China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theYears Ended December 31, 2021 and 2020 and
Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordancewith the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports andConsolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2021 are
all the same as the companies required to be included in the consolidated financial statements of parent
and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated
Financial Statements.” Relevant information that should be disclosed in the consolidated financial
statements of affiliates has all been disclosed in the consolidated financial statements of parent andsubsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements ofaffiliates.

Very truly yours,
CHINA AIRLINES, LTD.

March 15, 2022

-1-

INDEPENDENT AUDITORS’ REPORTThe Board of Directors and Shareholders
China Airlines, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of China Airlines, Ltd. andits subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance
sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive
income, changes in equity and cash flows for the years then ended, and the notes to theconsolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”).
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, andits consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, and International Financial Reporting Standards (IFRS), International AccountingStandards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued
into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestationof Financial Statements by Certified Public Accountants and auditing standards generally acceptedin the Republic of China. Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of ourreport. We are independent of the Group in accordance with The Norm of Professional Ethics for
Certified Public Accountant of the Republic of China, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient 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 consolidated financial statements for the year ended December 31, 2021. These
matters were addressed in the context of our audit of the consolidated financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.

-2-

Key audit matter in the audit of the Group’s consolidated financial statements is stated below:
Recognition of Cargo Revenue
In accordance with IFRS 15 “Revenue from Contracts with Customers”, cargo sales are accounted
for as cargo revenue after relevant transportation services have been provided. For the year ended
December 31, 2021, cargo revenue amounted to NT$124,541,265 thousand. Refer to Notes 4 and
27 to the accompanying consolidated financial statements for detailed information.
Cargo rates are highly affected by the supply and demand of the market and sales can only berecognized after relevant transportation services are provided. The input, processing andmaintenance of freight information on the airway bills involve manual operations. Therefore, we
identified the recognition of cargo revenue as a key audit matter.
Our main audit procedures performed included the following:1.

We understood the internal controls related to the recognition of cargo revenue, including
manual and automatic controls.

2.

We understood and tested the effectiveness of information system related to the recognition ofcargo revenue.

3.

We sampled the airway bills, confirmed that cargo rates were consistent with those stated in
airway bills, and verified the accuracy of cargo revenue.

Other Matter
We did not audit the financial statements of some subsidiaries which were included in the
consolidated financial statements. Such financial statements were audited by other independent
auditors, and our audit opinion is based solely on the reports of other auditors.
As of December 31, 2021 and 2020, total assets of these subsidiaries amounted to NT$13,453,308
thousand and $11,694,612 thousand, representing 4.56% and 4.12% of the consolidated total assets,
respectively. For the years ended December 31, 2021 and 2020, revenue from these subsidiaries
amounted to NT$90,843 thousand and $1,880,836 thousand, representing 0.07% and 1.63% of theconsolidated total revenue, respectively.
We have also audited the parent company only financial statements of China Airlines, Ltd. as ofand for the years ended December 31, 2021 and 2020 on which we have issued an unmodified
opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the Regulations Governing the Preparation of Financial Reports by
Securities Issuers, and International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China,
and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

-3-

In preparing the consolidated financial statements, management is responsible for assessing theGroup’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 toliquidate the Group 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 theGroup’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditors’ report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with the auditing standards
generally accepted in 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 consolidated financial statements.
As part of an audit in accordance with the auditing standards generally accepted in the Republic ofChina, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:1.

Identify and assess the risks of material misstatement of the consolidated 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 from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override 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 Group’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 Group’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 consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events 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 Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision, and performance of the groupaudit. We remain solely responsible for our audit opinion.

-4-

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 consolidated financial statements for the year
ended December 31, 2021 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 reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partners on the audits resulting in this independent auditors’ report are Jui-Chan
Huang and Shiuh-Ran Cheng.

Deloitte & Touche
Taipei, Taiwan
Republic of China
March 15, 2022

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

-5-

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars)

2021
Amount%2020
Amount%$ 45,269,866
155,780
13,028,521
3,563,319
13,473,493
2,348
752,764
59,3418,814,975
36,719692,464

15
5
1
5
3
-

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

10
2
3
4
3
-

85,849,590

29

61,872,468

22

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

1
44
19
1
2
4

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

1
50
21
1
2
3

208,871,491

71

222,321,616

78$ 294,721,081

100$ 284,194,084

100

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 31)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 31)
Financial assets at amortized cost (Notes 9 and 31)
Financial assets for hedging - current (Notes 4, 6 and 31)
Notes and accounts receivable, net (Notes 4, 10 and 31)
Notes and accounts receivable - related parties (Notes 31 and 32)
Other receivables (Notes 4 and 31)
Current tax assets (Notes 4 and 28)
Inventories (Notes 4 and 11)
Non-current assets held for sale (Notes 4, 5 and 12)
Other current assets (Note 18)
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 8 and 31)
Financial assets at amortized cost (Notes 4, 9 and 31)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 33)
Right-of-use assets (Notes 4, 21 and 33)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred tax assets (Notes 4, 5 and 28)
Other non-current assets (Notes 18, 21, 31 and 33)
Total non-current assets
TOTAL

LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term borrowings (Note 19)
Short-term bills payable (Note 19)
Financial liabilities for hedging - current (Notes 4, 21 and 31)
Notes and accounts payable (Note 31)
Accounts payable - related parties (Notes 31 and 32)
Other payables (Notes 22 and 31)
Current tax liabilities (Notes 4 and 28)
Lease liabilities - current (Notes 3, 4 and 21)
Contract liabilities - current (Note 23)
Provisions - current (Notes 4 and 24)
Current portion of bonds payable and put option of convertible bonds (Notes 4, 20, 27 and 31)
Current portion of long-term borrowings (Notes 19, 31 and 33)
Other current liabilities (Note 31)

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

1
3
3
1
3
1
1
4
5
-

18

62,649,715

22

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

10
4
29
5
1
4
3
-

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

11
4
27
1
5
5
4
-

Total non-current liabilities

164,276,958

56

160,832,796

57

Total liabilities

217,516,063

74

223,482,511

79

59,412,243
2,694,529

20
1

54,209,846
1,187,327

19-

9,253,848
9,253,848
2,713,828(30,875)33
1-(350,581)(350,581)
2,543,766(30,875)1-

74,043,573

25

57,559,483

20

3,161,445

1

3,152,090

1

77,205,018

26

60,711,573

21$ 294,721,081

100$ 284,194,084

100

Total current liabilities
NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 3, 4, 21 and 31)
Bonds payable - non-current (Notes 4, 20, 27 and 31)
Long-term borrowings (Notes 19, 31 and 33)
Contract liabilities - non-current (Notes 4 and 23)
Provisions - non-current (Notes 4 and 24)
Current tax liabilities - non-current (Notes 4 and 28)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 3, 4, and 21)
Net defined benefit liabilities - non-current (Notes 4, 5 and 25)
Other non-current liabilities (Note 31)

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

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

-6-$

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

1
3
5
1
1
1
1
1
3
1

53,239,105$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)%

2020
Amount%$ 138,841,403

100$ 115,250,550

100

OPERATING COSTS (Notes 4, 10, 11, 17, 24, 25, 27
and 32)

115,486,946

83

105,031,349

91

GROSS PROFIT

23,354,457

17

10,219,201

9

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

8,386,422

6

8,034,785

7

PROFIT FROM OPERATIONS

14,968,035

11

2,184,416

2

938,526(1,971,093)(2,407,442)

1
(2)
(2)

686,574(265,990)(3,057,963)

1(3)(401,421)-(200,834)-(3,841,430)(3)(2,838,213)(2)

PROFIT (LOSS) BEFORE INCOME TAX

11,126,605

8(653,797)-

INCOME TAX (EXPENSE) BENEFIT (Notes 4, 5
and 28)(2,169,941)(2)

373,983-

NET INCOME (LOSS) FOR THE YEAR

8,956,664

6(279,814)-(75,214)-(474,202)(1)(95,864)-(45,588)-(64,137)-(399,150)-

10,779-34,271-

26,961(197,475)-

OPERATING REVENUE (Notes 4, 27 and 32)

NON-OPERATING INCOME AND EXPENSES
Other income (Notes 4, 8 and 27)
Other gains and losses (Notes 12, 14, 15, 27 and 31)
Finance costs (Notes 27 and 31)
Share of the profit of associates and joint ventures(Note 14)
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, 26 and 31)
Unrealized gain (loss) on investments in equity
instruments at fair value through othercomprehensive income (Note 8)
Remeasurement of defined benefit plans (Notes 4
and 25)
Share of the other comprehensive income (loss) of
associates and joint ventures accounted forusing the equity method (Notes 4 and 14)
Income tax related to items that will not bereclassified subsequently to profit or loss
(Note 28)

-7-

2021
Amount144,158(740,511)(1)(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2021
AmountItems that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of thefinancial statements of foreign operations(Notes 4 and 26)
Gain on hedging instruments not subject to basis
adjustment (Notes 4, 26 and 31)
Income tax related to items that may bereclassified subsequently to profit or loss
(Note 28)$

NET INCOME (LOSS) ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests

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

EARNINGS PER SHARE (NEW TAIWANDOLLARS; Note 29)
Basic
Diluted%--2,103,332

2(57,330)
228,056-(400,801)
1,604,583

230,581-

864,0721$

8,987,245

6$584,258

1$

9,379,905(423,241)

7
(1)

$

140,000(419,814)-$

8,956,664

6$(279,814)-$

9,429,042(441,797)

7
(1)

$

966,968(382,710)

1-$8,987,245

6$584,2581$$

18,156-267,230

1.67
1.54

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

-8-

$

%

(97,948)

Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR

2020
Amount

$
$

0.03
0.03

(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Company

Retained Earnings

BALANCE AT JANUARY 1, 2020

Share Capital

Capital Surplus

Legal Reserve

Special Reserve

UnappropriatedEarnings(Accumulated
Deficit)$ 54,209,846

$

$

$

12,967$ (1,777,225)

2,488,907

466,416

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

Other Equity
Unrealized Gain
(Loss) on
Financial Asset at
Fair
Value Through
Other
Comprehensive
Income$107,262

Gain (Loss) on
Hedging
Instruments$

1,143,678

Treasury Shares
Held by
Subsidiaries$

Non-Controlling
Interests

Total(43,372)$ 56,553,772$

Total Equity

3,578,345$ 60,132,117

Issuance of employee share options by subsidiaries

-

172

-

-

-

-

-

-

-

172

52

224

Changes in percentage of ownership interests in subsidiaries

-

-

-

-

(169,272)

-

-

-

-

(169,272)

331,427

162,155

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

200,989-

200,989-

200,989

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

466,416
12,967
1,297,843

-

-

-

-

-

-

-

Net profit (loss) for the year ended December 31, 2020

-

-

-

-

140,000

-

-

-

-

140,000(419,814)(279,814)

Other comprehensive income (loss) for the year ended December 31, 2020,
net of income tax

-

-

-

-

(319,576)(79,545)(35,903)

1,261,992-

826,968

37,104

864,072

Total comprehensive income (loss) for the year ended December 31, 2020

-

-

-

-

(179,576)(79,545)(35,903)

1,261,992-

966,968(382,710)

584,258

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

12,497

6,854

-

6,854

Cash dividends distributed to non-controlling interests by subsidiaries

-

-

-

-

-

-

-

-

-

-

(375,024)(375,024)

54,209,846

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

71,3592,606,659(30,875)

57,559,483

3,152,090

60,711,573

Basis adjustment to gain (loss) on hedging instruments

-

-

-

-

-

-

-

99,507-99,507-99,507

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

350,581

-

-

-

-

-

-

-

Issuance of employee share options by subsidiaries

-

540

-

-

-

-

-

-

-

540

126

666

Changes in percentage of ownership interests in subsidiaries

-

-

-

-

(104,639)

-

-

-

-

(104,639)

575,753

471,114

Net profit (loss) for the year ended December 31, 2021

-

-

-

-

9,379,905

-

-

-

-

9,379,905(423,241)

8,956,664

Other comprehensive income (loss) for the year ended December 31, 2021
net of income tax

-

-

-

-

(21,418)

14,173(76,871)

133,253-

49,137(18,556)

30,581

Total comprehensive income (loss) for the year ended December 31, 2021

-

-

-

-

9,358,487

14,173(76,871)

133,253-

9,429,042(441,797)

8,987,245

Equity component of convertible bonds issued by the Company-

188,862

-

-

-

-

-

-

-

188,862-

188,8625,202,397

1,668,381

-

-

-

-

-

-

-

6,870,778-

6,870,778

-

-

-

-

-

-

-

-

-

-

(124,727)(124,727)(30,875)$ 74,043,573

3,161,445$ 77,205,018

BALANCE AT DECEMBER 31, 2020

Convertible bonds converted to ordinary shares
Cash dividends distributed to non-controlling interests by subsidiaries
BALANCE AT DECEMBER 31, 2021

$ 59,412,243$

2,694,529

$

-

$

-

$

9,253,848

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

-9-$(120,079)$(5,512)$

2,839,419$$

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars)

2021
CASH FLOWS FROM OPERATING ACTIVITIESIncome (loss) before income tax
Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities atfair value through profit or loss
Interest income
Dividend income
Share of loss (profit) of associates and joint ventures
Loss (gain) on disposal of property, plant and equipment
Loss on disposal of investments
Impairment loss recognized on property, plant, equipment
Loss on inventories and property, plant and equipment
Net gain on foreign currency exchange
Compensation costs of employee share options
Finance costs
Impairment loss recognized on investments accounted for using theequity method
Impairment loss recognized on intangible assets
Recognition of provisions
Loss on sale and leaseback transactions
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
Financial liabilities at fair value through profit or loss
Notes and accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Notes and accounts payable
Accounts payable - related parties
Other payables
Contract liabilities
Provisions
Other current liabilities
Defined benefit liabilities
Other liabilities
Cash generated from operations
Interest received
Dividends received- 10 -$ 11,126,605

2020

$

(653,797)

29,728,248
221,459
38,376

31,167,247
206,936
4,895

(186)
(156,339)(12,220)
401,421933,151
540
40,967
1,486,792(1,108,112)
666
2,407,442(2,287)(282,506)(23,043)
200,834(13,347)
424,573471,507(1,338,716)
224
3,057,963

59,901
143,0436,435,015
342,080(3,321)46,757
6,075,077(2,435)

119,424(3,956,141)(90,695)
133,762(840,170)
79,366(127,647)
89,0796,366,239(825,952)(2,042,423)
1,371,927
15,7992,739
52,380,835
153,976
24,840241,592(11,749)(1,073,959)
593,365(85,263)(83,341)
1,830,887(628,780)(1,043,501)(4,295,509)(17,966,621)(1,308,170)(2,620,022)(97,570)(17,082)
12,774,159
304,642
32,433(Continued)

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars)

2021

2020

$ (2,389,939)(284,312)$ (3,209,074)(178,685)

Net cash generated from operating activities

49,885,400

9,723,475

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
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in prepayments for equipment
Payments for other intangible assets
Increase in restricted assets
Net cash inflow on disposal of subsidiaries(13,371,713)
7,248,501(7,126,515)
11,110,497(2,477,191)
595,447(102,544)
136,943(12,249,495)(203,116)(226,905)
942(6,235,773)
1,934,516(10,269,055)
2,363,897(1,237,515)
45,620(63,005)
122,324(11,407,502)(130,461)(171,219)-(16,665,149)(25,048,173)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings(Decrease) increase in short-term bill payable
Proceeds from issuance of bonds payable
Repayments of bonds payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refund of guarantee deposits received
Proceeds from sale and leaseback transactions
Proceeds from issuance of ordinary shares of subsidiaries
Cash dividends paid to non-controlling interests
Proceeds from disposal of treasury shares(8,088,882)
4,500,000(6,300,000)
43,968,069(42,097,170)(10,466,575)
328,432(267,618)
2,810,098
471,114(124,727)-

1,552,000
8,088,882(9,850,000)
45,605,919(20,746,998)(10,583,872)
165,404(156,143)
162,155(375,024)
6,854

Net cash (used in) generated from financing activities(15,267,259)

13,869,177

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

190,937

121,930(Continued)

Interest paid
Income tax paid

Net cash used in investing activities- 11 -

CHINA AIRLINES, LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars)

2021

2020

$ 18,143,929$ (1,333,591)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

27,125,937

28,459,528

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

$ 45,269,866$ 27,125,937

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS

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

- 12 -(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION
China Airlines, Ltd. (the “Company”) was founded in 1959 and its shares have been listed on the Taiwan
Stock Exchange since February 26, 1993. The Company is primarily involved in (a) air transport services
for passengers, cargo and mail; (b) ground services and routine aircraft maintenance; (c) major maintenanceof flight equipment; (d) communications and data processing services to other airlines; (e) the sale ofaircraft parts, equipment and the entire aircraft; and (f) leasing of aircraft.
The major shareholders of the Company are China Aviation Development Foundation (CADF) andNational Development Fund (NDF), Executive Yuan. As of December 31, 2021 and 2020, CADF and NDF
held a combined 40.17% and 44.03%, respectively of the Company’s shares.

2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its subsidiaries (collectively referred to as the“Group”) were approved by the Company’s board of directors on March 15, 2022.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the International Financial Reporting Standards (IFRS),International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)(collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission(FSC)
The initial application of the IFRSs endorsed and issued into effect by the FSC did not have any
material impact on the Group’s accounting policies.
b. The IFRSs endorsed by the FSC for application starting from 2022
Effective Date
Announced by IASBNew IFRSs“Annual Improvements to IFRS Standards 2018-2020”
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling aContract”

January 1, 2022 (Note 1)
January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
January 1, 2022 (Note 4)

Note 1: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges offinancial liabilities that occur on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively tothe fair value measurements on or after the annual reporting periods beginning on or afterJanuary 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied
retrospectively for annual reporting periods beginning on or after January 1, 2022.

- 13 -

Note 2: The amendments are applicable to business combinations for which the acquisition date is on
or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 3: The amendments are applicable to property, plant and equipment that are brought to thelocation and condition necessary for them to be capable of operating in the manner intended
by management on or after January 1, 2021.
Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its
obligations on January 1, 2022.
The application of new IFRSs endorsed by the FSC for application starting from 2022 would not haveany material impact on the Group’s accounting policies. As of the date the consolidated financial
statements were authorized for issue, the Group has assessed that the application of other standards andinterpretations will not have a material impact on the Group’s financial position and financial
performance.
c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
Effective Date
Announced by IASB (Note 1)

New IFRSs
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between An Investor and Its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 Comparative Information”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12 “Deferred Tax related to Assets andLiabilities arising from a Single Transaction”

To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)
January 1, 2023 (Note 4)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods
beginning on or after their respective effective dates.
Note 2: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting
policies that occur on or after the beginning of the annual reporting period beginning on orafter January 1, 2023.
Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences
associated with leases and decommissioning obligations, the amendments will be applied
prospectively to transactions that occur on or after January 1, 2022.
As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact that the application of other standards and interpretations
will have on the Group’s financial position and financial performance and will disclose the relevant
impact when the assessment is completed.

- 14 -

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESStatement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by
the FSC.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments which are measured at fair value.
The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); andc. Level 3 inputs are unobservable inputs for an asset or liability.
Current and Non-current Assets and Liabilities
Current assets include:a. Assets held primarily for the purpose of trading;b. Assets expected to be realized within 12 months after the reporting period; andc. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period.
Current liabilities include:a. Liabilities held primarily for the purpose of trading;b. Liabilities due to be settled within 12 months after the reporting period; andc. Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12
months after the reporting period.
Assets and liabilities that are not classified as current are classified as non-current.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and the entities
controlled by the Company. Income and expenses of subsidiaries acquired or disposed of during the period
are included in the consolidated statements of comprehensive income from the effective dates ofacquisitions up to the effective dates of disposals, as appropriate. When necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies into line with those of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total
comprehensive income of subsidiaries is attributed to the owners of the Company and to thenon-controlling interests even if this results in the non-controlling interests having a deficit balance.
- 15 -

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of theGroup and the non-controlling interests are adjusted to reflect the changes in their relative interests in thesubsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and thefair value of the consideration paid or received is recognized directly in equity and attributed to the ownersof the Company.
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and any
investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the
assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary attheir carrying amounts at the date when control is lost. The Group accounts for all amounts recognized inother comprehensive income in relation to that subsidiary on the same basis as would be required had theGroup directly disposed of the related assets or liabilities.
Foreign Currencies
In preparing the consolidated financial statements of the Group, transactions in currencies other than the
Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at
the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items measured at fair valuethat are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fairvalue was determined. Non-monetary items measured at historical cost that are denominated in a foreign
currency are not retranslated.
Exchange differences on monetary items arising from settlement or translation are recognized in profit orloss in the period in which they arise except for exchange difference on:a. Foreign currency borrowings relating to assets under construction for future productive use, which areincluded in the cost of those assets when they are regarded as an adjustment to interest costs on thoseforeign currency borrowings; andb. Transactions entered into in order to hedge certain foreign currency risks.
Exchange differences arising from the retranslation of non-monetary items are included in profit or loss forthe period except for exchange differences arising from the retranslation of non-monetary items in respectof which gains and losses are recognized directly in other comprehensive income, in which case, theexchange differences are also recognized directly in other comprehensive income.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of eachreporting period. Income and expense items are translated at the average exchange rates for the period. The
resulting currency translation differences are recognized in other comprehensive income (attributed to theowners of the Company and non-controlling interests as appropriate).
On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect ofthat operation attributable to the owners of the Company are reclassified to profit or loss.

- 16 -

Business Combinations
Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of theacquirer’s previously held equity interests in the acquiree over the net of the acquisition-date amounts of theidentifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition dateamounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the considerationtransferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s
previously held interests in the acquiree, the excess is recognized immediately in profit or loss as a bargain
purchase gain.
When a business combination is achieved in stages, the Group’s previously held equity interest in an
acquiree is remeasured to fair value at the acquisition date, and the resulting gain or loss is recognized in
profit or loss or other comprehensive income. Amounts arising from interests in the acquiree prior to theacquisition date that have previously been recognized in other comprehensive income are recognized on thesame basis as would be required had those interests been directly disposed of by the Group.
If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the combination occurs, the Group reports provisional amounts for the items for which theaccounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement
period, or additional assets or liabilities are recognized, to reflect new information obtained about facts andcircumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognized as of that date.
Inventories
Inventories are primarily expendable and nonexpendable parts and materials, supplies used in operations
and items for in-flight sales and are stated at the lower of cost or net realizable value. The costs ofinventories sold or consumed are determined using the weighted-average method.
Non-current Assets Held for Sale
Non-current assets are classified as held-for-sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the non-current asset is available for immediate sale in its present condition.
To meet the criteria for the sale being highly probable, the appropriate level of management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one
year from the date of classification.
Non-current assets classified as held-for-sale are measured at the lower of their previous carrying amountand fair value less costs to sell. Recognition of depreciation of those assets would cease.
Investments in Associates and Joint Ventures
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor
an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties
that have joint control of the arrangement and the rights to the net assets of the arrangement.
The Group uses the equity method to account for its investments in associates and joint ventures.
Under the equity method, investments in an associate and a joint venture are initially recognized at cost andadjusted thereafter to recognize the Group’s share of profit or loss and other comprehensive income of theassociate and joint venture. The Group also recognizes the changes in the Group’s share of equity of
associates and joint venture attributable to the Group.

- 17 -

Any excess of the cost of acquisition over the Group’s share of net fair value of the identifiable assets andliabilities of an associate and a joint venture at the date of acquisition is recognized as goodwill, which isincluded within the carrying amount of the investment and is not amortized. Any excess of the Group’s
share of net fair value of the identifiable assets and liabilities over the cost of acquisition, after
reassessment, is recognized immediately in profit or loss.
When the Group subscribes for additional new shares of an associate and a joint venture at a percentage
different from its existing ownership percentage, the resulting carrying amount of the investment differsfrom the amount of the Group’s proportionate interest in the associate and joint venture. The Group records
such a difference as an adjustment to investments with the corresponding amount charged or credited tocapital surplus - changes in capital surplus from investments in associates and joint ventures accounted forusing the equity method. If the Group’s ownership interest is reduced due to its additional subscription of
the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously
recognized in other comprehensive income in relation to that associate and joint venture is reclassified to
profit or loss on the same basis as would be required had the investee directly disposed of the related assets
or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognizedfrom investments accounted for using the equity method is insufficient, the shortage is debited to retained
earnings.
When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in thatassociate and joint venture (which includes any carrying amount of the investment accounted for using theequity method and long-term interests that, in substance, form part of the Group’s net investment in theassociate and joint venture), the Group discontinues recognizing its share of further loss, if any. Additional
losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, orconstructive obligations, or made payments on behalf of that associate and joint venture.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset
by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms partof the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent
that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date on which its investment ceases to be an
associate and a joint venture. Any retained investment is measured at fair value at that date, and the fairvalue is regarded as the investment’s fair value on initial recognition as a financial asset. The difference
between the previous carrying amount of the associate and joint venture attributable to the retained interestand its fair value is included in the determination of the gain or loss on disposal of the associate and thejoint venture. The Group accounts for all amounts previously recognized in other comprehensive income inrelation to that associate and the joint venture on the same basis as would be required had that associate
directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment
in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group
continues to apply the equity method and does not remeasure the retained interest.
Property, Plant and Equipment
Property, plant and equipment are tangible items that are held for use in the production or supply of goods
or services, for rental to others, or for administrative purposes and are expected to be used for more than
one period. The cost of an item of property, plant and equipment shall be recognized as an asset if, and only
if, it is probable that future economic benefits associated with the item will flow to the Group; and the costof the item can be measured reliably. Property, plant and equipment are stated at cost less recognizedaccumulated depreciation and recognized accumulated impairment loss.

- 18 -

Freehold land is not depreciated.
Depreciation is recognized using the straight-line method. Each significant part is depreciated separately.
The estimated useful lives, residual values and depreciation methods are reviewed at the end of eachreporting period. The impact of any changes in accounting estimates is accounted for on a prospective basis
under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets. Assets are depreciated over the shorter of the lease term and their useful lives using the straight-line
method.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.
Investment Properties
Investment properties are properties held to earn rentals or for capital appreciation. Investment properties
also include land held for a currently undetermined future use.
Investment properties are initially measured at cost, including transaction costs. Subsequent to initialrecognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss.
Depreciation is recognized using the straight-line method, which is the amount of cost less residual value
decvided by the useful life of the investment property.
On derecognition of an investment property, the difference between the net disposal proceeds and thecarrying amount of the asset is included in profit or loss.
Intangible Assets
Intangible assets with finite useful lives that are acquired separately are initially measured at cost andsubsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, andamortization methods are reviewed at the end of each reporting period. The residual value of an intangible
asset with a finite useful life shall be assumed zero unless the Group expects to dispose of the intangible
asset before the end of its economic life. The impact of any changes in accounting estimates is accounted
for on a prospective basis under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
Impairment of Tangible and Intangible Assets Other Than Goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible
assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order todetermine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which theasset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable andconsistent basis; otherwise, corporate assets are allocated to the smallest group of cash-generating units on areasonable and consistent allocation basis.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.

- 19 -

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the Group uses the estimated cash flows discounted by the future pre-tax discount rate, and thediscount rate reflects the current market time value of money and the specific risks to the asset for estimatedfuture cash flows not yet adjusting to the market.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.
When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amountthat would have been determined had no impairment loss been recognized for the asset or cash-generating
unit in prior years. A reversal of an impairment loss is recognized in profit or loss.
Financial Instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issuance of financial assets and financial liabilities (other thanfinancial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of thefinancial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.
a. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade datebasis. All regular way purchases or sales of financial assets are buy or sell of financial assets in the
period set by regulation or market convention.
1) Measurement categories
Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.
a) Financial assets at FVTPL
Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified
or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include
investments in equity instruments which are not designated as at FVTOCI.
Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement
gains or losses on such financial assets are recognized in profit or loss. Fair value is determinedin the manner described in Note 31.
b) Financial assets at amortized cost
Financial assets that meet the following conditions are subsequently measured at amortized
cost:
i. The financial assets are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; andii. The contractual terms of the financial assets give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding.
- 20 -

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash
equivalents, trade receivables, other receivables and other financial assets, are measured atamortized cost, which equals the gross carrying amount determined using the effective interest
method less any impairment loss. Exchange differences are recognized in profit or loss.
Interest income is calculated by applying the effective interest rate to the gross carrying amountof a financial asset.
Cash equivalents include time deposits with original maturities within 3 months from the date ofacquisition, which are highly liquid, readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. These cash equivalents are held for the
purpose of meeting short-term cash commitments.
c) Investments in equity instruments at FVTOCI
On initial recognition, the Group may make an irrevocable election to designate investments inequity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if an equity
investment is held for trading or if it is contingent consideration recognized by an acquirer in abusiness combination.
Investments in equity instruments at FVTOCI are subsequently measured at fair value withgains and losses arising from changes in fair value recognized in other comprehensive income
and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit orloss on disposal of the equity investments; instead, they will be transferred to retained earnings.
Dividends on these investments in equity instruments are recognized in profit or loss when theGroup’s right to receive the dividends is established, unless the dividends clearly represent a
recovery of part of the cost of an investment.
2) Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets at amortizedcost (including trade receivables), as well as contract assets.
The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables and otherreceivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has
been a significant increase in credit risk since initial recognition. If, on the other hand, the credit
risk on a financial instrument has not increased significantly since initial recognition, the Groupmeasures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.
Expected credit losses reflect the weighted average of credit losses with the respective risks of a
default occurring as the weights. Lifetime ECLs represents the expected credit losses that will result
from all possible default events over the expected life of a financial instrument. In contrast,
12-month ECLs represents the portion of lifetime ECLs that is expected to result from default
events on a financial instrument that are possible within 12 months after the reporting date.
The impairment loss of all financial assets is recognized in profit or loss by a reduction in theircarrying amounts through a loss allowance account, except for investments in debt instruments thatare measured at FVTOCI, for which the loss allowance is recognized in other comprehensive
income and the carrying amounts of such financial assets are not reduced.

- 21 -

3) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows fromthe asset expire or when it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
which had been recognized in other comprehensive income is recognized in profit or loss.
b. Equity instruments
Equity instruments issued by the Group are classified as equity in accordance with the substance of thecontractual arrangements and the definitions of an equity instrument.
Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue
costs.
The repurchase of the Group’s own equity instruments is recognized in and deducted directly fromequity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of theGroup’s own equity instruments.
c. Financial liabilities
1) Subsequent measurement
Except for derivative financial instruments, all financial liabilities are measured at amortized costusing the effective interest method.
2) Derecognition of financial liabilities
The difference between the carrying amount of a financial liability derecognized and theconsideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss.
d. Convertible bonds
The component parts of compound instruments (i.e. convertible bonds) issued by the Group areclassified separately as financial liabilities and equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equity instrument.
On initial recognition, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recorded as a liability on anamortized cost basis using the effective interest method until extinguished upon conversion or the
instrument’s maturity date. Any embedded derivative liability is measured at fair value.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and includedin equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion
option classified as equity will remain in equity until the conversion option is exercised, in which case,the balance recognized in equity will be transferred to capital surplus - share premiums. When theconversion option remains unexercised at maturity, the balance recognized in equity will be transferred
to capital surplus - share premiums.

- 22 -

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability andequity components in proportion to the allocation of the gross proceeds. Transaction costs relating to
the equity component are recognized directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component.
e. Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate, foreign exchange rate and fuel price risks, including foreign exchange forward contracts, interest
rate swaps, currency options and fuel options.
Derivatives are initially recognized at fair value at the date on which the derivative contracts are enteredinto and are subsequently remeasured to their fair value at the end of each reporting period. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated andeffective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends
on the nature of the hedging relationship. When the fair value of a derivative financial instrument is
positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial
instrument is negative, the derivative is recognized as a financial liability.
Hedge Accounting
The Group designates certain hedging instruments, which include derivatives and non-derivatives in respectof foreign currency risk, as cash flow hedges. When entering into hedging transactions, the Group has
prepared official documents that describe the hedging relationship between hedging instruments and items
which have been hedged, the objective of risk management, the hedging strategy, and the way to evaluate
the effectiveness of the hedging instrument.
The effective portion of gains and losses on derivatives that are designated and qualify as cash flow hedges
is recognized in other comprehensive income. The gains or losses relating to the ineffective portion arerecognized immediately in profit or loss.
The associated gains or losses that were recognized in other comprehensive income are reclassified fromequity to profit or loss as reclassification adjustments in the line items relating to the hedged item in thesame period in which the hedged item affects profit or loss. If a hedge of a forecasted transaction
subsequently results in the recognition of a non-financial asset or a non-financial liability, the associatedgains and losses that were recognized in other comprehensive income are removed from equity andincluded in the initial cost of the non-financial asset or non-financial liability.
Starting from 2018, the Group discontinues hedge accounting only when the hedging relationship ceases tomeet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or
exercised. The cumulative gain or loss on the hedging instrument that has been previously recognized inother comprehensive income from the period (in which the hedge was effective) remains separately inequity until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur,
the gains or losses accumulated in equity are recognized immediately in profit or loss.
Provisions
The Group recognizes provisions when the Group has a present obligation (legal or constructive obligation)arising from past events, the payment for the obligation is probable, and the expenditure for settling theobligation can be reliably estimated.
The amount recognized as a provision is measured at the best estimate of the expenditure required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured at the estimate of using the cash flows to settle
the present obligation, its carrying amount is the present value of those cash flows.

- 23 -

Aircraft lease contracts
When the aircraft lease contracts expire and the leased item will be returned to the lessor, the Group willassess if there are existing obligations exist and if a provision is required to be recognized when signing thelease contract.
Revenue Recognition
When applying IFRS 15 during 2018, the Group recognizes revenue by applying the following steps:






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

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

- 24 -

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, withinterest expense recognized over the lease terms. When there is a change in a lease term, a change in theamounts expected to be payable under a residual value guarantee, a change in the assessment of an option topurchase an underlying asset, or a change in future lease payments resulting from a change in an index or arate used to determine those payments, the Group remeasures the lease liabilities with a corresponding
adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced
to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities arepresented on a separate line in the consolidated balance sheets.
Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods
in which they are incurred.
For sale and leaseback transactions, if the transfer of an asset satisfies the requirements of IFRS 15 to beaccounted for as a sale, the Group recognizes only the amount of any gain or loss which relates to the rights
transferred to the buyer-lessor, and adjusts the off-market terms to measure the sale proceeds at fair value.
If the transfer does not satisfy the requirements of IFRS 15 to be accounted for as a sale, it is accounted for
as a financing transaction.
Employee Benefits
a. Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related services.
b. Retirement benefits
Payments to the defined contribution retirement benefit plan are recognized as expenses whenemployees have rendered services entitling them to the contributions.
Defined benefit costs (including service cost, net interest and remeasurement) under defined retirement
benefit plan are determined using the projected unit credit method. Service cost (including current
service cost and past service cost) and net interest on the net defined benefit liabilities (assets) arerecognized as employee benefits expense in the period in which they occur. Remeasurement,
comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized inother comprehensive income in the period in which it occurs. Remeasurement recognized in othercomprehensive income is reflected immediately in retained earnings and will not be reclassified to
profit or loss.
Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined
benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds
from the plans or reductions in future contributions to the plans.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets(assets which are substantially ready for their intended use or sale through a fairly long period) are added tothe cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period
in which they are incurred.

- 25 -Government Grants
Government grants are not recognized until there is reasonable assurance that the Group will comply withthe conditions attached to them and that the grants will be received.
Government grants related to income are recognized in profit or loss on a systematic basis over the periods
in which the Group recognizes as expenses the related costs that the grants intend to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Group with no future related costs are recognized in
profit or loss in the period in which they are received.
The benefit of a government loan received at a below-market rate of interest is treated as a government
grant measured as the difference between the proceeds received and the fair value of the loan based onprevailing market interest rates.
Frequent Flyer Programs
The Group has a “Dynasty Flyer Program” through which program members can convert accumulated
mileage to a cabin upgrade, free tickets and other member rewards and operates a “Tigerclub Member
Privilege Program” to provide members with accumulated ticket reward bonuses, which can be used tooffset the payments for airfare, luggage fees, priority check-ins, and ordering of meals in flight cabins. A
portion of passenger revenue attributable to the rewards for the frequent flyer program is deferred. The
Group should recognizes this deferred revenue as revenue only when the Group has fulfilled its obligations
on the granting of rewards or when the period for converting the mileage to rewards has expired.
Share-based Payment Arrangements
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments
at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on astraight-line basis over the vesting period, based on the Group’s estimate of equity instrument that will
eventually vest, with a corresponding increase in capital surplus - employee share options. The fair value
determined at the grant date of the equity-settled share-based payments is recognized as an expense in fullat the grant date when the granted share options are vested immediately.
Taxation
Income tax expense represents the sum of the current tax and deferred tax.
a. Current tax
The current tax liabilities are based on current taxable profit. Since part of the income and expenses aretaxable or deductible in other periods, or in accordance with the relevant tax laws are taxable ordeductible, current taxable profit differs from net profit reported in the consolidated statements ofcomprehensive income. The Group’s current tax liabilities are calculated by the tax rate was legislated
or substantially legislated at the balance sheet date.
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided foras income tax in the year the shareholders approve the retain earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

- 26 -

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
In the application of the Group’s accounting policies as disclosed in Note 4, management is required tomake judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered relevant. Actual results may differ from these estimates.

- 27 -

The Group considers the possible impact of the COVID-19 in economic when making its criticalaccounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimates are revised if therevisions affect only that period or in the period of the revisions and future periods if the revisions affectboth current and future periods.
Key Sources of Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of thereporting period that have a significant risk causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
Defined Benefit Obligations
The present value of defined benefit obligations at the end of the reporting period is calculated using
actuarial assumptions. Those assumptions, which are based on management’s judgments and estimates,
comprise the discount rate and expected return on plan assets. Changes in actuarial assumptions may have amaterial impact on the amount of defined benefit obligations.
Useful Lives of Property, Plant and Equipment - Flight Equipment
Flight equipments are measured at cost less residual value, and are depreciated on a straight-line basis overtheir estimated useful lives. The estimated useful lives and residual values are evaluated base on the
Company’s historical experience and current usage condition in the aviation industry. Because of thechange in fleet planning, the Company's board of directors resolved to modify the estimated useful life offourteen B747-400F freighters from 25 years to 24 years and the estimated useful lives of three A330-300
aircraft from 20 years to 18 years, effective on January 1, 2022, in order to match the economic benefits
with the useful lives. It is estimated that the depreciation expense in 2022 will have an increase by $720
million.

6. CASH AND CASH EQUIVALENTS
December 31
2021
Cash on hand and revolving funds
Checking accounts and demand deposits
Cash equivalents
Time deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds

$

2020

294,026
28,507,427$

333,677
17,690,186

11,347,326
5,121,087

6,980,493
2,121,581$ 45,269,866$ 27,125,937

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

Bank balanceTime deposits with original maturities of less than three months
Repurchase agreements collateralized by bonds- 28 -

2021

2020

0%-1.9%0.07%-0.41%
0.20%-0.45%

0%-1.9%0.24%-2.20%
0.22%-0.55%

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

Maturity Date
December 31, 2021
December 31, 20202022.2.7-2022.2.14
2021.1.4-2021.11.1

Carrying
Value

Subject
Financial assets for hedging - current
Financial assets for hedging - current$ 3,545,706
7,613,636

Impact on comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the year ended December 31, 2021
For the year ended December 31, 2020

$ (75,214)(372,632)

For the years ended December 31, 2021, the amount of hedging instrument settlements recognized as
prepayments for equipment were $99,507 thousand and $81,111 thousand, respectively.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
December 31
2021

2020

$ 155,780$ 274,761

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME(FVTOCI)
Investments in Equity Instruments
December 31
2021

2020

Non-current
Foreign investments
Unlisted shares
Domestic investments
Unlisted shares$$- 29 -

39,080$ 134,042

28,80429,70467,884$ 163,746

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

9. FINANCIAL ASSETS AT AMORTIZED COST
December 31
2021

2020

Current
Time deposits with original maturities of more than 3 months
Government bonds$ 13,027,969
552$

6,551,693-$ 13,028,521$

6,551,693$$

311,596

Non-current
Time deposits with original maturities of more than 1 year

70,596

The range of interest rates for time deposits with original maturities of more than 3 months was
0.21%-1.05% and 0.21%-1.90% per annum as of December 31, 2021 and 2020, respectively.

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE
December 31
2021
Notes receivable

$

1,547

2020
$

655

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

13,707,506(235,560)
13,471,946$ 13,473,493

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

9,697,511

The average credit period was 7 to 55 days. In determining the recoverability of an accounts receivable, theGroup considered any change in the credit quality of the receivable since the date credit was initiallygranted to the end of the reporting period, and any allowance for impairment loss was based on theestimated irrecoverable amounts determined by reference to the Group’s past default experience with thecounterparty and an analysis of the counterparty’s current financial position. The Group adopted a policy of
only dealing with entities that are rated the equivalent of investment grade or higher and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit rating information is obtained from independent rating agencies where available or, if not available,
the Group uses other publicly available financial information or its own trading records to rate its major
customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored andthe aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed and approved by the risk management committee
annually.
- 30 -

The Group applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9,which permits the use of lifetime expected loss allowance for all accounts receivable. The expected credit
losses on accounts receivable are estimated using a provision matrix by reference to past default experience
with the debtors and an analysis of the debtors’ current financial position, adjusted for general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as theforecasted direction of economic conditions at the reporting date. As the Group’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the loss
allowance based on the past due status is not further distinguished according to the different segments of theGroup’s customer base.
The Group writes off accounts receivable when there is information indicating that the debtor isexperiencing severe financial difficulty and there is no realistic prospect of recovery. For accounts
receivable that have been written off, the Group continues to engage in enforcement activity to attempt torecover the past due receivables. Where recoveries are made, these are recognized in profit or loss.
The following table details the loss allowance of accounts receivable based on the Group’s provision
matrix.
December 31, 2021
Not Past Due

1 to 30 Days
Past Due

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

0.56%

6.79%

20.75%

99.92%

99.99%

Expected credit loss rate

Total

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

2,499(2,497)$

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

Amortized cost

$ 13,406,332$

57,777

$

7,833

$

2

$

2

$ 13,471,946

Not Past Due

1 to 30 Days
Past Due

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

0.14%

0.18%

1.20%

53.78%

92.74%

December 31, 2020

Expected credit loss rate

Total

Gross carrying amount
Loss allowance (lifetime ECLs)$

9,304,785(13,391)$

256,178(470)$

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

202,421(187,718)$

9,903,008(206,152)

Amortized cost$

9,291,394$

255,708$

132,503

$

2,548

$

14,703$

9,696,856

The movements of the loss allowance of accounts receivable were as follows:
For the Year Ended December 31
2021
2020
Balance at January 1
Add: Net remeasurement of loss allowance
Add: Amounts recovered
Less: Amounts written off
Foreign exchange gains and losses$ 206,152
38,376565(9,531)(2)$ 218,665
4,895(17,398)(10)

Balance at December 31$ 235,560$ 206,152- 31 -

11. INVENTORIES
December 31

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
Others2021

2020$ 7,603,809
621,181534,073
55,912$ 7,898,482
627,437
214,362
47,824$ 8,814,975$ 8,788,105

The operating costs for the years ended December 31, 2021 and 2020 included losses from inventory
write-downs of $855,834 thousand and $190,548 thousand, respectively.

12. NON-CURRENT ASSETS HELD FOR SALE
December 31

Aircraft held for sale

2021

2020

$ 36,719$ 89,296

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

13. SUBSIDIARIES
Subsidiaries included in the consolidated financial statements were as follow:

Investor Company
China Airlines, Ltd.

Investee Company

Main Businesses and Products

Tigerair Taiwan Co., Ltd. (Note)
Taiwan Aircraft Maintenance
And Engineering Co., Ltd.
CAL-Dynasty International
CAL-Asia Investment
Dynasty Aerotech International
Corp.
Yestrip
Cal Park
Cal Hotel Co., Ltd.

Proportion of
Ownership (%)
December 31
2021
2020

Air transportation
Aircraft maintenance

82
100

81
100

A holding company, real estate and hotel
services
General investment
Cleaning of aircraft and maintenance ofmachine and equipment
Travel business
Real estate lease and international trade
Hotel business

100

100

100
100

100
100

100
100

100
100
100

(Continued)- 32 -

Investor Company

Investee Company

Main Businesses and Products

Sabre Travel Network (Taiwan)
Mandarin Airlines

Cal-Dynasty
International
Taiwan Airport Services

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

Proportion of
Ownership (%)
December 31
2021
2020

Sale and maintenance of hardware andsoftware
Air transportation and maintenance of
aircraft
Air cargo and storage

94

94

97

94

59

59

In-flight catering

54

54

Airport services

49

49

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

48
25
100
100
100

48
25
100
100
100

(Concluded)
Note:

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

The Company has control over Taoyuan International Airport Service, Taiwan Airport Service and Global
Sky Express despite its ownership of less than 50% and for the other subsidiaries the Company had control
and more than 50% of their voting shares. The above financial information of the subsidiaries for the years
ended December 31, 2021 and 2020 was reported according to financial statements that were audited byindependent auditors.
To strengthen the capital structure of Tigerair Taiwan Co., Ltd., the board of directors of the Company
approved the plan to issue ordinary shares for cash at $25 per share on August 6, 2020. The Company
subscribed for 47,228 thousand shares in October 2020 and 26,286 thousand shares in November 2020. The
proportion of ownership of the Group increased to 81%. Because the shares were subscribed at a percentage
different from its existing ownership percentage, the Company’s retained earnings decreased by $169,272
thousand.
Tigerair Taiwan Co., Ltd. planned to issue ordinary shares for cash to meet the needs for funds. The boardof directors of the Company approved the plan to issue ordinary shares for cash at $25 per share on August
5, 2021. The Company subscribed for 101,212 thousand shares in September 2021. The proportion ofownership of the Group increased to 82%. Because the shares were subscribed at a percentage different
from its existing ownership percentage, the Company’s retained earnings decreased by $54,449 thousand.
To strengthen the capital structure of Mandarin Airlines, the board of directors of the Company approved
the plan to issue ordinary shares for cash at $10 per share on August 26, 2021. The Company subscribed for
199,677 thousand shares in September 2021. The proportion of ownership of the Group increased to 97%.
Because the shares were subscribed at a percentage different from its existing ownership percentage, theCompany’s retained earnings decreased by $50,190 thousand.
The liquidation of Yestrip Co., Ltd. was completed on April 22, 2021, and the Company recognized aliquidation loss of $540 thousand.

- 33 -

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
December 31
2021
Investments in associates
Investments in jointly ventures

$

2020

864,178
690,838$ 1,079,852
890,950$ 1,555,016$ 1,970,802

a. The investments in associates were as follows:
December 31
2021

2020

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

$

$

513,059
298,971$

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

52,14851,116864,178$ 1,079,852

At the end of the reporting period, the proportion of ownership and voting rights in associates held by
the Group were as follows:
Proportion of Ownership andVoting Rights
December 31
2021
2020

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

20%
20%
28%
28%

20%
20%
28%
28%

35%

35%

The investment loss (gain) recognized for associates accounted for using the equity method was asfollows:
For the Year Ended December 31
2021
2020
China Aircraft Services
Dynasty Holidays
Airport air Cargo Terminal (Xiamen)
Airport air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd. (HongKong)- 34 -$ (269,573)(1,436)36,53428,729$ (102,758)(4,740)25,57819,124

15,21893,375$ (190,528)

13,940$ (48,856)

The Group’s shares of other comprehensive income of associates accounted for using the equity method
were both in the amount of $0 for the years ended December 31, 2021 and 2020.
The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on these investees’ financial statements whichhave been audited, for China Aircraft Services and Eastern United International Logistics (Holding) Ltd(Hong Kong). However, the management determined that there would have been no significant
adjustments had this investee’s financial statements been independently audited.
b. Investments in joint ventures
The investments in joint ventures were as follows:
December 31

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

2021

2020

$ 533,251
120,876
28,836
7,875$ 695,959
149,353
37,7677,871$ 690,838$ 890,950

At the end of the reporting period, the proportion of ownership and voting rights in joint ventures heldby the Group was as follows:
Proportion of Ownership andVoting Rights
December 31
2021
2020
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

51%
55%
49%
51%

51%
55%
49%
51%

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

- 35 -

The investment (loss) gain recognized for joint ventures accounted for using the equity method was asfollows:
For the Year Ended December 31
2021
2020
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

$ (172,546)(29,418)(8,931)2$ (136,459)(15,475)(46)
2$ (210,893)$ (151,978)

The Group’s shares of other comprehensive income of joint ventures accounted for using the equity
method for the years ended December 31, 2021 and 2020 were $10,779 thousand and $34,271
thousand, respectively.
The investments accounted for using the equity method and the share of profit or loss and othercomprehensive income of those investments were based on these investees’ financial statements whichhave been audited. However, the management determined that there would have been no significant
adjustments had this investee’s financial statements been independently audited.
For information on the major businesses and products and the locations of registration for the major
business offices of the above entities, refer to Tables 7 and 8 (names, locations, and related informationof investees on which the Company exercises significant influence and investment in mainland China)
following the notes to the consolidated financial statements.

15. PROPERTY, PLANT AND EQUIPMENT
Freehold Land

Buildings

FlightEquipment

OthersTotal

Cost
Balance at January 1, 2020
Additions
Disposals
Reclassification
Net exchange differences$

1,002,499(18,026)(28,650)$

16,084,063
48,809(375,083)
304(52,458)$ 272,077,692
653,519(3,724,658)
13,000,582-$

16,846,835
535,187(387,858)
70,081(5,597)$ 306,011,089
1,237,515(4,505,625)
13,070,967(86,705)

Balance at December 31, 2020$

955,823$

15,705,635$ 282,007,135$

17,058,648$ 315,727,241

Balance at January 1, 2020
Depreciation expense
Disposals
Reclassification
Net exchange differences
Impairment losses

$

-

$

(7,028,540)(492,734)
371,933
27,704-$ (141,886,170)(18,007,550)
3,452,870
1,489,158(424,573)$ (11,209,408)(925,138)
381,037
1,348
4,516
-

$ (160,124,118)(19,425,422)
4,205,840
1,490,506
32,220(424,573)

Balance at December 31, 2020

$

-

$

(7,121,637)$ (155,376,265)$ (11,747,645)$ (174,245,547)

Balance at December 31, 2020, net value$

955,823$

8,583,998$ 126,630,870$

Accumulated depreciation and impairment

5,311,003$ 141,481,694(Continued)- 36 -

Freehold Land

Buildings

FlightEquipment

OthersTotal

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

955,823(12,518)$

15,705,635
69,826(18,860)
188,356(23,095)$ 282,007,135
1,427,541(46,096,114)
10,503,511-$

17,058,648
949,824(216,975)(163,693)(2,438)$ 315,727,241
2,447,191(46,331,949)
10,528,174(38,051)

Balance at December 31, 2021$

943,305$

15,921,862$ 247,842,073$

17,625,366$ 282,332,606

Balance at January 1, 2021
Depreciation expense
Disposals
Reclassification
Net exchange differences
Impairment losses

$

-

$

(7,121,637)(492,225)
18,86012,189-$ (155,376,265)(16,321,248)
39,176,337(136,004)(34,153)$ (11,747,645)(887,104)
207,759(1,438)2,014-$ (174,245,547)(17,700,577)
39,402,956(137,442)
14,203(34,153)

Balance at December 31, 2021

$

-

$

(7,582,813)$ (132,691,333)$ (12,426,414)$ (152,700,560)

Balance at December 31, 2021, net value$

943,305$

8,339,049$ 115,150,740$

Accumulated depreciation and impairment

5,198,952$ 129,632,046(Concluded)
Reclassification is mainly resulted from the transfer of prepayments for equipment.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of theasset as follows:
Building
Main buildings
Others
Machinery and equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersAssets leased to others
Flight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

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

Regarding changes in fleet composition and the retirement schedule, the Company measured therecoverable amount of some flight equipment by deducting the transaction costs from fair value (level 3).
The Company recognized an impairment loss on a part of aircraft equipment of $34,153 thousand and$424,573 thousand in 2021 and 2020, respectively. The fair value was determined by reference to factors
such as the condition of the flight equipment and possible market estimates.
Refer to Note 33 for the carrying amounts of property, plant and equipment and right-of-use assets pledgedby the Group.

- 37 -

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

16. INVESTMENT PROPERTIES
December 31

Carrying amount
Investment properties

2021

2020

$ 2,074,531$ 2,074,798

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to other parties. The buildings are depreciated on a straight-line basis over 55 years.
The fair value of the investment properties held by the Group were both $2,488,931 thousand as ofDecember 31, 2021 and 2020, respectively. The above fair value valuation was performed by independent
qualified professional valuers, and the future income evaluated by management was based on market
transactions.
All of the Group’s investment properties were held under freehold interest.

Cost

Accumulated
Depreciation

Net Value

Balance at January 1, 2020
Depreciation expense$ 2,082,390-$(7,322)(270)$ 2,075,068(270)

Balance at December 31, 2020

$ 2,082,390$(7,592)$ 2,074,798

Balance at January 1, 2021
Depreciation expense$ 2,082,390-$(7,592)(267)$ 2,074,798(267)

Balance at December 31, 2021

$ 2,082,390$(7,859)$ 2,074,531

Accumulated
Amortization

Net Value

17. OTHER INTANGIBLE ASSETS
Computer
Software Cost

OthersBalance at January 1, 2020
Additions
Reclassification
Amortization expense
Disposals
Effects of exchange rate changes$ 2,406,163
130,461(765,426)(7,554)-$

186,197-$ (1,409,668)
735,881(206,936)
7,243
(10)

$ 1,182,692
130,461(29,545)(206,936)
(311)
(10)

Balance at December 31, 2020

$ 1,763,644$

186,197$$ 1,076,351(Continued)- 38 -(873,490)

Computer
Software Cost

Accumulated
Amortization

OthersNet Value

Balance at January 1, 2021
Additions
Reclassification
Amortization expense
Impairment losses
Disposals
Effects of exchange rate changes$ 1,763,644
117,836
10,975(12,406)-$

186,197
168,280(186,197)-$(873,490)(221,459)
43,154
12,40652$ 1,076,351
286,116
10,975(221,459)(143,043)
52

Balance at December 31, 2021

$ 1,880,049$

168,280$ (1,039,337)$ 1,008,992(Concluded)

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

18. OTHER ASSETS
December 31
2021

2020

Current
Temporary payments
Prepayments
Restricted assets
Others$138,688327,140
9,562
217,074$

136,681348,554
11,065364,879$

692,464$

861,179$

8,624,307
1,249,389
1,000,457
568,247
18,497
8,584$

5,725,340
2,216,049
1,138,943
240,467
18,07814,015$ 11,469,481$

9,352,892

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

- 39 -

19. BORROWINGSa. Short-term borrowings
December 31
2021

2020

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

0.90 %-1.26%

0.92%-1.28%

b. Short-term bills payable
December 31
2021
Commercial paper
Less: Unamortized discount on bills payable

Annual discount rate

2020

$

-

$ 8,100,000(11,118)$-$ 8,088,882-

0.99%-1.00%

c. Long-term borrowings
December 31

Unsecured bank loans
Secured bank loans
Commercial paper
Proceeds from issue
Less: Unamortized discounts
Less: Current portion

Interest rates

2021

2020

$ 33,248,892
35,721,925$ 23,470,696
39,584,540

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

29,490,000
22,532
92,522,704
15,234,374$ 85,069,285$ 77,288,330

0.81%-1.22%

0.81%-1.63%

Secured bank loans are secured by flight equipment, buildings, and other equipment, refer to Note 33.
Bank loans (denominated in New Taiwan dollars) are repayable quarterly, semiannually or in lump sum
upon maturity. The related information is summarized as follows:
December 31

Periods

2021

2020

2009.2.42032.6.30

2009.2.42032.6.30

The Company has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until September 2026, were used by the Company to guarantee commercial
papers issued. As of December 31, 2021 and 2020, the commercial papers were issued at discount rates
of 0.985%-1.097% and 1.0263%-1.1629%, respectively.

- 40 -

In accordance with the “Regulations on Relief and Revitalization Measures for Industries andEnterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry ofTransportation and Communications and the “Operational Guides on Relief Loan Guarantees for Ailing
Aviation Industry Affected by Severe Pneumonia with Novel Pathogens”, the Group applied for a
special loan project to maintain its operations, and the fund along with subsidized interest rates were
provided by the government. The total amount of the loans is $35,590 million, which shall be repaid
within 2 years from the date of initial drawdown. As of December 31, 2021, the Group had made adrawdown in the amount of $33,560 million.

20. BONDS PAYABLE
December 31
2021
Unsecured corporate bonds first-time issued in 2016
Unsecured corporate bonds second-time issued in 2016
Unsecured corporate bonds first-time issued in 2017
Unsecured corporate bonds second-time issued in 2017
Unsecured corporate bonds first-time issued in 2018
Unsecured corporate bonds first-time issued in 2019
Convertible bonds - sixth-time issued
Convertible bonds - seventh-time issued$

Less: Current portion and put option of convertible bonds

1,000,000
1,300,000
4,500,000
3,500,000
379,284
2,970,742
13,650,026
2,525,000

2020$

2,350,000
2,500,000
1,000,000
2,600,000
4,500,000
3,500,000
5,832,859
22,282,859
11,982,859$ 11,125,026$ 10,300,000

Rate
(%)

Related issuance conditions were as follows:

Category

PeriodConditions

Five-year unsecured bonds - issued at par in
May 2016; repayable in May 2020 and 2021;
1.19% interest p.a., payable annually.

2016.05.262021.05.26

Five-year unsecured bonds - issued at par in
September 2016; repayable in September 2020
and 2021; 1.08% interest p.a., payableannually.
Three-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.2% p.a., payable annually.
Seven-year private unsecured bonds - issued at
par in May 2017; repayable on due date;interest of 1.75% p.a., payable annually.
Three-year private unsecured bonds - issued at
par in October 2017; repayable on due date;interest of 1.14% p.a., payable annually.

2016.09.272021.09.27

Principal repayable in May
of 2020 and 2021;
indicator rate; payableannually.
Principal repayable in
September of 2020 and2021; indicator rate;
payable annually.
Principal repayable on due
date; indicator rate;
payable annually.
Principal repayable on due
date; indicator rate;
payable annually.
Principal repayable on due
date; indicator rate;
payable annually.

2017.05.192020.05.19
2017.05.192024.05.19
2017.10.122020.10.12

1.19

1.08

1.20

1.75

1.14

(Continued)- 41 -

Category

PeriodFive-year private unsecured bonds - issued at parin October 2017; repayable in October 2021
and 2022; 1.45% interest p.a., payableannually.
Five-year private unsecured bonds - issued at parin November 2018; repayable inNovember 2022 and 2023; 1.32% interest p.a.,payable annually.
Seven-year private unsecured bonds - issued at
par in November 2018; repayable inNovember 2024 and 2025; 1.45% interest p.a.,payable annually.
Five-year private unsecured bonds - issued at par
in June 2019; repayable in June 2023 and2024; 1.10% interest p.a., payable annually.

2017.10.122022.10.12

Seven-year private unsecured bonds - issued at
par in June 2019; repayable in June 2025 and2026; 1.32% interest p.a., payable annually.

2019.06.212026.06.21

Five-year convertible bonds - issued at discountin January 2018; repayable in lump sum uponmaturity; 1.3821% discount rate p.a.

2018.01.302023.01.30

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

2021.4.282026.4.28

2018.11.302023.11.30

2018.11.302025.11.30

2019.06.212024.06.21

Conditions

Rate
(%)

Principal repayable in
1.45
October of 2021 and2022; indicator rate;
payable annually.
Principal repayable in
1.32
November of 2022 and2023; indicator rate;
payable annually.
Principal repayable in
1.45
November of 2024 and2025; indicator rate;
payable annually.
Principal repayable in June
1.10
of 2023 and 2024;
indicator rate; payableannually.
Principal repayable in June
1.32
of 2025 and 2026;
indicator rate; payableannually.
Unless bonds are converted
to share capital orredeemed, principal
repayable in January of2023; 1.3821 discountrate p.a.
Unless bonds are converted
to share capital orredeemed, principal
repayable in April of2026; 0.8612 discountrate p.a.
(Concluded)

The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:
a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.
c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions. The Company resolved to exercise the right of redemption on January 14,2022. The reference date of redemption of the bonds is March 9, 2022 and the expected face value ofredemption is $200 thousand.

- 42 -

d. Between April 30, 2018 and January 30, 2023 (except for the period between the former dividend date
and the date of the dividend declaration on record), holders may convert their bonds into the Company’s
ordinary shares. The initial conversion price was set at NT$13.2, which is subject to adjustment if there
is a capital injection by cash, share dividend distribution, and the proportion of cash dividends per sharein market price exceeding 1.5%. Because the Company distributed cash dividends on July 29, 2019, theconversion price was adjusted to NT$12.6. As of December 31, 2021, a total face value of
NT$5,615,200 thousand of convertible bonds was converted into 445,650 thousand ordinary shares of
the Company.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.
Proceeds from issuance
Equity component$ 6,012,000(409,978)Liability component at the date of issuance$ 5,602,022

The Company issued the seventh issue of its unsecured convertible bonds, and the issuance conditions wereas follows:a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on April 28, 2024.
c. The Company may redeem the bonds at face value between July 28, 2021 and March 18, 2026 undercertain conditions.
d. Between July 28, 2021 and April 28, 2026 (except for the period between the former dividend date andthe date of the dividend declaration on record), holders may convert their bonds into the Company’s
ordinary shares. The initial conversion price was set at NT$19 per share, which is subject to adjustment
if there is a capital injection by cash or share dividend distribution. As of December 31, 2021, a total
face value of NT$1,417,200 thousand of convertible bonds was converted into 74,589 thousand
ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 0.8612% per annum on initial recognition.
Proceeds from issuance
Equity component$ 4,500,000(188,862)

Liability component at the date of issuance$ 4,311,138- 43 -

21. LEASE AGREEMENTS
a. Right-of-use assets
December 31
2021
Carrying amounts
Land
Buildings
Flight equipment
Other equipment

$

2020

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

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

For Year Ended December 31
2021
2020
Additions to right-of-use assets
Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment$ 10,597,531$

2,463,869$$

362,386
335,753
11,041,881
1,535

376,515
228,489
11,420,746
1,654$ 12,027,404$ 11,741,555

b. Lease liabilities
December 31

Carrying amounts
Current
Non-current

2021

2020

$ 2,533,452$ 12,758,050$ 2,525,957$ 13,279,792

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

Land
Buildings
Flight equipment
Other equipment- 44 -

2021

2020

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

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

c. Financial liabilities under hedge accounting
The Group specifies a part of aircraft leases denominated in USD as hedging instruments to avoid
exchange rate fluctuations in passenger revenue and applies the accounting treatment of cash flow
hedging. The lease information is as follows:
Maturity Date
December 31, 2021

December 31, 20202022.2.9-2033.12.12

2022.2.9-2028.5.15

Subject

Carrying Value

Financial liabilities for hedging current
Financial liabilities for hedging non-current
Financial liabilities for hedging current
Financial liabilities for hedging non-current$

8,434,893
27,839,847
8,120,445
32,455,333

Influence of comprehensive income
Recognized in
Other
Comprehensive
IncomeFor the year ended December 31, 2021
For the year ended December 31, 2020$

252,250
2,099,550

Reclassified toIncome$679,554352,674

d. Material leasing activities and terms
China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, twenty A330-300
planes, fifteen 737-800 planes, ten A320-200 planes, four ERJ190 planes and three ART72-600 planes
for operation, lease period are 3 to 16 years from February 2006 to December 2033. The rental pricing
method is partly a fixed amount of funds, and some of them are floating rents, floating rents areaccording to benchmark ratio, the rent is revised every half year. When the lease expires, the leaseagreements have no purchase rights.
The information of refundable deposits and opening of letter of credit due to rental of planes:
December 31
2021
Refundable deposits
Credit guarantees$

682,376
1,699,376

2020$

725,135
1,756,656

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, for the details for the lease agreement, please refer to Note 34. The lease includes an option
to extend the lease, as it is not possible to extend the lease, the amount of the lease related to the period
covered by the option is not included in the lease liability. If the amount of the extended lease period is
included in the lease liability, the lease liability would have increased by $897,264 thousand on
December 31, 2021.
Taiwan Air Cargo Terminal Co. and CAA signed a BOT contract with a land lease agreement. For
details, please refer to Note 34.

- 45 -

e. Lease agreement signed but not yet delivered
In September 2019, the Company signed a rental contract for six A321neo with Air Lease Corporation,
which is expected to be introduced between 2021 and 2022. As of December 31, 2021, two A321neo
have been delivered.
In October 2019, the Company signed a rental contract for for eight A321neo with CALC Lease
Corporation, which is expected to be introduced in 2024.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental contract for eight A320neo with ICBC
Lease Corporation, which is expected to be delivered between 2021 and 2024. As of December 31,
2021, two A320neo have been delivered.
The Group also signed related aircraft purchase agreement, please refer to Note 34 for details.
f. Sale and leaseback
In order to revitalize assets and strengthen financial structure, the Company signed a sale and leaseback
agreement for five A330-300 with CALC Lease Corporation in June 2021 and September 2021. Thoseaircraft were sold for $2,810,098 thousand and the Company recognized a loss of $342,080 thousand.
The lease term is 4 years without renewal option or right of first refusal and the annual lease payments
for each aircraft are US$4,200 thousand to US$4,823 thousand.
g. Aircraft leases
In order to revitalize assets, the Company signed a lease agreement for two 747-400F with US Cargo
Company in August 2021 and September 2021.
h. Other lease information
The Group uses operating lease agreement for investment properties, refer to Note 16.
For the Year Ended December 31
2021
2020
Short-term leases and low-value asset leases
Total cash outflow for leases$
34,858$ (11,921,548)$
41,568$ (12,410,357)

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

- 46 -

22. OTHER PAYABLES
December 31
2021
Fuel costs
Ground service expenses
Repair expenses
Interest expenses
Short-term employee benefits
Terminal surcharges
Commission expenses
Others$2020

3,049,812
778,546
1,580,899
83,2505,848,866
716,531
149,2962,454,147$

1,853,717
956,956
366,589
120,550
1,948,982
420,194
184,3632,454,906$ 14,661,347$

8,306,257

23. CONTRACT LIABILITIES
December 31

Frequent flyer programs
Advance ticket sales
OthersCurrent
Non-current

2021

2020

$ 2,810,482
1,693,863-$ 2,671,203
2,659,093
168$ 4,504,345$ 5,330,464$ 3,868,712
635,633$ 3,569,360
1,761,104$ 4,504,345$ 5,330,464

24. PROVISIONS
December 31
2021

2020

Operating leases - aircraft$ 18,654,223$ 14,534,286

Current
Non-current$$

3,247,236
15,406,987$ 18,654,223- 47 -

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

Aircraft Lease
Contracts
Balance at January 1, 2020
Additional provisions recognized
Usage
Effect of foreign currency exchange differences$ 10,371,857
6,075,077(1,308,170)(604,478)

Balance at December 31, 2020

$ 14,534,286

Balance at January 1, 2021
Additional provisions recognized
Usage
Unwinding of discounts and effects of changes in the discount rate
Effect of foreign currency exchange differences$ 14,534,286
6,435,015(2,042,423)(51,678)(220,977)

Balance at December 31, 2021

$ 18,654,223

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

25. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, the Group makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
Employees based in the United States and Japan of China Airlines Co., Ltd. and subsidiaries are
members of the United states and Japan government retirement benefit plans. Subsidiaries should
appropriate a specific portion to retirement benefit plans. The obligation to the government retirement
benefit plans of China Airlines Co., Ltd. and subsidiaries is to appropriate a specific portion amount.
b. Defined benefit plans
The defined benefit plans adopted by the Company in accordance with the Labor Standards Law isoperated by the government of the R.O.C. Pension benefits are calculated on the basis of the length ofservice and average monthly salaries of the six months before retirement. The Company and subsidiary
contribute amounts equal to 2%-15% of total monthly salaries and wages to a pension fundadministered by the pension fund monitoring committee. Pension contributions are deposited in the
Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balancein the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement
benefits for employees who conform to retirement requirements in the next year, the Group is required
to fund the difference in one appropriation that should be made before the end of March of the next
year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”);
the Group has no right to influence the investment policy and strategy.

- 48 -

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans
were as follows:
December 31
2021

2020

Present value of defined benefit obligation
Fair value of plan assets$ 19,159,344(9,346,800)$ 18,793,509(9,055,768)

Deficit$

9,812,544$

9,737,741

Net defined benefit liabilities
Net defined benefit assets$$

9,814,737
2,193

$
$

9,737,741-

Movements in net defined benefit liabilities were as follows:

Balance at January 1, 2020
Service cost
Current service cost
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in demographic
assumptions
Actuarial loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income
Contributions from the employer
Benefits paid
OthersBalance at December 31, 2020
Service cost
Current service cost
Past service cost and loss on settlements
Net interest expense (income)
Recognized in profit or loss
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
Actuarial loss - changes in demographic
assumptions
Actuarial (gain) loss - changes in financial
assumptions
Actuarial loss - experience adjustments
Recognized in other comprehensive income

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)$ 18,457,304$ (9,022,269)$

1,323,036
126,390
1,449,426(63,554)(63,554)

1,323,036
62,836
1,385,872-(303,407)(303,407)

9,770

-

9,770

658,370
34,417
702,557(1,638,230)(177,547)
18,793,509(303,407)(1,304,769)
1,638,230(9,055,768)

658,370
34,417399,150(1,304,769)(177,547)
9,737,741

1,301,730
581
64,2281,366,539(31,307)(31,307)

1,301,730
581
32,921
1,335,232-(131,974)(131,974)

526,399-

526,399(575,703)
245,415
196,111(131,974)(575,703)
245,415
64,137(Continued)- 49 -

9,435,035

Present Valueof the Defined
BenefitObligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiabilities(Assets)

Contributions from the employer
Benefits paid
Others$(1,043,124)(153,691)$ (1,163,444)
1,035,693-$ (1,163,444)(7,431)(153,691)

Balance at December 31, 2021

$ 19,159,344$ (9,346,800)$

9,812,544(Concluded)

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

Discount rate
Expected rate of salary increase

2021

2020

0.60%-0.70%
1.00%-2.50%

0.32%-0.80%
1.00%-2.50%

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

Discount rate
0.25% increase
0.25% decrease
Expected rate of salary increase
0.5% increase
0.5% decrease- 50 -

2021

2020$ (419,153)
437,615$ (438,527)
457,422823,125(783,845)

830,329(772,927)

The sensitivity analysis presented above may not be representative of the actual changes in the present
value of the defined benefit obligation as it is unlikely that changes in assumptions will occur inisolation of one another as some of the assumptions may be correlated.
December 31
2021

2020

Expected contributions to the plan for the next year

$ 924,261$ 916,627

Average duration of the defined benefit obligation

7-10 years

8-11 years

26. EQUITY
a. Share capital
Ordinary shares
December 31

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

2021

2020

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

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

The Company issued the 6th and the 7th domestic unsecured convertible bonds, and the holders of theconvertible bonds applied for conversion in the amount of $7,032,400 thousand for the year ended
December 31, 2021. The number of ordinary shares exchanged was 520,239 thousand and entitled toregistration change after the issuance of new shares.
b. Capital surplus
December 31
2021
Issuance of convertible bonds in excess of par value andconversion premium
Retirement of treasury shares
Expired employee share options
Long-term investments
Bonds payable equity component
Others2020$ 1,668,381
540
155,676
869,932$

146,351
33,513
11,747
119,134
409,978
466,604$ 2,694,529$ 1,187,327

The capital surplus from shares issued in excess of par (including additional paid-in capital from theconverted convertible bonds) may be used to offset deficits; in addition, when the Company has no
deficit, such capital surplus may be distributed as cash dividends or transferred to capital (but limited toa certain percentage of the Company’s paid-in capital on a yearly basis).
The capital surplus arising from long-term investments, expired employee share options, dividends
distributed to subsidiaries and retirement of treasury shares may not be used for any purpose, except foroffsetting a deficit. The capital surplus arising from the conversion of convertible bonds may not be
used for any purpose.

- 51 -

c. Appropriation of earnings and dividend policy
Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”),
where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes,
offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting
aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining
profit together with any undistributed retained earnings shall be used by the Company’s board of
directors as the basis for proposing a distribution plan, which is to distribute dividends and bonus noless than 50% of the remaining profit and undistributed retained earnings. The dividends and bonus
mentioned above can be distributed in the form of new shares or cash, and the cash dividends should be
no less than 30% of the total dividends.
Under the Company Act, if surplus earnings are distributed in the form of new shares, the distributionof shares shall be approved in the meeting of the board of directors; if such earnings are distributed in
the form of cash, the cash distribution shall be authorized after a resolution has been adopted by amajority vote at a meeting of the board of directors attended by two-thirds of the total number of
directors; and in addition, a report of such distribution shall be submitted to the shareholders’ meeting.
If the Group has no loss, according to laws and regulations, the Group can distribute its capital reserve,in whole or in part, by issuing new shares or cash based on financial, business and management
considerations. If such surplus earnings is distributed in the form of new shares, it shall be approved bya meeting of the board of directors; if such surplus earning is distributed in the form of cash, it shall beauthorized after a resolution has been adopted by a majority vote at a meeting of the board of directors
attended by two-thirds of the total number of directors; and in addition thereto a report of such
distribution shall be submitted to the shareholders’ meeting.
Under the dividend policy as set forth in the Company’s Articles of Incorporation (the “Articles”) basedon the amended Company Act, where the Company made profit in a fiscal year, the profit shall be firstutilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of theremaining profit, setting aside or reversing a special reserve in accordance with the laws andregulations, and then any remaining profit together with any undistributed retained earnings shall be
used by the Company’s board of directors as the basis for proposing a distribution plan with due
consideration of any future aircraft acquisition plans and fund demands, which should be resolved in theshareholders’ meeting for the distribution of dividends and bonuses to shareholders by cash or shares(cash dividends cannot be less than 30% of total dividends distributed). However, if the Company’s
profit before tax in a fiscal year after deductions for the abovementioned items is not sufficient forearnings distribution, retained earnings can be used as a supplement for the deficiency.
The Company shall set aside profits as a legal reserve until the legal reserve amounts to the authorized
capital. The legal reserve could be used for offsetting deficit of the Company. If the Company has no
deficit in a fiscal year, the Company can distribute all or part of the capital surplus by cash or shareswith due consideration of finance, marketing and management requirements in accordance with thelaws and regulations.
The distribution of dividends should be resolved and recognized in the shareholders’ meeting in thecurrent year.
1) Offsetting deficit in 2020
On August 12, 2021, the offsetting of deficit in 2020 was resolved and recognized in theshareholders’ meeting. The deficit included a net income of $140,000 thousand and negative
adjustment of other retained earnings of $490,581 thousand; thus, the remaining amount ofaccumulated deficit was $350,581 thousand. The deficit was offset by the capital reserve of$350,581 thousand.

- 52 -

2) Appropriation of earnings in 2021
On March 15, 2022, the appropriation of earnings in 2021 which was resolved in the meeting of theCompany’s board of directors as follows:

Legal reserve
Cash dividends

Appropriationof Earnings

Dividends Per
Share (NT$)$$ 0.83636529

925,385
5,000,000

The appropriation of earnings in 2021 is subject to the resolution of the shareholders in their
meetings on May 26, 2022.
d. Other equity items
The movement of other equity items is as follows:
Exchange
Differences on
the Translationof the Financial
Statements ofForeign
Operations
Balance at January 1, 2020
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transferred to initial carrying
amount of hedged items$

Balance at December 31, 2020$

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI

Gain (Loss) on
Hedging
Instruments

Total

107,262$ 1,143,678$ 1,196,233(99,774)--(99,774)--

1,921,255

1,921,255--(293,518)(293,518)

20,229(45,588)
9,685(365,745)(45,588)(335,831)(79,545)(35,903)

1,261,992

1,146,544--

200,989

200,989

71,359$ 2,606,659$ 2,543,766(54,707)(134,252)$$(Continued)- 53 -

Exchange
Differences on
Translation of
the Financial
Statements ofForeign
Operations
Balance at January 1, 2021
Exchange differences ontranslation of the financial
statements of foreign operations
Cumulative loss on changes in fairvalue of hedging instruments
Cumulative gain on changes in fairvalue of hedging instruments
reclassified to profit or loss
Unrealized gain on financial assets
at FVTOCI
Effects of income tax
Other comprehensive income(loss) recognized in the period
Transferred to initial carrying
amount of hedged items$

Balance at December 31, 2021$

Unrealized Gain
(Loss) on
Financial Assets
at FVTOCI

Gain (Loss) on
Hedging
Instruments

Total

71,359$ 2,606,659$ 2,543,766

17,692--

17,692--858,540

858,540--(667,096)(667,096)(3,519)(95,864)
18,993(58,191)(95,864)(42,717)

14,713(76,871)

133,253

70,555--99,50799,507(5,512)$ 2,839,419$ 2,713,828(134,252)(120,079)$$(Concluded)e. Non-controlling interests
For the Year Ended December 31
2021
2020
Beginning balance
Net (loss) income attributable to non-controlling interests
Foreign exchange differences
Actuarial gains and losses on defined benefit plans
Cash flow hedge on changes in fair value of hedging instruments
Cumulative gain (loss) arising on changes in fair value ofhedging instruments reclassified to profit or loss
Effect of income tax
Outstanding share options held by employees of subsidiaries
Change in subsidiaries’ equity
Dividends paid by subsidiaries
Ending balance- 54 -$ 3,152,090(423,241)464(23,895)(614)$ 3,578,345(419,814)
1,826
43,157
2,993

1,186
4,303
(18,556)126
575,753(124,727)(1,600)(9,272)
37,10452
331,427(375,024)$ 3,161,445$ 3,152,090

f. Treasury shares
Treasury shares are the Company’s shares held by its subsidiaries as of December 31, 2021 and 2020
were as follows:(In Thousands of Shares)

Period of Treasury Shares

Number of
Shares,Beginning ofYear

For the year ended December 31, 2021
For the year ended December 31, 2020

Subsidiary

Reduction
During the
Year

2,075
2,889

(814)

Shares(In Thousands)

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

Carrying
AmountMarket Value

2,075$ 57,156$ 57,156

2,075$ 24,999$ 24,999

December 31, 2021
Mandarin Airlines
December 31, 2020
Mandarin Airlines

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

27. NET INCOME
a. Revenue
For the Year Ended December 31
2021
2020
Passenger
Cargo
Others$- 55 -

6,063,776
124,541,265
8,236,362$ 25,704,367
81,917,976
7,628,207$ 138,841,403$ 115,250,550

b. Other income
For the Year Ended December 31
2021
2020
Interest income
Dividend income
Others$ 156,339
12,220769,967$ 282,506
23,043381,025$ 938,526$ 686,574

c. Other gains and losses
For the Year Ended December 31
2021
2020
(Loss) gain on disposal property, plant and equipment
Gain on financial assets mandatorily classified as at FVTPL
Net foreign exchange (losses) gains
Impairment loss recognized on flying equipment
Foreign investment impairment loss under equity method
Impairment loss recognized on intangible assets
Loss on disposal of investments
Loss arising from sale and leaseback transactions
Others$(933,151)
186(2,925)(40,967)(59,901)(143,043)(540)(342,080)(448,672)$

13,3472,287
527,234(424,573)(46,757)(337,528)$ (1,971,093)$(265,990)

d. Finance costs
For the Year Ended December 31
2021
2020
Interest expense
Bonds payable
Bank loans
Interest on lease liabilities$

262,237
725,090
1,420,115$

342,963930,083
1,784,917$ 2,407,442$ 3,057,963

Capitalization interest$$

Capitalization rate

0.55%-1.11%- 56 -

42,44078,863

0.71%-1.92%

e. Depreciation and amortization expense
For the Year Ended December 31
2021
2020
Property, plant, equipment
Right-of-use assets
Investment properties
Intangible assets$ 17,700,577
12,027,404
267
221,459$ 19,425,422
11,741,555
270
206,936

Depreciation and amortization expense$ 29,949,707$ 31,374,183

An analysis of depreciation by function
Operating costs
Operating expenses$ 28,885,177
843,071$ 30,171,665
995,582$ 29,728,248$ 31,167,247$

12,308209,151$

14,312
192,624$

221,459$

206,936

An analysis of amortization by function
Operating costs
Operating expenses

f. Employee benefits expense
For the Year Ended December 31
2021
2020
Post-employment benefits
Defined contribution plan
Defined benefit plan

Other employee benefits
Salary expenses
Personnel service expenses

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

519,911
1,335,232$

551,154
1,385,872$

1,855,143$

1,937,026$ 20,878,698
5,761,628$ 17,958,185
5,400,252$ 26,640,326$ 23,358,437$ 23,127,124
5,368,345$ 20,466,080
4,829,383$ 28,495,469$ 25,295,463

According to the Company’s articles, the Company accrues compensation of employees at rates of noless than 3% of the net profit before income tax and compensation of employees. When the Company
has an accumulated deficit, the Company shall set aside some amounts to offset the deficit in advance.
For the year ended December 31, 2021, the estimated amount of compensation of employees was$366,429 thousand, and for the year ended December 31, 2020, the compensation of employees was not
estimated since the Company had an accumulated deficit.

- 57 -

Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date that the annual consolidated financial statements are authorized for issue
are adjusted in the year that the compensation and remuneration are recognized. If there is a change inthe proposed amounts after the annual consolidated financial statements are authorized for issue, thedifferences are recorded as a change in the accounting estimate.
Information on the compensation of employees resolved by the Company’s board of directors in 2021
and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

28. INCOME TAX
a. Income tax expense recognized in profit or loss
The major components of tax expense (benefit) were as follows:
For the Year Ended December 31
2021
2020
Current tax
Current year
Adjustments for prior year
Income tax on unappropriated earnings
Deferred tax
Current year
Adjustments for prior year

$ 3,092,405
10,077-$(938,165)
5,624

Income tax expense recognized in profit or loss

$ 2,169,941

118,814(29,845)628(551,574)
87,994$(373,983)

A reconciliation of accounting profit and income tax expense was as follows:
For the Year Ended December 31
2021
2020
Profit before tax from continuing operations$ 11,126,605$(653,797)

Income tax expense calculated at the statutory rate
Effect of different tax of subsidiaries
Effect of adjustments to income tax
Non-deductible expenses in determining taxable income
Tax-exempt income
Income tax on unappropriated earnings (5%)
Overseas income tax expense
Unrecognized loss carryforwards, investment tax credits andtemporary difference
Adjustments for prior years’ tax
Adjustments prior years’ deferred tax
Other

$

$

(130,759)(8,456)

Income tax expense (benefit) recognized in profit or loss$

- 58 -

2,225,321(10,261)
718,589(1,307,837)
33,817

388,066(711,001)
628
16,244

491,708
10,077
5,624
2,903

12,129(29,845)
87,994
1,017

2,169,941$(373,983)

b. Income tax recognized in other comprehensive income
2021

2020

Deferred tax
Recognized in other comprehensive income
Translation of foreign operations
Fair value changes of financial assets at FVTOCIFair value changes of hedging instruments for cash flow
hedging
Remeasurement of defined benefit plans$

Total income tax recognized in other comprehensive income(3,884)18,993$

19,864
9,685(58,305)
12,827(366,022)
79,830$ (30,369)$ (256,643)

c. Deferred tax assets and liabilities
For the year ended December 31, 2021
Beginning
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive
Income$ 1,956,577
550,530
2,522,024
255,267
743,802$

16,39135,431(53,718)
26,922
848,191$

12,588(11,500)$

28,473$ 1,985,556
585,9612,468,306
282,189
1,608,966$ 6,028,200$

873,217

$

1,088

$

28,473$ 6,930,978$

163,433
859,651$(30,158)
181(29,347)$

31,457$

26,336$$ 1,023,084$(59,324)$

31,457$

26,336$ 1,021,553

Exchange
Difference

EndingBalance

Deferred tax assets
Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventories
OthersDeferred tax liabilities
Temporary differences
Unrealized foreign exchange gains
Defined benefit plans
Others133,275
181
888,097

For the year ended December 31, 2020
Beginning
Balance

Recognized in
Profit or Loss

Recognized in
Other
Comprehensive
Income$ 1,891,851
592,977
2,240,003
296,857
315,938$(15,520)(42,447)
282,021(41,590)367,228$

80,246
77,917$(17,281)$ 1,956,577
550,530
2,522,024
255,267
743,802$ 5,337,626$

549,692$

158,163$(17,281)$ 6,028,200$

81,777475,365$

81,656
4,456$

414,806$(34,976)$$

557,142$

86,112$414,806$(34,976)$ 1,023,084

Exchange
Difference

EndingBalance

Deferred tax assets
Temporary differences
Defined benefit plans
Frequent flyer programs
Maintenance reserves
Allowance for reduction of inventories
OthersDeferred tax liabilities
Temporary differences
Unrealized foreign exchange gains
Others- 59 -

163,433
859,651

Deductible temporary differences and unused loss carryforwards for which no deferred tax assets havebeen recognized in the consolidated balance sheets were as follows:
December 31
2021
Loss carryforwards
Expiry in 2025
Expiry in 2026
Expiry in 2027
Expiry in 2028
Expiry in 2029
Expiry in 2030
Expiry in 2031$

Others18,124344,200
68,415
175,712206,151
1,282,549
1,596,332

2020$

18,124344,200
68,415671,529
1,645,438
852,281-$ 3,691,483$ 3,599,987$ 7,109,835$ 4,563,924

d. Unused tax loss carryforwards as of December 31, 2021 were as follows:
UnusedAmountExpiry Year
Mandarin Airline Co., Ltd.
2026
2028
2030
2031

$

312,724
72,551
524,478
1,344,629$ 2,254,382
Tigerair Taiwan Co., Ltd.
2030
2031

$ 1,951,372
2,884,376$ 4,835,748

Taoyuan International Airport Services
2030
2031

$

591,291
385,915$

977,206$

245,159
284,037$

529,196(Continued)

Taiwan Airport Services
2030
2031

- 60 -

UnusedAmountExpiry Year
Sabre Travel Network (Taiwan)
2030
2031

$

75,174
61,107$

136,281$

102,477
101,896$

204,373$

84,873
191,868$

276,741$

18,124
31,476
68,415
103,161
206,151
275,075
149,807$852,209(Concluded)

Cal Hotel Co., Ltd.
2030
2031

Kaohsiung Catering Services, Ltd.
2030
2031

Taiwan Aircraft Maintenance And Engineering Co., Ltd.
2025
2026
2027
2028
2029
2030
2031

e. Income tax assessment
The income tax returns of the Company through 2018 and its subsidiaries have been examined by the
tax authorities. And the income tax returns of the Company’s subsidiaries through 2019 have been
examined by the tax authorities.

- 61 -

29. EARNING PER SHARE
For the Year Ended December 31
2021
2020
Basic earnings per share
Diluted earnings per share

$
$

1.67
1.54

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

$ 9,379,905

Earnings used in the computation of diluted earnings per share$ 9,452,543$$$

72,6380.03
0.03
140,000-$

140,000

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

5,615,684

5,418,776

13,300512,144-

6,141,128

5,418,776

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

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

- 62 -

31. FINANCIAL INSTRUMENTS
a. Financial instruments not evaluated at fair value
Except as detailed in the following table, the management considers the carrying amounts of financial
assets and financial liabilities recognized in the financial statements as approximating their fair values.
December 31
2021
Carrying
Amount$ 13,650,026

2020
Fair Value

Carrying
AmountFair Value$ 14,557,830$ 22,282,859$ 22,459,685

Financial liabilities
Bonds payable

Lease liabilities and long-term borrowings are floating-rate financial liabilities, so their carrying
amounts are their fair values. Fair values of bond payable trading in OTC are based on quoted market
prices (Level 1).
b. Fair value of financial instruments measured at fair value on a recurring basis
The following table provides an analysis of financial instruments that are measured subsequent toinitial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fairvalue is observable:
1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;2) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) orindirectly (i.e. derived from prices); and3) Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
December 31, 2021
Level 1
Financial assets at
FVTPL
Domestic money
market funds
Financial assets at
FVTOCI
Investments in equity
instruments
United shares domestic
Unlisted shares foreign

Level 2

Level 3

Total$

155,780

$

-

$

-

$

155,780

$

-

$

-

$

28,804$28,804$-- 63 -$-

39,080$67,88439,080$67,884(Continued)

Level 1

Level 2

Level 3

Total

Financial assets forhedging$

3,545,706$-$

17,613$Financial liabilities forhedging$ 36,274,740

$

449

$

2,755

$ 36,277,944(Concluded)

3,563,319

December 31, 2020
Level 1
Financial assets at
FVTPL
Domestic money
market funds
Financial assets at
FVTOCI
Investments in equity
instruments
United shares domestic
Unlisted shares foreign

Level 2

Level 3

Total$

274,761

$

-

$

-

$

274,761

$

-

$

-

$

29,704$29,704--

134,042

134,042

$

-

$

-

$

163,746$

163,746

Financial assets forhedging$

7,613,636

$

-

$

-

$

7,613,636

Financial liabilities forhedging$ 40,575,778

$

9,307

$

-

$ 40,585,085

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

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

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

- 64 -

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

Multiplicator
December 31, 2021
December 31, 2020

0.74-14.31
0.79-16.32

80%
80%

Derivative
Instruments

EquityInstruments

Balance at January 1, 2021
Recognized in other comprehensive income

$

6,124

$ 163,746(95,862)

Balance at December 31, 2021

$

6,124

$

Balance at January 1, 2020
Recognized in other comprehensive income

$

5,524
(5,524)$ 209,221(45,475)

Balance at December 31, 2020$-

$ 163,746

67,884

Because some financial instruments and nonfinancial instruments may not have their fair values
disclosed, the total fair value disclosed herein is not the total value of the Group’s collective
instruments.
c. Categories of financial instruments
December 31
2021

2020

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

155,780
3,563,319
74,194,351
67,884$

274,761
7,613,636
45,898,091
163,746

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

36,277,944
160,383,305

40,585,085
165,458,441

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

- 65 -

Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term loans, short-term notes payable, notes and accounts payable, accounts payable related parties, other payables, bonds payable, long-term loans, lease liabilities payable, leaseliabilities, provisions, part of other current liabilities, part of other non-current liabilities andguarantee deposits.
d. Financial risk management objectives and policies
The Group has risk management and hedging strategies to respond to changes in the economic andfinancial environment and in the fuel market. To reduce the financial risks from changes in interest,
exchange rates and in fuel prices, the Group has its operating costs stay within a specified range byusing appropriate financial hedging instruments and hedging percentages in accordance with the“Processing Program of Derivative Financial Instrument Transactions” approved by the Group’s
shareholders to reduce the impact of market price changes on earnings. These risks include market risk(including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
In addition, the Group has a risk committee, which meets periodically to evaluate the performance of
derivative instruments and determine the appropriate hedging percentage. This committee informs theGroup of global economic and financial conditions, controls the entire financial risk resulting fromchanges in the financial environment and fuel prices, and develops the strategy and response to avoid
financial risk with the assistance of financial risk experts to effect risk management.
1) Market risk
The Group is primarily exposed to the financial risks of changes in foreign currency exchange rates
and interest rates. The Group entered into derivative financial instruments to manage its exposure toforeign currency risk and interest rate risk. The Group enters into foreign exchange forward
contracts, foreign currency option contracts, and interest swap contracts with fair values that arehighly negatively correlated to the fair values of hedged items and evaluates the hedging
effectiveness of these instruments periodically.
a) Foreign currency risk
The Group enters into foreign currency option contracts to hedge against the risks on change in
related exchange rates, enters into forward contracts to hedge against the risks on changes inforeign-currency assets, liabilities and commitments in the related exchange rates.
Sensitivity analysis
The Group was mainly exposed to the U.S. dollar.
An increase/decrease in U.S. dollars one dollar against New Taiwan dollars when reporting
foreign currency risk internally to key management personnel represents management’s
assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis
included only outstanding foreign currency denominated monetary items, and adjusts theirtranslation at the end of the reporting period for U.S. dollars increase/decrease by one dollar
against New Taiwan dollars in foreign currency rates.
When New Taiwan dollars increased by one dollar against U.S. dollars and all other variables
were held constant, there would be a decrease in pre-tax profit and an increase in othercomprehensive income for the year ended December 31, 2021 of $187,869 thousand and$1,173,733 thousand and an increase in pre-tax profit and other comprehensive income for theyear ended December 31, 2020 of $345,440 thousand and $1,150,896 thousand, respectively.

- 66 -

The Group’s hedging strategy is to enter into foreign exchange forward contracts to avoid
exchange rate exposure of its foreign currency denominated receipts and payments and to
manage exchange rate exposure of its aircraft prepayments in the next year. Those transactions
are designated as cash flow hedges. When forecasted purchases actually take place, basis
adjustments are made to the initial carrying amounts of hedged items.
For the hedges of highly probable aircraft prepayments, as the critical terms (i.e. the notionalamount, useful life and underlying asset) of the foreign exchange forward contracts and theircorresponding hedged items are the same, the Group performs a qualitative assessment of theeffectiveness, and it is expected that the value of the foreign exchange forward contracts and thevalue of the corresponding hedged items will systematically change in the opposite direction in
response to movements in the underlying exchange rates.
The following table summarizes the information relating to the hedging of foreign currency risk.
December 31, 2021
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts

Currency

NTD/USD

Notional
AmountMaturity

Forward Rate

NTD215,651/
USD7,785

2022.4.292022.12.23

27.6-27.9

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets forhedging - current/
liabilities for hedging current

$

-

$

449

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars) was $449 thousand.
For the year ended December 31, 2021
Hedging Gains(Losses)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelNote:

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

3,062
5,794

$ (6,392)(6,844)$8,856$ (13,236)(Note)

Decrease in operating costs or exchange loss.

December 31, 2020
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aviation fuel - forward
exchange contracts

Notional
AmountMaturity

NTD/USD

NTD127,906/
USD4,371

2021.1.82021.11.9

28.5-29.7

NTD/USD

NTD142,045/
USD5,000

2021.1.292021.5.28

29.9-29.8

Currency- 67 -

Forward RateLine Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

-

-

$

3,513

5,794

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals and aviation fuel in U.S. dollars) was $(3,513)
thousand and $(5,794) thousand, respectively.
For the year ended December 31, 2020
Hedging Gains(Losses)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments
Maintenance cost

Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

4,939
4,367
(101,570)-$

11,908(16,616)5$ (92,264)$(4,703)(Note)

Decrease in operating costs or exchange loss.

The amount of gains and losses on hedging instruments for the year ended December 31, 2020
reclassified from profit or loss to prepayments for equipment was $119,878 thousand.
b) Interest rate risk
The Group enters into interest swap contracts to hedge against the risks on change in net
liabilities interest rates. The risk is managed by the Group by maintaining an appropriate mix of
fixed and floating rate borrowings, and using interest rate swap contracts and forward interest
rate contracts.
The carrying amount of the Group’s financial assets and financial liabilities with exposure tointerest rates at the end of the reporting period were as follows.
December 31

Fair value interest rate risk
Cash flow interest rate risk

2021

2020

$ 56,279,341
105,262,530$ 68,883,667
112,324,305

Sensitivity analysis
The sensitivity analyses below were determined based on the Group’s exposure to interest rates
for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A one yard
(25 basis points) increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
Had interest rates increased by one yard (25 basis points) and all other variables been held
constant, the Group’s pre-tax profit for the year ended December 31, 2021 would havedecreased by $263,156 thousand.

- 68 -

Had interest rates increased by one yard (25 basis points) and had all other variables been held
constant, the Group’s pre-tax profit for the year ended December 31, 2020 would havedecreased by $280,811 thousand.
c) Other price risk
The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel options contracts to hedge against adverse risks on fuel price changes.
December 31, 2021
Hedging Instrument
Cash flow hedges fuel options

Currency

USD

Notional
Amount

NTD6,124

Maturity

Forward Rate

2022.1.312022.9.30

USD62-USD122

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

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

2,755

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was$6,124.
For the year ended December 31, 2021

Hedging Gains
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedges - fuel options
Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

6,124

$

(408)

(Note)

Increase in operating costs.

December 31, 2020
Hedging Instrument
Cash flow hedges fuel options

Currency

USD

Notional
AmountMaturity

Forward Rate

-

-

-

Line Item in
Balance Sheet

Carrying AmountAsset
Liability

Financial assets forhedging - current/
liabilities for hedging current

$

-

$

-

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments in U.S. dollars) was $0.
For the year ended December 31, 2020

Comprehensive Income
Cash flow hedges - fuel options
Note:

Increase in operating costs.
- 69 -

Hedging Losses
Recognized in
Other
Comprehensive
IncomeAmountReclassified toProfit and Lossand theAdjusted LineItem

$ (5,524)$ (52,853)(Note)

Sensitivity analysis
The sensitivity analysis below was determined based on the exposure to fuel price risks at theend of the reporting period.
For the Year Ended December 31
2021
2020
Other
Other
CompreComprehensive
hensive
Pre-tax Profit
IncomePre-tax Profit
IncomeIncrease
Increase
Increase
Increase(Decrease)(Decrease)(Decrease)(Decrease)
Fuel price increase of5%
Fuel price decrease of
5%

$

-

$

306
(306)

$

1,479
(1,479)$-2) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in a financial loss to the Group. The Group’s credit risk primarily comes from accounts receivable
generated from operating activities and bank deposits generated from investing activities, fixedincome investments and other financial instruments, operation related credit risk and financial credit
risk are managed separately.
Operation - related credit risk
The Group has established procedures to manage operations related credit risk to maintain thequality of accounts receivable.
To assess the risk of individual customers, the Group consider into the financial condition of thecustomers, the credit rating agency rating, the Group’s internal credit rating, transaction history andcurrent economic conditions and many other factors that may affect the repayment. Sometimes, theGroup uses certain credit enhancement tools to reduce the credit risk of specific customers. Since
the customers of the aviation industry are dispersed and non-related, the credit risk concentration is
not critical.
Financial credit risk
Credit risk on bank deposits, fixed income investments and other financial instruments aremeasured and monitor by the Group’s finance department. The Group’s trading partners and otherparties are well-performing banks and financial institutions, corporations, and government agencies,
and so the risk of counterparties failing to discharge an obligation is low; therefore, there is no
significant credit risk.

- 70 -

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

$ 27,719,857

Liquidity and interest risk rate table
The following table shows the remaining contractual maturity analysis of the Group’s financial
liabilities with agreed-upon repayment periods, which were based on the date the Group may berequired to pay the first repayment and financial liabilities is evaluated based on undiscounted cash
flows, including cash flows of interest and principal.
Bank loans with a repayment on demand clause were included in the second column of the tablebelow regardless of whether or not the banks would choose to exercise early their rights to
repayment. The maturity dates for other non-derivative financial liabilities were based on theagreed-upon repayment dates. The Group’s liquidity analysis for its derivative financial instruments
is also shown in the following table. The table was based on the undiscounted contractual net cash
inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted grosscash inflows and outflows on those derivatives that require gross settlement. When the amountpayable or receivable is not fixed, the amount disclosed has been determined by reference to theprojected interest rates as illustrated by yield curves at the end of the reporting period.
December 31, 2021
The Weighted
Average
Effective
Interest Rate(%)
Lease liabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

2.4651Less than 1Year$0.90052.9022
1.46863,440,414

1 to 5 Years

Over 5 Years$$

9,119,294

7,314,114

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

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

13,979,191
1,532,555-$ 27,680,146$ 121,521,677$ 22,825,860- 71 -

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

2.3584

Less than 1Year$

1.62693.04921.2311

3,494,299

1 to 5 Years

Over 5 Years$$

9,770,964

7,982,767

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

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

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

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

Relationship with the Company

China Aircraft Service
Airport Air Cargo Terminal (Xiamen) Co., Ltd.
Airport Air Cargo Service (Xiamen) Co., Ltd.
Eastern United International Logistics (Hong Kong)
Dynasty Holidays
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.
China Aviation Development Foundation
Others

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

b. Operating income

Account Items
Other income

Related Party Type
Major shareholder of theCompany
Associate
Joint venture- 72 -For the Year Ended December 31
2021
2020
$

12,634

$

5,097

$
$

56
20,365$$122
22,445

c. Purchases
For the Year Ended December 31
2021
2020

Related Party Type
Major shareholder of the Company
Associate
Joint venture$ 28,574$ 536,086$ 221,802$ 11,417$ 457,005$ 516,347

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

2021

Joint venture
Major shareholder of the Company

2020

$

1,563
785

$

1,667
-

$

2,348

$

1,667

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

2021

Associate
Joint venture
Major shareholder of the Company

$

2020

68,82659,9301,816$$ 130,572

52,18776,380-$ 128,567

The remaining balance of accounts payable - related parties will be paid in cash if they are not secured.
f. Lease arrangements (operating leases)
Under an operating lease agreement, the Company rented flight training machines and flight simulatorsfrom China Aviation Development Foundation to train pilots, the Company paid the rental based on
usage hours. For the years ended December 31, 2021 and 2020, the Company had paid rentals of about$28,574 thousand and $11,417 thousand, respectively.
g. Endorsements and guarantees
December 31
2021

2020

Authorized
AmountActualAmount Used

Authorized
AmountActualAmount Used

$ 3,850,000
2,590,360
2,000,000$ 1,663,320
258,454
1,459,000$ 3,850,000
2,656,591
2,000,000$ 1,892,540
265,062
1,336,000

The Company
CAL Park
Tigerair Taiwan
Taiwan Air Craft Maintenance- 73 -

h. Remuneration of key management personnel
For the Year Ended December 31
2021
2020
Short-term employee benefits
Post-employment benefits$

42,09342,123$33,376
2,525$

84,216$35,901

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

33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were pledged or mortgaged as collateral for long-term bank loans, lease liabilities andbusiness transactions:
December 31

Property, plant and equipment
Right-of-use assets
Restricted assets
Pledged certificate deposits

2021

2020

$ 31,823,285
56,061,967$ 34,170,076
59,861,537

577,809302,807$ 88,463,061$ 94,334,420

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESIn addition to those disclosed in the other notes, significant commitments and contingent liabilities of theGroup at December 31, 2021 were as follows:a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of transfer of the chartered operation rights from CAA to TACT. TACT filed an
application for a 10-year extension of the COP for the cargo terminals in the Taiwan Taoyuan
International Airport and Kaohsiung International Airport and received the approval from the Taoyuan
Airport Corporation and CAA in July 2013 and July 2015, respectively.
However, TACT filed an arbitration in 2012 to revise the total amount of expenditure to $6,840,000
thousand. As of December 31, 2021, TACT had signed the following construction contracts withunrelated parties:

Client NameContract Title

CECI Engineering
Consultant, Inc., Taiwan

Cargo Terminal Expansion Construction Consultant
Contract- 74 -

Contract
Amount (VAT
Included)$ 192,000

Assets acquired from cargo terminal improvements, equipment acquisition and subsequent equipment
acquisition and replacement will be transferred to the government without any compensation when thechartered operating license expires.
TACT should pay royalties to Taoyuan Airport Corporation and the CAA during the charteredoperation period. The calculation is based on annual sales (including operating and non-operating
revenue but excluding the rental revenue from specific districts), and Taoyuan Airport Corporation and
the CAA have the option to adjust the royalty rates every 3 years starting from the date of transfer of thechartered operation rights on the basis of actual revenue and expenditures. The current royalty rate is
6%.
b. CAL Park Co., Ltd. (“CAL Park”) signed “Taiwan Taoyuan International Airport Aviation Operation
Center (including Airport Hotel) Construction Operating Contract” with the CAA on September 20,
2006. However, on November 1, 2010, the Taoyuan Airport Corporation took over the CAA’s rights on
this contract from the CAA. The contract is effective for 50 years (consisting of the development stage
and operating period) from the contract date. Three years before contract expiry date, CAL Park has thefirst option to renew the contract with a 20-year extension.
CAL Park’s business scope includes providing business and other operating space related to civil airtransport, hotels, aviation service and related industries adhered to the base and essential services law
and approved by the Taoyuan Airport Corporation.
CAL Park should pay land rentals on the date of the registration of surface rights. The rental rates forthe development stage differ from those for the operation period. The rental rates should follow Article
No. 2 of the “Regulations for Favorable Rentals Regarding Public Land Lease and Superficies inInfrastructure Projects,” which states that rental calculation in the development stage should include theland value added tax plus the necessary maintenance fee; in the operation period, rentals are 60% of theamount based on the National Building Land Rental Standard plus land value tax, value-added tax andthe necessary maintenance fees.
During the 50 years beginning from the initial operation date of CAL Park to the end of the construction
period, CAL Park should pay royalties based on the operating revenue estimated in the financial plan of
its investment execution proposal. If the sales and business tax declared and filed by a business entity
for a single year exceeds 10% of the operating revenue as estimated in the financial plan in its
investment execution proposal, CAL Park should pay additional royalties at 10% of this excess.
CAL Park should submit the asset transfer plan within five years before the expiry date of the charteredoperation period, begin the negotiation of the asset transfer contract, and complete the assignment nolater than three years before the expiry date of the chartered period. If CAA decides not to keep thebuilding and equipment on the base area, CAL Park should remove all related building and equipment
within three months after the expiry date.
c. In October 2019, the Company signed a contract with Airbus S.A.S. to purchase eleven A321neo
aircraft and an option to purchase five A321neo aircraft. The total list price of the eleven aircraft is
US$1,676,413 thousand, and the list price of the option to purchase five aircraft is US$769,922
thousand. The expected delivery periods of the eleven aircraft are from 2024 to 2026. As of December
31, 2021, the list price had been paid in the amount of US$32,578 thousand (recognized as prepayments
for aircraft). In October 2019, the Company signed a contract with International Aero Engines
Company to purchase four backup engines of A321neo. As of December 31, 2021, one out of the four
backup engines has been delivered. The Group also signed related aircraft lease agreement, please refer
to Note 21.

- 75 -

d. In July and August 2019, the Company signed a contract with the Boeing Company to purchase three
777F aircraft and exercised the option to purchase three 777F aircraft. The expected delivery periods
are from 2020 to 2023. In January 2022, the Company signed an additional contract with the Boeing
Company to purchase another four 777F aircraft. The expected delivery periods are from 2023 to2024.The total list price of the ten aircraft is US$3,914,818 thousand. As of December 31, 2021, threeout of ten aircraft have been delivered. The total list price of the remaining seven aircraft is
US$1,172,357 thousand, and the list price has been paid in the amount of US$234,471 thousand(recognized as prepayments for aircraft).
e. In October 2019, Tigerair Taiwan Co., Ltd. signed a contract with Airbus S.A.S. to purchase sevenA320neo aircraft and an option to purchase two A320neo aircraft. The total list price of the sevenaircraft is US$729,746 thousand, and the list price of the option to purchase two aircraft is US$208,499
thousand. The expected delivery period of the seven aircraft ranges from 2025 to 2027. As of December
31, 2021, the list price has been paid in the amount of US$18,549 thousand (recognized as prepayments
for aircraft). In addition, in December 2019, Tigerair Taiwan Co., Ltd. signed a contract with
International Aero Engines Company to purchase two backup engines of A320neo aircraft. The total list
price of the two engines is US$27,345 thousand. As of December 31, 2021, one out of the two backup
engines has been delivered, and the other was expected to be delivered in 2025. The Group also signed
related aircraft lease agreement, please refer to Note 21.

35. IMPACT OF COVID-19
Since the outbreak of the COVID-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have not removed their travel restrictions.
Because the number of inbound and outbound passengers has decreased significantly, the Group adjusts the
proportion between passenger aircraft and cargo aircraft used in operations to comply with thegovernment’s epidemic prevention policy and cater to market demand. The Company reduces the frequencyof passenger air services that have been severely affected, uses the passenger aircraft to support the cargoflight arrangement and expands the function of all-cargo aircraft to maximize the opportunities from air
cargo business. Since March 2020, cargo has become the main source of revenue for the Group.
The Group continues to adjust the response measures according to the situation. In addition, to ensure theadequate liquidity, the Group also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Group’s policies to control spending include suspension of non-urgent capital expenditures, reduction inand postponement of payments.
For the years ended December 31, 2021 and 2020, because of the COVID-19 pandemic, the Company
received subsidies of $1,476,141 thousand and $1,293,388 thousand, respectively, for airport landing feesand parking fees, etc. The subsidies for housing and land rental, and salary and interest expense were$1,536,709 thousand and $961,208 thousand, respectively. These subsidies were recognized as otherincome or deduction from other expenses.
The Group has obtained relief loan from the government. Refer to Note 19 for details on the amount of loan
and its allocation.

- 76 -

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIESThe following information was aggregated by the foreign currencies other than functional currency ofentities in the Group and the exchange rates between foreign currencies and respective functional currencies
were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:
December 31, 2021
Foreign
Currencies (InThousands)

Exchange Rate

Carrying
Amount1,123,112
24,700551,856
5,082,118
768,075

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

2,116,761
3,724
65,6412,810,820
112,02527.700831.44653.54990.24074.345958,635,978117,119
233,020
676,564
486,852

Exchange Rate

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

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

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

Financial assets
Monetary items
USD
EUR
HKD
JPY
CNY

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
CNY
December 31, 2020
Foreign
Currencies (InThousands)
Financial assets
Monetary items
USD
EUR
HKD
JPY
CNY

$

Financial liabilities
Monetary items
USD
EUR
HKD
JPY
CNY

For the years ended December 31, 2021 and 2020, the Group’s net foreign exchange gain (losses) were$(2,925) thousand and $527,234 thousand, respectively. It is impractical to disclose net foreign exchange
gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions
and functional currencies of the entities in the Group.
- 77 -

37. ADDITIONAL DISCLOSURESa. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided to others: Table 1 (attached)2) Endorsements/guarantees provided: Table 2 (attached)
3) Marketable securities held: Table 3 (attached)4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: Table 4 (attached)5) Acquisitions of individual real estates at costs of at least NT$300 million or 20% of the paid-in
capital: None
6) Disposals of individual real estates at costs of at least NT$300 million or 20% of the paid-in capital:
None7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 5 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 6 (attached)9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 7 (attached)10) Trading in derivative instruments (Notes 7 and 31)
b. Information on investments in mainland China: Table 8 (attached)c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 9 (attached)d. Information of major shareholders: Table 10 (attached)- 78 -

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

For the Year Ended December 31, 2021
Adjustments
Othersand Write-offs

Total

Operating revenue$ 134,808,935$

7,632,435$(3,599,967)$ 138,841,403

Operation profit and loss
Interest revenue
Investments income accounted forusing the equity method
Revenue
Financial costs
Expenses$ 15,210,818$(162,108)$(80,675)$ 14,968,035
156,339(401,421)
782,373(2,407,442)(1,971,279)

Profit before income tax
Identifiable assets
Investments accounted for using
the equity method
Assets$ 11,126,605$ 179,433,732$ 14,522,321(6,187,509)

1,555,016
105,397,521

Total assets$ 294,721,081

Air
Transportation

For the Year Ended December 31, 2020
Adjustments
Othersand Write-offs

Operating revenue$ 112,031,124$

7,263,997$(4,044,571)

Operation profit and loss
Interest revenue
Investments income accounted forusing the equity method
Revenue
Financial costs
Expenses$$(509,281)$(84,604)

2,778,301

Total$ 115,250,550$

2,184,416
282,506(200,834)
711,308(3,057,963)(573,230)

Profit before income tax
Identifiable assets
Investments accounted for using
the equity method
Assets$ 187,768,544$$ 194,219,132$ 15,319,185(6,120,289)(653,797)$ 203,418,029
1,970,802
78,805,253

Total assets$ 284,194,084- 79 -

b. Geographical segment
The geographical segment information of the Company and its subsidiaries in 2021 and 2020 is listed
below:For the Year Ended December 31, 2021

Operating revenue$

America

Northeast Asia

Southeast Asia

80,022,276$$

6,251,447

22,407,885

Europe$10,404,072

Australia$

3,671,852

China$

8,018,797$

Domestic

Adjustment andEliminations

Consolidation

11,665,041$$ 138,841,403(3,599,967 )Operation profit
and losses
Interest revenue
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses$(401,421 )
782,373(2,407,442 )(1,971,279 )Profit before
income tax
Identifiable assets
Investments
accounted forusing the equity
methodAssets

14,968,035
156,339$$

1,302,449$

145,702$

159,531$

19,669

$

6,766

$

32,070$ 192,289,866$(6,187,509 )11,126,605$ 187,768,544

1,555,016
105,397,521

Total assets$ 294,721,081

For the Year Ended December 31, 2020

Operating revenue$

America

Northeast Asia

Southeast Asia

53,248,499$$

10,515,272

21,782,132

Europe$9,736,725

Australia$

4,377,261

China$

7,374,972$

Domestic

Adjustment andEliminations

Consolidation

12,260,260$$ 115,250,550(4,044,571 )Operation profit
and losses
Interest revenue
Investments
incomeaccounted forusing the equity
methodRevenue
Interest expense
Expenses$(200,834 )
711,308(3,057,963 )(573,230 )Profit before
income tax
Identifiable assets
Investments
accounted forusing the equity
methodAssets2,184,416
282,506$$

1,336,074$

168,356$

213,936$

20,984$

15,383$53,322$ 207,730,263$(6,120,289 )(653,797 )$ 203,418,029

1,970,802
78,805,253

Total assets$ 284,194,084- 80 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)No.

Lender1

Cal-Dynasty International

Borrower

Financial
Statement
Account

Dynasty Hotel of Notes receivable
Hawaii, Inc.

RelatedParty

HighestBalance for
the PeriodY$ 100,000

EndingBalance$

96,953

ActualBorrowed
Amount$96,953

Interest Rate
(%)

2.25

Nature ofFinancing

Short-term
financingfacility isnecessary

Note 1:

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

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

- 81 -

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

Allowance for
Impairment
Loss
$

-

Collateral
Item

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 141,266$ 282,532

Note

TABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENT/GUARANTEE PROVIDEDFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Endorsee/Guarantee
Endorsor/
Guarantor

No.

0

Name

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

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Relationship100% owned subsidiary
82.27% owned subsidiaryby direct and indirect
holdings
100% owned subsidiary

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

Maximum
AmountEndorsed/
Guaranteed
During the
PeriodOutstanding
Endorsement/
Guarantee atthe End of the
PeriodRatio ofAccumulated
Endorsement/ Endorsement/ Endorsement/
AmountAggregate
Endorsement/
Guarantee
Guarantee
Guarantee
Actual AmountEndorsed/Endorsement/
Guarantee toGiven by Parent
Given byGiven on Behalf
Borrowed
Guaranteed by
Guarantee
Net Equity inon Behalf of
Subsidiaries on of Companies in
Collateral
Limit (Note 2)
Latest Financial
Subsidiaries Behalf of Parent Mainland China
Statements (%)$ 14,808,714
14,808,714$ 3,850,000
2,671,771$ 3,850,000
2,590,360$ 1,663,320
258,454

14,808,714

2,000,000

2,000,000

1,459,000$

Note 1:

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

Note 2:

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

- 82 -

-

5.20
3.50

$ 37,021,787
37,021,787

Y
Y

N
N

N
N

-

2.70

37,021,787

Y

N

N

TABLE 3

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELDDECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name

Marketable Security Type and Issuer/Name

China Airlines (“Parent company”)

SharesEverest Investment Holdings Ltd. - ordinary shares
Everest Investment Holdings Ltd. - preference shares
Chung Hua Express Co.
Jardine Air Terminal Services
The Grand Hi Lai Hotel

Mandarin Airlines

Cal-Asia Investment

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Dynasty Aerotech International Corp.

Kaohsiung Catering Services

Tigerair Taiwan Co., Ltd.

SharesChina Airlines

Relationshipwith the Holding
Company-

Financial Statement AccountDecember 31, 2021
Percentage of Market Value
Carrying
Ownership
or Net Asset
Amount(%)
Value

Number of
Shares/Units

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

1,359,368
135,937
1,100,000
12,000,000
4,021

Parent company Financial assets at FVTOCI - non-current$

24,231
2,423
28,804
-

13.59
11.00
15.00
0.02

2,074,628

57,156-$

Note

26,65428,804-Note 1--

57,156-

12,426

2.59
5.45

12,426Note 2
Note 2-

49,379---

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

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

Beneficiary certificates
FSITC Money Market Fund-

Financial assets at FVTPL - current

273,999

49,379

SharesTransAsia Airways-

Financial assets at FVTPL - current

2,277,786-

Beneficiary certificates
Taishin 1699 Money Market Fund-

Financial assets at FVTPL - current

349,523

4,781

-

4,781

-

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

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

5,407,832

86,480-86,4801,106,807

15,140-15,140--552

Not applicable

552-

Government bonds
Philippines Government Bond

Financial assets at amortized cost - current

Note 1: The subsidiary’s net asset value was $26,654 thousand, which included ordinary shares and preference shares as of December 31, 2021.
Note 2: The Company does not issue shares because it is a limited company.
Note 3: The table only lists financial assets that are in accordance with IFRS 9.

- 83 -

0.4

TABLE 4

CHINA AIRLINES, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name

Type and Name ofMarketable Securities

China Airlines (“Parent Mandarin Airlines
company”)
Tigerair Taiwan

Financial Statement
Account

Counterparty(Note 2)

Investments accounted for Mandarin Airlines
using the equity method
Investments accounted for Tigerair Taiwan
using the equity method

Relationship(Note 2)Beginning Balance
Number ofAmountShares

Subsidiary-

Subsidiary-$

Acquisition (Note 3)
Number ofAmountShares
-

-

-

-

$

Disposal (Note 3)
Carrying
AmountAmountNumber of
Shares
-

-

-

-

$

-

$

Gain (Loss) on
Disposal-$Ending Balance
Number ofAmountShares

-

-

-

-

$

-

Note 1:Marketable securities included shares, bonds, beneficiary certificates and marketable securities derived from the above stated items.

Note 2:Marketable securities recognized as investments accounted for using the equity method shall be included in these two columns, others are exempt.

Note 3:

Accumulated acquisition and disposal amount should be evaluated separately whether it reaches NT$300 million or 20% of the paid-in capital by their market value.

Note 4:Paid-in capital is the parent company’s paid-in capital. When the issuer issues shares without face value or face value other than NT$10, according to the policy for the transaction price of 20% of the paid-in capital, it is calculated based on 10% of the equity attributable to the owner of theparent company in balance sheets.

- 84 -TABLE 5

CHINA AIRLINES, LTD. AND SUBSIDIARIESTOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)Transaction Details
Company Name

China Airlines, Ltd.
(“China Airlines”)

Related Party

Nature of Relationship

Purchase/
Sale$

Amount% of
Total

Payment Terms

Unit Price

363,578
138,264( 127,598)
747,778
1,113,547( 201,463)( 147,001)
215,222
149,036

0.34
0.13(0.10)
0.70
1.05(0.15)(0.11)
0.2
0.14

2 months
1 month
2 months
30 days
40 days
15 days
1 month
2 months
2 months$

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

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

Purchase
Purchase
Sale
Purchase
Purchase
Sale
Sale
Sale
Purchase

Equity-method investee
Equity-method investee

Purchase
Purchase

478,437
204,687

0.45
0.19

Mandarin Airlines

Taiwan Airport Services
Tigerair Taiwan

Same parent company
Same parent company

Purchase
Purchase

120,005
164,165

Cal Hotel

CAL Park

Same parent company

Purchase

106,157- 85 -

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

Abnormal Transaction

Note( 37,949)( 29,503)
26,347( 62,743)( 251,044)
11,320( 55,763)(2.43)(1.89)
1.69(4.02)(16.08)
0.08
0.00
0.00
(0.41)--( 57,497)( 56,930)(3.68)(3.65)

-

-

-

(965)
-

(3.37)
0.00

-

-

-

(128)

(0.68)---

2 months
90 days

-

3.53
0.15

1 month
1 month73.25

1 month$TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Overdue
Company Name

Related Party

Nature of RelationshipEnding Balance

Turnover Rate

Mandarin Airlines

China Airlines

Parent company$ 154,849

NoteTaoyuan International Airport Service

China Airlines

Parent company

251,044

4.77

Note:

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

- 86 -

Action Taken

Amounts Received
in Subsequent
Period--$ 152,307--

251,044

Allowance for
Impairment Loss$-TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Original Investment Amount
Investor Company

Investee Company

Location

Main Business and Product

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

Taoyuan, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan
Los Angeles, USA
Taoyuan, Taiwan
Taoyuan, Taiwan
Territory of the British Virgin Islands
Taipei, Taiwan
Hong Kong International Airport
Taipei, Taiwan
Kaohsiung, Taiwan
Taoyuan, Taiwan
Taoyuan, Taiwan

Dynasty Aerotech International Corp.

Taoyuan, Taiwan

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

Taipei, Taiwan
Tokyo, Japan
Taipei, Taiwan
Taipei, Taiwan
Taoyuan, Taiwan

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

Aircraft maintenance

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Taipei, Taiwan
Taipei, Taiwan

Air transportation and maintenance of aircraft
Airport services

CAL-Asia Investment

Eastern United International Logistics

Hong Kong

Forwarding and storage of air cargo

HK$

3,329

Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

Kaohsiung Catering
Services

Delica International Co., Ltd.

Kaohsiung, Taiwan

Catering business

China Airlines, Ltd.

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

Note 2:

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

Note 3:

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

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

Note 5:The difference is due to acquisition.

December 31,
2021

December 31,
2020

$

$

1,500,000
4,039,140
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500

1,500,000
2,042,368
1,350,000
US$ 26,145
439,110147,000
US$
7,172
52,200
HK$ 58,000
12,289383,846
465,000
137,500

150,000,000
387,831,234
135,000,000
2,614,500
43,911,000
34,300,000
7,172,346
13,021,042
28,400,000
20,626,644
21,494,637
46,500,000
13,750,000

100.0096.96
54.00
100.0051.00
49.00
100.00
93.93
20.00
47.35
53.67
100.0055.00

77,27077,270100.0026,265
20,4002,500
3,109,907
1,350,000

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

37,97537,975

154,330
11,6588,000
2,500
5,640,197
1,350,000

10,200- 87 -

1,656,167
1,787,355
1,691,853
1,169,505
533,251
613,697
514,959
190,694
137,378
381,148335,242
120,876$

Share of profit(Loss)

Note

59,549 Note 4(1,484,975) Notes 1 and 4
293,078
10,954 Note 2(172,546)
19,75650,423(42,097)(269,573)(59,549)(48,695) Note 5(70,111) Note 4(29,418)-

147,608

48,62048,649 Note 4100.00
20.00
25.00
78.41
100.007,630
2,955,909
557,918(7,181)
7,748(2,269,379)(141,846)(1,436)
1,937(1,740,148) Note 4(141,875)-

3,797,500

49.00

28,836(18,227)(8,931)-

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

3.86
1.08

145,453
3,125(2,269,379)(125,763)(113,068)(1,354)

-

HK$

3,329

1,050,000

35.00

52,14743,48015,218

-

US$

5,877

-

100.00406,340

32,65532,655 Note 3

10,2001,020,000

51.00

7,867

4

JPY

$

Net Income(Loss) of theInvestee

17,182 $(1,565,065)
542,784
10,237(338,326)
40,31950,423(44,817)(1,347,865)(125,763)(70,287)(70,040)(53,487)

77,270JPY

As of December 31, 2021
Percentage
Number ofof
Carrying
SharesOwnership
Amount(%)

2-

TABLE 8

CHINA AIRLINES, LTD. AND SUBSIDIARIESINFORMATION ON INVESTMENTS IN MAINLAND CHINAFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars, Unless Stated Otherwise)

China Airlines

Investee Company

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

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

Forwarding and storage $ 1,105,954
of air cargo(RMB 254,480)

Indirect(Note 1)

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

Forwarding and storage
60,843of air cargo(RMB 14,000)

Indirect(Note 1)

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,301,662
maintenance services (US$ 83,090)

Indirect(Note 1)

Taikoo Spirit Aerospace
Systems (Jinjiang)

Composite material

Indirect(Note 1)

323,075(US$ 11,663)

Remittance of Funds

Outward$
115,955 $(US$4,186)

Inward--(US$53,946
1,947)

59,5902,151)

-

(US$

-

(US$

17,618636)

Accumulated Outward Remittancefor Investment in Mainland China
as of December 31, 2021

Investment Amount
Authorized by the Investment
Commission, MOEA

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

$247,109(US$8,920)$604,181 (Note 3)$46,323,011 (Note 4)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2021$% Ownershipof Direct orIndirect
Investment

Net Income(Loss) of
the Investee

Carrying
Amountas ofDecember 31,
2021

Investment
Gain (Loss)

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2021

-

$
115,955 $
130,500(US$4,186) (RMB 30,106)

14.00

$
18,264 $256,967 $(RMB 4,215) (RMB 59,128) (US$97,966
3,537)(Note 2)

-

14.00

(US$

53,946102,619
1,947) (RMB 23,674)

14,362
149,504(RMB 3,314) (RMB 34,401) (US$43,228
1,561)(Note 2)59,5902,151)

-

2.59

-

(US$

-

5.45

-

(US$

17,618
636)

-

-

-

-

12,426(RMB 2,859) (US$

9,875
357)

(Continued)- 88 -

Taiwan Airport Services

Investee Company

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

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

Forwarding and storage $ 1,105,954
of air cargo(RMB 254,480)

Indirect(Note 5)$111,312 $(US$4,018)

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

Forwarding and storage
60,843of air cargo(RMB 14,000)

Indirect(Note 5)

(US$

Accumulated Outward
Investment Amounts Authorized by theRemittance for Investment in
Investment Commission, MOEA
Mainland China as of December 31, 2021
$164,684(US$5,945)$164,684(US$5,945)

Remittance of Funds

Outward

Inward-53,373
1,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof December 31,
2021

$

-

-

Net Income(Loss) of theInvestee% Ownershipof Direct orIndirect
Investment$
111,312 $
130,500(US$
4,018) (RMB 30,106)

14.00

53,373
102,619
1,927) (RMB 23,674)

14.00

(US$

Investment
Gain (Loss)

Carrying
Amount as ofDecember 31,
2021

Accumulated
Repatriation of
Investment
Income as ofDecember 31,
2021$
18,270 $256,091 $
125,793(RMB 4,215) (RMB 58,888) (US$4,541)(RMB

14,367
149,467
3,314) (RMB 34,421) (US$57,9452,092)

Upper Limit on the Amount of
Investment Stipulated by
Investment Commission, MOEA
$174,080(Note 4)Note 1: The Company invested in CAL-Asia Investment, which invested in a company located in mainland China.
Note 2: As of December 31,2021, the inward remittance of earnings amounted to US$3,536,561 and US$1,560,538.
Note 3: The amount comprised US$19,828,324, RMB4,200,000 and NT$36,666,667.
Note 4: The limit stated in the Investment Commission’s regulation “The Review Principle of Investment or Technical Cooperation in Mainland China” is the larger of the Company’s net asset value or 60% of the consolidated net asset value.
Note 5: Taiwan Airport Services invested in Taiwan Airport Services (Samoa), which invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are converted at period-end rates and the gains (losses) are converted at the average of the period-end rates for the reporting period.
(Concluded)- 89 -TABLE 9

CHINA AIRLINES, LTD. AND SUBSIDIARIES
BUSINESS RELATIONSHIPS AND IMPORTANT TRANSACTIONS BETWEEN CHINA AIRLINES, LTD. AND ITS SUBSIDIARIESFOR THE YEAR ENDED DECEMBER 31, 2021
(In Thousands of New Taiwan Dollars)Intercompany Transactions
No.

0

Company Name

China Airlines, Ltd.

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account

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

a
a
a
a
a
a

Cargo revenue
Other operating revenue
Other operating revenue
Airport service costs
Airport service costs
Maintenance costs

a
a
a
a
a

Amount$Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets

201,463
127,598
147,001
1,113,547
363,578
149,036

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

0.15
0.09
0.11
0.80
0.26
0.11

Other operating costs
Other operating costs
Other operating costs
Accounts payable - related parties
Accounts payable - related parties

747,778
215,222
138,264
154,849
251,044

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

0.54
0.16
0.10
0.05
0.08

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

Sales revenue

747,778

The same as ordinary transactions

0.54

2

Mandarin Airlines

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

c
b
b
c

Airport service costs
Operating expenses
Accounts receivable - related parties
Air transport service costs

120,005
127,598
154,849
164,165

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

0.09
0.09
0.05
0.12

3

Taoyuan International Airport Services

China Airlines, Ltd.
China Airlines, Ltd.

bb

Airport service revenue
Accounts receivable - related parties

1,113,547
251,044

The same as ordinary transactions
The same as ordinary transactions

0.80
0.08

4

Taiwan Airport Service

Mandarin Airlinesc

Operating revenue

120,005

The same as ordinary transactions

0.09

5

Dynasty Aerotech International Corp.

China Airlines, Ltd.

b

Operating revenue

363,578

The same as ordinary transactions

0.26

6

Global Sky Express

China Airlines, Ltd.

b

Operating expense

201,463

The same as ordinary transactions

0.15

7

CAL Park

China Airlines, Ltd.
Cal Hotel Co., Ltd.

bc

Operating revenue
Operating revenue

215,222
106,157

The same as ordinary transactions
The same as ordinary transactions

0.16
0.08

8

Cal Hotel Co., Ltd.

China Airlines, Ltd.
CAL ParkbcOperating revenue
Operating costs

138,264
106,157

The same as ordinary transactions

0.10
0.08
(Continued)- 90 -

Intercompany Transactions
No.

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account9

Tigerair Taiwan Co., Ltd.

China Airlines, Ltd.
Mandarin AirlinesbcOperating expenses
Operating revenue

10

Taiwan Aircraft Maintenance andEngineering Co., Ltd.

China Airlines, Ltd.

b

Operating revenue

Amount$Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets

147,001
164,165

The same as ordinary transactions
The same as ordinary transactions

0.11
0.12

149,036

The same as ordinary transactions

0.11

Note 1: The three directional types for transactions by business relationship between China Airlines, Ltd. and its subsidiaries are as follows:a. Parent to subsidiaries.
b. Subsidiaries to parent.
c. Subsidiaries to subsidiaries.
Note 2: Intercompany transactions were eliminated in the consolidated financial statements.
Note 3: The Company only discloses transaction amounts or balances of more than $100,000 thousand.
(Concluded)- 91 -TABLE 10

CHINA AIRLINES, LTD.
INFORMATION OF MAJOR SHAREHOLDERSDECEMBER 31, 2021

SharesNumber ofPercentage ofSharesOwnership (%)

Name of Major Shareholder

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

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

31.43
8.74

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

- 92 -