedging - current/
liabilities for hedging current

Carrying AmountAsset
Liability

$

-

$

1,080

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $(1,080) thousand.
For the nine months ended September 30, 2022

Comprehensive Income

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

Cash flow hedge
Aircraft rentals
Aircraft prepayments$ 12,546
15,529$ (16,904)-$ 28,075$ (16,904)

Note:(Note)

Increase in operating costs or foreign exchange loss.

For the nine months ended September 30, 2022, the amount of hedging instrument settlements
recognized as aircraft prepayments were $(1,086) thousand.
For the three months ended September 30, 2022
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aircraft prepayments

Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

(397)
14,432$ (13,281)-$ 14,035$ (13,281)(Note)

Increase in operating costs or foreign exchange loss.

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

Note:

$

2,432
5,794

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

Increase in operating costs or foreign exchange loss.
- 47 -

AmountReclassified toProfit and Lossand theAdjusted Line
Item

(Note)

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

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

405
-

$

(356)
-

$

405

$

(356)

(Note)

Increase in operating costs or foreign exchange loss.

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

Fair value interest rate risk
Cash flow interest rate risk

September 30,
2022

December 31,
2021

September 30,
2021$ 63,974,480
87,058,658$ 56,279,341
105,262,530$ 60,769,474
101,512,073

Sensitivity analysis
The sensitivity analysis below was determined based on the Group’s exposure to interest rates
for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A one yard
(25 basis points) increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
Had interest rates increased one yard (25 basis points) and all other variables been held constant,
the Group’s pretax profit for the nine months ended September 30, 2022 would have decreased
by $163,235 thousand.
Had interest rates increased one yard (25 basis points) and all other variables been held constant,
the Group’s pretax losses for the nine months ended September 30, 2021 would have decreased
by $190,335 thousand.

- 48 -

The following tables summarize the information relating to the hedges for interest rate risk.
September 30, 2022

Hedging Instruments
Cash flow hedge
Interest expenses onlong-term
borrowings interest rate swaps

Currency

NTD

Notional
Amount

NTD900,000

Maturity

FixedInterest
Rate on
Payments

2027.4.12027.5.24

1.39%1.58%

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (interest expense on long-term borrowings) was $(6,619)
thousand.
For the nine months ended September 30, 2022

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

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

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

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

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

Increase in financial costs or other losses.

For the three months ended September 30, 2022

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

Increase in financial costs or other loss.

c) Other price risk
The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel options contract to hedge against adverse risks on fuel price changes.
September 30, 2022
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
Amount
NTD144,880

Maturity

ForwardRate

2022.12.312023.9.30

USD60USD177- 49 -

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

Carrying AmountAsset
Liability$

19,720$ 164,600

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$(144,880) thousand.
December 31, 2021
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
Amount
NTD6,124

Maturity

ForwardRate

2022.1.312022.9.30

USD62USD122

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets forhedging - current/
liabilities for hedging- current$ 17,613$

2,755

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$6,124 thousand.
September 30, 2021
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
AmountMaturity

NTD11,463

2021.12.312022.6.30

ForwardRate
USD65USD99

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

424

Hedge accounting is continued 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$11,463 thousand.
For the nine months ended September 30, 2022

Comprehensive Income
Cash flow hedges - fuel options
Note:

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

$ (151,004)$ 112,008

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

(Note)

Increasing in operating costs.

For the three months ended September 30, 2022

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

Decreasing in operating costs.

- 50 -$(2,993)(Note)

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

$

11,463

AmountReclassified toProfit and Lossand theAdjusted Line
Item
$

1,629

(Note)

Increasing in operating costs.

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

$

710

AmountReclassified toProfit and Lossand theAdjusted Line
Item
$

2,472

(Note)

Increasing in operating costs.

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Nine Months Ended September 30
2022
2021
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%

$

1,375
(3,854)$

7,244(7,244)$1,040(1,040)

$

573
(573)

2) Credit risk
The objective, policies and procedure of credit risk management are the same as the consolidated
financial statements for the year ended December 31, 2021. Related illustration can be referred in
Note 31.

- 51 -

3) Liquidity risk
The objective of the Group’s management of liquidity is to maintain cash and cash equivalents
sufficient for operating purposes, marketable securities with high liquidity and loan commitmentsthat are sufficient to ensure that the Group has adequate financial flexibility.
Unused Bank
Loan Limit(Unsecured)
The Group (China Airlines, Ltd., Mandarin Airlines and Tigerair Taiwan Co.,Ltd.)

$ 25,558,021

Liquidity and interest risk rate table
The following table shows the remaining contractual maturity analysis of the Group’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Group may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.
Bank loans with a repayment on demand clause are included in the second column of the tablebelow regardless of whether or not the banks would choose to exercise early their rights to
repayment. The maturity dates for other non-derivative financial liabilities were based on theagreed-upon repayment dates. The Group’s liquidity analysis for its derivative financial instruments
is also shown in the following table. The table was based on the undiscounted contractual net cash
inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted grosscash inflows and outflows on those derivatives that require gross settlement. When the amountpayable or receivable is not fixed, the amount disclosed has been determined by reference to theprojected interest rates as illustrated by yield curves at the end of the reporting period.
September 30, 2022
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

2.5457Less than 1Year$

1.36252.4194
1.11553,260,971

1 to 5 Years

Over 5 Years$$

8,649,596

8,845,938

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

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

10,154,623
6,229,188-$ 33,658,165$ 100,218,946$ 25,229,749- 52 -

December 31, 2021
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Hedging instruments
Bonds payable

Less than 1Year

2.4651$3,440,414

0.90052.9022
1.4686

1 to 5 Years

Over 5 Years$$

9,119,294

7,314,114

12,123,745
9,375,841
2,740,146

71,980,918
28,118,375
12,303,090

13,979,191
1,532,555-$ 27,680,146$ 121,521,677$ 22,825,860

Less than 1Year

1 to 5 Years

Over 5 Years$$

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

2.3213$

1.04122.91200.8872

3,383,178

9,320,267

7,124,893

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

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

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

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

Relationship with the Company

China Aircraft Service
Airport Air Cargo Terminal (Xiamen) Co., Ltd.
Airport Air Cargo Service (Xiamen) Co., Ltd.
Eastern United International Logistics (Hong Kong)
Dynasty Holidays
China Pacific Catering Services
China Pacific Laundry Services- 53 -

Associate (became not related party since
March 2022)
Associate
Associate
Associate
Associate
Joint venture
Joint venture(Continued)

Related Party Name

Relationship with the Company

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

Account
Items

For the Three Months Ended
September 30
Related Party Type
2022
2021

Other income Major shareholdersof the Company
Associate
Joint venture$

For the Nine Months Ended
September 30
2022
2021

1,646

$

2,040

$

5,614

$ 10,075$$ 11,303

$
$

4,959

$
$ 35,310$
56$ 14,554

c. Purchases

Related Party TypeFor the Three Months Ended
September 30
2022
2021

For the Nine Months Ended
September 30
2022
2021

$
3,418
$ 93,251$ 187,518$ 11,701$ 308,816$ 348,713$ 23,286$ 350,512$ 160,833

December 31,
2021

September 30,
2021

Major shareholders of theCompany
Associate
Joint venture$
4,714$ 143,994$ 51,472

d. Accounts receivable - related parties (generated by operations)

Related Party Type

September 30,
2022

Major shareholders of the Company
Joint venture

$

625
3,731

$

785
1,563

$

718
1,683

$

4,356

$

2,348

$

2,401

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.

- 54 -

e. Accounts payable - related parties (generated by operations)
September 30,
2022

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

December 31,
2021

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

September 30,
2021

1,816
68,82659,930$$ 130,572

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

The remaining balance of accounts payable - related parties will be paid in cash if they are not secured.
f. Lease arrangements
Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots, and the Company paid the rental based on
usage hours. For the nine months ended September 30, 2022 and 2021, the Company paid rentals of$11,701 thousand and $23,286 thousand, respectively; for the three months ended September 30, 2022
and 2021, the Company paid rentals of $3,418 thousand and $4,714 thousand, respectively.
g. Endorsements and guarantees
September 30, 2022
Authorized
ActualAmountAmount Used

December 31, 2021
Authorized
ActualAmountAmount Used

September 30, 2021
Authorized
ActualAmountAmount Used

$ 3,850,000
2,968,635$ 1,444,200
296,197$ 3,850,000
2,590,360$ 1,663,320
258,454$ 3,850,000
2,671,771$ 1,663,320
259,8942,000,000

1,517,000

2,000,000

1,459,000

2,000,000

1,400,000

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

h. Remuneration of key management personnel
For the Three Months Ended
September 30
2022
2021
Short-term employee benefits
Post-employment benefits

For the Nine Months Ended
September 30
2022
2021

$ 11,811
198$ 11,459
516$ 47,211
13,368$ 30,126
41,654$ 12,009$ 11,975$ 60,579$ 71,780

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

- 55 -

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

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

September 30,
2022

December 31,
2021

September 30,
2021$ 30,047,303
58,168,590
691,773$ 31,823,285
56,061,967
577,809$ 32,399,027
56,761,245
572,632$ 88,907,666$ 88,463,061$ 89,732,904

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

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESIn addition to those disclosed in the other notes, significant commitments and contingent liabilities of theGroup at September 30, 2022 were as follows:a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of transfer of the chartered operation rights from CAA to TACT. TACT filed an
application for a 10-year extension of the COP for the cargo terminals in the Taiwan Taoyuan
International Airport and Kaohsiung International Airport and received the approval from the Taoyuan
Airport Corporation and CAA in July 2013 and July 2015, respectively.
However, TACT filed an arbitration in 2012 to revise the total amount of expenditure to $6,840,000
thousand. As of September 30, 2022, TACT had signed the following construction contracts withunrelated parties:

Client NameContract Title

CECI Engineering
Consultant, Inc., Taiwan
HTS Construction Co., Ltd.

Cargo Terminal Expansion Construction Consultant
Contract
Waterproof landside terminal walkway construction
project

Contract
Amount (VAT
Included)$ 192,000
11,200

As of September 30, 2022, the accumulated payments of construction in process for construction
equipment were $4,799 thousand (VAT included). The amounts were recognized as construction inprogress.
Assets acquired from cargo terminal improvements, equipment acquisition and subsequent equipment
acquisition and replacement will be transferred to the government without any compensation when thechartered operating license expires.
TACT should pay royalties to Taoyuan Airport Corporation and CAA during the chartered operation
period. The calculation is based on annual sales (including operating and non-operating revenue but
excluding the rental revenue from specific districts), and Taoyuan Airport Corporation and CAA havethe option to adjust the royalty rates every 3 years starting from the date of transfer of the charteredoperation rights on the basis of actual revenue and expenditures. The current royalty rate is 6%.
- 56 -

b. CAL Park Co., Ltd. (“CAL Park”) signed “Taiwan Taoyuan International Airport Aviation Operation
Center (including Airport Hotel) Construction Operating Contract” with the CAA on September 20,
2006. However, on November 1, 2010, the Taoyuan Airport Corporation took over the CAA’s rights on
this contract from the CAA. The contract is effective for 50 years (consisting of the development stage
and operating period) from the contract date. Three years before contract expiry date, CAL Park has thefirst option to renew the contract with a 20-year extension.
CAL Park’s business scope includes providing business and other operating space related to civil airtransport, hotels, aviation service and related industries adhered to the base and essential services law
and approved by the Taoyuan Airport Corporation.
CAL Park should pay land rentals on the date of the registration of surface rights. The rental rates forthe development stage differ from those for the operation period. The rental rates should follow Article
No. 2 of the “Regulations for Favorable Rentals Regarding Public Land Lease and Superficies inInfrastructure Projects,” which states that rental calculation in the development stage should include theland value added tax plus the necessary maintenance fee; in the operation period, rentals are 60% of theamount based on the National Building Land Rental Standard plus land value tax, value-added tax andthe necessary maintenance fees.
During the 50 years beginning from the initial operation date of CAL Park to the end of the construction
period, CAL Park should pay royalties based on the operating revenue estimated in the financial plan of
its investment execution proposal. If the sales and business tax declared and filed by a business entity
for a single year exceeds 10% of the operating revenue as estimated in the financial plan in its
investment execution proposal, CAL Park should pay additional royalties at 10% of this excess.
CAL Park should submit the asset transfer plan within five years before the expiry date of the charteredoperation period, begin the negotiation of the asset transfer contract, and complete the assignment nolater than three years before the expiry date of the chartered period. If CAA decides not to keep thebuilding and equipment on the base area, CAL Park should remove all related building and equipment
within three months after the expiry date.
c. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery periods of the eleven aircraft are from 2024 to 2026. As of September
30, 2022, the list price has been paid in the amount of US$41,496 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 September 30, 2022, two out of the four backup engines have beendelivered. The Group also signed related aircraft lease agreement, please refer to Note 21.
d. In July and August 2019, the Company signed a contract with Boeing Company to purchase three 777F
aircraft and exercised the option to purchase three 777F aircraft. In January 2022, the Company signed
an additional contract with Boeing Company to purchase another four 777F aircraft. The expected
delivery periods are from 2023 to 2024. The total list price of the ten aircraft is US$3,905,142 thousand.
As of September 30, 2022, four out of the ten aircraft have been delivered. The total list price of theremaining six aircraft is US$2,411,351 thousand, and the list price has been paid in the amount of
US$482,270 thousand (recognized as prepayments for aircraft).
e. On September 28, 2022, the Company signed a contract with the Boeing Company to purchase sixteen
787-9 aircraft and the option to purchase eight 787-9 aircraft. The expected delivery periods are from2025 to 2027. The total list price of the sixteen aircraft is US$5,868,695 thousand, and the list price ofthe option to purchase eight aircraft is US$3,039,894 thousand. As of September 30, 2022, theCompany has not yet paid the above amounts.

- 57 -

f. In October 2019, Tigerair Taiwan Co., Ltd. signed a contract with Airbus S.A.S. to purchase sevenA320neo aircraft and an option to purchase two A320neo aircraft. The total list price of the sevenaircraft is US$729,746 thousand, and the list price of the option to purchase two aircraft is US$208,499
thousand. The expected delivery period of the seven aircraft ranges from 2025 to 2027. As of
September 30, 2022, the list price has been paid in the amount of US$18,549 thousand (recognized as
prepayments for aircraft). In addition, in December 2019, Tigerair Taiwan Co., Ltd. signed a contract
with International Aero Engines Company to purchase two backup engines of A320neo aircraft. The
total list price of the two engines is US$27,345 thousand. As of September 30, 2022, one out of the two
backup engines has been delivered, and the other engine was expected to be delivered in 2025. The
Group also signed related aircraft lease agreement, please refer to Note 21.

35. IMPACT OF COVID-19
Since the outbreak of the COVID-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have travel restrictions. Because the numberof inbound and outbound passengers has decreased significantly, the Group adjusts the proportion between
passenger aircraft and cargo aircraft used in operations to comply with the government’s epidemic
prevention policy and cater to market demand. The Company reduces the frequency of passenger air
services that have been severely affected, uses the passenger aircraft to support the cargo flight arrangement
and expands the function of all-cargo aircraft to maximize the opportunities from air cargo business. Since
March 2020, cargo has become the main source of revenue for the Group.
In mid-June 2022, under the situation of government to ease the limits, the peak season of summer
vacation, and most countries gradually removed their travel restrictions, the demand in passenger aircraftcontinues to recover.
The Group continues to adjust the response measures according to the situation. In addition, to ensure theadequate liquidity, the Group also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Group’s policies to control spending include suspension of non-urgent capital expenditures, reduction inand postponement of payments.
For the nine months ended September 30, 2022 and 2021, because of the COVID-19 pandemic, the Group
received subsidies of $936,141 thousand and $1,195,340 thousand, respectively, for airport landing fees andparking fees, etc. The subsidies for housing and land rental, and salary and interest expenses were $692,160
thousand and $823,449 thousand, respectively. These subsidies were recognized as other income or
deduction from other expenses. The Group has obtained relief loan from the government. Refer to Note 19
for details on the amount of loan and its allocation.

- 58 -

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currency ofentities in the Group, and the exchange rates between foreign currencies and respective functional
currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as
follows:(In Thousands of Foreign Currencies)
September 30, 2022
Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
Amount

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

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

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

Exchange Rate

Carrying
AmountFinancial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB
December 31, 2021
Foreign
Currencies(In Thousands)
Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

- 59 -

1,123,112
24,700551,856
5,082,118
768,075

27.700831.44653.54990.24074.3459$ 31,111,094
776,718
1,959,032
1,223,259
3,337,976(Continued)

Foreign
Currencies(In Thousands)

Exchange Rate

Carrying
AmountFinancial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

$

2,116,761
3,724
65,6412,810,820
112,02527.700831.44653.54990.24074.3459$ 58,635,978117,119
233,020
676,564
486,852(Concluded)

September 30, 2021
Foreign
Currencies(In Thousands)

Exchange Rate

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

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

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

27.8552
32.3625
3.57780.24904.3066

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

Financial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

For the three months ended September 30, 2022 and 2021, the Group’s net foreign exchange gains (losses)
were $259,989 thousand and $(17,152) thousand, respectively, and for the nine months ended September
30, 2022 and 2021, the Group’s net foreign exchange gains (losses) were $464,940 thousand and $(19,211)
thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant
foreign currency due to the variety of the foreign currency transactions and functional currencies of theentities in the Group.

37. ADDITIONAL DISCLOSURESa. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided to others: Table 1 (attached)2) Endorsements/guarantees provided: Table 2 (attached)- 60 -

3) Marketable securities held: Table 3 (attached)4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: None
5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in
capital: None
6) Disposals of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital:
None7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 4 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 5 (attached)9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 6 (attached)10) Trading in derivative instruments (Notes 31)
b. Investments on investments in mainland China: Table 7 (attached)c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 8 (attached)d. Information of major shareholders: Table 9 (attached)

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

- 61 -

For the nine months ended September 30, 2022 and 2021, financial information of reportable segments islisted below:
For the Nine Months Ended September 30, 2022
Air
Adjustments
Transportation
Othersand Elimination
Total
Operating revenue$ 108,769,786$

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

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

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

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

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

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

Total assets$ 283,483,366
For the Nine Months Ended September 30, 2021
Air
Adjustments
Transportation
Othersand Elimination
Total

Operating revenue$ 88,752,596$

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

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

5,052,803$

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

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

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

Total assets$ 275,886,836- 62 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)No.

Lender1

Cal-Dynasty International

Borrower

Financial
Statement
Account

Dynasty Hotel of Notes receivable
Hawaii, Inc.

RelatedParty

HighestBalance for
the PeriodEndingBalance

ActualBorrowingAmountInterest Rate
(%)

Yes

$ 111,111$ 111,111$ 111,111

2.25

Nature ofFinancing

Short-term
financingfacility isnecessary

Note 1:

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

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

- 63 -

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

Allowance for
Impairment
Loss
$

-

Collateral
Item

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 161,895$ 323,790

NoteTABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENTS/GUARANTEES PROVIDEDFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Endorsee/Guarantee
Endorser/
Guarantor

No.

0

Name

China Airlines
Cal Park(the “Company”) Tigerair Taiwan Ltd.

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Nature of Relationship100% owned subsidiary
82.27% owned subsidiary bydirect and indirect
holdings
100% owned subsidiary

Limits on
Maximum
Endorsement/
AmountGuarantee
Endorsed/
Given on Behalf Guarantee atof Each Party the End of the(Note 1)
PeriodOutstanding
Endorsement/
Guarantee atthe End of the
PeriodRatio ofAccumulatedAggregate
Endorsement/ Endorsement/ Endorsement/
AmountEndorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Actual AmountEndorsed/
Guarantee to
Guarantee
Given by Parent
Given byGiven on Behalf
Borrowed
Guaranteed by
Net Equity in
Limit
on Behalf of
Subsidiaries on of Companies in
Collateral
Latest Financial(Note 2)
Subsidiaries Behalf of Parent Mainland China
Statement (%)$ 13,941,456
13,941,456$ 3,850,000
2,968,635$ 3,850,000
2,968,635$ 1,444,200
296,197

13,941,456

2,000,000

2,000,000

1,517,000$

Note 1:

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

- 64 -

-

5.52
4.26

$ 34,853,640
34,853,640

Yes
Yes

No
No

No
No

-

2.87

34,853,640

Yes

No

No

TABLE 3

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELDSEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name

Marketable Securities Type and Issuer/Name

China Airlines (the “Company”) Shares
Everest Investment Holdings Ltd. - ordinary shares
Everest Investment Holdings Ltd. - preferred shares
Chung Hua Express Co.
China Aircraft Services Limited
The Grand Hi Lai Hotel
Mandarin Airlines

Cal-Asia Investment

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

Relationshipwith theHoldingCompany-

Financial Statement AccountSeptember 30, 2022
Percentage ofCarrying
Ownership
Amount(%)

Number of
Shares/Units

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

1,359,368
135,937
1,100,000
28,400,000
4,021

Parent company Financial assets at FVTOCI - non-current$

18,776
1,878
38,078
-

13.59
11.00
4.00
0.02

2,074,628

40,766-

Market Valueor Net Asset
Value

$

Note

20,65338,078-Note 1--

40,766-

12,166

2.59
5.45

12,166Note 2
Note 2-

24,588----Financial assets at FVTPL - current
Financial assets at FVTOCI - non-current

Beneficiary certificates
FSITC Money Market Fund-

Financial assets at FVTPL - current

136,067

24,588

SharesTransAsia Airways-

Financial assets at FVTPL - current

2,277,786-

Dynasty Aerotech International
Corp.

Beneficiary certificates
Taishin 1699 Money Market Fund-

Financial assets at FVTPL - current

349,523

4,798

-

4,798

-

Kaohsiung Catering Services

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

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

5,407,832
1,106,807

86,713
15,193-86,713
15,193-Government bondTreasury Bill (Philippines government bond)-Financial assets at amortized cost - current-

551

Not applicable

551-

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Tiger Taiwan Co., Ltd.

Note 1: The subsidiary’s net asset value was $20,653 thousand, which included ordinary shares and preference shares as of September 30, 2022.
Note 2: The company does not issue shares because it is a limited company.
Note 3: The table only listed financial assets that are in accordance with IFRS 9.

- 65 -

0.40

TABLE 4

CHINA AIRLINES, LTD. AND SUBSIDIARIESTOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.

Mandarin Airlines

Related Party

Nature of Relationship

Purchase/
Sale

Amount% of
Total

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

Abnormal Transaction
Payment Terms

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

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

Purchase
Purchase
Purchase
Purchase
Purchase
Purchase$ 463,639
173,495
307,573
833,443
271,959
296,165

0.49
0.18
0.33
0.89
0.29
0.32

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

Subsidiary
Subsidiary

Purchase
Purchase

147,676
182,688

0.16
0.19

Subsidiary
Subsidiary
Subsidiary

Sales
Sales
Sales

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Same parent company
Same parent company

Purchase
Purchase

Unit Price--$ (42,686)(160,118)(203,873)(53,937)(34,017)(2.51)(9.43)(12.01)(3.18)(2.00)-

2 months
1 months--(1,451)(10,627)(0.09)(0.63)-(160,490)(178,491)(148,428)(0.15) 2 months(0.17) 1 months(0.14) 15 days--

83,60722,156
5,831

0.68
0.19
0.05

-

399,149
154,824

12.50
4.85

-

-

(45,175)(19,896)(8.44)(3.72)-- 66 -

1 months
1 months$

Note

TABLE 5

CHINA AIRLINES, LTD. AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALSEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Overdue
Company Name

Related Party

Nature of RelationshipEnding Balance

Turnover Rate

Taoyuan International Airport Service

China Airlines

Parent company$ 203,873

4.89

China Pacific Catering Services

China Airlines

Parent company

160,118

3.78

Note:

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

- 67 -

Action Taken

Amounts Received
in Subsequent
Period--$ 122,257--

46,899Allowance for
Impairment Loss$-TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company

China Airlines, Ltd.

Investee Company

Cal Park
Mandarin Airlines
Taiwan Air Cargo Terminal
Cal-Dynasty International

Location

Main Businesses and Products

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

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

Original Investment Amount
September 30, December 31,
2022
2021

As of September 30, 2022
Number ofPercentage ofCarrying
SharesOwnership
AmountNet Income(Loss) of theInvestee$

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

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

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

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

51.00
49.00
100.00
93.93

HK$

HK$

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

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

77,27053,970 Note 4(589,298) Notes 1 and 4
296,396
38,698 Note 2416,852
441,171560,063
172,853(228,232)(352,093)
32,055(18,994)(116,399)(172,525)
32,055(17,841)

4.00
47.35
53.67
100.0055.00

94,792355,348
326,647
91,977(98,482)(41,840)(9,419)(52,545)- Note 6(46,631) (25,801) Note 5(8,595) Note 4(28,900)-

77,270100.00131,794

28,57728,576 Note 4

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

160
250,000
313,631,656
70,000,000

20.00
25.00
78.41
100.007,902
1,034,804
486,923

8,889(2,460,221)(70,995)

2,222(1,928,982) Note 4(70,995)-

37,97537,975

3,797,500

49.00

13,864(30,554)(14,971)-

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

3.86
1.08

50,9192,156(2,460,221)(98,482)(94,921)(1,061)-

77,270
JPY

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

JPY

1,710,137
1,200,247
1,729,048
1,382,414

Note

23,747 $(606,060)
548,859
38,81258,00012,289383,846
465,000
137,500$

Share of Profit(Loss)

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Taipei, Taiwan
Taipei, Taiwan

Air transportation and maintenance of aircraft
Airport services

Cal-Asia Investment

Eastern United International Logistics

Hong Kong

Forwarding and storage of air cargo

HK$

3,329

HK$

3,329

1,050,000

35.00

64,21930,34010,619Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

US$

5,877

-

100.00437,795

20,776

20,776 Note 3

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,875

-

Kaohsiung Catering Services Delica International Co., Ltd.

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

Note 2:

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

Note 3:

The Company does not issue shares because it is a limited company.

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

Note 5:The difference is due to acquisition.

Note 6:

The Group lost significant influence over it during the year.

10,200- 68 ----TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESINVESTMENTS IN MAINLAND CHINAFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars in Thousands, Unless Stated Otherwise)

China Airlines

Investee Company Name

Accumulated
Outward
Remittance forMain Businesses andMethod ofPaid-in Capital
Investment
Products
Investment
from Taiwan asof January 1,
2022

Remittance of Funds

Outward

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

Forwarding and storage $ 1,134,552
of air cargo(RMB 254,480)

Indirect(Note 1)$
132,888 $(US$4,186)

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

Forwarding and storage
62,416of air cargo(RMB 14,000)

Indirect(Note 1)

61,824
1,947)-(US$

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,637,778
maintenance services (US$ 83,090)

Indirect(Note 1)

68,292
2,151)-(US$

Taikoo Spirit Aerospace
Systems (Jinjang)Composite material

Indirect(Note 1)

20,190
636)

-

(US$

(US$

370,254
11,663)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof
September 30,
2022

-

$

-

61,824
91,137
1,947) (RMB 20,640)

14.00

(US$

68,292
2,151)

-

2.59

-

(US$

20,190
636)

-

5.45

-

(US$

-

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

$283,194 (US$8,920)$684,862 (Note 3)$43,317,267 (Note 4)

Investment
Gain (Loss)

14.00

-

Investment Amounts
Authorized by Investment Commission,
MOEA

Net Income(Loss) of
the Investee

Accumulated
Carrying
Repatriation ofAmountInvestment
as ofIncome as of
September 30,
September 30,
2022
2022

$
132,888 $
60,668(US$
4,186) (RMB 13,740)-

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2022

% Ownershipof Direct orIndirect
Investment

$
(RMB

(RMB

8,025 $
272,344 $112,272
1,924) (RMB 61,086) (US$3,537)(Note 2)
12,726
166,171
2,890) (RMB 37,271) (US$

-

(RMB

49,541
1,561)(Note 2)-

12,1662,729) (US$11,318357)(Continued)- 69 -

Taiwan Airport Services

Investee Company

Accumulated
Outward
Remittance forMain Businesses andMethod ofPaid-in Capital
Investment
Products
Investment
from Taiwan asof January 1,
2022

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

Forwarding and storage $ 1,134,552
of air cargo(RMB 254,480)

Indirect(Note 5)$
127,567 $(US$4,018)

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

Forwarding and storage
62,416of air cargo(RMB 14,000)

Indirect(Note 5)

(US$

Remittance of Funds

Outward61,167
1,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan
as of
September 30,
2022

Inward

-

$

-

-

14

61,167
91,137
1,927) (RMB 20,640)

14

(US$

Investment Amounts Authorized by
Investment Commission, MOEA

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

$188,734 (US$5,945)$188,734 (US$5,945)$120,117 (Note 4)% Ownershipof Direct orIndirect
Investment$
127,567 $
60,668(US$
4,018) (RMB 13,740)-

Accumulated Outward Remittance forInvestment in Mainland China as of
September 30, 2022

Net Income(Loss) of theInvestee

Investment
Income (Loss)

Accumulated
Carrying
Repatriation ofAmount as ofInvestment
September 30, Income as of
2022
September 30,
2022

$
(RMB

8,494 $
270,666 $
144,163
1,924) (RMB 60,710) (US$4,541)(RMB

12,759166,268
2,890) (RMB 37,294) (US$66,407
2,092)

Note 1: The Company invested in Cal-Asia Investment, which invested in a company located in mainland China.
Note 2: As of September 30, 2022, the inward remittance of earnings amounted to US$3,536,561 and US$1,560,538.
Note 3: The amounts comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.
Note 4: The limit stated in the Investment Commission’s regulation, “The Review Principle of Investment or Technical Cooperation in mainland China,” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.
Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are translated at period-end rates and the gains (losses) are converted at the average of the period-end rates of refer for the reporting period.
(Concluded)- 70 -TABLE 8

CHINA AIRLINES, LTD. AND SUBSIDIARIES
BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Thousands of New Taiwan Dollars)Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account0

China Airlines, Ltd.

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

a
a
a
a
a
a
a
a
a
a

Other operating cost
Cargo revenue
Other operating revenue
Other operating revenue
Airport service cost
Airport service cost
Other operating cost
Other operating costAccounts payable - related parties
Operating cost

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

2

Mandarin Airlines

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

3

Taoyuan International Airport Services

4

Amount(Note 2)

Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets$ 147,676
146,690
129,353
178,491
833,443
271,959
463,639
173,495
203,873
182,688

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

0.13
0.13
0.12
0.16
0.75
0.24
0.41
0.16
0.07
0.16

Sales revenue

463,639

The same as ordinary transactions

0.41

b
c
c

Operating expense
Airport service cost
Operating expense

129,353
154,824
397,879

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

0.12
0.14
0.36

China Airlines, Ltd.
China Airlines, Ltd.

bb

Airport service revenue
Accounts receivable - related parties

833,443
203,873

The same as ordinary transactions
The same as ordinary transactions

0.75
0.07

Dynasty Aerotech International Corp.

China Airlines, Ltd.

b

Operating revenue

271,959

The same as ordinary transactions

0.24

5

Cal Park

China Airlines, Ltd.

b

Operating revenue

173,495

The same as ordinary transactions

0.16

6

Global Sky Express

China Airlines, Ltd.

b

Operating cost

146,690

The same as ordinary transactions

0.13

7

Tigerair Taiwan Co., Ltd.

China Airlines, Ltd.
Mandarin AirlinesbcOperating expense
Operating revenue

178,491
397,879

The same as ordinary transactions
The same as ordinary transactions

0.16
0.36

8

Taiwan Airport Services

Mandarin Airlinesc

Operating revenue

154,824

The same as ordinary transactions

0.14

9

Cal Hotel Co., Ltd.

China Airlines, Ltd.

b

Operating revenue

147,676

The same as ordinary transactions

0.13

10

Taiwan Aircraft Maintenance andEngineering Co., Ltd.

China Airlines, Ltd.

b

Operating revenue

182,688

The same as ordinary transactions

0.16(Continued)- 71 -

Note 1: The three directional types for transactions by business relationship between China Airlines, Ltd. and its subsidiaries are as follows:a. Parent to subsidiaries.
b. Subsidiaries to parent.
c. Subsidiaries to subsidiaries.
Note 2: Intercompany transactions were eliminated in the consolidated financial statements.
Note 3: The Company only discloses transaction amounts or balances more than $100,000 thousand.
(Concluded)- 72 -TABLE 9

CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION OF MAJOR STOCKHOLDERSSEPTEMBER 30, 2022

SharesNumber ofPercentage ofSharesOwnership (%)

Name of Major Shareholder

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

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

31.05
8.64

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 andpreference shares held by shareholders with ownership of 5% or greater, that have been
issued without physical registration (including treasury shares) by the Company as of thelast business day for the current quarter. The share capital in the consolidated financial
statements may differ from the actual number of shares that have 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 the individual 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, the shareholdings include shares held by shareholders andthose delivered to the trust over which shareholders have rights to determine the use oftrust property. For information relating to insider shareholding declaration, please refer toMarket Observation Post System.

- 73 -