2023

CHINA AIRLINES
Annual Report

CONTENTS
2023 CHINA AIRLINES ANNUAL REPORT
02		

Financial Highlights

05		

A Message from the Chairman

06		

A Message from the President07		

Board of Directors

09		

2023 Operational Overview and 2024 Outlook

		 Robust Operations and Breaking New Ground		Providing Exceptional Traveler Experiences through Innovativeand Friendly Services
		 Enhancing Digital Services
		 Group Consolidation for Increased Synergy		Building a Friendly Workplace through Inclusive Talent Development
		Promoting Social Sustainability to Co-Create the Cycle of Goodness

45		 Demonstrating Commitment to Flight Safety50		

Environmental Protection Trends

54		

China Airlines' Glory59		

Financial Status

		 Financial and Operational Analysis
		 2023 Financial Statements

2023 CHINA AIRLINESANNUAL REPORT

Financial Highlights

Financial andOperational
Analysis

Financial
Highlights

A Message fromthe Chairman

Financial Statistics

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
Status

Unit

2023

2022

% Change( Million TWD )161,676

141,070

14.61%

Passenger Revenue( Million TWD )99,05920,479383.70%Cargo Revenue( Million TWD )56,852

115,864-50.93%

Other Revenue( Million TWD )

5,765

4,727

21.97%

Operating Expenses( Million TWD )155,081

135,153

14.75%

Operating Income( Million TWD )

6,594

5,917

11.45%Net Income( Million TWD )

6,819

2,860

138.45%

Operating Margin

(%)

4.08

4.19

-0.11ppt

Net Margin

(%)

4.22

2.03

2.19ppt

Operating Revenue

Balance Sheet
Total Assets( Million TWD )264,966

268,092-1.17%

Total Liabilities( Million TWD )190,375

198,092-3.90%

Equity( Million TWD )74,59170,0006.56%

Total Liabilities/ Total Assets

(%)

71.85

73.89

-2.04ppt

Return on Assets (ROA)

(%)

3.23

1.72

1.51ppt

Return on Equity (ROE)

(%)

9.43

3.97

5.46ppt

Book Value per Share( TWD )

12.32

11.64

5.84%

02

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Operating Statistics

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
Status

Unit

2023

2022

% Change

Passengers Carried( 1,000 )

9,597

1,503

538.68%Passenger Capacity( Million ASK )43,237

14,879190.59%Passenger Traffic( Million RPK )33,8086,583

413.53%

(%)

78.19

44.25

33.94PPT

Passenger Yield( TWD/RPK )

2.93

3.11

-5.79%

Cargo Carried( 1,000 kg )721,226

932,812-22.68%Cargo Capacity( Million FATK )

7,920

8,265

-4.18%

Cargo Traffic( Million FRTK )

5,337

6,362

-16.11%

(%)

67.39

76.97

-9.58PPT

Cargo Yield( TWD/FRTK )

10.65

18.21

-41.52%Overall Capacity( Million ATK )11,812

9,605

22.98%Overall Traffic( Million RTK )

8,380

6,954

20.50%Overall Yield( TWD/RTK )

19.29

20.29

-4.93%Overall Unit Cost

( TWD/ATK )

13.13

14.07

-6.68%

(%)

68.05

69.37

-1.32PPT

Passenger Load Factor

Cargo Load Factor

Break Even Load Factor

032023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Employee Productivity

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
Status

Unit

2023

2022

% Change

Revenue per Employee( 1,000TWD/Person )14,65913,08012.07%

Capacity per Employee( ATK/Person )1,070,962

890,548

20.26%

Traffic per Employee( RTK/Person )759,796644,80117.83%Notes
RPK

Revenue Passenger Kilometers Number of revenue passengers carried multiplied by distance flown

ASK

Available Seat Kilometers

Passenger Load Factor

Number of seats available for sale multiplied by distance flown
Revenue Passenger Kilometers divided by Available Seat Kilometers

FRTK

Freight Revenue Tonne
Kilometers

Number of revenue tonnes of freight carrier multiplied by distance flown

FATK

Freight Available Tonne
Kilometers

Number of tonnes of capacity available to carry freight multiplied by distance flown

Cargo Load Factor

Freight Revenue Tonne Kilometers divided by Freight Available Tonne Kilometers

RTK

Revenue Tonne Kilometers

Revenue load (passengers and freight) in tonnes multiplied by distance flown

ATK

Available Tonne Kilometers

Number of tonnes of capacity available to carry revenue load (passengers and freight)
multiplied by distance flown04

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusA Message from the Chairman

Tracking the Market for Steady Growth and Expansion
The global airline industry experienced a rebound in travel in 2023. China Airlines (hereafter referred to as “CAL”)
adopted an agile business strategy, responding to supply and demand in market to achieve record revenues.
Our excellent business performance over the past year was not by chance. A multitude of factors including
geopolitical unrest, disturbances in global manufacturing, and shrinking end-user demand were at play. Aircraft
manufacturers delayed aircraft delivery times as their supply chains faced continued pressure. Nevertheless, bystaying true to our strategies on aviation safety, environmental sustainability, and revenue management, CAL
and our employees safeguarded our business development and profitability.
CAL is continuing to introduce new aircraft and is planning to phase out older aircraft in order to improve theoverall yield of our fleet, lower fuel costs and strengthen our financial constitution. At the same time, we arecontinuing to improve our products and services by optimizing network structure, schedule, and cabin facilities,
by boosting our business performance in passenger and freight, and by increasing our overall competitivenessin the industry. In the future, new technologies and digital upgrades will be introduced to enhance our operating
efficiency and strengthen our business performance. We will also maintain the service capacity of stations
around the world, invest in cultivating talent, and enhance our organizational competitiveness to prepare for our
future growth and development.
Our focus on sustainability continues to drive Environmental Protection, Social Responsibility, and Corporate
Governance (ESG) practices at CAL. Our accomplishments have received widespread recognition. In 2023,
CAL became the only airline to be named a constituent stock in the Dow Jones Sustainability Indices (DJSI)- Emerging Markets” for eight consecutive years. We were included in the UK FTSE4Good Index Series forthe eighth time, were named winner of Taiwan Corporate Sustainability Awards (TCSA) for ten straight years,
received the “The Most Prestigious Sustainability Awards - Top Ten Domestic Companies Award” and won the
Global Corporate Sustainability Awards (GCSA) for the fifth straight year.
2024 is shaping up to be another year filled with economic and geopolitical uncertainties. CAL will monitorchanges in demand within the passenger-freight market and leverage our exceptional management flexibility andagile operations to have all the necessary resources in place. At the same time, we will enforce safe practices,boost product competitiveness, provide quality services, and expand our initiatives in every ESG aspect to ensurethat we become a leader in sustainable development in the highly competitive global airline industry.

Chairman of China Airlines

Hsieh Su-Chien05

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusA Message from the President

Next-Generation Fleet Ushers in New Era
The CAL Group reported consolidated revenues of TWD184.819 billion in 2023. CAL itself carried morethan 9.59 million passengers for a total passenger load factor of 78.2%. By adding more services to key
destinations, resuming flights to Chiang Mai, Rome, and Fuzhou, and opening up new destinations suchas Da Nang, Prague, and Kumamoto, we have provided travelers with greater flexibility in their itineraries
and have met the demand from a red-hot passenger market. Cargo services achieved 5,337 million FRTK(Freight Revenue Ton Kilometers) and a cargo load factor of 67.4%. Revenue was maximized throughspecial projects and medium and long-term custom charter flights, by contracting for high-yield cargosources such as semiconductors and cold-chain logistics, and by collaborating on code-share flights.
CAL products and services continue to win recognition for global rating bodies including “Best Airline inNorth Asia” from Global Traveler for the tenth time, being named an APEX Five Star Global Airline for eight
consecutive years and being awarded “Design Airline of the Year - Asia” by TheDesignAir.
In 2024, CAL will introduce the A321neo passenger aircraft and 777F freighter. Deliveries of the 787 passenger
aircraft will start in 2025. Expanding the size of our next-generation fleet and making sustainability, fuel-efficiency,
and environmental protection the key pillars of our future fleet will assist in increasing our business performance.
Traveler expectations will be progressively raised through upgrades to cabin planning and catering services aswell. Due to the strong outlook in the international passenger market, CAL is increasing flights through Asia-Pacificand the world. Particular emphasis is being placed on the development of the transit passenger market. The
central geographic location of Taiwan will be used to build a transit hub and a more connected network. On the
cargo side, CAL will consolidate existing markets as we continue to aggressively develop potential markets. Our
comprehensive network and extensive experience will be used to transport high-value cargo such as AI servers,
5G, autotronics, semiconductors, and wafer machines etc. E-commerce cargo will also be actively targeted withadditional scheduled services and charter flights arranged as necessary to maximize business yield.
Looking ahead in 2024, CAL will continue to provide travelers with a safe and comfortable journey. The launch of
new destinations, resumption of past routes, greater code-sharing, and a proactive strategy will all be harnessedto build a more profitable network. Special projects and medium-to-long-term customer charter flights will
drum up new business with an emphasis on transnational e-commerce to boost our overall revenues. Yield
management and effective dispatching of carrying capacity will be maintained to maximize returns. Planningwork on a prospective fleet will help assess development potential and meet future market demand. The additionof even more energy-efficient aircraft will solidify the future sustainability and profitability of CAL.
President of China Airlines

Kao Shing-Hwang

06

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusBoard ofDirectors

Chairman

Director

Director

Director

Director

Director

Hsieh Su-Chien

Kao Shing-Hwang

Charles C. Y. Chen

Ting, Kwang-Hung

Chen, Han-Ming

Chen, Maun-Jen

Chairman, China

President, China

Chairman, Eyon Holding

Group Chairman, Phu

Chairman, Tigerair

Vice Chairman, Everpar

Airlines Ltd.

Airlines Ltd.

GroupMy Hung Holdings

Taiwan Co., Ltd.

Enterprise Corporation

Group

Chairman, CAL Park

Chairman, Mandarin

Vice Chairman, Taiwan

Chairman, Prime

Chairman, Hi Safe

Co., Ltd.

Airlines, Ltd.

Air Cargo Terminal Ltd.

Development Co., Ltd.

Technologies Co., Ltd.

Chairman, CAL Hotel

Director, CAL Hotel Co.,

Vice Chairman, Taian

Director, Chyn-Tay

Chairman, EMPRO

Co., Ltd.

Ltd.

Insurance Co., Ltd.

Bearing Co., Ltd.

Environment Co., Ltd.

Chairman, CAL-Asia

Director, CAL-Asia

Director, Shihlin Paper

Board of Director,

President, Taiwan

Investment Inc.

Investment Inc.

Corporation

Taiwan-Hong Kong

Association of Tsai Ing-

Chairman, CAL-Dynasty

Director and President,

Chairman, Wan Hai

Economic and Cultural

wen’s Friends

International, Inc.

CAL Park Co., Ltd.

International Pte. Ltd.

Director, CAL-Dynasty

Vice Chairman, Wan

International, Inc.

Hai Lines (Singapore)

Cooperation Council

Vice Director, The Golf
Association of R.O.C.

Pte. Ltd.
President, Cheng-Yung
Foundation07

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusDirector

Director

Director

Director

Independent Director

Independent Director

Independent Director

Wei, Yung-Yeh

Chao, Kang

Chang, Hui-Chuan (Connie)

Wang, Shih-Szu

Huang, Hsieh-Hsing

Chang, Hsieh Gen-Sen

Hwang, Chin-Yeong

Member of Council,

Member of Council,

Director, TaiMed

Political Deputy Minister,

Chairman, Audit

Chairnan, Risk

Chairman, Compensation

China Airlines

China Airlines

Biologics Inc.

Ministry of Culture

Committee, China

Committee, China

Committee,

Employees Union

Employees Union

Airlines Ltd.

Airlines Ltd.

China Airlines Ltd.

Foreman, Line

HQ President andMaintenanceFounder, Chungsun

Department,

Prime Certified Public

Engineering &Accountants

Maintenance Division,
China Airlines

Honorary Director,
Taiwan Provincial CPA
Association
Independent Director,
TECO Electric andMachinery Co., Ltd.
Director, CPA
Associations R.O.C.
(Taiwan)Chairman, Digitimes Inc.
Director, Monte Jade
Science and Technology
Association
Independent Director,
Alltek Technology Corp.
Chairman, IC
Broadcasting Company
LimitedAdjunct Professor
for National Taiwan
University, National
Chiao Tung University
and Feng Chia University
082023 CHINA AIRLINESANNUAL REPORT2023 Operational Overview and 2024 Outlook

Robust Operations andBreaking New GroundIn 2023, the global airline industry showed signs of recovery as traveler numbers began to rise. While the pace ofrecovery differed among regions, the overall financial health of the airline industry was restored. Despite geopoliticalturmoil and increased operating costs due to investments in sustainable assets, CAL worked to track market
demand and restore flight density. Optimizing the use of passenger aircraft’s belly cargo holds and freighters set
new revenue records with passenger revenue exceeding TWD99 billion and cargo revenue reaching TWD56.8 billion.
CAL optimized passenger-cargo routes and flight configurations, enhanced the competitiveness of products
and services, emphasized yield management, and made effective use of existing carrying capacity to boost
revenues. By increasing revenue and cutting costs, CAL made effective use of management resources to improve
efficiency and business performance. Maintenance capabilities were strengthened to enhance our ability tosustain GTF engines and generate new revenue. CAL leveraged our competitive advantage in operations andtalent to strengthen our corporate culture, focus on our core airlines, and maintain our profitability. The global
airline industry is set to enter a period of mild recovery in 2024. Fares are expected to remain high, helping CAL
maintain its revenue growth. At the same time, delays in aircraft delivery by manufacturers and the industry push
on net zero emissions will put pressure on future operating costs.
09

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

Economy is Stabilizing Amidst Strong
Passenger Demand
The International Monetary Fund (IMF) reported in January that the
GDP of the global economy is expected to grow by 3.1% in 2024.
Despite economic growth in the U.S., large emerging markets anddeveloping economic entities, global GDP forecasts remain below
the average growth rate of 3.8% between 2000 and 2019. In many
regions, inflation is dropping more quickly than expected andglobal inflation is expected to drop to 5.8% in 2024. A tighteningof monetary policies and steady growth means the economic
risks facing global growth have stabilized. Nations are expected toadopt looser fiscal policies in the future to stimulate a growth inproductivity. Geopolitical conflict may however lead to volatile prices
for crude oil and other commodities, and the potential of inflationary
risk may slow the pace of economic recovery.

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Freight Market Overview and Outlook
The airline industry carried 117 million tonnes of freight in 2023, similar to that of 2022. Freight
volumes in all regions showed signs of growth compared to the previous year thanks to the
dynamic development of global e-commerce. The Asia-Pacific region in particular is seeing a
rapid growth in Cargo Tonnes Kilometer (CTK). Available Cargo Tonnes Kilometer (ACTK) in 2023
reached 49.8 billion Tonne Kilometers and global air cargo revenue amounted to USD134.7 billion.
The recovery in passenger traffic will also increase overall carrying capacity from belly cargo.
The outlook for 2024 suggests an easing in global inflation with moderate economic growth,
although domestic economic issues in China may eventually impact the global economic cycle.
International trade has been affected even as belly cargo capacity continues to grow. The increasein supply suggests that yields will see further correction to pre-2019 levels. The closure of air
spaces due to the Russo-Ukrainian War and Israeli-Gaza conflict is also having an effect on routes
and is driving an increase in operating costs. Global cargo volume is expected to reach 61 million
tonnes in 2024 and revenue from cargo will drop to USD111 billion.

Passenger Market Overview and Outlook
The International Air Transport Association (IATA) report indicated that
Revenue Passenger Kilometer (RPK) had recovered to 94.1% of prepandemic levels in 2023. The lifting of border restrictions aided recovery
in the Asia-Pacific region and China in particular saw a strong demand
from the domestic market as well as steady growth on internationalroutes. The number of US-China flights has been slow to recover,
however, even though service on international routes to Europe, Australia,
and Asia are all improving steadily. In 2023, global passenger revenues
reached USD642 billion with a passenger load factor of 82%.
The outlook for 2024 suggests steady global economic growth thatshould translate into passenger revenue. The global airline industry is
expected to see profits of USD25.7 billion on approximately 4.7 billion
passenger trips. Passenger load factor should reach 82.6% and be on
par with 2019. Local airlines are now actively jockeying for a position
as they expand their passenger business. Fleet renewal plans willcontinue with the introduction of next-generation passenger aircraft toimprove overall operational efficiency and set new revenue records.
10

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Continued Renewal and Improvement of Fleet Operating Efficiency
CAL continues to move ahead on our aircraft introduction and replacement program
to support our long-term fleet and network development strategies and improve ouroverall operating efficiency. At the end of 2023, the CAL fleet consisted of 82 aircraft –62 passenger aircraft and 20 freighters – with an average fleet age of 10.1 years. The
revitalization of the short-haul fleet will continue while the introduction of the 777F freighter
will boost our operating efficiency and competitive advantages in the market.
As part of our commitment to the quality of cabin services, the new 787 wide-body passenger
aircraft was purchased by CAL with the first aircraft scheduled for delivery in 2025 Q1. The
new fleet will feature the latest cabin seating configuration, next-generation high-definition
personal infotainment system and onboard network. All cabin equipment will be customized
to take advantage of the most advanced specifications and the latest trends in the industry.
We are gradually standardizing the level of service and cabin equipment across all CAL fleetsin order to provide travelers with a more comfortable journey and progressively boost thecompetitiveness of in-flight services. Fleet revitalization and network upgrades will create agreater operating advantage and more opportunities for profitability.
CAL has introduced ten new A321neo aircraft since 2023. The A321neo is configured for
180 seats in two classes, including twelve fully flat Business Class seating and 168 of the
new more spacious Economy Class seats. Facilities include the latest in-flight infotainment
system, industry-leading individual 4K displays, and support for Bluetooth headphones.
Travelers can use their own Bluetooth headphones to enjoy audio-visual entertainment
programs. The aircraft is also equipped with a high-speed Internet to support network
roaming during the flight. The A321neo cabin was designed in conjunction with leadingindustry design consultants. The design, inspired by Asian aesthetics, incorporates the local
cultural heritage to establish a deep bond that resonates with travelers.

Type

777-300ER
passenger aircraft

A350-900
passenger aircraft

A330-300
passenger aircraft

737-800
passenger aircraft

A321neopassenger aircraft

747-400F
cargo aircraft

777F cargo aircraft

Number

10

14

18

10

10

13

7

Total

82

11

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Increasing Network Density, Expanding Destinations with Potential, and Tracking Passenger-Cargo Market Demand
Aiming to meet the renewed demand for travel after Taiwan opened its borders in October 2022, CAL began to gradually add more flights in 2023. We further optimized route products
and strengthen our network during this time. In 2024, CAL will continue to evaluate the number of flights on each route based on demand, aiming to reach pre-pandemic levels. Market
developments will be closely monitored, and the network structure adjusted in support of the government’s foreign policy. We are continuously evaluating that addition of flights in thosemarkets where we see the potential to strengthen our competitiveness.

122023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

2023 Passenger Operations Overview
The global airline industry saw a gradual recovery in passenger numbers in 2023,
with a particular emphasis in travel to and from North America and Europe.
Passenger demand in the Asia-Pacific is expected to continue climbing during2024. Adjustments have been made to existing routes with CAL working actively
to bring flight frequency back to previous levels. Transportation capacity from the
newly introduced A321neo is being used to develop potential destinations andoptimize the existing network to support the steady recovery in services.
CAL’s transportation capacity has already exceeded 82% of pre-pandemic
levels thanks to the growing demand from Taiwanese in 2023. We continue
to cultivate key markets in an effort to restore pre-pandemic routes and scaleof operations, strengthen Taoyuan Airport as a transfer hub, and adjust our
network in response to the government’s foreign policy and market conditions
in order to consolidate market leadership.
Due to a capacity shortage and slower-than-expected recovery in manpowerof our Japanese ground handling agent, flight frequency on Northeast Asia
routes is now only back to 57.5% of 2019’s level and seats available are backto 61.8% of 2019’s level. Thanks to CAL’s attentiveness to the government’s
Southbound Policy and industry trends, flight frequency on Southeast Asia
routes has increased steadily since 2023 Q4. We are using the opportunity toevaluate promising markets in Southeast Asia and potential new destinations.
Taiwanese business travelers are the largest group to utilize the cross-strait
passenger routes due to government policies on both sides. Demand forbusiness and tourism travel, with departures from Taiwan, is expected togradually increase. On North American, Oceania and some European routes,
capacity is now back to pre-pandemic levels. For Oceania routes, we are
maintaining existing passenger services while also competing for the transfer
market on travel to and from Europe, North America, Northeast Asia, andSoutheast Asia in order to increase our market share.
With effect from second half of 2023, our revenue management team used
past analysis experience supplemented by systems and reports to optimize
the management strategy. Traveler consumption models are also being closely
examined so that suitable price increases can be made when appropriate tomaximize profits. Greater emphasis will be placed on the transfer market in the
future to boost network sales and overall revenue.

2023 Freight Operations Overview
The air cargo market shrank for the first time in 2023 since the emergence of COVID-19, due tohigh inflation and a downturn in manufacturing. In addition to carrying imports and exports, CAL
has long worked to develop the market for transshipping goods via Taiwan. A combination of
network development and schedule integration is employed to strengthen Taiwan’s importanceas a transshipment hub. The freighter fleet is currently being dispatched as a result of decreasein market demand in order to greatly reduce fuel consumption and maintenance costs.
The network now aims to maximize profits while maintaining flexibility on aircraft and crew
dispatching. At the same time, we are actively positioning ourselves as a transporter of highvalue and time-critical products. Custom aircraft and cabin charter services are operated ona regular basis to maximize revenue. CAL cargo revenue amounted to TWD56.852 billion or
35.16% of annual consolidated revenue. As of December 2023, CAL had 20 freighters flying to
14 countries and 31 stations in Asia, Europe, and the Americas with an average of 89 flights aweek. Annual capacity in the form of Freight Available Tonne Kilometers (FATK - 7,920 million
tonne kilometers) and freight carried in the form of Freight Revenue Tonne Kilometers (FRTK5,337 million tonne kilometers) were 4.2% and 16.1%, down from 2022 respectively.
13

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

Monitoring of Freight Market Demand with Dynamic Adjustments
to Boost Revenue
When the border restrictions were first lifted, global inflation and rising interest rates
diminished end-user demand. The slow pace of stock reduction and replenishment by
vendors led to a weak freight market in the first half of 2023. Adjustments to national
economic policies as well as changes in consumer behavior brought about by the stayat-home economy during the pandemic spurred the rapid growth of e-commerce cargo.
Strong demand during the traditional European and American shopping season in thesecond half of the year meant the cargo market’s unit revenue remained consistently higher
than pre-pandemic levels. CAL closely monitors international developments, industry policy,
supply chain, and domestic consumption and we also dynamically adjust and optimize ourflight schedule in support of fast-growing industries such as e-commerce, IC, AI, and green
energy to maximize profits.

Synergies from the Integration of Passenger and Cargo Aircraft
Capacity
CAL owns 20 freighters including thirteen 747F freighters that can cater to loading extralarge cargo through the nose and seven 777F freighters that offer better fuel economy. The
lifting of border restrictions stimulated the gradual recovery of international travel demand.
Passenger services rapidly increased in frequency along with the capacity of the belly holdon passenger aircraft. Regular schedules and aircraft types were arranged for Europeanand American routes characterized by high volume, steady demand, and long range tomaintain the standard of service. For Asian stations with better cargo sourcing, CAL uses
a combination of passenger aircraft capacity, freighters, and network architecture to boost
aircraft payloads and hold utilization.

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Proactive and Flexible Multi-pronged Business Strategy
CAL is actively positioning itself as a transporter of high-value and time-critical products
such as semiconductors, consumer electronics, biotech and pharmaceuticals, fresh fruitand vegetables, automobile parts, and aircraft materials, as well as fast-growing cargosources like e-commerce and green new energy. CAL assesses suppliers and cargosources and considers the traditional peak and off-peak periods for freight when competingfor charter aircraft or cabin services. The guaranteeing of aircraft utilization and load factor
helps to stabilize the market prices of shipping. In 2023, incentive plans signed with global
transnational agents include a strategic cooperation plan for inter-regional transshipmentof cargo via passenger aircraft. The plan serves to stabilize basic cargo sources and offers
an opportunity to secure more cargo. In addition to maintaining our relationship withinternational integrated courier delivery companies, we are continuing to build new codesharing partnerships and expand our service region in order to secure more cargo sources.

Strong Performance in the Sustainable Flight Challenge
CAL submitted a number of operations to the “The Sustainable Flight Challenge (TSFC)”
launched by the SkyTeam, including “Mobile Apron Operations,” “Eco-friendly Tarpaulin Madefrom 40% Recycled Materials”, and “Replacement of Combustion-engine Tractors with Electric
Tractors.” CAL was ultimately presented with the award for Best Sustainable Innovation Cargo.

Authorized Economic Operator
In 2023, CAL obtained Authorized Economic Operator (AEO) certification once again. AEO
certification helps CAL expand its international trade supply chain business and boosts its
competitiveness for potential trade partners.

142023 CHINA AIRLINESANNUAL REPORT

Providing Exceptional Traveler
Experiences through Innovativeand Friendly Services

As the COVID-19 pandemic began to subside in 2023, CAL continued to conduct diplomatic and special
charter flights. When international borders started reopening, CAL worked with the Japanese Immigration
Services Agency to put in place the immigration pre-clearance program in an effort to streamline theimmigration process. VIP lounges showcased the authentic taste of Taiwan while also making vegetarian
meal options available to travelers. CAL collaborated with other industries on the gourmet in-flightofferings to create innovative and fresh meals that highlighted Taiwan’s specialty foods and products.
“China Airlines Members Day” digital marketing campaign was launched to boost engagement with
Dynasty members. Upgrades on promotional routes and birthday discounts were also launched to reward
and strengthen traveler loyalty. Since the pandemic, CAL has been working actively to introduce one-stop
security measures that simplify airport transits and improve flight punctuality.

15

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Exclusive Chartered Flights in Response to
Government and Business Requirements
Nations lifted their border restrictions in 2023 as the COVID-19
pandemic began to ease, and CAL continued to conduct diplomatic andspecial charter flights. Our professional ground services ensured that
diplomats and government officials traveling overseas enjoyed a safe
and comfortable journey as they carried out their missions. CAL also
undertook charter flights for the Ministry of Defense and army personnel
were flown to the US for training and to foster US-Taiwan military ties.
The high standard of CAL charter services is widely recognized in thecorporate sector. In 2022, CAL was chosen by TSMC, the leading global
foundry, to provide eight non-stop charter flights from Taipei to Phoenix,
Arizona (USA). In 2023, TSMC chose CAL once again for four non-stop
charter flights from Taipei to Kumamoto (Japan). All the TSMC charter
flights were carried out successfully in 2023. During the process, The
Customer Service Department in Taoyuan International Airport liaised
closely with Taipei Branch Office, Hsinchu Branch Office, and the load
department to shorten the check-in process for TSMC VIPs as well as
provide them with expedited check-in, VIP lounge, and boarding services.

CAL VIP Lounges Captivate Travelers with Local Cuisine
CAL VIP lounges provide travelers with a high-quality repast based on local cuisine. The design of the airport
lounges fuses modernism with Oriental appeal. Song Dynasty aesthetics and the scenery of landscaped
courtyard gardens in Jiangnan provide the inspirations for these delightful spaces.
CAL understands how much travelers miss Taiwanese cuisine, so we partnered with Novotel Taipei to create a rangeof foods to give travelers one last taste of Taiwan before heading overseas. In addition to the Three Treasures of CAL,
the Beef Noodle Soup, the Tea Egg, and the Tainong No. 57 Roast Sweet Potato, a variety of other Taiwanese cuisine
is also served, including wontons from a century-old restaurant in Ligang, Pingtung, a Garlic-flavored Pork Thick Soup
from Yilan, Oyster Vermicelli made from oysters cultured locally, Sakura Shrimp Oil Rice from Donggang, Sweet andSour Fried Pork Ribs, Deep-fried Squid in Salty Egg Yolk Paste, and Stir-fried Turnip Cake in XO Sauce.
To encourage vegetarianism and work towards the reduction of carbon emissions, CAL VIP lounges servedvegan cuisine such as Lion’s Mane Mushroom Soup, Noodles with Toon Sauce, and Misua Noodles Wrapped
Taro Rolls. Preference was given to local ingredients during menu design to support community agriculture andlivestock business and to seek sustainable low-carbon development. More than 85% of the ingredients havebeen sourced locally in Taiwan including the “Taiwan No. 9” edamame. These are cultivated by Shennong Awardwinner Chao-pai Hou and guaranteed to be natural products of the highest quality. CAL will continue to focus
on incorporating local food to provide a great experience before departure.
16

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Collaboration with Japan’s Immigration Services
Agency on Preclearance for Added Convenience
CAL collaborated with the Japanese Immigration Services Agency(ISA) to introduce immigration preclearance at Taoyuan International
Airport during the Lunar New Year period. Immigration preclearance
is reviewed by ISA officers in advance and allows travelers to proceed
through dedicated immigration channels upon arrival in Japan, greatly
shortening the clearance time.
Signs were made visible, and flyers and immigration cards were madeavailable at the check-in counter to assist with Japanese promotional
efforts. PA announcements were also made at the boarding gate to
explain the new measures. Taiwanese nationals traveling to Japanenthusiastically applied for this service as it greatly improved andstreamlined their travel experience.

Security Screening Waived for Passenger Transfers on Flightsfrom the US to Taiwan Thanks to New One-Stop Security Regime“One-Stop Security” uses document review and on-site validation to confirm that the origin
country’s airline security measures are equivalent to or stricter than that of the transfer
country. If proper security controls are maintained throughout the process, then security
screening of transfer passengers and their carry-on luggage can be waived.
CAL currently implements One-Stop Security measures at the boarding gate. Transfer
passengers holding onward boarding pass can pass through the designated security door
in the boarding gate to enter the Departures Lobby. The area is strictly controlled during
this period to strengthen traveler streaming and security enforcement. The regime meansthat security screening can be waived for transfer travelers on CAL flights from the US. Thisis more convenient for travelers and saves them precious time on their journey. Travelers
can also take advantage of their transit time to eat, shop, or relax at Taoyuan International
Airport. Delays in transfer flights are also minimized.

17

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Transforming Cabin Crews into Brand Ambassadors
through Enhanced Professionalism
CAL focuses on enhancing professional competency in cabin safety andservices. With the introduction of the leased A350 aircraft, CAL procured
accompanying emergency training materials to improve performance.
In 2023, the theme for the “Cabin Crew Service Recurrent Training” was “Molding
China Airlines Brand Ambassadors.” CAL gathered traveler expectations to design
training materials that outlined tools and techniques needed to enhance positive
communication and interaction with travelers. Attitude and behavior, professional
skills, and image management were integrated with core skills such as crossgenerational communication and personalized service to build a diversified
training course. By giving equal emphasis to theory and practice, the breadth anddepth of the team’s professional competencies were systematically enhanced.
The training helped crew members better understand what travelers expect fromairline service. It is our hope that every crew member will become the best brandambassador for CAL.

Creating Peripheral Business Opportunities throughCo-branded Marketing
In 2023, the “Pikachu Jet CI” became the latest trend to mark a return to the skies. The
livery on the fuselage featured 11 popular cartoon Pokemons, as CAL joined forces
with Pokemon to develop a range of peripheral merchandise. The “Pikachu Jet CI Model
Airplane” is a must-have collectible for fans, the “Pikachu Jet Ci Mixed Snack Gift” contained
delicious crunchy classic airline snacks, the “Pikachu Jet CI Apron” and “Travel Tote Bag” arevery convenient and practical, while the aircraft-shaped iPass card became a smash hit withmembers due to its charming, rounded appearance. The limited edition “China Airlines CI
sustainable Life Vest Bag” demonstrated the philosophy of sustainable recycling by reusing
aircraft life vests. China Airlines produced new duty-free marketing videos for Sky Boutiqueand eMall to promote the use of reward miles to purchase a wide range of products and toprovide members with a more convenient and diversified shopping experience.
18

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

New Co-branded Japanese Tableware:
Experience the Full Beauty of Four Seasons in JapanCAL partnered with JIA, an internationally recognized and awarded
design brand, to introduce all new co-branded Japanese tableware tocomplement the exquisite cuisine. The design inspiration came fromthe traditional lacquerware and gold lacquer crafts of Japan. The
tableware featured motifs of the four seasons of Japan including cherry
blossoms in spring, fireworks in summer, red leaves in autumn, andsnowy winter scenery. A surprise awaited passengers on the base of
their tray as they finished their meal, adding a memorable sixth element
to the exquisite five senses of their journey.

Innovation on a Popular Theme Takes In-Flight Cuisine to the Next Level
CAL is actively working to create innovative gourmet experiences in the sky. In 2023, we continued topartner with Yangming Spring, a Michelin Green Star restaurant, and Le Ruban Pâtisserie, considered
to be the Chanel of the dessert world, to craft innovative menus that feature seasonal ingredients.
The launch of the Salted Egg Yolk Pastry by Le Ruban Pâtisserie during the Mid-Autumn Festival won
praise from travelers for perfectly complementing the holiday season. In 2023, CAL took part in “TheSustainable Flight Challenge”, further demonstrating the importance of vegetarian food in sustainable
development through the co-branded menu with Yangming Spring. Through low-carbon flights andcuisine, CAL strives to make a greater contribution to planet Earth and to create better future.
In January 2023, CAL partnered with Toutouan, a famous restaurant in Tokyo famed for their“natural style” Japanese banquet cuisine for Premium Business and Business class on flagshiproutes to Japan. In April of the same year, CAL and Les Palais, the Michelin 3-Star Chinese
restaurant, joined forces to offer travelers in all classes the opportunity to enjoy a starred tastingin the clouds. The menu included elements of a secret menu popular with Les Palais patrons that
perfectly brought the 3-Star Michelin chef’s childhood memories of great flavors to life. From July
2023, CAL collaborated with the popular shaken beverage brand WooTEA to develop a range of
exclusive tea themed desserts and beverages. The delightful desserts were offered in Economy
Class on all flights departing from Taiwan to win the hearts of younger travelers.
192023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Partnering with The Wonderful Food to Highlight the
Economic Value of Taiwanese Agriculture
In the second half of 2022, CAL partnered with The Wonderful Food to feature
hand-picked specialty products from each county and city in-flight, introducing
international travelers to the amazing regional cuisine of Taiwan. In 2023, we
maintained the strict selection criteria for products by highlighting items such as
O-Nong Rice Pearls, Dried Mango from Fangshan, Pingtung, and the Chishang
Rice Cake from the Chi-shang Farmers’ Association. These quality agricultural
products fulfilled the CAL spirit of sustainability and supporting the community.

Membership Marketing and Social Media Promotions
The 16 th of each month was declared “China Airlines Member’s Day” to boost
interactions with Dynasty members and travelers. In addition to launching special
promotional fares via the CAL website, limited-edition promotions were also
launched by cross-industry partners. Event information was disseminated through
CAL’s social media and other digital marketing channels as an invitation to members
across the world.
In December 2023, the event was expanded and combined with CAL anniversarycelebrations in the form of the “Member’s Treat is on CAL” digital marketing campaign.
Promotional fares were combined with the “Unlimited Upgrades MVP” prize thatgenerated quite a lot of interest as well as the “Global Members Lucky Draw.”
In 2023, the members-only birthday offer “My Birthday, My Rules” chose the theme of“CAL Celebrates Your Birthday With You” to offer a 5% discount on all routes, and 10%
discount for Business Class on regional routes as a birthday present to thank members
for their longstanding support and to boost member loyalty.
With short videos dominating social media, CAL produced a number of reels in 2023 toattract a younger audience resulting in a breakthrough increase in Instagram followers.
Our social media strategy focused on opportunistic business promotions and members’
events to cultivate a positive brand image and boost traveler engagement.
202023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Luggage Service Upgrades toBetter Meet Traveler Needs
Traveler’s needs are important to us. CAL offers group travelers theoption of purchasing additional seats for important personal belongings
at group fare prices. This means group travelers can easily purchaseadditional seats and board with important personal items.
The checked luggage specifications for pets, sporting equipment,
including windsurfing boards, surfboards and kayaks, and musicalinstruments were also relaxed. Special sporting equipment can betransported as checked luggage with no restrictions on size as long as
it falls within the weight limits.
To take the stress out of traveling with young children for families, theexisting free luggage quota was also increased so that a folding stroller
or child safety seat can be checked-in as hold luggage.

Temperature-controlled Cargo with Constant Recording for Safeand Punctual Delivery
In 2016, CAL began assisting vendors with applications to the Civil Aeronautics
Administration (CAA) of the Ministry of Transportation and Communications (MOTC) for
fitting cargo with tracking devices. Freight operators attached tracking devices and used
Envirotainer equipped with e-tech real-time monitoring equipment. The transmission oflocation, temperature, and humidity data in real-time enabled the effective monitoring of
high-value, high-precision and sensitive cargo throughout the entire transportation success.
It also streamlined vendors’ operations and helped promote use of the Envirotainer. In
2022, we began signing agreements with 10 local warehouse agents on temperaturecontrolled cargo services to ensure that the highest standards are maintained during thetransportation of temperature-controlled cargo. At the end of 2023, approval for 38 types ofcargo tracking devices was granted by the CAA.
21

2023 CHINA AIRLINESANNUAL REPORT

Enhancing Digital Services

CAL introduced the Customer Relationship Management (CRM) system in response to industry
developments and as part of our customer service revamp. Mobile app and website services were
upgraded and optimized so that travelers could access all necessary services, including booking anditinerary management through the CAL website. We offered discounts for member services, launchedsocial media events and promotional surprise fares for China Airlines Member’s Day, and joined forces
with cross-industry partners to launch bonus events. At the same time, we worked actively to promote inflight e-menu and electronic boarding passes at all airports around the world. Cabin crews used mobile
devices and technology to carry out their duties, and CAL promoted e-Cargo to provide travelers withreal-time cargo information and accelerate the deployment of a digital cargo system, which aims to becompleted in 2024.

22

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Integration of Customer Data for an Enhanced
Customer Experience
CAL has launched the CRM system to adapt to the development of theaviation industry and improve customer satisfaction. The CRM systemcompiles customer marketing, sales and service records before, during
and after sales processes for the purpose of maintaining member
relationships and optimizing service quality. We also properly utilize
the CRM system to integrate customer database data, develop multichannel automated communication functions, and provide customized
and precise marketing.

Promotion of Online Ticketing and Optimization ofUser Experience
Consumer habits changed after the pandemic and there was asignificant up-tick in the number of tickets purchased through the CAL
website in 2023. Dynamic online marketing of fares was introduced
by CAL to optimize website searches. The entire booking process was
streamlined, and itinerary management was made easier; travelers can
now complete all the services required for their trip in one go. Real-time
fare function was also introduced providing travelers with information
on ever changing fares and allowing them to search for the lowest fares
within a 90-day timeframe.

Upgrades to CAL Website and Mobile App for
Improved Responsiveness
CAL made upgrades and optimizations to mobile devices and website
services to optimize functionality for travelers. These included upgrading
the booking process, revamping the user interface design, integrating
service web pages, and optimizing online self-service functions. To provide
a more user-friendly interface and experience, CAL streamlined our
website, added a robot verification mechanism at login pages, simplified
the date selection process, and heightened our information security.
23

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Digital Services for Enhanced Membership Experience

Continued Promotion of In-flight e-Menu for a More Eco-Friendly Journey

The number of Dynasty members surpassed the 3 million mark at the endof 2023. To welcome the surge in post-pandemic travel demand and thankmembers for their longstanding support, CAL continued to offer members
new membership renewal packages. Memberships were also automaticallyextended based on membership type and requirements. A members
recruitment drive was also launched with a 10% discount on all global routes
for new members from June 2023 onwards. The offer will run through to 2024.

As part of CAL’s ongoing commitment to environmentally friendly services, the development andintroduction of electronic menus has now been expanded beyond the A321neo fleet to include the 777300ER and A350-900 fleets. Electronic menus offer huge savings on paper and printing costs comparedto legacy menus while also effectively reducing carbon emissions. The introduction of electronic menus
expanded menu services beyond Business and Premium Economy Class to all cabin classes andupgraded the quality of in-flight services while also supporting environmental sustainability targets.

A number of digital membership experiences were progressively
introduced during 2023 to increase service speed and convenience. The
all-new services included:
1. Activation of online award transfer function:
Direct management of recipient lists and transfer of membershiprewards.

2. Online ticketing for award tickets:
Award tickets can be booked and issued directly through the CAL
website without having to call the customer service center.

3.Cabin Upgrade/Award Ticket availability search function:
AI customer service agent can be used to search for seatavailability that match the requirements of the itinerary. Cabin
upgrades or issuing of the award ticket can then be carried out
through the Dynasty Members area.

CAL and CTCB Bank continued to offer co-branded cards with a myriadof privileges and premium rewards. Additional partnerships wereformed with partner airlines, banks, global hotel chains, online hotel
booking centers, and global car rental chains.
242023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Global Electronic Boarding Passes and Green Energy
CAL continues to promote the Mobile Boarding Pass service at all airports around the world.
Travelers that complete their online check-in receive an electronic boarding pass on theirmobile devices to streamline the boarding process. As of December 31, 2023, the service
was available at 41 airports globally, an increase of 16 airports from 2022. From December
15, 2023, the paper-free policy was also implemented in ground operations as the printingof Chinese cabin lists in Taiwan was eliminated to meet carbon reduction targets.

Supporting the Green Energy Policy throughTechnology-Enabled Missions
To support the Company’s implementation of green energy and environmental protection, as ofJanuary 1, 2023, all cabin crew members are now required to use mobile devices to carry out theirwork and access manuals, bulletins, and other operational details. Cabin crews can use the mobile
devices to search regulatory and service information, enhance their safety awareness and service
concept, provide passengers with related station information, enhance the flying experience forpassengers, progressively realize the target of paperless operations, lighten the equipment load
for crew members, improve fuel efficiency and aircraft weight reduction. We are also introducing
pre-recorded in-flight PA announcements and simplifying the payment and account-keeping
process for duty-free sales. By simultaneously optimizing functionality and implementing system
improvements, CAL provides a convenient and user friendly working environment.

25

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Promotion of e-Freight and e-Waybill Operations
CAL is cooperating with the International Air Transport Association(IATA) to embrace environmental protection and promote e-freight
services. Electronic data exchange is conducted with other airlines andground agents to provide customers with real-time tracking of cargo
status. We continue to implement paperless waybill operations andencourage customers to sign the MeA (Multilateral e-AWB Agreement)
to eliminate printed waybills. Electronic transmission and dataexchange with cargo agents not only lowers operating costs for bothcarriers and agents, but also avoids delays due to incorrectly enteredwaybills or lost documentation.

Digital Freight System Scheduled for Accelerated Deployment by 2024
The digital freight system is being accelerated and deployment of the next-generation systemis scheduled for 2024 Q2. The new freight system will formally go live in July 2024 and will
be based on the iCargo solution. Information is exchanged with third-party systems using
the Software-as-a-Service (SaaS) model and API (Application Program Interface) technology
now in mainstream use as part of our total digital transformation. Once the system is live,
marketing, airport operations, and financial operations will all be integrated into the same
platform. Potential benefits include faster feedback on business performance, improved
transparency on cargo movements, as well as alignment with international standards andenhanced service quality. All of these will further cement CAL’s leadership in global freight. At
the same time, phase two of the digital optimization process will be launched in the second
half of 2024. A B2B digital marketing channel will be developed that will support connections
to a third-party booking system and other supply chain service systems as part of ouromni-channel strategy. The initiative is aimed at strengthening the overall digital marketing
competitiveness of our freight operations in the future.
26

2023 CHINA AIRLINESANNUAL REPORTGroup Consolidation for
Increased Synergy

CAL has made direct and indirect investments in 29 businesses to establish a complete airline service
network. These businesses span seven key categories including air transport, ground services, airtransport support, aerospace technology, warehouse and logistics, tourism and leisure, shareholding, andleasing. We will consolidate the shared links, while also improving the quality of the overall service chain
to boost the competitiveness of the CAL Group as a whole.

27

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Mandarin Airlines: Winning Traveler Trust through Attentive Service
Mandarin Airlines is a CAL subsidiary (96.96% owned) established in 1991. It is an official
member of IATA and holds valid certifications for IOSA aviation safety audits and ISO 9001.
Mandarin Airlines is actively working to build up its business and portfolio of domestic
routes. In addition to the air transportation of passenger and cargo, Mandarin Airlines has
also obtained approval to operate airport ground services. As the only airline in Taichungto operate both a professional maintenance facility and warehousing service for air cargo,
Mandarin Airlines can provide central Taiwan with a full spectrum of passenger, cargo andlogistics services.
Eight ERJ-190 passenger jets were introduced by Mandarin Airlines in 2007. The last E190
was retired in February 2023 after 14 years of service as part of the fleet revitalization
strategy. The airline currently operates ten ATR72-600 70-seater turbo-prop passenger
aircraft. Two more aircraft are to be introduced in the first half of 2024 to expand fleet
capacity. 737-800, A330-300 777-300ER, A350-900 and A321neo fleets are also leased
from its parent company, China Airlines, for servicing international regional and cross-strait
routes in Asia. The fleet resources of the CAL Group are used to supplement the ATR72600 fleet during the peak travel season and public holidays on domestic routes. Larger
aircraft, such as A320 with 180 seats from Tigerair and B737-800 with 158 seats from CAL,
are leased to provide more seats and meet traveler demand. Mandarin Airlines operates
non-stop flights from Taipei, Taichung and Kaohsiung to the offshore islands of Kinmen
and Mazu. The Taipei-Mazu (Nangang) service was also inaugurated on March 26, 2023.
Domestic routes in Taiwan proper include Taipei-Taitung, and Taichung/Kaohsiung-Hualien.
Mandarin Airlines is committed to promoting environmental protection and carbon
reduction. In 2017, it became the first domestic airline to obtain the EPA Carbon Label andISO 14067 Carbon Footprint certification. In December 2020, it was presented with the first“Carbon Reduction Label” in the airline industry by the EPA Executive Yuan. In November
2021, Mandarin Airlines was presented with the “2021 Excellence Award for Low-Carbon
Products”. The ECO Travel Carbon Offset Program, which allows travelers to purchase thecarbon offsets for their flight from the Environmental Sustainability section of the Mandarin
Airlines website, was jointly launched by Mandarin Airlines and CAL. Travelers have theopportunity to reduce their net emissions from the journey to carbon neutral or net zero.
Brand new life vests decommissioned from ERJ were turned into an eco-fashion range ofsmall tote bags by Mandarin Airlines. Orange drawstring bags made from the life vests ofcrew members were released in 2023, followed by other eco-friendly upcycled merchandise
such as the Gen 2 eco tote bags and beverage tote bags.

For the ferry flight from the ATR Delivery Center in France to Taiwan on December 30, 2023,
the new ATR aircraft (B-16861) purchased by Mandarin Airlines used 30% Sustainable
Aviation Fuels (SAF) made from biofuel. Mandarin Airlines became the first airline to use
SAF on a domestic route, demonstrating its contribution to global sustainability.
Mandarin Airlines has long taken an interest in rural community development. In May 2023,
a charity auction was held at Songshan Airport as part of the airline’s 32nd anniversary withall proceeds going to Hannah’s Home, an organization in Taitung that cares for abandoned
infants under the age of two in the Hualien-Taitung region. In August 2023, the Mandarin
Airlines Employee Charity Club was formed. Volunteers were mobilized to teach aviation at
Minquan Elementary School and on Christmas Eve 2023, volunteers traveled to Taitung toprovide elders with disabilities or dementia in rural areas with the opportunity to experience
heart-warming service in a virtual cabin.

28

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Tigerair Taiwan: An Award-Winning Airline
Tigerair Taiwan, the low-cost carrier (LCC) arm of the CALGroup, is set to celebrate the 10th anniversary of its first flightin 2024. The airline currently operates nine Airbus A320 and six
A320neo. Both aircraft are configured for 180 seats and a single
cabin class. The current fleet numbers 15 aircraft and will be
progressively revitalized, with the A320neo accounting for all 15
aircraft by 2027. Average fleet age will be reduced from 5.4 years
to 3.5 years, making Tigerair Taiwan’s fleet one of the youngest interms of average aircraft age in the Asia-Pacific region.
The target market for Tigerair Taiwan is younger travelers
including backpackers and students between the ages of 20 and
40. Network emphasis is on Asia and Northeast Asia in particular.
Since Tigerair Taiwan’s maiden flight in September 2014, it haslaunched international routes to Macau, Tokyo (Narita), Okinawa,
Osaka, Nagoya, Pusan, and Incheon. When the COVID-19
restrictions were first lifted, Tigerair Taiwan’s main focus was on
new destinations in Japan, Korea, Thailand, and Vietnam. Services
were launched to Sapporo and Danag in 2022 Q4, for example,
while new destinations such as Niigata, Phuket, Gimpo, Kochi,
and Akita were progressively added in 2023. Tigerair Taiwan held
24% market share of total LCCs operating in Taiwan in the first
three quarters of 2023, making it the undisputed leader of the
Taiwanese LCC market.
The end of COVID-19 created a surge in market demand for travel and tourism in 2023. Tigerair
Taiwan responded by launching a variety of marketing campaigns and saw an immediate return toprofitability soon after the end of border restrictions. Total revenue in 2023 reached a new record
high of more than TWD12.4 billion and the airline was listed on the TWSE TIB in August 2023.
Tigerair Taiwan’s 10th anniversary represents a new milestone for the airline. In the next chapter, theairline will focus on Japan, given the higher density of destinations within the country. The airline
will not only open up routes to new destinations but also partner with popular celebrities among
the youngest generation to act as spokespeople and to boost its brand recognition in the Japanesemarket. Tigerair Taiwan continues to surpass itself, creating unlimited possibilities. The fleet
revitalization program, continued optimizations to the corporate websites and mobile app, crossindustry collaboration, and creativity-fueled brand marketing plans will demonstrate how the airline
fulfills its corporate social responsibility as it aims to become the best LCC in Asia.
29

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Dynasty Aerotech: World-Class Quality and Technology
The Dynasty Aerotech International Corp., formerly named Hwa Hsia Company Ltd., isa 100% CAL subsidiary that was established in 1989. Its core business is the cleaningof aircraft cabins, aircraft exteriors, aircraft parts and accessories, air cargo container
maintenance, and cabin trolley repairs. Eco-friendly water-saving aircraft cleaning
technology from France was introduced in 2016 by Dynasty Aerotech as part of its
continued improvements to technical capabilities and service quality. Dynasty Aerotech
provides CAL fleets with eco-friendly, energy efficient and low carbon aircraft cleaning
services. It is the only air cargo container maintenance center to have received both FAA(US) and CAA (Taiwan) certification for servicing air cargo containers.

CAL changed the name to Dynasty Aerotech International Corp. as
part of its internationalization and high-tech strategy. The subsidiary
meets the container maintenance requirements of the CAL Group andis actively expanding its international air cargo container servicing
business. New maintenance technologies are also being introduced to
upgrade maintenance expertise, quality of service, and open up new
international business opportunities. The airline industry was greatly
affected by the pandemic between 2020 and 2022. Dynasty Aerotech
was able to maintain its business growth by focusing on epidemic
prevention and disinfection of aircraft. International air passenger
and freight services began to recover in November 2022 when the
pandemic started to subside. The company began focusing on theairline ground services and air cargo container servicing businesses tosupport continued revenue growth and service improvements.
30

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Taoyaun International Airport Service: Setting an Example in Total Ground Services
Taoyuan International Airport Service Co., Ltd. (TIAS) is a 49% owned subsidiary of China
Airlines. Established in 1978, it provides ground services to aircraft operating from Taoyuan
International Airport and is the largest professional airport service company in Taiwan.
TIAS currently services around 66% of all flights at Taoyuan International Airport and is
the agent for 63 customers operating scheduled passenger and cargo services. In 2011,
TIAS became the first operator to obtain IATA Safety Audit for Ground Operations (ISAGO)
certification. The certification is the highest safety audit standard for ground service
providers. Re-certification for an additional two years was completed in June 2021.
In 2016, TIAS began implementing the Safety Management System (SMS) to upgrade
the safety of all ground operations. Electric tractors have been procured in recent years
to support the international push for low-carbon airports and CAL Group’s ESG policy.
Green energy equipment ground operations will also be progressively introduced; TIAS isstrengthening corporate governance and operations management through the deploymentof related e-management application systems and corporate internal communication apps.

Facility services permit for Taoyuan Airport was obtained in January 2020 to expand thebusiness portfolio of TIAS. The Ground Service Division was established in February to
begin providing ground services to foreign airlines. TIAS now counts leading airlines such
as Peach Aviation, Cebu Pacific Air, Royal Brunei Airlines, Greater Bay Airlines, CapitalA, and HK Express among its customers. Using the experience of large ground service
operators overseas as a guide, TIAS is now providing integrated below-the-wing and abovethe-wing services with the goal of becoming a fully-fledged Ground Handling Agent (GHA).
Passenger services have rebounded after the lifting of COVID-19 restrictions. IATA is
forecasting a return to pre-pandemic levels of passenger traffic in the Asia-Pacific regionin 2024. TIAS will fulfill its social responsibility by actively cooperating with the CAL Groupstrategy and government policies. It will use its experience as a professional groundservices company to have the necessary capabilities and training in place to meet customer
requirements and standards once the market fully recovers. The service portfolio will also be
expanded when appropriate to maintain its leading position in airport ground services.

312023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

China Pacific Catering Services: Diversification in Action
China Pacific Catering Services Ltd. (CPCS) was established 27 years ago in 1996 and is
the largest airline catering company in Taiwan. It currently supports 33 airline customers
from the three main airline alliances of SkyTeam, Star and One World on inventory
management, preparation, and transportation of in-flight meals and amenity kits. CPCS has
always maintained the highest standards in food safety. HACCP, ISO 22000 and HALAL
certifications ensure the quality and safety of all food operations.
Now that the pandemic situation is improving and air travel is back on the mend, CPCS
is expanding beyond the supply of high-quality catering services, branching out into VIPlounge services, school catering, catering services, festival merchandise and e-commerce.
The diversification strategy is a demonstration of CPCS’s sensitivity to market changes
and its determination to compete with the market. The soon-to-be completed terminal at
Taoyuan Airport is expected to produce a significant growth in passenger volumes andcatering requirements. CPSC investments in capacity expansion reflects the company’s
exceptional strength and confidence in business outlook. In the future, CPSC will continue
to use the most advanced equipment in the world to provide its customers with even morediverse, high-quality, and attentive services.

Kaohsiung Airport Catering Services: Expansive Array of Gourmet Products
Kaohsiung Airport Catering Services (KACS) was established in 1999 and became a CAL
subsidiary in 2018. KACS now supplies in-flight meals to flights departing and operating fromSongshan Airport (Taipei), Taichung Airport, and Xiaogang Airport (Kaohsiung), making it the
only airline catering company in Taiwan to operate in northern, central, and southern Taiwan.
KACS is also contracted to provide catering services for the VIP lounge at Songshan Airport.
All KACS plants in northern, central, and southern Taiwan have obtained ISO 22000 food safety
certification. ISO 45001 occupational health and safety certification was also obtained in 2022.
The Kaohsiung Plant has received ISO 50001 energy management system certification as well.
In addition to in-flight catering, KACS is a longtime OEM supplier for fresh food and baked
goods to convenience stores. It also supplies Taiwan High Speed Rail (THSR) meal boxes
to THSR and meal boxes to organizations and groups. There is even a KACS branded chainof food & beverage shops. In recent years, the company has sold frozen meals and baked
goods through online shopping and group buying platforms, with its precooked meals
carving out a niche in the group buying market. The diverse range of products provide
ample proof of KACS’s exceptional meal preparation capability and the quality of its meals.
322023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Novotel Taipei Taoyuan International Airport:
Exceptional Quality of Service
Novotel Taipei Taoyuan International Airport (Novotel Taipei) is a 100% subsidiary of CAL
that first opened its doors in November 2009. The hotel is managed under the Novotel
brand by the French Accor Group. As the only 5-star international tourist airport hotelin Taiwan, Novotel Taipei features 516 rooms and world cuisine with its Chinese andWestern restaurants. Located next to Taoyuan Airport and Airport MRT Station A14a, it
is conveniently situated for connections to Taoyuan HSR station as well. Green Globe
certification has been introduced across the global Novotel network and the brand is aleader in environmental sustainability.
Renovations of guest rooms in the main annex started in 2019. The work will provide
travelers with more comfortable, updated accommodations and a more relaxing
environment. During COVID-19, the hotel was used as the epidemic prevention hotel for
CAL flight and cabin crews in May 2021. It was temporarily closed to the public while CAL
crew members stayed at the hotel for their home quarantine periods. On June 30, 2022, thehotel resumed normal operations and in 2023 the hotel began to recover from the effectsof the pandemic. Guest numbers were uncertain but a change in the customer structure led
to a significant increase in accommodation and catering income compared to 2022.

Taiwan Airport Services:
Forging a Professional Ground Services Brand
Taiwan Airport Services (TAS) is a 47.35% owned subsidiary of China
Airlines. The company was formed in 1966 as the first professional
ground services company in Taiwan. TAS provides airlines with safe,
efficient and quality professional ground services. Cargo agent service
was introduced in 2017 to provide a more complete service offering.
Transportation services are now provided in Hualien and Kaohsiungfor domestic routes flown by Mandarin Airlines, as well as internationalroutes flown by Tigerair Taiwan and other carriers.
TAS formally applied to IATA for ISAGO_HS certification in 2014 toenhance its competitiveness as a ground agent. Certification was
obtained in 2015 making it the first ground agent at Taipei International
Airport to obtain the certification. ISAGO certification was also obtainedfor Kaohsiung Airport at the end of 2017. As of 2022, TAS Head Office,Taipei Songshan and Kaohsiung have all obtained IATA certificationas ISAGO provider, a first for ground services companies in Taiwan.
Ground service operations will be aligned with international standards,
while internal organizational SOP manuals will be updated to enhanceapron operations and improve competitiveness while delivering safer
and better-quality ground services.
33

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Taiwan Air Cargo Terminal:
Continued Success through Pursuit of Perfection
Taiwan Air Cargo Terminal Ltd. (TACT) is a 54% owned subsidiary of CAL that started operating in
2000. TACT is the only operator in Taiwan with cargo terminals in both Taipei and Kaohsiung. The
company provides professional, high-quality import, export, transshipment and express air cargo
warehousing services based on a quality policy of “friendliness, safety, efficiency, and innovation.”
The spacious facilities include a range of standard warehouse, pallet packing and unpacking
equipment, and systems.
The post-pandemic period in 2023 saw the economy battered by rising inflation and geopoliticalrisk. During these difficult times, TACT was chosen again as the warehousing service provider
for National Space Organization’s Triton satellite project due to its experience with airline
warehousing. The mission was carried out successfully. TACT also supported the governmenton the importation of various vaccines as well as egg imports during Taiwanese egg shortage.
After a major earthquake in Turkey, TACT assisted with the export of diplomatic and emergency
relief supplies as well. TACT has consistently won praise and approval in the market through its
professional handling of passenger and freighter (cargo hold) charter exports for freight agents,
and importation and exportation of high precision temperature-controlled machines for major
semiconductor manufacturers.

Convening of Affiliate Security Conference to Share
Practical Experiences
The CAL “Security Conference for Affiliates and Agents” was hosted on
March 31, 2023, to share information on the latest security and groundsafety issues, as well as lessons on operational management between
the corporate security departments of CAL affiliates and agents. The
Criminal Investigation Bureau of the National Police Agency, Ministryof the Interior, was invited to provide the keynote speeches and to
discuss risk management in the context of criminal cases. The keynote
speakers shared with the attending units their precious experience,experience, and knowledge. This will in turn facilitate the early
detection of aviation security risks and the planning of aviation security
management operations.
342023 CHINA AIRLINESANNUAL REPORT

Building a Friendly Workplacethrough Inclusive Talent
Development

CAL cares for and supports its employees, the company’s most important asset. Through workplace DEI,
employee health benefits, and employee engagement, CAL provides competitive remuneration, great
working conditions and environment, as well as comprehensive professional training and diverse career
opportunities to ensure the safety and growth of its employees. Continual talent development is thus
made possible through the building of a sustainable, caring, and inclusive workplace.

352023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

Enhancing Employee Compensation and Fulfilling Promises
CAL provides employees with competitive salaries and benefits aimed at talent retention
and cultivation. Salary surveys are periodically conducted with compensation packages
adjusted based on prevailing industry and regional standards, the cost of living, statutory
minimum wages, and social welfare regulations. We ensure that salaries and benefits exceed
statutory requirements every year based on the Company’s overall profitability, fulfilling
our commitment to look after our employees and to work towards a common goal ofsustainability and inclusivity.

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Strengthening Quality of Personnel throughSustainability, Caring and InclusivenessThe post-pandemic era saw a strong recovery from the airline industry as
well as changes in personnel. CAL training courses are now focusing on
the themes of sustainability, caring, and inclusivity. In addition to existingcourses in management, specialty topics, and competency courses,
Inclusivity Across Generations, was chosen as the theme for the annual
management refresher training. We hope to promote greater networking
among colleagues to realize the corporate goal of “Fusion and Inclusion.”
A range of management and communication courses were held toenhance employee skills. The masterclass cross-department courses
also increased employee understanding of the different professional
tracks to help build team harmony. We also continued to hold theManagement Training Class and the Management Improvement Class
to develop talented employees.
CAL was even invited by the Taiwanese government to conduct training
courses for senior public servants, in our capacity as a private enterprise,contributing to society by advancing high-level national expertise.

Lean and Flexible Organization, and Fulfillment ofSocial Responsibility
CAL has been actively expanding our network and increasing thenumber of services after the pandemic. We will continue to introduce
new aircraft and recruit for diverse roles to meet future businessdemand. In 2023, we hired 1,003 new employees, including 559
domestic hires and 444 overseas hires for customer service and officesupport positions. CAL continues to diversify its employee recruitment
focusing on diversity and inclusion in the workplace.
CAL was presented with the Gold award for Trade and Circulation at the2023 Happy Enterprise Survey by the 1111 job agency. We partneredwith CommonWealth Learning to record podcasts and videos to aid inrecruiting quality talent.

362023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Recruitment and Training Campaign to
Boost Talent Quality and Meet Capacity Demand
A recruitment and training initiative for traffic personnel, cabin crew and pilots waslaunched by CAL in 2023 in response to the recovery of the airline industry, demandfor increased capacity, and introduction of new aircraft. A total of 193 ground staffs,
280 cabin crew were hired, and total of 119 pilots were recruited in various roles.
Professional skills and development and introduction to corporate culture training
was carried out so that new hires could adapt quickly to their working environmentand boost their productivity. Education and training will continue to be emphasizedin the future to ensure competitiveness and sustainable development.
To improve the quality of service, 2,619 employees completed cabin safety andservice recurrent training in 2023. Premium Class Cabin Crew Training was also
developed for cabin crew members with more than three years of experience,with 464 people completing it. Quality training and best practices are used to
improve the service skills of cabin crews so they can more precisely cater totravelers. To ensure effective management, cabin managers at CAL must havean extensive service resume. Professional competency evaluations were also
conducted for cabin managers in 2023 with 373 people completing the oral
exam. We hope to enhance travelers’ satisfaction and loyalty by cultivatingorganizational knowledge and strengthening professional skills.
2023 NTU campus career expos

In order to continue the promotion of Ab-initio pilot recruitment program, CAL
participated in the campus career expos and promotion presentations during
the university graduations in March. Pilot recruitment Promotion Presentations
were held at Science Parks in northern, central and southern Taiwan. The Abinitio Pilot Autumn Recruitment Promotion Presentation was held in Taipei and
Kaohsiung in September.

Group photo from graduation of the 425th class of trainees

To let the new generation understand the work of pilots much better, CAL posted amonthly series which called "30,000 Feet Office X Pilot Daily" on CAL's Facebook fan
page from July to December 2023. This series are about the daily work and life ofpilots. CAL is actively expanding its network, increasing more flights. Additionally,
we still continue to recruit for various pilots including Ab-initio pilots, CPL pilots,commercial first officers from other airlines, and retired military pilots to attract
talented person with passion and dreams for the aviation industry to join CAL.
37

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

Equipment Upgrades for Realistic Flight Crew Training
CAL flight simulation training devices have been certified by the MOTC Civil Aviation
Administration. CAL not only provide flight simulation training, safety and emergency
procedure training to flight crews from other domestic and international airlines, we also
took pride in the highly renowned quality for our emergency response training for cabincrews. In addition to that, training facilities are continuously updated as well.
The all-new A320neo full flight simulator was commissioned in March 2022, and theA320neo flight training device was commissioned in April 2023. Both the full flight simulator
and flight training device are configured to Airbus Standard 2.1 and are consistent with theaircraft models to meet the requirements for pilot training, reduce training discrepancies,and ensure flight safety.
In May 2022, the Boeing 744F aircraft were all upgraded to the Next Generation Flight
Management System (NG FMS). Corresponding upgrades to the full flight simulator wascompleted at the end of 2023, it facilitates pilot familiarization with interface control andenhances training performance.

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

A350 leased aircraft were introduced in 2023 Q4. To ensure that personnel were familiar
with the differences in emergency equipment and meet statutory requirements, all-new
A350 1L Slide/Raft was procured in September 2023.
Due to the introduction of the Boeing 787-9 next-generation passenger aircraft, CAL isplanning to introduce both a full flight simulator and a flight training device, which are
expected to be operational in December 2024. To this end, the Boeing 747-400P full flight
simulator was decommissioned and sold in December 2023, which not only provided
space for the introduction of the Boeing 787 full flight simulator but also helped to revitalize
assets. Furthermore, the Cabin Emergency Evacuation Trainer (CEET) and Door Trainerfor Boeing 787 and CEET for A321neo were purchased in 2023, which should be ready fortraining in 2024 Q4. Emergency training for next-generation aircraft models can then be
conducted, offering courses with a more comprehensive functionality.
CAL is continuing to revise the Simulation Quality Management System (SQMS) to better
match actual operations. In accord with paperless trend, multiple paper forms have been
incorporated into The Logistics & Maintenance Management System (LMMS) and replacedwith electronic forms. In addition to enhance the security of the system, it also strengthens
the data storage reliability and availability, contributing to the environment.

38

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

Enhancing Employee Welfare and Building a Happy Workplace
CAL is rolling out a new share trust arrangement and offering higher bonuses. New employee
discounts on flights were introduced as a way to welcome new employees and build a friendly
workplace. The Happiness Charter in Flight program hosts three activities with themes ofHeart Line - Matchmaking Event for Singles, Eternity Line - CAL Group Weddings, and Handin-Hand Line - Family Tours of CAL to cultivate a sense of belonging and inclusion, resulting in
CAL being named one of the 2023 Best Companies to Work for in Asia.
An employee care e-newsletter is published every quarter to communicate positivity
through the written word. Retirement planning seminars and outdoor health promotion andrelaxation activities for employees are also held. A combination of newsletters and eventsare created to help with mental and physical health and to mitigate the pressures of work,
life, or interpersonal relationships. This in turns boosts motivation and enthusiasm at work
while also fostering a warm and welcoming workplace.

Investing in Employee Health and Enforcement of
Epidemic Prevention Measures
International exchange increases the risk of cross-border transmission of infectious diseases.
Proper enforcement of airline epidemic prevention measures is necessary to reduce thethreat from imported infectious diseases. CAL organizes on-site vaccinations every year to

Health promotion and relaxation activities for employees

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

boost epidemic prevention in the workplace. We have been an active supporter of Taiwan
Immunization Vision and Strategy (TIVS) since 2016 and were presented with the TIVSAward of Quarantine Excellence in 2023. We actively implement airline epidemic prevention
measures to protect traveler health and employee safety, and to maintain a friendly
workplace. In addition, we also offer employees broad health exam coverage that surpasses
the legal requirement, and we work to enhance employee health and prevention knowledge. A
variety of healthcare plans provide robust protection for employees in the workplace.

Strengthening Workplace Safety Through Effective Management
CAL is committed to preventing occupational injuries and building a healthy workplace as outlined
in our occupational health and safety policy of Respect Life, Safety First. The Occupational
Health and Safety (OHS) management system was set up in 2016 to provide the necessary
resources and training for risk management enforcement and potential risk elimination. We
continue to carry out hazard identification, assessment and improvement in pursuit of sustainablecorporate development. In addition to conducting health and safety education and training for
new hires, current employees, and new managers, in accordance with OHS regulations and the
CAL Health and Safety Education and Training Management Procedures, we have also carriedout OHS cadres compilation and in-service training to every unit, mentored units at all levels onrisk assessment and preventive improvements and conducted health and safety education for
all employees. By controlling occupational disaster risks, strengthening occupational disease
prevention and management, improving OHS management performance, and enforcing our OHS
policy, CAL ensures a safe, healthy and comfortable working environment for employees.

Happiness Flight Program392023 CHINA AIRLINESANNUAL REPORT

Promoting Social
Sustainability to Co-Create
the Cycle of Goodness

As the leader of the Taiwanese airline industry and a corporate citizen of Taiwan, CAL embraces corporate
philanthropy and the creation of social value as an important part of our commitment to sustainability.
Over the years, we have utilized our authority and invested resources to fulfill our civic responsibility
to society. In 2023, CAL continued to advance its sustainability strategy with the core focus on “Brand
Awareness,” extending the development of social sustainability strategies. This includes promoting theinternationalization of local education, enhancing medical assistance for humanitarian aid, and providing
employment opportunities for vulnerable groups to raise the international visibility of local brands in Taiwan.
The strategies were also aligned with UN SDG 4 Quality Education, SDG 3 Good Health and Well-being, andSDG 8 Decent Work and Economic Growth. CAL is confident that our investment in social development willreflect positively on our business operations and will engender sustainability to take root even more firmly inthe everyday lives of people.

40

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Promoting the Internationalization of Local Education

Company Tours
In 2023, we hosted 17 tours
with a total of 586 university
students in attendance.

Charity Sports Camp
Popular Taiwanese athletes
were invited to co-organizedcharity baseball camp, twocharity basketball camps,
and one charity table tennis
camp in 2023. 948 children
were in attendance. Charity
sports programs encouragechildren to pursue their dreams
and to one day spread theirwings and fly.

Volunteer Teaching
In 2023, 11 teaching sessions were
held for a total of 1,000 students
at Xihai, Zhuwei, Sanfeng, Guolin,
Qingxi and Nanshi elementary
schools in Dayuan District. The selfdirected Rural Development teamtraveled to Jiana Elementary School
and Jiana Junior High School in
Haiduan Township, Taitung County,
to host three rural teaching eventswith a total of 339 students.

41

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Building a Common Knowledge Platform
for Elementary Schools

Coastal Clean-up

CAL has been sponsoring the Common
Knowledge Platform Charity Program
since 2014 by donating Global Kids
Junior Monthly and Global Kids Juniorsubscriptions to elementary schools in
the countryside. The program reacheda total of 90 schools and around
38,652 students in 2023.

April 22, 2023 marked the firstyear that coordinated coastal
clean-up events were held in thenorth and south for Earth Day. A
total of 450 employees took part.

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Tree-planting
CAL adopted nearly two hectaresof forest land at Nanzhuang, Miaoli,
and planted 4,250 saplings of thenative Taiwania tree species. Oncethe forest takes shape in two years,
it should capture 65 tonnes ofcarbon and fulfill the UN SDGs.

42

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

Corporate Training Course for Outside Companies
CAL provides professional service
training courses to outside companies.
In 2023, 18 external training courses
were conducted for government
agencies, schools, and businesses.
The courses covered premium service
philosophy and their implementation,communication and response skills,
posture, etiquette, make-up training andsharing of aviation topics.

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Enhancing Medical Assistancefor Humanitarian Aid
International Emergency Aid
In 2023, CAL participated in theOverseas Humanitarian Medical
Assistance project organized by
Chiayi Christian Hospital to treat alittle girl named Liao, an overseas
compatriot from Myanmar. The
use of our corporate resources
demonstrated the humanitarianspirit of international aid.

Domestic Charity Appeal
CAL is a longstanding partner for
Huashan Foundation’s Dayuan
Station. In 2023, we hosted three
charity events, including Elder
Care and Reunion, Elder Care on
the Move, and Elder Care Shines
for Mid-Autumn that provided
outreach services to 420 seniors.

43

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Robust Operations andBreaking New Ground

Providing Employment Opportunities
for Vulnerable Groups
Disadvantaged Children and Adults
Around 40 people including families,
students, and volunteers from the ROC
Foundation for Autistic Children and
Adults in Taiwan were treated to a freetrip to the Bologna Illustration Exhibition.
CAL also partnered with Make-a-Wish
Taiwan to co-organize the Make-a-Wish
Aviation Camp, bringing hope to 50
children and their families.

A Message fromthe President

Board ofDirectors

Providing Exceptional Traveler Experiences
through Innovative and Friendly Services

2023 Operational Overview
and 2024 Outlook
Enhancing
Digital Services

Demonstrating Commitment
to Flight Safety

Group Consolidation
for Increased Synergy

Environmental
Protection Trends

Building a Friendly Workplacethrough Inclusive Talent Development

China
Airlines’ Glory

Financial
StatusPromoting Social Sustainability to
Co-Create the Cycle of Goodness

Charity Sales and Donations
A charity sale of merchandise
no longer in production fromthe Corporate Communications
Office was organized at the endof 2023. Obsolete PR gifts weresold with all proceeds donated to
the Taoyuan branch of the Taiwan
Children and Families Fund.

Supporting Small Local Farmers and Charities
CAL purchased 1,000 cartons of custard apples from
Taitung Shijia valued at NT$600,000 in support of quality
Taiwanese agricultural products. Additionally, Lunar
New Year holiday gift boxes from the Down Syndrome
Foundation R.O.C. were listed in the Abrazo section of the
CAL eMall with 570 gift boxes sold through the platform in
2023. We also purchased 140 cans of brown rice crackers
produced by indigenous peoples and supplied them to
140 elders living alone or with disabilities and dementia
receiving care from Huashan Foundation in Taoyuan.
442023 CHINA AIRLINESANNUAL REPORT

Demonstrating Commitment to Flight Safety

Strengthening Drills in Pursuitof Perfect Flight Safety

THE IOSA safety audit developed by IATA is the gold standard in international aviation safety audits. CAL
not only completed our 11th IOSA Renewal Audit in 2022 but also began preparing for the 12th IOSA Renewal
Audit in 2024 to continue meeting the highest international safety standards. We also convened the Aviation
Security Risk Management Seminar to boost security awareness among employees. Emergency response
drills are held on a regular basis and a total emergency response mobilization drill was conducted in 2023
to strengthen our ability to respond to emergencies. To ensure consistent training quality and schedule forpilot trainees, we introduced the latest flight simulator training software developed by Airbus in 2024. System
visualization improves the quality of subject training. CAL Maintenance Facility now serves more than 40
domestic and overseas customers. It is recognized by civil aviation authorities in many countries and willcontinue to uphold its commitment to flight safety through its actions.

45

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
Statuse-Upgrades and Safety Management
CAL introduced the Safety Management System (SMS) in 2007 in accordance with Taiwan’s
civil aviation regulations using the DOC 9859 (Safety Management Manual) published by
the International Civil Aviation Organization (ICAO) as a reference. The system is now quite
mature in its implementation. The CAA began auditing the SMS performance of domestic
airlines to verify their safety management practices and outcomes in 2016. As of 2023,
CAA began inspecting the SMS operations at each operating unit using the SMS evaluation
tool developed by Safety Management International Collaboration Group (SM ICG). We evencomply with the requirement for interviews of unit supervisors from the SMS evaluation
tool to ensure safety management is enforced at every level.
To continue strengthening employee understanding of safety culture, CAL strengthened
education on topics such as complacency and Just Culture, authoring of safety reports
and other topics during the 2023 SMS refresher training and safety culture assessment
for all employees. These provided all employees with a better understanding of the key
requirements in Just Culture and authoring of safety reports while also enhancing theCompany’s safety culture and overall safety awareness. The Rolls-Royce SMS Solution
used as current SMS operating system was also upgraded to meet the latest international
operational and user standards. A mobile app was also developed to make reporting easierfor employees and CAL continues to recognize employees for quality hazard reporting.
Employees are encouraged to make timely oral or written reports if they discover any
immediate, obvious, or potential risk factors that will have an overall impact on safe
operations. We hope this will prevent and reduce the risk of safety hazards.
In keeping with the spirit of by walking around (MBWA), tours to the Taipei TWR wereorganized in 2023 Q3 for the sharing of practical experience and safety insights. The Taiwan
Transportation Safety Board was also invited to hold the General Discussion of the Human
Factor seminar to help employees understand the history of human-factor engineering aswell as how interviews and investigative tools are used to reduce the potential operating
risks from human negligence. Participation in the seminar helped the relevant personnel
improve and apply their safety knowledge in their work.

46

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusUncompromising Commitment to Safety ThroughContinued Certification
The IATA Operational Safety Audit (IOSA) is the international gold standard for safety audits
in the airline industry. IATA regulations require all 423 of its member airlines to be IOSAcertified and a renewal audit must be completed every two years to ensure that flight safety
quality is being maintained.
CAL commissioned Quali-Audit from France to conduct the 11 th IOSA Renewal Audit
through an on-site audit from the 24th to 28th of October 2022. A comprehensive audit was
conducted and passed in accordance with IOSA standards. The IOSA certificate is now
valid through to February 25, 2025. Planning for the 12th IOSA Renewal will start in 2024 toensure continued conformity with the highest international safety standards.
IOSA certification encompasses eight major safety aspects of airline operations: organizationand management system, flight operations, Aircraft Engineering and Maintenance,
operational control and flight dispatch, cabin operations, ground handling operations, cargo
operations and security management. A systematic on-site audit is conducted by an IATAapproved audit organization. CAL first achieved IOSA certification in 2005 and since then we
have continued to improve all aspects of our safety quality, including rigorous pilot screenings
and evaluations as well as introducing Flight Operation Quality Assurance (FOQA) and Flight
Operation Risk Assessment System (FORAS) to monitor flight records. Safety audits are also
conducted by a dedicated unit to ensure that the quality and safety management systems(SMS) are being enforced. Our commitment and uncompromising stance on quality ensures
total protection. We are continuing to implement IOSA certification standards and therequirements of international guidelines. Flight safety is assured through concrete actions
and continued improvements in order to provide travelers with quality service they can trust.

Aviation Security Risk Management Seminar
Promotes Security Awareness
The Aviation Security Risk Management Seminar was held on May 19, 2023 with the aimof strengthening and consolidating risk management awareness among aviation security
operators. The seminar, organized by CAL and aimed at increasing awareness, wassponsored by the CAA, China Aviation Development Foundation, Flight Safety Foundation- Taiwan, Chinese Society of Civil Aviation, and CAL. Leading experts were invited to givelectures and host talks on topics that ranged from challenges in aviation security, as well asairline, cargo, and warehouse insider threats, and cyber security threats.
47

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusUpgrading Emergency Response Capabilities
through Full-scale Drills
Emergency response training and drills are regularly held by CAL. Training
is used to strengthen the emergency response concepts, knowledge, andskills of designated personnel while drills are used to examine emergency
response performance at the system and field level, and to ensure
regulatory compliance. We hosted five split team drills during 2023. A fullscale exercise was also held for the Head Office on December 19, 2023
with the Indonesian branch taking part via video conferencing. 612 people
including senior executives were mobilized during the exercise. CAA wasalso invited to observe and provide their guidance. The full-scale exercise
ensured the systematic and efficient activation of emergency personnel,materials, and finances. Upgrading the ability of internal and external
communication and coordination abilities of the emergency responders
ensured that everyone would be able to work together in an emergency. CAL
also took part in the Taoyuan City Government and Taoyuan International
Airport’s 2023 extra-airport crash prevention and rescue exercise. Simulated
scenes, scenarios, and division of labor between emergency responders
and firefighters were used to conduct a joint exercise with the relevant
agencies that enhanced our ability to respond to emergencies.

Enhanced Flight Training Ensures Flight Safety Quality
In addition to organizing regular simulator and aircraft training and checkflights for all flight crew members as required by CAA regulations, CAL
is continuing to develop and implement the enhancement program forlong-haul fleet first officers who have fewer landings. The program allows
them to practice takeoffs and landings in the simulator to maintainfamiliarity with flight operations and reach the safety quality targets.

In response to the ever-growing demand for pilots as well as theintroduction of the new 787 aircraft in 2025, CAL is planning for an
increase in the number of ab-initio cadet pilots. To ensure the quality
and stability of the ab-initio cadet pilot program, in addition to the two
existing flight schools AeroGuard Flight Training (AeroGuard) has been
selected to be an additional training resource.

Crew type conversion and upgrade training continue to be carried out insupport of the flight crew manpower plan and in response to industry
recovery and adjustments to business policy. Rigorous reviews andrelated training programs ensure that crew members are replenishedin a timely manner, flight dispatching demands are met, Company
revenues are fortified, and strict flight safety standards are maintained.

To improve the quality of subject training, we plan to introduce MATe
Suite (Mobile Airbus Training Experience) in 2024. This next-generation
aircraft system training software designed by Airbus will replace theexisting A320 ACE (Airbus Cockpit Experience) software. The system’s
improved system visual effects and new mobility functions are sure toenhance the crew’s learning outcomes.
48

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusTransforming Maintenance Capabilities Leads to Upgraded Fleet Support
The CAL Maintenance Facility’s extensive capabilities include two maintenance hangars
that can hold up to five widebody aircraft, a large engine test cell rated for up to 120,000
pounds of thrust, and various fully-equipped shops. We can provide heavy maintenance,line maintenance, as well as engine and component repair at the same time. The facility not
only meets CAL’s maintenance requirements but also serves more than 40 domestic andoverseas customers.
The CAL Maintenance Facility is not only Taiwan CAA-certified but also received
international certification from other international civil aviation regulators including the
FAA (US), EASA (EU), JCAB (Japan), CAAS (Singapore), and CAAM (Malaysia). We are also
the first in Taiwan to obtain AS9110 certification from AFNOR (France), a prerequisite forentering the international aerospace maintenance industry.

At the end of 2023, we not only completed base maintenance on 41 CAL and customer
aircraft but also became the third aerospace maintenance company in the world to carryout whole aircraft stripping and painting for the A350 aircraft. Regardingthe maintenance of
aircraft parts, we serviced more than 14,000 parts and, at the same time, established manydifferent in-house maintenance capabilities to greatly reduce the time and cost needed foroutside repairs. These included six capabilities for repairs to the composite flight control
surfaces of 747 aircraft, six capabilities for fitter repairs to 777 freighter accessories, as wellas maintenance of flight recorders, cockpit control panels, air traffic controller, hydraulicpumps, auxiliary hydraulic pumps, life rafts and evacuation slides, emergency device
batteries, generators, and the low-frequency positioning devices of different aircraft types.
Accessory maintenance consisted not only of general capabilities but also deep into cabin,power, and communication and navigation electronic accessories.
The PW1100G engine from leading US engine maker Pratt & Whitney is expected to offer
tremendous potential opportunities in the future global maintenance market. As a result,
CAL joined the PW1100G global maintenance network at the end of 2020. To prepare thenew engine maintenance line for the incoming engine repair business, USD15 million was
spent on upgrading the software and hardware of the engine test cell. Tools and equipment
were also purchased to meet the manufacturer’s assembly quality. The first engine arrived
for repairs in 2023 Q3. To strengthen production management, material management, andmaintenance work order editing and signing, we are developing an engine maintenancemanagement system (NX system) that aims to improve quality and output through digitizedmanagement. The goal is to host 100 engines every year by 2032.
To support CAL fleet operations, CAL partnered with aircraft manufacturers Boeing andAirbus to introduce their flight data analytics systems from Boeing Insight Accelerator andAirbus Skywise. The timely replacement of aircraft system parts before failure improves
aircraft reliability and flight safety. There are plans to introduce an apron technician
rostering system for integrating human resources and line maintenance requirements.
In addition to improving manpower utilization, the system will ensure that technicians
performing line maintenance possess the proper certificates, authorizations, andmaintenance quality. The Records Management System (RMS) was also introduced
from GE, another leading US aerospace company. Maintenance records are stored asdigital documents within the system. This will not only improve repair efficiency but also
greatly reduce paper consumption in keeping with the current international goal of energy
efficiency and carbon reduction.

49

2023 CHINA AIRLINESANNUAL REPORT

Environmental Protection Trends

Leading the Industry in Net
Zero by 2050

After becoming the first and only airline in Taiwan to publicly sign and introduce climaterelated financial disclosures in 2018, CAL became the first of its peers in Taiwan to announce
the Net Zero by 2050 targets in 2021. Internally, a multitude of channels continue to beharnessed to promote environmental education and sustainability. We also engage inactive fleet management and upgrade by introducing the latest eco-friendly aircraft and fueloperations. These will effectively increase fuel efficiency and reduce air and noise from boththe landing and take-off. In addition to making adjustments for climate change, we have also
made enhancing the eco-efficiency of operations. Business models and values continue to
evolve, honing in on environmental sustainability and ecological inclusiveness in order tofulfill our promise to Earth.

China Airlines
Corporate
Sustainability Site
Sustainable
Environment50

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

Supporting International Trends in the Industry and Promotion ofEnvironmental Sustainability Governance
CAL led the Taiwanese service industry in establishing and putting into operation theEnvironmental Department and Environmental Management Committee. We were the firstto promote a sound environmental risk management mechanism that actively sets energyefficiency targets and promotes environmental protection projects every year. Performance
reviews and rolling management is carried out by the Environmental Management
Committee. Third-party international standards certifications such as ISO 14001 / 50001 /
14064 are conducted annually as well. A total of 82 environmental protection and energyefficiency KPI measures were conducted in 2023, reducing carbon emissions by 54,834
tonnes CO2 and exceeding the target by 149%.
Guided by the Sustainable Environment Development implementation principles from the
China Airlines Sustainable Development Best Practice Principles issued by the Board of
Directors, China Airlines has drawn up an Environmental and Energy Management Philosophy
and Environmental and Energy Policy that complies with environmental laws and regulations,conserves the Earth’s resources, improves eco-efficiency, and fulfills our social responsibility.
We are continuing to transition our operations to eco-friendly, low-carbon, and energy-efficiency
sustainable development in accordance with the UN Sustainable Development Goals.

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

including the Task Force on Nature-related Financial Disclosure (TNFD), theNatural Capital Protocol, and Science-based Targets Network (SBTN) to
identify the biodiversity impact, dependence, risks and opportunities of ourown operations and that of upstream and downstream business activities.
Response strategies and corresponding management targets and indicators
were formulated to actively undertake two biodiversity conservation andsustainable development operations.

Financial
StatusCAL Actions for
the Earth

To realize the targets of Net Zero by 2050 and support the government’s
renewable energy policy, CAL is continuing to store and deploy additional
renewable energy equipment as well as promote various green officemeasures. The goal is to have renewable energy installed capacity reach
10% and 15% of the contract capacity by 2030 and 2040, respectively. At
the end of 2023, CAL actively engaged with the government and domestic
and overseas suppliers and joined leading international fuel suppliers
and block-chain platforms to establish the Sustainable Aviation Fuels
Program. A new corporate partnership model for corporate procurementof sustainable aviation fuels (SAF) was introduced for the first time inorder to realize the goal of 2% use in 2025, 5% use in 2030, 40% use in
2040, and 65% in 2050.

Following the Path to Net Zero through Environmental and Climate
Change Mitigation and Adaptation
CAL is actively responding to global climate change and net zero trends by becoming thefirst Taiwanese transportation operator to commit to Net Zero by 2050 and the Carbon
Reduction Pathway. In 2018, we became the first airline in Taiwan to publicly sign andintroduce the Task Force on Climate-related Financial Disclosure (TCFD). In 2019, TCFD
operations were incorporated into the company’s management and board reporting
mechanism. The Board’s functional committees have been briefed on TCFD and the
independent Climate-related Financial Disclosure Report published since 2020. CAL is
the first airline in the world to publish consecutive independent reports and the leader insustainable aviation in Taiwan.
Conservation of forests and bio-diversity are important to CAL and the Declaration on Forest
and Bio-diversity Conservation was signed by the Chairman and President in 2022. In 2023,
CAL took this even further by utilizing the biodiversity risk analysis toolkit and other tools

51

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

Fostering a Culture of Sustainability and Environmental Protection
to Create Environmentally Friendly Operations
CAL continues to promote environmental education for all employees through different
channels by regularly sending environment-focused communications, and organizing
offline and online training, environmental seminars, and company-wide environmental
protection competitions for domestic and foreign employees and affiliated enterprises. We
use an inside-out approach to strengthen the environmental consensus among employees,
promote environmental issues, and implement an environmental and energy policy basedon the cultivation of employee awareness through education. Education events wereconducted for 2,809 people in 2023 with an overall satisfaction rating of 96%.

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusAir passenger and cargo services represent the primary business activities of CAL. Some
environmental impacts are therefore unavoidable including GHG emissions, air pollution,and noise pollution. On the other hand, proactive fleet management, such as introductionof the latest and most eco-friendly aircraft, or adopting more fuel-efficient flying practices,
engine out taxi procedures and improving the efficiency of aircraft ground power units can
all improve fuel efficiency, as well as reduce air and noise pollution during take-off andlanding. We are continuing to upgrade our fleet. In 2023, CAL introduce 70 environmentallyfriendly and energy-efficiency ground and air measures as well as 12 fuel-saving flightmeasures that reduced carbon emissions by 54,834 tonnes and met 149% of our target.
In 2024, we plan to implement 82 measures that will reduce carbon emissions by 32,919
tonnes and realize our goal of eco-friendly operations.
52

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusIndustry Leader and Successes in Environmental Advocacy
CAL supported the SkyTeam’s first Sustainable Flight Challenge (TSFC) initiative in 2022 by launching thefirst and only Sustainability Demonstration Flight in Taiwan. The flight, incorporating a hundred eco-friendly
and carbon reduction initiatives, won the awards for Best Sustainable Innovation Cargo and Best Employee
Engagement. In 2023, CAL took part in SkyTeam’s TSFC again by launching the CI-753/CI-754 Taipei-Singapore
Sustainability Demonstration Flight. CAL partnered with travelers to reach a new milestone in looking after
planet Earth through net zero flights. These included being the first Taiwanese carrier to operate a passengercarrying flight with Sustainable Aviation Fuel (SAF), enthusiastic traveler response to the low-carbon plantbased in-flight menu, and carbon offsets on both the outbound and inbound flights. Carbon emissions werereduced by approximately 150 tonnes, the equivalent of planting a forest the size of 375 basketball courts
and a 15-fold improvement on our 2022 performance. CAL is currently the only airline in Taiwan promoting
sustainable demonstration flights. Eco-friendly measures will continue to be promoted in routine flights toincrease our sustainability value.
To fulfill our commitment on forest and biodiversity conservation, CAL took part in a national-level forestation
project in 2023 by partnering with the Hsinchu Branch of Forestry and Nature Conservation Agency, Ministryof Agriculture, to adopt nearly two hectares of forest land at Nanzhuang, Miaoli. We worked with our the
Saisiat Tribe, our local wilderness custodian partner, to plant and cultivate 4,250 native Taiwania saplings.
The forest is expected to reduce carbon emissions by 65 tonnes once it takes shape in two years. The
partnership follows the FSC sustainable forest management principles and incorporates local forestry
expertise as well as the traditional wisdom of the Saisiat Tribe to set an example for sustainable forestry in
Taiwan. It also promotes sustainable ESG development by supporting the Satoyama Initiative and UN SDGs
(SDG 1, 2, 3, 5, 8, 12, 15).
CAL has supported the Earth Hour initiative since it was launched by the World Wildlife Fund (WWF) in 2008.
In addition to providing direct support in conjunction with Group value chain partners, we also use media
and marketing to raise public awareness about the impacts of global warming and climate change. CAL
has participated in the Pacific Greenhouse Gases Measurement (PGGM) program between National Central
University, the Taiwanese government, and EU IAGOS-ERI since 2012. We are the only Taiwanese carrier
involved in the program. As of December 2023, we collected 18,705 atmospheric gas data points, which havebeen supplied to the World Meteorological Organization (WMO) for research. It is also used as a reference by
the UN Framework Convention on Climate Change (UNFCCC) and listed as a key achievement in the National
Yearbook. At the same time, all new CAL 777F aircraft is equipped with Boeing's turbulence detection algorithm,
technology and software. CAL is the only carrier in Taiwan to carry out this operation, which is connected to
IATA and was upgraded with PGGM Package2 instrumentation (P2b and P2d) in 2023. The technology willassist with the diagnosis and avoidance of turbulence on the route and will also enhance the internationalsustainability reputation of Taiwan.

53

2023 CHINA AIRLINESANNUAL REPORT

China Airlines' GloryAwards and Accolades

CAL constantly strives to provide travelers with an even better experience through hardware and software.
China Airlines was voted a 2024 APEX Five Star Global Airline in a poll conducted by the Airline Passenger
Experience Association (APEX). We were named the Best Airline in North Asia for many years, rated the
Design Airline of the Year (Asia) by the international airline design review guide TheDesignAir, as well as
the No.4 design airline in the world. In terms of sustainability management, CAL was ranked in the Top
1% of the 2023 Sustainability Yearbook published by S&P Global, the international sustainability ratings
body. Other awards included the Taiwan Corporate Sustainability Awards, Global Corporate SustainabilityAwards, and The Most Prestigious Sustainability Awards - Top Ten Domestic Award. CAL also won the
Climate Leadership Award ten consecutive years and obtained our 11th IOSA flight safety certification. The
constant stream of accolades is a testament to CAL’s commitment to the pursuit of excellence.

542023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusCAL Named APEX Five Star Global Airline for Eighth Straight YearCAL strives to provide travelers with the best service and was named the 2024 Five Star
Global Airline by APEX. For the award, travelers rate airlines based on the five categories
of seat comfort, cabin service, food and beverage, entertainment, and Wi-Fi. CAL also
won the award for Best Wi-Fi in the Greater China region. All aircraft from our nextgeneration 777, A350 and A321neo fleets are now equipped with onboard Wi-Fi. The
A321neo, the all-new mainstay on regional routes, even provides travelers with free Wi-Fi
text messaging services.

CAL Rated Best Airline in North
Asia by Global Traveler in the US

CAL Named Design Airline of theYear (Asia) by TheDesignAir

CAL continued the long-running streak ofbeing named Best Airline in North Asia
in the 20th Global Traveler Test Reader
Survey hosted by Global Traveler, therenowned U.S. travel magazine. Our
longstanding commitment to providing
a high-standard service that makes
travelers feel at home on every flight
won the praise and preferences ofinternational travelers.

CAL was once again named Design
Airline of the Year (Asia) and thefour th design airline in the worldby TheDesignAir, the well-known
international airline design review guide.
Our accomplishments have received
extensive international recognition.

55

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusCAL Ranked in the Top 1% by 2023 S&P Global Sustainability Yearbook
S&P Global, the international sustainability ratings agency, recently announced theresults of the Sustainability Yearbook 2023. Being placed in the Top 1% made CAL
Taiwan’s top transport operator by total ESG score. Just five airlines were included in
the Yearbook this year.

CAL Makes First Passenger Flightwith Sustainable Aviation Fuels
CAL took part in The Sustainable Flight
Challenge (TSFC) by SkyTeam Alliancefor a second time in 2023 with the launchof the Sustainability Demonstration
Flight on the Taipei-Singapore route.
CAL became the first Taiwanese carriert o o p e ra t e p a s s e n g e r f l i g h t s w i t h
Sustainable Aviation Fuels (SAF). Our
outstanding performance earned the Best
Inflight Supply Chain and Best Adopted
Solution awards, setting an example forpartner airlines.

CAL Wins 10th TCSA Awards and The Most Prestigious Award for Top Ten
Domestic Companies
The emphasis on sustainability and continued successes at CAL garnered five awards at
the Taiwan Corporate Sustainability Awards (TCSA) and Global Corporate SustainabilityAwards (GCSA). We were awarded the Most Prestigious Awards - Top Ten Domestic
Companies (Service Industry) with our first nomination in this category. At the sametime, CAL won back-to-back awards for Best Report in sustainability reporting and the
Climate Leadership award for the 10th consecutive year.

562023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

Inclusion in DJSI for 8th Yearand Top Score for Environmental Aspectin the Global Airline Industry
The Dow Jones Sustainability Indices (DJSI) is themost authoritative index on corporate sustainability
performance in the world. CAL was chosen as aconstituent stock for the DJSI Emerging Markets forthe 8th straight year. We were the only Taiwanese airline
to be included, further cementing our leadership insustainability within the airline industry. CAL scoredfull marks in the Waste, Water, Passenger Safety,
Sustainable Marketing and Brand Perception, Business
Ethics, and Transparency and Reporting categories,
as well as the highest score in the airline industry for
the Biodiversity, Talent Attraction and Retention, Cyber
Security and System Availability, and Labor Practice
Indicators categories. An outstanding performance in allten categories demonstrated our success in integrating
business strategy with sustainability philosophy.

Global and Industry Excellenceat the 12th CDP Ratings
CAL has been responding to the Carbon Disclosure
Project (CDP) management questionnaire every year
since 2012. The questionnaire is a voluntary disclosure
made to leading international investment institutions
regarding the risk management measures adopted
throughout the company in response to climate change.
Our grade of B for carbon management performance in2023 surpassed the airline industry average both in Asiaand globally.

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusSecond Crossover Travel Kit Wins Travel Plus
Gold Award for Sustainability
CAL’s second crossover partnership with The North Facefused the travel life philosophy of China Airlines and theoutdoor spirit of The North Face to deliver a stylish andlively flying accessory. The all-new travel kit features
environmentally sustainable and high-performance inflight skin care products from the Norwegian brand
SPREKENHUS. Eco-friendly materials were given
precedence for everything from the packaging to thecontents to encourage travelers to join in protecting theenvironment. The Premium Business Class travel packwon praise for its flexible carry-strap and sustainability
philosophy, beating out many other airline designs to win
the Gold Award for Asia/Oceania from Travel Plus.

Ministry of the Interior Renews Diamond Green
Building Mark for Administrative Center in CAL Park
Carbon reduction for ground operations is an importantcomponent of CAL’s commitment to realizing thetarget of net zero carbon emissions by 2050. Greenbuildings in particular will play a critical role. CAL
continued to upgrade the energy efficiency of buildings
at CAL Park resulting in the renewal of Diamond Green
Building Mark. In 2023, CAL continued to replace andupgrade energy intensive equipment and facilities,
installed energy monitoring equipment and systems
that surpassed statutory requirements, and completedplans to install two solar power facilities. Electricvehicle charging pillars were also installed for the carpark at CAL Park, bringing the infrastructure for electrictransportation closer to completion.
57

2023 CHINA AIRLINESANNUAL REPORTCAL Included in Taiwan High
Compensation 100 Index and
Taiwan Employment 99 Index
CAL is a strong advocate for corporatesocial responsibility and has continued
to implement corporate governance.
We have always respected employee
rights, and we provide competitive
remuneration and employee benefits.
Our policies on fair compensation,
profit-sharing, and job creation in
Taiwan led to CAL being chosen asa constituent stock for Taiwan High
Compensation 100 Index and Taiwan
Employment 99 Index.

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusCAL Named Asia's Best Cargo Airline for Cold Chain Logistics
CAL was named the 2022 Best Cargo Airline (Asia) by the Air Cargo News magazine.
International recognition of our expertise in freight was reinforced by the renewalof the IATA Center of Excellence for Independent Validators in Pharmaceutical
Logistics (CEIV Pharma) certification. CAL entered the pharmaceutical cold-chain
logistics market in 2013. Active temperature-controlled containers were introduced
in 2014 and we became the first Taiwanese airline to receive CEIV Pharma
certification from the IATA in 2019. The renewal of CEIV Pharma certification in
2022 demonstrated the quality and reliability of our cold chain logistics. Thanks toextensive experience with transporting temperature-controlled cargo, comprehensive
passenger and cargo network, as well as professional station staff and agents, CAL
has undertaken many transportation missions for vaccines purchased by Taiwan.
We have also been successful in competing for vaccine transshipments and haveplayed a crucial role in international vaccine deliveries. More than 2,100 temperaturecontrolled containers were transported by CAL in 2023, a significant increase overthe 1,900 in 2022.

11th IOSA Certification of
Aviation Safety
Safety is the core value of CAL. We
passed our first IATA Operational
Safety Audit (IOSA) in 2005 and haveso far completed eleven successful
ISOA Renewal Audits. CAL continues
to undergo IOSA Renewal Audits inaccordance with IATA regulations.
We work actively to ensure theintegrity of our safety operations andour continued compliance with thehighest international cer tification
standards.

582023 CHINA AIRLINESANNUAL REPORT

Financial Status

τ Financial and Operational Analysis

τ 2023 Financial Statements

592023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

Financial
Status2023 Financial
Statements

Financial and Operational Analysis
Operating Income and
Net Income (Loss)
In 2023, China Airlines’ operating
income was TWD6.59 billion(operating margin 4.08%), an increaseof TWD0.68 billion over 2022. Net
Income was TWD6.82 billion (netmargin 4.22%), an increase of
TWD3.96 billion over 2022.

Operating Income & Operating Margin
Operating Income

In 2023, total operating revenue was
TWD161.68 billion, an increase of
14.61% yoy. Total operating costs
increased by 14.75% to TWD155.08
billion. Passenger revenue increased
by 383.71% to TWD99.06 billion andcargo revenue decreased by 50.93%
to TWD56.85 billion, respectively.
Other revenue increased by 21.96% to
TWD5.77 billion.

Operating Margin

TWD million

1412,00018,00012

10,00015,00010

8,000

12,000

8

6,000

9,000

6

4,000

6,000

4

2,000

3,000

2

0

0

-2000

2019

2020

2021

2022

2023

Operating Revenue & Costs

Operating Revenue

TWD million

21,0000Operating Revenue

Net Income(Loss) & Net Margin
Operating Costs

%
8
6
4
2
0

2019

2020

2021

2022

2023

-2

Revenue Composition, 2023
Net Income(Loss)

Net Margin

TWD million

160,000
140,000

Cargo Revenue
61.27%
Passenger Revenue
35.16%
Other Revenue
3.57%

120,000
100,000
80,00060,000

2019

2020

2021

2022

2023

60

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusFinancial andOperational Analysis

Passenger Business
Passenger revenue was TWD99.06
billion in 2023, an increase by 383.71%
over 2022. According to the breakdownof passenger revenue by routes, North
America represented the prime market
contributing 25.68%, followed by
Northeast Asia ,Southeast Asia andEurope with the contribution of 25.43%,
17.59% and 13.39%, respectively.

Passenger Revenue

Passenger Revenue Breakdown by Routes, 2023

TWD million

120,000
N. America

25.68%

S. E. Asia

17.59%

80,000Europe13.39%

60,000Oceania7.29%

100,000

Mainland China 6.66%

40,00020,0000Compared with those in 2022,
passenger capacity (ASK) increasedby 190.59%, passenger traffic(RPK) increased by 413.57%, andpassenger yield decreased by 5.79%
to 2.93 (TWD/RPK). Passenger loadfactor increased by 33.94 ppt to78.19%.

2023 Financial
Statements

2019

2020

2021

2022

Hong Kong

3.96%

N. E. Asia

25.43%

2023

Passenger Capacity & Traffic

Passenger Load Factor & Yield益
ASK

Passenger Load Factor

RPK

million%60,00090

Passenger Yield
TWD/RPK

6

80

50,000570
40000
30,00050

20,000

40

3
2

30

10,000
0

4

60

1

20
2019

2020

2021

2022

2023

10

2019

2020

2021

2022

2023

0

61

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusFinancial andOperational Analysis

Cargo Business
Cargo revenue was TWD56.85 billion
in 2023, a decrease by 50.93% over2022. According to the breakdown
of cargo revenue by routes, North
America represented the prime market
contributing 56.76%, followed by
Europe ,Southeast Asia and Mainland
China with the contribution of 14.06%,
11.14% and 10.15%, respectively.

Cargo Revenue

2023 Financial
Statements

Cargo Revenue Breakdown by Routes, 2023

TWD million

120,000
100,000

N. America

80,00056.76%

S. E. Asia

11.14%

Europe14.06%

60,000Mainland China 10.15%

40,000N. E. Asia

5.20%

Oceania

2.70%

20,0000

In 2023 cargo capacity (FATK) decreased
by 4.17%. Cargo Traffic (FRTK) decreased
by 16.11% yoy, and cargo yield decreased
by 41.52% to 10.65(TWD/FRTK). Cargoload factor decreased by 9.58 ppt to67.39%.

2019

2020

2021

2022

2023

Cargo Capacity & Traffic

Cargo Load Factor & Yield

million%Cargo Yield
TWD/FRTK

10,000

80

18

FATK

Cargo Load Factor

FRTK

16

8,000
70

6,000

14
12

4,000
60

10

2,000
0

8
2019

2020

2021

2022

2023

50

2019

2020

2021

2022

2023

6

62

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

Operating Costs and Employee
Productivity

Categorized Breakdown of Costs, 2023

Unit Cost
34.72%

15

Airport & Ground
Handling Charges 10.23%

13

Labor

14.57%

Maintenance Costs 12.10%
Sale & General
Administratio

3.67%

Insurance

0.22%

Others

2.85%

ATK & RTK per Employee

ATK/Employee
RTK/Employee

11
9
7
5

2019

1,000 TWD/Employee

1,200,000

15,0001,100,000

14,0001,000,000

13,000900,000

12000

800,000

11000

700,000

10,000
2019

2020

2021

2022

2023

2020

2021

2022

2023

2021

2022

2023

Revenue per Employee

ATK & RTK/Employee

600,000

Unit Cost excluding Fuel Costs

TWD/ATK

Rental & Depreciation& Amortization
17.90%

Passenger Service 3.74%

As of December 31st 2023, the numberof average employees for 2023
was 11,029. Employee productivity,m e a s u r e d b y AT K p e r e m p l o y e e
increased by 20.26% yoy, RTK per
employee increased by 17.83% yoy,and revenue per employee increased by
12.07% yoy.

2023 Financial
Statements

Overall Unit Cost

Fuel costs

Operating expenses were TWD155.08
billion in 2023. The three largest cost
items were fuel (34.72%), depreciation &amortization (17.9%),and labor (14.57%).
Overall unit cost decreased by 6.68% yoy
to 13.13 (TWD/ATK), unit cost excluding
fuel cost increased by 1.78% yoy.

Financial
Status

9,000

2019

2020

63

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

2023 Financial Statements
INDEPENDENT AUDITORS' REPORT

Financial
Status2023 Financial
Statements

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

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

1.

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

2.

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

3.

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

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

64

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

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

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

2.

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

3.

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

4.

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

5.

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

6.

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

Financial
Status2023 Financial
Statements

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

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

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

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

65
- 3 -

- 4 -

(With Deloitte & Touche auditors’ audit report dated March 8, 2024)

The accompanying notes are an integral part of the financial statements.

TOTAL

- 5 -

$ 264,966,406

100$ 268,092,198

70,000,201

100

26

3
3
-

22
1

74

51

12
3
21
1
6
4
3
1

23

4
5
1
6
1
1
4
1

Financial andOperational Analysis

28

925,385
6,384,381
7,309,766(534,375)(30,875)

60,135,374
3,120,311

198,091,997

135,811,114

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

62,280,883

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

China
Airlines’ Glory

74,591,115

1
3
4
-

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

Environmental
Protection Trends

Total equity

23
1

72

42

60,513,407
3,887,046

190,375,291

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

110,703,328

10
2
16
1
6
4
3
-

30

3
6
9
1
2
7
2

100

Demonstrating Commitment
to Flight Safety

Total non-current liabilities

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

79,671,963

8,886,485
1,049,762
1,297,950
14,977,536
212,883
1,351,737
23,107,378
2,591,751
4,723,814
17,297,086
4,175,581$ 268,092,198

78

4
43
20
1
2
8

2023 Operational Overview
and 2024 Outlook

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

100

208,555,953

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

22

10
2
2
4
4
-

%

Board ofDirectors

Total current liabilities

CURRENT LIABILITIESFinancial liabilities for hedging - current (Notes 4, 19 and 29)
Notes and accounts payable (Note 29)
Accounts payable - related parties (Note 30)
Other payables (Notes 20 and 25)
Current tax liabilities
Lease liabilities - current (Notes 4, 19 and 29)
Contract liabilities current (Notes 4 and 21)
Provisions - current (Notes 4 and 22)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 18, 24 and 29)
Current portion of long-term borrowings (Notes 17, 29 and 31)
Other current liabilities$ 264,966,406

79

5
42
17
1
3
11

59,536,245$ 27,492,827
4,764,601
4,031,662
10,529,664
130,678
709,962
10,568,039
1,308,812

2022
AmountA Message fromthe President

LIABILITIES AND EQUITY

TOTAL

208,377,626

8
1
4
3
4
1
21

%

A Message fromthe Chairman

Total non-current assets

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

56,588,780$ 20,385,668
3,086,923
10,353,943
9,023,469
172,826
265,955
567,882
10,476,961
1,290,581
964,572

2023
AmountFinancial
Highlights

NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 7 and 29)
Investments accounted for using the equity method (Notes 4 and 12)
Property, plant and equipment (Notes 4, 5, 13 and 31)
Right-of-use assets (Notes 4 and 19)
Investment properties (Notes 4 and 14)
Other intangible assets (Notes 4 and 15)
Deferred tax assets (Notes 4 and 26)
Finance lease receivables - non-current (Notes 4, 19 and 29)
Other non-current assets (Notes 16, 19, 29 and 31)

Total current assets

CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 29)
Financial assets at amortized cost - current (Notes 4, 8 and 29)
Financial assets for hedging - current (Notes 4, 6 and 29)
Notes and accounts receivable, net (Notes 4, 9 and 29)
Notes and accounts receivable - related parties (Notes 29 and 30)
Finance lease receivables - current (Notes 4, 19 and 29)
Other receivables (Notes 4 and 29)
Inventories (Notes 4 and 10)
Non-current assets held for sale (Notes 4, 5 and 11)
Other current assets (Note 16)

ASSETSBALANCE SHEETSDECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

CHINA AIRLINES, LTD.

2023 CHINA AIRLINESANNUAL REPORT
Financial
Status2023 Financial
Statements

66

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

CHINA AIRLINES, LTD.

CHINA AIRLINES, LTD.

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

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

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

100$ 141,069,849

100

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

144,040,004

89

128,089,348

91

GROSS PROFIT

17,635,529

11

12,980,501

9

OPERATING EXPENSES (Notes 4, 25 and 30)

11,041,166

7

7,063,461

5

PROFIT FROM OPERATIONS

6,594,363

4

5,917,040

4

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

1
(1)
(1)

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

1
1
(1)

2,720,299

2(2,939,603)(2)

1,461,091

1(2,028,138)(1)

PROFIT BEFORE INCOME TAX

8,055,454

5

3,888,902

3

INCOME TAX EXPENSE (Notes 4 and 26)

1,236,902

1

1,029,399

1

NET PROFIT FOR THE YEAR

6,818,552

4

2,859,503

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

-

8,570

-

(322,908)-

28,890-(200,784)-

219,689-

64,543-(67,750)-

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

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

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

Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAREARNINGS PER SHARE (NEW TAIWANDOLLARS; Note 27)
Basic
Diluted$Financial
Status2023 Financial
Statements

2022
Amount%(7,093)-(4,555)

141,415

-

-

2,814

-

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

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

6,049,509

4(292,972)

-

$
$

1.13
1.11

$

%

$

$
$

0.48
0.47

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

67
- 6 -

- 7 -

2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial andOperational Analysis

CHINA AIRLINES, LTD.

Financial
Status2023 Financial
Statements

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

Retained Earnings
Share Capital

Capital Surplus

Legal Reserve

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

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

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

Changes in capital surplus from dividends distributed tosubsidiaries
Net profit for the year ended December 31, 2022

BALANCE AT JANUARY 1, 2022-

$ 9,253,848

-

-

-

-

925,385
-

-

-

1,725

-

-

-

-

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

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

Convertible bonds converted to ordinary shares
OthersBALANCE AT DECEMBER 31, 2022-

UnappropriatedEarnings

Exchange
Differences on
Translation of the
Financial
Statements ofForeign Operations$(120,079)

Other Equity
Unrealized Gain
(Loss) on Financial
Assets at Fair
Value Through
Other
Comprehensive
Income$Gain (Loss) on
Hedging
Instruments(5,512)$ 2,839,419--(925,385)(5,000,000)

-

-

-

-

2,859,503

-

-

-

-

723,131424,050-

7Treasury Shares$

Total Equity(30,875)$ 74,043,573

100,687-

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

-

-

-

-

1,725

-

-

-

-

2,859,503

196,415

115,781

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

3,055,918

115,781

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

-

-

-

-

-

-

-

1,147,181

-

-

-

-

-

-

-

7

60,135,374

3,120,311

925,385-

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

70,000,201

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

168,844-

168,844

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

305,592-

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

-

-

-

-

(2,772,207)

Changes in capital surplus from dividends distributed tosubsidiaries

-

955

-

-

-

-

-

-

-

955

Changes in percentage of ownership interests in subsidiaries-

452,110

-

-

-

-

-

-

-

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

24,055

-

-

-

-

-

-

-

24,055

Net profit for the year ended December 31, 2023

-

-

-

-

6,818,552

-

-

-

-

6,818,552

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

-

-

-

-

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

Total comprehensive income (loss) for the year ended
December 31, 2023
Convertible bonds converted to ordinary shares
BALANCE AT DECEMBER 31, 2023

-

-

-

-

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

6,049,509

378,033

289,615

-

-

-

-

-

-

-

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

534,375$ 9,146,199(30,875)$ 74,591,115$$(12,965)$

22,726$(699,775)$

The accompanying notes are an integral part of the financial statements.

68(With Deloitte & Touche auditors’ audit report dated March 8, 2024)- 8 -2023 CHINA AIRLINESANNUAL REPORT

Financial
Highlights

A Message fromthe Chairman

A Message fromthe President

Board ofDirectors

2023 Operational Overview
and 2024 Outlook

Demonstrating Commitment
to Flight Safety

Environmental
Protection Trends

China
Airlines’ Glory

Financial
StatusFinancial andOperational Analysis

CHINA AIRLINES, LTD.

CHINA AIRLINES, LTD.

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands of New Taiwan Dollars)
2023

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

8,055,454

2022$

3,888,902

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

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

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

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

Net cash generated from operating activities

47,892,511

45,586,790

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost
Proceeds from sale of financial assets at amortized cost
Purchase of financial assets for hedging
Proceeds from sale of financial assets for hedging(17,155,191)
18,700,767(16,276,122)
9,497,256(4,793,951)
11,923,194(9,535,604)
9,063,037(Continued)

2023 Financial
Statements2023
Acquisition of investments accounted for using the equity method
Net cash inflow on disposal of investments accounted for using theequity method
Proceeds from capital reduction of subsidiaries
Proceeds from disposal of non-current assets held for sale
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in finance lease receivables
Decrease in finance lease receivables
Increase in prepayments for equipment
Payments for other intangible assets
Decrease (increase) in restricted assets$(599,821)

2022
$

-

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

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

91,680(394,070)

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

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

27,492,827

35,913,117

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

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

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

69
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- 10 -

Together with You,

Blossoming in the Sky