China Airlines, Ltd. and Subsidiaries
Consolidated Financial Statements for theThree Months Ended March 31, 2021 and 2020 and
Independent Auditors’ Review ReportINDEPENDENT AUDITORS’ REVIEW REPORTThe Board of Directors and Shareholders
China Airlines, Ltd.
Introduction
We have reviewed the accompanying consolidated balance sheets of China Airlines, Ltd. and its
subsidiaries (collectively, the “Group”) as of March 31, 2021 and 2020, the related consolidated
statements of comprehensive income, changes in equity and cash flows for the three months thenended, and the related notes to the consolidated financial statements, including a summary ofsignificant accounting policies (collectively referred to as 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 Accounting Standard 34 “Interim Financial Reporting”
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
Our responsibility is to express a conclusion on the consolidated financial statements based on ourreviews.
We did not review the financial statements of some subsidiaries included in the consolidated
financial statements of the Group, but such statements were reviewed by other auditors. Our
conclusion, insofar as it relates to the amounts included in the consolidated financial statements forthese subsidiaries, is based solely on the reports of other auditors. The total assets of thesesubsidiaries were NT$11,831,573 thousand and NT$12,297,166 thousand, which constituted 4.37%
and 4.17% of the consolidated total assets as of March 31, 2021 and 2020, respectively, and thetotal revenue was NT$14,968 thousand and NT$1,619,077 thousand, which constituted 0.05% and4.97% of the consolidated total revenue for the three month ended March 31, 2021 and 2020,
respectively.
Scope of Review
Except as explained in the following paragraph, we conducted our reviews in accordance with theStatement of Auditing Standard No. 65 “Review of Financial Information Performed by the
Independent Auditor of the Entity”. A review of consolidated financial statements consists ofmaking inquiries, primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially less in scope than an
audit and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Basis for Qualified Conclusion
As disclosed in Notes 13 and 14 to the accompanying consolidated financial statements, thefinancial statements of some non-significant subsidiaries and investments accounted for using theequity method were not reviewed. As of March 31, 2021 and 2020, the combined total assets ofthese non-significant subsidiaries were NT$20,742,633 thousand and NT$22,565,190 thousand,respectively, representing 7.67% and 7.64%, respectively, of the consolidated total assets, and the-1-

combined total liabilities of these non-significant subsidiaries were NT$10,977,026 thousand andNT$11,514,855 thousand, respectively, representing 5.20% and 4.81%, respectively, of
consolidated total liabilities; for the three months ended March 31, 2021 and 2020, the amounts ofthe combined comprehensive income (loss) of these non-significant subsidiaries were NT$(168,915)
thousand and NT$(103,781) thousand, respectively, representing 11.36% and 2.50% respectively,of the consolidated total comprehensive income. As of March 31, 2021 and 2020, theaforementioned investments accounted for using the equity method were NT$1,889,627 thousand
and NT$2,173,929 thousand, respectively; and for the three month ended March 31, 2021 and 2020,
the amounts of the Group’s share of the profit of such investments accounted for using the equity
method were NT$(81,674) thousand and NT$(24,494) thousand, respectively.
Qualified Conclusion
Based on our reviews, except for adjustments, if any, as might have been determined to benecessary had the financial statements of the non-significant subsidiaries and investments
accounted for by using the equity method as described in the preceding paragraph been reviewed,
nothing has come to our attention that caused us to believe that the accompanying consolidated
financial statements do not present fairly, in all material respects, the consolidated financial
position of the Group as of March 31, 2021 and 2020 and its consolidated financial performanceand its consolidated cash flows for the three months then ended in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and International AccountingStandard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial
Supervisory Commission of the Republic of China.
The engagement partners on the reviews resulting in this independent auditors’ review report are
Huang, Jui Chan and Cheng, Shiuh Ran.

Deloitte & Touche
Taipei, Taiwan
Republic of China
May 6, 2021

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

-2-

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

March 31, 2021
(Reviewed)
Amount%ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 33)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 31)
Financial assets at amortized cost - current (Notes 4 and 9)
Financial assets for hedging - current (Notes 4 and 31)
Notes and accounts receivable, net (Notes 4, 5, 10 and 31)
Notes and accounts receivable - related parties (Note 32)
Other receivables (Note 31)
Current tax assets (Notes 4 and 28)
Inventories, net (Notes 4 and 11)
Non-current assets held for sale (Notes 4 and 12)
Other assets - current (Note 18)

March 31, 2020
(Reviewed)
Amount%$ 24,026,029
257,820
1,536,398
3,319,084
9,296,240
2,852
734,498
70,381
8,264,929
89,956
1,105,885

9
1
1
4
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
-

$ 39,600,960
567,970
1,724,004
12,473
7,046,769
7,684
689,745
64,306
7,941,066
1,872,669

13
1
2
3
1

48,704,072

18

61,872,468

22

59,527,646

20

161,331353,462
1,889,627
143,241,463
57,790,916
2,074,731
1,030,289
6,048,683
9,225,197

1
53
21
1
2
4

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

1
50
21
1
2
3

210,925
207,968
2,173,929
142,531,989
68,591,872
2,075,000
1,151,247
5,288,631
13,476,986

1
48
23
1
2
5

221,815,699

82

222,321,616

78

235,708,547

80$ 270,519,771

100$ 284,194,084

100$ 295,236,193

100

Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8)
Financial assets at amortized cost - non-current (Notes 4 and 9)
Investments accounted for using the equity method (Notes 4 and 14)
Property, plant and equipment (Notes 4, 5, 15 and 33)
Right-of-use assets (Notes 4, 21 and 33)
Investment properties (Notes 4 and 16)
Other intangible assets (Notes 4 and 17)
Deferred income tax asset (Notes 4, 5 and 28)
Other assets - non-current (Notes 18, 21, 31, 33 and 34)
Total non-current assets
TOTAL

December 31, 2020
(Audited)
Amount%LIABILITIES AND EQUITYCURRENT LIABILITIESShort-term debts (Note 19)
Short-term bills payable (Note 19)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 31)
Financial liabilities for hedging - current (Notes 4, 21 and 31)
Notes and accounts payable (Note 31)
Notes and accounts payable - related parties (Note 32)
Contract liabilities - current (Notes 4, 5 and 23)
Other payables (Notes 22 and 31)
Current tax liabilities (Notes 4 and 28)
Provisions - current (Notes 4, 24 and 31)
Lease liabilities - current (Notes 4 and 21)
Bonds payable and put options of convertible bonds - current portion (Notes 4, 20 and 31)
Loans and debts - current portion (Notes 19, 31 and 33)
Other current liabilities (Note 31)$

1,932,000
8,088,882
8,129,752
1,354,237
128,5673,569,360
8,306,257
216,602
164,800
2,525,957
11,982,859
15,234,374
1,016,068

1
3
3
1
1
3
1
4
5
-

19

62,649,715

30,606,694
16,152,661
71,546,595
1,417,609
14,415,791
842,194
72,651
13,497,658
9,735,920
534,867

11
6
27
1
5
5
4
-

Total non-current liabilities

158,822,640

Total liabilities

Total current liabilities
NON-CURRENT LIABILITIESFinancial liabilities for hedging - non-current (Notes 4, 21 and 31)
Bonds payable - non-current (Notes 4, 20 and 31)
Loans and debts - non-current (Notes 19, 31 and 33)
Contract liabilities - non-current (Notes 4 and 23)
Provisions - non-current (Notes 4, 24 and 31)
Current tax liabilities - non-current (Notes 4 and 28)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - non-current (Notes 4 and 21)
Accrued pension cost (Notes 4, 5 and 25)
Other noncurrent 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.
(With Deloitte & Touche auditors’ review report dated May 6, 2021)-3-

1,932,000
8,168,211
1,398,349
103,450
3,540,129
8,061,204
226,604
1,262,426
2,562,559
6,150,000
17,931,908
1,056,195

1
3
1
1
3
1
2
7
-

52,393,035$$

8,385,000
8,788,145
5,075
8,769,419
2,171,820
370,919
11,071,797
9,236,031
341,136
343,6452,549,104
13,022,470
15,941,499
1,997,256

3
3
3
1
4
3
1
4
5
1

22

82,993,316

28

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
-

40,472,454
16,300,000
60,337,972
2,326,234
11,057,817
397,517
15,665,569
9,218,089
472,647

14
6
20
1
4
5
3
-

59

160,832,796

57

156,248,299

53

211,215,675

78

223,482,511

79

239,241,615

81

54,209,926
1,187,345

20-

54,209,846
1,187,327

19-

54,209,846
2,484,998

19
1(1,369,957)(1,369,957)
2,352,322(30,875)

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

466,416
12,967(5,552,292)(5,072,909)
862,386(30,875)

(2)
(2)
-

56,348,761

21

57,559,483

20

52,453,446

18

2,955,335

1

3,152,090

1

3,541,132

1

59,304,096

22

60,711,573

21

55,994,578

19$ 270,519,771

100$ 284,194,084

100$ 295,236,193

100

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

For the Three Months Ended March 31
2021
2020
Amount%Amount%REVENUE (Notes 4, 27 and 32)$ 27,827,656

100$ 32,557,130

100

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

26,159,788

94

32,336,262

99

GROSS PROFIT

1,667,868

6

220,868

1

OPERATING EXPENSES (Notes 4, 25 and 27)

2,137,046

8

3,191,724

10

OPERATING PROFIT(469,178)(2)(2,970,856)(9)

95,820(219,433)(657,383)(1)(2)

163,630(154,090)(820,672)(3)(81,674)-(24,494)-(862,670)(3)(835,626)(3)(1,331,848)(5)(3,806,482)(12)

115,301

1(4,083)-(1,216,547)(4)(3,810,565)

(12)

6,434

-

19,904-(2,419)

-

2,569

-

(376)
3,639

-

(4,105)18,368(Continued)

NON-OPERATING INCOME AND EXPENSES
Other income (Note 27)
Other gains and losses (Notes 15 and 27)
Finance costs (Notes 27 and 30)
Share of the profit of associates and joint ventures(Note 14)
Total non-operating income and expenses
LOSS BEFORE INCOME TAX
INCOME TAX PROFIT (EXPENSE) (Notes 4 and 28)
NET LOSS FOR THE PERIODOTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Gain on hedging instruments subject to basis
adjustment
Unrealized (loss) gain on investments in equity
instruments designated as at fair value throughother comprehensive income
Income tax relating to items that will not bereclassified subsequently to profit or loss
(Note 28)

-4-

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

For the Three Months Ended March 31
2021
2020
Amount%Amount%Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translating foreign
operations (Notes 4 and 26)
Loss on hedging instruments not subject to basis
adjustment (Notes 4, 21, 26 and 31)
Income tax relating to items that may bereclassified subsequently to profit or loss
(Note 28)

(18,063)-(1)(422,938)(1)

69,066(274,273)(1)

88,805(352,196)(1)(270,634)(1)(333,828)(1)

TOTAL COMPREHENSIVE LOSS FOR THE
PERIOD$ (1,487,181)(5)$ (4,144,393)(13)

NET LOSS ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests$ (1,019,376)(197,171)(3)(1)$ (3,773,333)(37,232)(12)-$ (1,216,547)(4)$ (3,810,565)(12)$ (1,290,426)(196,755)(4)(1)$ (4,107,180)(37,213)(13)-$ (1,487,181)(5)$ (4,144,393)(13)

Other comprehensive loss for the period, net ofincome tax

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

LOSS PER SHARE (NEW TAIWAN DOLLARS;
Note 29)
Basic
Diluted

$

7,163

-

(350,502)$$(0.19)(0.19)$$$(0.70)(0.70)

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated May 6, 2021)-5-(Concluded)

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

Share Stock

Capital Surplus

Legal Reserve

Equity Attributable to Owners of the Company
Other Equity
Unrealized
Gain onExchange
Financial Assets
UnappropriDifferences on
at Fair Value
ated Earnings
Translating
Through Other(Accumulated
ForeignComprehensive
Special Reserve
Deficit)Operations
Income$ 54,209,846$ 2,488,907$$

Net loss for the three months ended March 31, 2020--

Other comprehensive income (loss) for the three months ended
March 31, 2020, net of income tax-

Total comprehensive income (loss) for the three months ended
March 31, 2020
Disposal of treasury shares

BALANCE AT JANUARY 1, 2020

107,262$ 1,143,678$

Total Equity(43,372)$ 56,553,772$ 3,578,345$ 60,132,117-(3,773,333)

-

-

-

-

(3,773,333)(37,232)(3,810,565)

-

-

-

-

(13,686)

2,445(322,606)-(333,847)

19(333,828)

-

-

-

-

(3,773,333)(13,686)

2,445(322,606)-(4,107,180)(37,213)(4,144,393)-(3,909)--(1,734)---

12,497

6,854

-

6,854

BALANCE AT MARCH 31, 2020

$ 54,209,846$ 2,484,998$

466,416$

12,967$ (5,552,292)$(68,393)$

109,707$821,072$(30,875)$ 52,453,446$ 3,541,132$ 55,994,578

BALANCE AT JANUARY 1, 2021

$ 54,209,846$ 1,187,327

$

-

$

-

$

$

(134,252)$

71,359$ 2,606,659$(30,875)$ 57,559,483$ 3,152,090$ 60,711,573

Basis adjustments to gain on hedging instruments

-

-

-

-

-

-

-

79,606-

79,606-

79,606Net loss for the three months ended March 31, 2021

-

-

-

-

(1,019,376)

-

-

-

-

(1,019,376)(197,171)(1,216,547)

Other comprehensive income (loss) for the three months ended
March 31, 2021, net of income tax

-

-

-

-

-

5,693

(1,507)(275,236)-(271,050)

416(270,634)

Total comprehensive income (loss) for the three months ended
March 31, 2021

-

-

-

-

(1,019,376)

5,693(1,507)(275,236)-(1,290,426)(196,755)(1,487,181)

Convertible bonds converted to ordinary shares

80

18

-

-

-

-

-

-

-

98

-

98

$ 54,209,926$ 1,187,345-$ (1,369,957)

69,852$ 2,411,029(30,875)$ 56,348,761$ 2,955,335$ 59,304,096-$

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated May 6, 2021)-6-$(128,559)$

Non-controlling
Interests-$(54,707)Total$ (1,777,225)(350,581)$

Treasury
SharesHeld by
Subsidiaries

12,967BALANCE AT MARCH 31, 2021

466,416

Gain (Loss) on
Hedging
Instruments$$

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

For the Three Months Ended
March 312021
2020
CASH FLOWS FROM OPERATING ACTIVITIESLoss before income tax
Adjustments for:
Depreciation expenses
Amortization expenses
Expected credit loss recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities held
for trading
Interest income
Share of loss of associates and joint ventures
Loss (gain) on disposal of property, plant and equipment
Loss on inventories and property, plant and equipment
Net (income) loss on foreign currency exchange
Finance costs
Recognition of provisions
OthersChanges in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit
or loss
Financial liabilities classified as at fair value through profit or loss
Notes and accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Notes and accounts payable
Accounts payable - related parties
Other payables
Contract liabilities
Provisions
Other current liabilities
Accrued pension liabilities
Other liabilities
Cash generated from (used in) operations
Interest received
Interest paid
Income tax paid
Net cash generated from (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of financial assets at amortized cost
Disposal of financial assets at amortized cost
Payments to acquire financial assets for hedging
Disposal of financial assets for hedging-7-$ (1,331,848)$ (3,806,482)

7,881,376
54,3289,370

8,167,598
49,902
172(149)(41,153)
81,67436,476386,381(452,373)
657,383
1,372,144(2,666)(3,296)(88,300)
24,494(5,121)
220,263
11,053820,672
1,443,036
16,86017,007345,392(20,911)
111,511504,149(258,198)(10,756)(21,963)(287,580)(372,673)(313,099)
40,211732
5,602
8,390,367
43,637(612,422)(22,876)(52,608)(6,674)
1,413,470
709,392
42,345
848,941
833,409496,061(881,463)(3,678,880)(9,899,054)(469,834)(1,889,113)(216,946)(20,271)(5,920,374)
94,316(893,895)(18,968)

7,798,706(6,738,921)(983,424)
5,994,682(2,537)
4,604,205(73,012)602,195(Continued)

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

For the Three Months Ended
March 31
2021
2020
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Increase in prepayments for equipment
Increase in computer software costs
Increase in restricted assets
Net cash generated from (used in) investing activities$(189,642)
770(19,011)
16,114(6,529,185)(8,266)(77,553)$(258,811)
6,946(167,653)
13,382(1,976,671)(18,457)(34,483)

2,806,153(1,906,564)(8,088,882)
230,925(3,304,180)(2,743,077)
61,302(63,533)-

7,405,000
8,788,145(2,750,000)
13,582,703(4,367,016)(2,870,281)
13,809(54,935)
6,854

Net cash (used in) generated from financing activities(13,907,445)

19,754,279

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

202,678

32,638NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS(3,099,908)

11,141,432

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD

27,125,937

28,459,528

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$ 24,026,029$ 39,600,960

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term debts(Decrease) increase in short-term bills payable
Repayments of bonds payable
Proceeds from long-term debts
Repayments of long-term debts
Repayments of the principal portion of lease liabilities
Proceeds from guarantee deposits received
Refund of guarantee deposits received
Proceeds from disposal of treasury shares

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ review report dated May 6, 2021)-8-(Concluded)

CHINA AIRLINES, LTD. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)(Reviewed, Not Audited)

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

2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its subsidiaries (collectively, the “Group”) wereapproved by the board of directors and authorized for issue on May 6, 2021.

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

New IFRSs“Annual Improvements to IFRS Standards 2018-2020”
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between An Investor and Its Associate or Joint Venture”
Amendment to IFRS 16 “Covid-19 - Related Rent Concessions
beyond 30 June 2021”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB
April 1, 2021 (Note 8)
January 1, 2023
January 1, 2023
January 1, 2023
(Continued)-9-Effective Date
Announced by IASB (Note 1)

New IFRSs
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling aContract”

January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)(Concluded)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 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.
Note 3: 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 4: 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 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its
obligations on January 1, 2022.
Note 6: The amendments will be applied prospectively for annual reporting periods beginning on orafter January 1, 2023.
Note 7: 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 8: A lessee should apply the amendment for annual reporting periods beginning on or after April
1, 2021, recognizing the cumulative effect of initial application at the beginning of the annual
reporting period.
The application of new IFRSs in issue but not yet endorsed and issued into effect by the FSC would nothave any material impact on the Group’s accounting policies. As of the date the consolidated financial
statements were authorized for issue, the Group is continuously assessing the possible impact that theapplication of other standards and interpretations will have on the Group’s financial position andfinancial performance and will disclose the relevant impact when the assessment is completed.

- 10 -

4. 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 IAS 34 “Interim Financial Reporting” asendorsed by the FSC. Disclosure information included in these interim consolidated financial statements isless than the disclosures required in a full set of annual consolidated financial statements.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments which are measured at fair value.
The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fairvalue measurement inputs are observable and based on the significance of the inputs to the fair value
measurement in its entirety, are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;2) 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); and3) Level 3 inputs are unobservable inputs for an asset or liability.
Basis of Consolidation
The reporting principles of these consolidated financial statements are the same as those of the consolidated
financial statements for the year ended December 31, 2020.
Employee Benefits
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determinedpension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since thattime and for significant plan amendments, settlements, or other significant one-off events.
Income Tax
Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income
taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income thetax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY
The critical accounting judgments and key sources of estimation uncertainty for these interim consolidated
financial statements are the same as those applied in the annual consolidated financial statements for theyear ended December 31, 2020.

- 11 -

6. CASH AND CASH EQUIVALENTS

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

March 31,2021

December 31,
2020

107,856
12,030,912$

333,677
17,690,186

March 31,2020$

30,76015,916,090

9,512,184
2,375,077

6,980,493
2,121,581

11,246,906
12,407,204$ 24,026,029$ 27,125,937$ 39,600,960

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

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

March 31,2021

December 31,
2020

March 31,2020

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

0.13%-2.40%
0.22%-0.41%

0.24%-2.20%
0.22%-0.55%

0.34%-3.15%
0.39%-3.55%

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
March 31, 2021
December 31, 20202021.4.1-2021.8.2
2021.1.4-2021.11.1

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

Carrying Value$ 3,314,286
7,613,636

Impact on other comprehensive income (loss)
Recognized in
Other
Comprehensive
Income (Loss)
For the three months ended March 31, 2021

$

6,434

For the three months ended March 31, 2021, the amount of hedge settlements recognized as prepayments
for equipment was $79,606 thousand.

- 12 -

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

December 31,
2020

March 31,2020

Financial assets - current
Financial assets mandatorily classified at FVTPL
Derivative financial instruments (not underhedge accounting)Foreign exchange forward contracts
Non-derivative financial assets
Beneficiary certificates

$

-

$

-

$

30

257,820274,761

567,940$ 257,820$ 274,761$ 567,970$$$

Financial liabilities - current
Financial liabilities held for trading
Derivative financial instruments (not underhedge accounting)Foreign exchange forward contracts

-

-

5,075

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:
Notional Amount(In Thousands)

Currency

Maturity Date

NTD/USD

2020.4.23-2020.7.31

March 31, 2020
Buy forward contracts

NTD271,903/USD9,000

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Investments in Equity Instruments
March 31,2021

December 31,
2020

March 31,2020

$ 129,488
31,843$ 134,042
29,704$ 182,109
28,816$ 161,331$ 163,746$ 210,925

Non-current
Foreign investments
Unlisted shares
Domestic investments
Unlisted shares

These investments in equity instruments are not held for trading. Instead, they are held for medium- tolong-term strategic purposes. Accordingly, the management elected to designate these investments in equity
instruments as at FVTOCI as it believes that recognizing short-term fluctuations in these investments’ fairvalues in profit or loss would not be consistent with the Group’s strategy of holding these investments forlong-term purposes.

- 13 -

9. FINANCIAL ASSETS AT AMORTIZED COST
March 31,2021

December 31,
2020

March 31,2020

$ 1,534,735
1,663$ 6,551,693-$ 1,724,004-$ 1,536,398$ 6,551,693$ 1,724,004

$

$

$

Current
Time deposits with original maturities of morethan 3 months
Government bondNon-current
Time deposits with original maturities of morethan 1 year

353,462

311,596

207,968

The interest rates for time deposits with original maturities of more than 3 months ranged from 0.21% to1.10%, from 0.21% to 1.90% and from 0.40% to 2.75% as of March 31, 2021, December 31, 2020 andMarch 31, 2020, respectively.

10. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

Notes receivable

March 31,2021

December 31,
2020

March 31,
2020

$

$

$

1,860

655

11,401

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

9,509,934(215,554)
9,294,380

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

7,254,151(218,783)
7,035,368$ 9,296,240$ 9,697,511$ 7,046,769

The average credit period was 7 to 55 days. In determining the recoverability of a trade 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.

- 14 -

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 trade receivables. The expected credit
losses on trade receivables 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 a trade receivable when there is information indicating that the debtor is experiencing
severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that havebeen written off, the Group continues to engage in enforcement activity to attempt to recover thereceivables which are due. Where recoveries are made, these are recognized in profit or loss.
The following table details the loss allowance of trade receivables based on the Group’s provision matrix.
March 31, 2021
Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

Expected credit loss rate

0.30%

0.67%

0.10%

22.45%

94.51%

Gross carrying amount
Loss allowance (lifetime
ECLs)$ 8,935,260

Amortized cost

$ 8,907,743$

Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

Expected credit loss rate

0.14%

0.18%

1.20%

53.78%

92.74%

Gross carrying amount
Loss allowance (lifetime
ECLs)$ 9,304,785

Amortized cost

$ 9,291,393$

Not Past Due

Up to 30 Days

31 to 60 Days

61 to 90 Days

Over 90 Days

Expected credit loss rate

0.07%

0.39%

7.67%

14.50%

99.27%

Gross carrying amount
Loss allowance (lifetime
ECLs)$ 5,648,200$ 1,251,611(3,834)(4,841)

Amortized cost

$ 5,644,366$ 1,246,770$(27,517)

261,227$(1,745)
259,482

110,923

$

(107)
$

110,816

7,238$(1,625)
$

5,613

$

Total

195,286$ 9,509,934(184,560)(215,554)

10,726$ 9,294,380

December 31, 2020$

(13,392)

256,178$(470)
255,708

134,111$(1,608)$132,503

5,513$(2,965)
$

2,548

$

Total

202,421$ 9,903,008(187,718)(206,152)

14,703$ 9,696,856

March 31, 2020$

46,419$(3,562)$- 15 -

42,857

116,938$(16,956)$

99,982$

Total

190,983$ 7,254,151(189,590)(218,783)

1,393$ 7,035,368

The movements of the loss allowance of trade receivables were as follows:
For the Three Months Ended
March 312021
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
9,370
106
(76)
2

$ 218,665
172
(55)
1

Balance at March 31$ 215,554$ 218,783

March 31,2021

December 31,
2020

March 31,2020

$ 7,348,878
627,067
241,072
47,912$ 7,898,482
627,437
214,362
47,824$ 7,217,977
602,247
96,58524,257$ 8,264,929$ 8,788,105$ 7,941,066

11. INVENTORIES

Aircraft spare parts
Items for in-flight sale
Work in process - maintenance services
OthersThe operating costs recognized for the three months ended March 31, 2021 and 2020 included losses frominventory write-downs of $188,279 thousand and $139,463 thousand, respectively.

12. NON-CURRENT ASSETS HELD FOR SALE

Aircraft held for sale

March 31,2021

December 31,
2020$ 89,956$ 89,296

March 31,
2020
$

-

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

Investor Company
China Airlines, Ltd.

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

Main Businesses and Products

Proportion of Ownership (%)
March 31,
December 31,
March 31,
2021
2020
2020

Air transportation
Aircraft maintenance

81
100

81
100

77
100

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

100

100

100

100
100

100
100

100
100

100
100
100
94

100
100
100
94

100
100
100
94

(Continued)- 16 -

Investor Company

Investee Company
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 (%)
March 31,
December 31,
March 31,
2021
2020
2020

Main Businesses and Products
Air transportation and maintenance of
aircraft
Air cargo and storage
In-flight catering
Airport services
Airport services
Forwarding and storage of air cargo
Real estate management
Hotel businessAirport supporting service andinvestment

94

94

94

59
54
49
48
25
100
100
100

59
54
49
48
25
100
100
100

59
54
49
48
25
100
100
100

(Concluded)
Note:

Based on the Group’s proportion of ownership.

The Company has substantial control over Taoyuan International Airport Service, Taiwan Airport Service
and Global Sky Express, while the rest of investees have more than 50% of their voting shares owned by
the Company. The above financial information for the three months ended March 31, 2021 and 2020 ofthese subsidiaries was not reviewed by independent auditors, except for Mandarin Airlines and Tigerair
Taiwan Co., Ltd.
To strengthen the capital structure of Tigerair Taiwan Co., Ltd., the board of directors of the Company
approved the plan to issue ordinary shares for cash at $25 per share on August 6, 2020. The Company
subscribed for 47,228 thousand shares in October 2020 and 26,286 thousand shares in November 2020. The
proportion of ownership of the Group increased to 81%. Because the shares are subscribed at a percentage
different from its existing ownership percentage, the Company’s retained earnings decreased by $169,272
thousand.

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates
Investments in jointly controlled entities

March 31,2021

December 31,
2020

March 31,2020

$ 1,072,589
817,038$ 1,079,852
890,950$ 1,161,492
1,012,437$ 1,889,627$ 1,970,802$ 2,173,929

March 31,2021

December 31,
2020

March 31,
2020

$

$

$

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

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

250,420
4,485
487,319
276,386

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

412,4639,573
445,285
251,10253,97951,11643,069$ 1,072,589$ 1,079,852$ 1,161,492- 17 -

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

20%
20%
28%
28%

20%
20%
28%
28%

20%
20%
28%
28%

35%

35%

35%

The investment (loss) gain recognized for associates accounted for using the equity method was asfollows:
For the Three Months Ended
March 312021
2020
China Aircraft Services
Asian Compressor Technology Services
Airport Air Cargo Terminal (Xiamen)
Airport Air Cargo Service (Xiamen)
Eastern United International Logistics (Holdings) Ltd.

$ (27,310)(438)
10,9086,233
2,844$ (29,700)
(576)
2,975
4,943
725

$ (7,763)$ (21,633)

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

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

March 31,2021

December 31,
2020

March 31,2020$

630,774
141,441
36,952
7,871$

695,959
149,353
37,7677,871$$

817,038$

890,950$ 1,012,437- 18 -

799,660
167,097
37,8127,868

At the end of the reporting period, the proportion of ownership and voting rights in jointly controlled
entities held by the Group were as follows:
Proportion of Ownership and Voting Rights
March 31,
December 31,
March 31,
2021
2020
2020
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

51%
55%
49%
51%

51%
55%
49%
51%

51%
55%
49%
51%

The Group entered into a joint venture agreement with the Taikoo Group to invest in China Pacific
Catering Services and China Pacific Laundry Services. According to the agreement, both sides have theright to make major motion vetoes on the board of directors, and therefore, the Group does not havecontrol.
To expand the Group’s catering business, Kaohsiung Catering entered into a joint venture agreement toinvest in Delica International Co, Ltd., with the other company have the right to make decisions on
operations, and therefore, the Group does not have control.
Details of the investment loss attributable to investments in jointly controlled entitles were as follows:
For the Three Months Ended
March 312021
2020
China Pacific Catering Services
China Pacific Laundry Services
NORDAM Asia Ltd.
Delica International Co., Ltd.

$ (65,184)(7,912)(815)-$ (1,411)(1,449)(1)-$ (73,911)$ (2,861)

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

- 19 -

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
3,207$ 16,084,063
13,2645,817$ 272,077,692
181,295(1,256,170)
1,358,008-$ 16,846,835
64,252(55,690)
12,328605$ 306,011,089
258,811(1,311,860)
1,370,336
9,629

Balance at March 31, 2020$

1,005,706$ 16,103,144$ 272,360,825$ 16,868,330$ 306,338,005

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

$

-

$

(7,028,540)(122,706)(2,973)$ (141,886,170)(4,550,598)
1,177,898
536-$ (11,209,408)(233,605)
54,790(536)(4,704)$ (160,124,118)(4,906,909)
1,232,688(7,677)

Balance at March 31, 2020

$

-

$

(7,154,219)$ (145,258,334)$ (11,393,463)$ (163,806,016)

Balance at March 31, 2020,
net value$

1,005,706$

8,948,925$ 127,102,491$

5,474,867$ 142,531,989

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

955,823
2,869$ 15,705,635
12,731
5,297$ 282,007,135
12,266(1,072,693)
6,63,856-$ 17,058,648
164,645(46,317)
13,958558$ 315,727,241
189,642(1,119,010)
6,647,814
8,724

Balance at March 31, 2021$

958,692$ 15,723,663$ 287,580,564$ 17,191,492$ 321,454,411

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

$

-

$

(7,121,637)(123,184)(2,882)$ (155,376,265)(4,504,782)
838,779-$ (11,747,645)(220,509)
45,56289(474)$ (174,245,547)(4,848,475)
884,341
89(3,356)

Balance at March 31, 2021

$

-

$

(7,247,703)$ (159,042,268)$ (11,922,977)$ (178,212,948)

Balance at March 31, 2021,
net value$

958,692$

8,475,960$ 128,538,296$$ 143,241,463

Accumulated depreciationand impairment

Cost

Accumulated depreciationand impairment

Reclassification was mainly aircraft prepayment.

- 20 -

5,268,515

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of theassets:Buildings
Main buildings
Others
Machinery equipment
Electro-mechanical equipment
Others
Office equipment
Leasehold improvements
Building improvements
OthersAssets leased to others
Flight equipment and equipment under finance leases
Airframes
Aircraft cabins
EnginesHeavy maintenance on aircraft
Engine overhauls
Landing gear overhauls
Repairable spare parts
Leased aircraft improvements

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

Refer to Note 33 for the carrying amounts of property, plant and equipment pledged by the Group.
Based on the particularity of risk in the aviation industry, all of the Group’s assets such as aircraft, realestate, and movable property are adequately insured to diversify the potential risk related to operations.

16. INVESTMENT PROPERTIES

Carrying amount
Investment properties

March 31,2021

December 31,
2020

March 31,2020

$ 2,074,731$ 2,074,798$ 2,075,000

The investment properties held by the Group were land located in Nankan and buildings in Taipei, whichwere all leased to others. The buildings are depreciated on a straight-line basis over 55 years.
The fair values of the investment properties held by the Group were both $2,488,931 thousand as of March
31, 2021 and December 31, 2020. In addition, management assessed that there was no significant difference
between the fair values on March 31, 2021 and December 31, 2020. The fair value valuations were
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 interests.

- 21 -

17. OTHER INTANGIBLE ASSETS
Computer
Software Cost

Goodwill

Accumulated
Amortization

Net Value

Balance at January 1, 2020
Additions
Amortization expenses$ 2,406,163
18,457-$

186,197-$ (1,409,668)(49,902)$ 1,182,692
18,457(49,902)

Balance at March 31, 2020

$ 2,424,620$

186,197$ (1,459,570)$ 1,151,247

Balance at January 1, 2021
Additions
Amortization expenses$ 1,763,644
8,266
-

$

186,197-$(873,490)(54,328)$ 1,076,351
8,266(54,328)

Balance at March 31, 2021

$ 1,771,910$

186,197$(927,818)$ 1,030,289

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

18. OTHER ASSETSMarch 31,2021

December 31,
2020

March 31,2020

Current
Temporary payments
Prepayments
Restricted assets
Others$626,997
264,231
11,000203,657$

136,681348,554
11,065364,879$

254,893
1,292,328
42,120283,328$

1,105,885$

861,179$

1,872,669$

5,349,874
2,373,661
1,090,546
374,058
18,06018,998$5,725,340
2,216,049
1,087,668
291,742
18,07814,015$

8,983,412
2,874,778
1,361,370
115,0283,384
139,014$9,225,197$

9,352,892$ 13,476,986

March 31,2021

December 31,
2020

March 31,
2020

Bank loans - unsecured$ 1,932,000$ 1,932,000$ 8,385,000Interest rates

0.92%-1.28%

0.92%-1.28%

0.87%-1.12%

Non-current
Prepayments for aircraft
Prepayments - long-term
Refundable deposits
Restricted assets
Other financial assets
Others

19. BORROWINGSa. Short-term loans- 22 -

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

December 31,
2020

March 31,
2020

$

-

$ 8,100,000
11,118$ 8,859,472
71,327$-$ 8,088,882$ 8,788,145-

0.99%-1.00%

1.00%-1.17%

March 31,2021

December 31,
2020

March 31,2020

$ 22,433,196
39,587,276$ 23,470,696
39,584,540

27,480,000
21,96989,478,503
17,931,908

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

35,420,000
37,19776,279,471
15,941,499$ 71,546,595$ 77,288,330$ 60,337,972

0.81%-1.63%

0.81%-1.63%

1.00%-1.79%

Annual discount ratec. Long-term debts

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

Interest rates$

5,957,500
34,939,168

For information on secured bank loans which were secured by freehold land, buildings, machinery
equipment and flight equipment, refer to Note 33.
Bank loans (In New Taiwan dollars and U.S. dollars) are repayable quarterly, semiannually or in lumpsum upon maturity. Related information is summarized as follows:

Periods

March 31,2021

December 31,
2020

March 31,2020

2009.2.42032.6.30

2009.2.42032.6.30

2009.2.42032.3.5

The Company has note issuance facilities (NIFs) obtained from certain financial institutions. The NIFs,
with various maturities until March 2025, were used by the Group to guarantee the commercial paperissued. As of March 31, 2021, December 31, 2020 and March 31, 2020, such commercial paper was
issued at discount rates of 1.0177%-1.0997%, 1.0263%-1.1629% and 0.9993%-1.1650%, respectively.
In accordance with the “Regulations on Relief and Revitalization Measures for Industries andEnterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry ofTransportation and Communications and the “Operational Guides on Relief Loan Guarantees for Ailing
Aviation Industry Affected by Severe Pneumonia with Novel Pathogens”, the Group applied for project
finance loans from financial institutions to maintain its operations; and special funds, credit guarantees
along with subsidized interest rates were provided by the government. The total amount of the loans is$24,390,000 thousand, which shall be repaid within 2 years from the date of initial drawdown. As of
March 31, 2021, the Group had made a drawdown in the amount of $23,482,000 thousand.

- 23 -

20. BONDS PAYABLE
March 31,
2021
Unsecured corporate bonds first-time issued in2016
Unsecured corporate bonds second-time issued in2016
Unsecured corporate bonds first-time issued in2017
Unsecured corporate bonds second-time issued in2017
Unsecured corporate bonds first-time issued in2018
Unsecured corporate bonds first-time issued in2019
Convertible bonds sixth-time issues$

2,350,000

December 31,
2020$

2,350,000

March 31,2020$

4,700,000

2,500,000

2,500,000

5,000,000

1,000,000

1,000,000

2,350,000

2,600,000

2,600,000

3,500,000

4,500,000

4,500,000

4,500,000

3,500,000
5,852,661
22,302,661

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

3,500,000
5,772,470
29,322,470

6,150,000

11,982,859

13,022,470$ 16,152,661$ 10,300,000$ 16,300,000

Conditions

Rate (%)

2016.5.26-2021.5.26

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

1.19

2016.9.27-2021.9.27

Principal repayable in September of2020 and 2021; interest p.a. payableannually
Principal repayable on due date;indicator rate; payable annually

1.08

2017.5.19-2024.5.19

Principal repayable on due date;indicator rate; payable annually

1.75

2017.10.12-2020.10.12

Principal repayable on due date;indicator rate; payable annually

1.14

2017.10.12-2022.10.12

Principal repayable in October of 2021
and 2022; indicator rate; payableannually
Principal repayable in November of2022 and 2023; indicator rate;
payable annuallyPrincipal repayable in November of2022 and 2023; indicator rate;
payable annuallyPrincipal repayable in June of 2023 and2024; indicator rate; payableannually
Principal repayable in June of 2025 and2026; indicator rate; payableannually
Unless bonds are converted to sharecapital or redeemed, principal
repayable one time in January 2023;
1.3821 discount rate p.a.

1.45

Less: Current portion and put option of
convertible bonds

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

Period2017.5.19-2020.5.19

2018.11.30-2023.11.30

2018.11.30-2025.11.30

2019.06.21-2024.06.21

2019.06.21-2026.06.21

2018.1.30-2023.1.30- 24 -

1.20

1.32

1.45

1.10

1.32

-

The Company issued its 2016 first unsecured corporate bonds with a face value of $5,000,000 thousand,and the purchasers of the bonds included Mandarin Airlines and Sabre Travel Network (Taiwan), who held
a cumulative face value of $150,000 thousand which was eliminated from the consolidated financial
statements.
The Company issued the sixth issue of its unsecured convertible bonds, and the issuance conditions were as
follows:
a. The holders may demand a lump-sum payment for the bonds upon maturity.
b. The holders can request that the Company repurchase their bonds at face value on the third anniversaryof the offering date. The holders can exercise the right to sell on January 30, 2021.
c. The Company may redeem the bonds at face value between April 30, 2018 and December 20, 2022
under certain conditions.
d. Between January 26, 2014 and December 16, 2018 (except for the period between the former dividend
date and the date of the dividend declaration on record), holders may convert the bonds to theCompany’s ordinary shares. The initial conversion price was set at NT$13.2, which is subject toadjustment if there is a capital injection by cash, share dividend distribution, and the proportion of cash
dividends per share in market price exceeding 1.5%. Because the Company distributed cash dividends
as of July 29, 2019, the conversion price was adjusted to NT$12.6. Also a total face value of NT$100
thousand of convertible bonds was converted into 8,000 ordinary shares of the Company.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.3821% per annum on initial recognition.
Proceeds from issuance
Equity component$ 6,012,000(409,978)Liability component at the date of issuance$ 5,602,022

The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 7, 2019. The cumulative face value of the bonds shall not exceed $3,000,000
thousand. The bonds are issued at 100%-100.5% of the face value, and the issuance period is 5 years.
During the period of public offerings, the stock market and the domestic capital market were volatile due tocoronavirus pneumonia and the changes in the share price of the Company were unfavorable to the seventh
issue of the Company’s unsecured convertible bonds. After comprehensive consideration, the issuance wassuspended with the permission of the competent authority based on the best interest of the Company andthe shareholders’ equity.
The seventh issue of the Company’s unsecured convertible bonds was resolved by the board of directors of
the Company on August 6, 2020. The Company issued all the bonds on April 28, 2021. The cumulative
face value of the bonds was $4,500,000 thousand, and the bonds were issued at the face value. The issuance
period is 5 years and the conversion price is set at NT$19.

- 25 -

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

Carrying amounts
Land
Buildings
Flight equipment
Other equipment$

March 31,2021

December 31,
2020

7,542,964
1,363,432
48,876,393
8,127

$

$ 57,790,916

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

March 31,2020$

8,170,745
1,291,054
59,127,742
2,331$ 68,591,872

For the Three Months Ended
March 31
2021
2020
Additions to right-of-use assets
Depreciation for right-of-use assets
Land
Buildings
Flight equipment
Other equipment$ 1,374,300$

720,868$$

155,719
290,064
2,814,198
640

102,486
201,366
2,725,484
3,498$ 3,032,834$ 3,260,621

Except for the additions and recognitions of depreciation expense listed above, the Group’s right-of-use
assets for the three months ended March 31, 2021 and 2020 did not have significant sublease andimpairment.
b. Lease liabilities

Carrying amounts
Current
Non-current

March 31,2021

December 31,
2020

March 31,2020

$ 2,562,559$ 13,497,658$ 2,525,957$ 13,279,792$ 2,549,104$ 15,665,569

Range of discount rate for lease liabilities (including US lease hedging instruments):

Land
Buildings
Flight equipment
Other equipment

March 31,2021

December 31,
2020

March 31,2020

1.09%-1.80%
0%-2.98%
0.68%-3.34%
1.06%-1.50%

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

0%-1.65%0%-3.56%
2.00%-3.34%
1.06%-1.50%- 26 -

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

December 31, 2020

March 31, 20202022.2.9-2028.5.15

2022.2.9-2028.5.15

2021.4.15-2028.5.15

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

8,165,713
30,606,694
8,120,445
32,455,333
8,678,982
40,472,454

Influence of comprehensive income

For the three months ended March 31, 2021
For the three months ended March 31, 2020

Recognized in
Other
Comprehensive
IncomeReclassified toIncome$ (359,570)(356,468)$ 150,096
50,487d. China Airlines, Mandarin Airlines and Tigerair Taiwan leased ten 777-300ER planes, fifteen A330-300
planes, fifteen 737-800 planes, ten A320-200 planes, one A320 neo, five ERJ190 planes and three
ART72-600 planes for operation, lease period are 6 to 12 years from February 2006 to March 2031. The
rental pricing method is partly a fixed amount of funds, and some of them are floating rents, floating
rents are according to benchmark ratio, the rent is revised every half year. When the lease expires, thelease agreements have no purchase rights.
The information of refundable deposits and letter of credit due to rental of planes:

Refundable deposits
Credit guarantees

March 31,2021

December 31,
2020

March 31,
2020

$

$

$

716,694
1,766,692

725,135
1,756,656

771,140
1,868,105

CAL Park, and Taoyuan International Airport Service signed a BOT contract with a land leaseagreement, refer to Note 34. The lease includes an option to extend the lease, as it is not possible toextend the lease, the amount of the lease related to the period covered by the option is not included in
the lease liability. If the amount of the extended lease period was included in the lease liability, thelease liability would have increased by $888,623 thousand, $885,657 thousand and $876,820 thousand
on March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

- 27 -

Taiwan Air Cargo Terminal Co. and CAA signed a BOT contract with a land lease agreement. For
details, please refer to Note 34.
e. In September 2019, the Company signed a rental contract for six A321neo with Air Lease Corporation,
which is expected to be introduced between 2021 and 2022.
In October 2019, the Company signed a rental letter of intent for eight A321neo with CALC Lease
Corporation, which is expected to be introduced in 2022.
In February 2020, Tigerair Taiwan Co., Ltd. signed a rental letter of intent for eight A321neo withICBC Lease Corporation, which is expected to be introduced between 2021 and 2024. As of March 31,
2021, one A321neo has been delivered.
f. Other lease information
The Group use operating lease agreement for investment properties, refer to Note 16.
For the Three Months Ended
March 312021
2020
Short-term leases and low-value asset leases
Total cash outflow for leases$
6,507$ (3,100,692)$
6,384$ (3,314,349)

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

22. OTHER PAYABLES

Fuel costs
Short-term employee benefits
Ground service expenses
Repair expenses
Terminal surcharges
Interest expenses
Commission expenses
OthersMarch 31,2021

December 31,
2020

March 31,2020

$ 2,178,473
1,610,364
818,197
717,310415,349
170,560
140,492
2,010,459$ 1,853,717
1,948,982
956,956
366,589
420,194
120,550
184,3632,454,906$ 1,798,469
1,734,796
1,009,103
1,017,554
672,350
250,531497,470
2,255,578$ 8,061,204$ 8,306,257$ 9,236,031- 28 -

23. CONTRACT LIABILITIES/DEFERRED REVENUE
March 31,2021
Frequent flyer program
Advance ticket sales
Others

December 31,
2020

March 31,2020$

2,504,217
2,442,307
11,214$

2,671,203
2,659,093
168

$

$

4,957,738$

5,330,464$ 13,398,031$

3,540,129
1,417,609$

3,569,360
1,761,104$ 11,071,797
2,326,234$

4,957,738$

5,330,464$ 13,398,031

March 31,2021

December 31,
2020

March 31,2020

Operating leases - aircraft$ 15,678,217$ 14,534,286$ 11,401,462

Current
Non-current

$

$

$

Current
Non-current

3,034,418
10,363,613-

24. PROVISIONS

1,262,426
14,415,791$ 15,678,217

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

343,645
11,057,817$ 11,401,462
Aircraft Lease
Contracts

Balance at January 1, 2020
Additional provisions recognized
Usage
Effects of exchange rate changes$ 10,371,857
1,443,036(469,834)
56,403

Balance at March 31, 2020

$ 11,401,462

Balance at January 1, 2021
Additional provisions recognized
Usage
Effects of exchange rate changes$ 14,534,286
1,372,144(313,099)
84,886

Balance at March 31, 2021

$ 15,678,217

The Company and Mandarin Airlines leased flight equipment under operating lease agreements. Under thecontracts, when the leases expire and the equipment is returned to the lessor, the flight equipment has to be
repaired according to the expected years of use, number of flight hours, flight cycles and the number ofengine revolution. The Company and Mandarin Airlines had existing obligations to recognize provisions
when signing a lease or during the lease term. Tigerair Taiwan Co., Ltd. also leased flight equipment underoperating lease agreements. In accordance to the contract, Tigerair had to pay the maintenance reserve
accounted for by using the number of flying hours.

- 29 -

25. RETIREMENT BENEFIT PLANS
Employee benefits expense in respect of the Group’s defined benefit retirement plan were calculated using
the actuarially determined pension cost discount rate as of December 31, 2020 and 2019.
For the Three Months Ended
March 312021
2020
Operating costs
Operating expenses$ 243,547
96,330$ 243,940
106,466$ 339,877$ 350,406

March 31,2021

December 31,
2020

March 31,2020

7,000,000$ 70,000,000$ 54,209,926

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

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

26. EQUITY
a. Share capital
Ordinary shares

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

For the three months ended March 31, 2021, the Company issued the 6th domestic unsecured
convertible bonds, and the convertible bonds holders applied for conversion in the amount of $100
thousand. The number of ordinary shares exchanged was 8,000 and entitled to have their registration
changed after the issuance of new shares.
b. Capital surplus

Issuance of shares in excess of par value andconversion premium
Retirement of treasury shares
Employee share options expired
Long-term investments
Bonds payable - equity component
Difference in sale price of shares ofsubsidiaries and book value
OthersMarch 31,2021

December 31,
2020

March 31,
2020

$

$

$

146,369
33,513
11,747
119,134
409,971

146,351
33,513
11,747
119,134
409,978

315,11433,513
11,747
118,962
409,978

466,611466,604

1,129,080
466,604$ 1,187,345$ 1,187,327$ 2,484,998

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

- 30 -

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

- 31 -

d. Other equity items
The movement of other equity items is as follows:
Unrealized Gain
(Loss) on
Financial Assets
at Fair Value
Through Other
Comprehensive
IncomeGain (Loss) on
Hedging
Instruments

Total(54,707)$ 107,262$ 1,143,678$ 1,196,233(16,816)--(16,816)--(355,209)(355,209)--(49,091)(49,091)

3,130

2,569
(124)

81,694

2,569
84,700(13,686)

2,445(322,606)(333,847)(68,393)$ 109,707$ 821,072$ 862,386$

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

7,102

-

-

7,102

-

-

(201,215)(201,215)--(143,208)(143,208)(1,409)(2,419)912

69,187(2,419)68,6905,693(1,507)(275,236)(271,050)--

79,606

79,60669,852$ 2,411,029$ 2,352,322

Exchange
Differences on
Translating
Foreign
Operations
Balance on January 1, 2020
Exchange differences on translating
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 atfair value through othercomprehensive income
Effects of income tax
Other comprehensive income (loss)
recognized in the period$

Balance on March 31, 2020$

Balance on January 1, 2021
Exchange differences on translating
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 atfair value through othercomprehensive income
Effects of income tax
Other comprehensive income (loss)
recognized in the period
Transfers of initial carrying amount ofhedged items$ (134,252)

Balance on March 31, 2021

$ (128,559)$

e. Non-controlling interests
For the Three Months Ended
March 312021
2020
Beginning balance
Net loss attributable to non-controlling interests
Exchange differences on translating foreign operations
Gain loss on hedging instruments
Cumulative gain (loss) on changes in fair value of hedging
instruments reclassified to profit or loss

$ 3,152,090(197,171)615$ 3,578,345(37,232)(1,247)
1,471

350
416

(205)
19

Ending balance$ 2,955,335$ 3,541,132- 32 -

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

Purpose of Treasury Shares

Number of
Shares,Beginning ofYear

For the three months ended March 31, 2021
For the three months ended March 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$ 31,638$ 31,638

2,075$ 24,999$ 24,999

2,075$ 13,713$ 13,713

March 31, 2021
Mandarin Airlines
December 31, 2020
Mandarin Airlines
March 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 its shares in the Company
between January 1, 2020 and March 31, 2020. The disposal price was $6,854 thousand.

27. NET INCOME
a. Revenue
For the Three Months Ended
March 31
2021
2020
Passenger
Cargo
Others$- 33 -

1,974,969
24,025,206
1,827,481$ 18,728,022
11,095,611
2,733,497$ 27,827,656$ 32,557,130

b. Other income
For the Three Months Ended
March 312021
2020
Interest income
Subsidy income
Others$41,153
3,739
50,928$88,30018,12557,205$95,820$ 163,630

c. Other gains and losses
For the Three Months Ended
March 312021
2020
Gain (loss) on disposal of property, plant and equipment
Net gain on financial assets classified as held for sale
Loss on foreign exchange, net
Others$ (36,476)
149(127,657)(55,449)

$

5,121
3,296
(79,114)(83,393)$ (219,433)$ (154,090)

d. Finance costs
For the Three Months Ended
March 312021
2020
Interest expense
Bonds payable
Bank loans
Interest on lease liabilities$

72,539206,467
378,377$ 106,674
285,756
492,193$ 657,383$ 820,672

Capitalization interest$$

Capitalization rate

0.7204%1.1147%

8,293

27,6491.226%1.453%

e. Depreciation and amortization expenses
For the Three Months Ended
March 312021
2020
Property, plant, equipment
Right-of-use assets
Investment properties
Intangible assets$ 4,848,475
3,032,834
67
54,328$ 4,906,909
3,260,621
68
49,902

Depreciation and amortization expenses$ 7,935,704$ 8,217,500(Continued)- 34 -

For the Three Months Ended
March 312021
2020
An analysis of depreciation by function
Operating costs
Operating expenses

An analysis of amortization by function
Operating costs
Operating expenses$ 7,506,640
374,736$ 7,749,835
417,763$ 7,881,376$ 8,167,598

$

3,822
50,506$

3,538
46,364$54,328$49,902(Concluded)

f. Employee benefits expense
For the Three Months Ended
March 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$

132,328
339,877$

155,859
350,406$

472,205$506,265$ 4,482,317
1,120,329$ 5,382,169
1,787,364$ 5,602,646$ 7,169,533$ 4,879,279
1,195,572$ 6,260,960
1,414,838$ 6,074,851$ 7,675,798

To be in compliance with the Company Act as amended, the Articles stipulate the distribution ofcompensation of employees at rates of no less than 3% of the net profit before income tax andcompensation of employees. For the three months ended March 31, 2021 and 2020, the Company has
experienced a deficit and, therefore, no compensation of employees was estimated.
Material differences between such estimated amounts and the amounts proposed by the board of
directors on or before the date that the annual consolidated financial statements are authorized for issue
are adjusted in the year that the bonuses and remuneration were recognized. If there is a change in the
proposed amounts after the annual consolidated financial statements are authorized for issue, thedifferences are recorded as a change in the accounting estimate.

- 35 -

28. INCOME TAX
a. Income tax expense recognized in profit or loss
The major components of tax expense (benefit) were as follows:
For the Three Months Ended
March 31
2021
2020
Current tax
Current year
Deferred tax
Current year$

28,101$

23,296(143,402)

Income tax (revenue) expense recognized in profit or loss

$ (115,301)(19,213)$

4,083

b. Income tax recognized in other comprehensive income
For the Three Months Ended
March 312021
2020
Deferred tax
Recognized in other comprehensive income
Translation of foreign operations
Fair value changes of financial assets at FVTOCI
Hedging instruments’ fair value revaluation$ (1,409)
912
69,187$

Total income tax recognized in other comprehensive income$ 68,690$ 84,700

3,130
(124)
81,694c. Income tax assessment
Income tax returns of the Company and its subsidiaries through 2018 have been examined by the tax
authorities.

29. LOSS PER SHARE
The numerators and denominators used in calculating earnings and losses per share were as follows:
For the Three Months Ended
March 312021
2020
Basic loss per share
Diluted loss per share
Loss used in the computation of diluted loss per share$ (0.19)$ (0.19)$ (0.70)$ (0.70)$ (1,019,376)$ (3,773,333)

5,418,911

5,418,367

In thousands of shares
Weighted average number of ordinary shares used in thecomputation of diluted earnings per share- 36 -

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

31. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments not measured at fair value
Except as detailed in the following table, the management considers the carrying amounts of financial
assets and financial liabilities recognized in the financial statements as approximating their fair values.
March 31, 2021
Carrying
AmountFair Value

December 31, 2020
Carrying
AmountFair Value

March 31, 2020
Carrying
AmountFair Value$ 22,302,661$ 22,282,859$ 29,322,470

Financial liabilities
Bonds payable$ 23,734,187$ 22,459,685$ 29,303,333

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

257,820

$

-

$

-

$

257,820

$

-

$

-

$

31,843$31,843$-- 37 -$-

129,488$

161,331

129,488$

161,331(Continued)

Level 1

Level 2

Level 3

Total

Financial assets for hedging$

3,314,286

$

-

$

4,798

Financial liabilities forhedging$ 38,772,407

$

2,498

$

-

$

3,319,084$ 38,774,905(Concluded)

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 for hedging$

7,613,636

$

-

$

-

$

7,613,636

Financial liabilities forhedging$ 40,575,778

$

9,307

$

-

$ 40,585,085

March 31, 2020
Level 1
Financial assets at FVTPL
Domestic money market
funds
Foreign exchange
agreement

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

Level 2567,940$-

Level 3

-

$

30

Total

-

$

-

567,94030$

567,940

$

30

$

-

$

567,970

$

-

$

-

$

28,816$

28,816$-- 38 -$-

182,109$

210,925

182,109$

210,925(Continued)

Level 1

Level 2

Level 3

Total

Financial liabilities at
FVTPL
Derivative instruments

$

-

$

5,075

$

-

$

5,075

Financial assets for hedging

$

-

$

11,853$620$

12,473Financial liabilities forhedging$ 49,151,436$

14,560$75,877$ 49,241,873(Concluded)

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

Valuation Techniques and Inputs
The fair values of derivatives (except options) have been
determined based on discounted cash flow analyses using
interest yield curves applicable for the duration of thederivatives. The estimates and assumptions that the Group
used to determine the fair values are identical to those used in
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. An increase in the implied fluctuation used in isolation
would result in a decrease in the fair value of fuel options.
The domestic unlisted equity investment is based on the comparative company valuation to estimate
the fair value. The main assumptions are based on the multiplier of the market price of thecomparable listed company and the net value per share, which have considered the liquidity
discount. The higher the multiplier or the lower the liquidity discount, the higher the fair value ofthe relevant financial instruments.
The multiplier and liquidity discount of Level 3 financial instruments are as follows:

March 31, 2021
December 31, 2020
March 31, 2020

- 39 -

Multiplier

Liquidity
Discount

0.79-16.32
0.79-16.32
0.75-13.23

80%
80%
80%

The movements of Level 3 financial instruments are as follows:
Derivative
Instruments

EquityInstruments

Balance at January 1, 2021
Recognized in other comprehensive income$(2,260)$ 163,746(2,415)

Balance at March 31, 2021$

(2,260)$ 161,331

Balance at January 1, 2020
Recognized in other comprehensive income

$

5,524
(80,781)$ 209,221
1,704

Balance at March 31, 2020

$ (75,257)$ 210,925

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
March 31,2021

December 31,
2020

257,820
3,319,084
37,443,143
161,331$

March 31,2020

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

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

567,970
12,47350,799,032
210,925

Financial liabilities
Financial liabilities at FVTPL
Derivative financial liabilities for hedging
Financial liabilities at amortized cost (Note 2)

38,774,905
155,516,020

40,585,885
165,458,441

5,075
49,241,873
164,615,811

Note 1: The balances include loans and receivables measured at amortized cost, which comprise cash
and cash equivalents, notes and accounts receivable, accounts receivable - related parties,
other receivables, refundable deposits and other restricted financial assets.
Note 2: The balances include financial liabilities measured at amortized cost, which compriseshort-term loans, short-term notes payable, notes and accounts payable, accounts payable related parties, other payables, bonds payable and long-term loans, lease liabilities, provisions,parts of other current liabilities, parts of other non-current liabilities and guarantee deposits.
d. Financial risk management objectives and policies
The Group has risk management and hedging strategies to respond to changes in the economic andfinancial environment and in the fuel market. To reduce the financial risks from changes in interest,
exchange rates and fuel prices, the Group has its operating costs stay within a specified range by using
appropriate financial hedging instruments and hedging percentages in accordance with the “Processing
Program of Derivative Financial Instrument Transactions” approved by the Group shareholders to
reduce the impact of market price changes on earnings. These risks include market risk (including
currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

- 40 -

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 market risks of changes in foreign currency exchange rates,interest rates and fuel prices. The Group entered into derivative financial instruments to manage its
exposure to those related risk.
The Group enters into forward contracts, fuel option contracts, and interest swap contracts with fairvalues that are highly negatively correlated to the fair values of hedged items and evaluates thehedging effectiveness of these instruments periodically.
a) Foreign currency risk
The Group engages in ticket sales and purchase transactions which denominated in foreign
currency, which exposed to risks on change in exchange rates. The Group uses forward
contracts to manage risk within the scope of the Group’s policy of management exchange raterisk.
Sensitivity analysis
The Group was mainly exposed to the U.S. dollar.
The following details the Group’s sensitivity to increase and decrease in New Taiwan dollars(functional currency) against the relevant foreign currencies. U.S. dollars increase/decrease one
dollar against New Taiwan dollars used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis included only outstanding foreign
currency denominated monetary items and foreign currency forward contracts designated as
cash flow hedges, and adjusts their translation at the end of the reporting period for U.S. dollars
increase/decrease one dollar against New Taiwan dollars change in foreign currency rates.
When New Taiwan dollars increase one dollar against U.S. dollars and all other variables were
held constant, there would be a decrease in pre-tax profit and an increase in pre-tax othercomprehensive income gain and losses for the three months ended March 31, 2021 of $271,676
thousand and $1,237,102 thousand, respectively, and a decrease in pre-tax profit and increase in
pre-tax other comprehensive income gain and loss for the three months ended March 31, 2020
of $146,379 thousand and $1,513,104 thousand, respectively.
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.

- 41 -

The following table summarizes the information relating to the hedges of foreign currency risk.
Please refer to Note 21 for rental contract for hedging.
March 31, 2021
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aviation fuel - forward
exchange contracts

Notional
AmountMaturity

Forward Rate

NTD/USD

NTD85,216/
USD2,932

2021.4.282021.11.9

28.48-29.72

NTD/USD

NTD28,571/
USD1,000

2021.5.28

29.38

Currency

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

-

$

-

1,638

860

The abovementioned hedging instruments applied hedge accounting. The book value of other
equity for each hedging item (aircraft rentals in U.S. dollars and aviation fuel) was $(2,498)
thousand.
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

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 in U.S. dollars and aviation fuel) was $(3,513)
thousand and $(5,794) thousand, respectively.
March 31, 2020
Hedging Instruments
Cash flow hedge
Aircraft rentals forward exchange
contracts
Aviation fuel - forward
exchange contracts

Aircraft prepayments forward exchange
contracts

Currency

Notional
AmountMaturity

Forward Rate

NTD/USD

NTD417,205
USD13,809

2020.4.212021.3.5

29.5-30.8

NTD/USD

NTD755,287/
USD25,000

2020.4.302021.1.29

29.6-30.7

NTD/USD

NTD2,265,861/
USD75,000

2020.11.42020.12.4

29.6-30.5

Line Item in
Balance Sheet

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

Carrying AmountAsset
Liability

$

664

$

3,680

2,482

3,769

8,707

7,111

The above mentioned hedging instruments applied hedging accounting. The book value of other
equity which belongs to each hedging item (aircraft rentals, aviation fuel in U.S. dollars andaircraft prepayment) was $(3,016) thousand, $(1,287) thousand and $1,596 thousand,respectively.

- 42 -

For the three months ended March 31, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelNote:

AmountReclassified toProfit and Lossand theAdjusted Line
Item

$

1,874
4,934

$ (1,844)(5,394)$

6,808$ (7,238)(Note)

Decrease in operating costs or foreign exchange loss.

For the three months ended March 31, 2020
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedge
Aircraft rentals
Aviation fuelAircraft prepayments

Note:

$

AmountReclassified toProfit and Lossand theAdjusted Line
Item

5,437
8,874
19,904

$

882
(271)
-

$ 34,215$

611(Note)

Decrease in operating costs or foreign exchange loss.

b) Interest rate risk
The Group was exposed to interest rate risk because entities in the Group borrowed funds atboth fixed and floating interest rates. The risk is managed by the Group by maintaining anappropriate mix of fixed and floating rate borrowings and using interest rate swap contracts andforward interest rate contracts.
The carrying amounts of the Group’s financial assets and financial liabilities with exposure tointerest rates at the end of the reporting period were as follows:

Fair value interest rate risk
Financial liabilities
Cash flow interest rate risk
Financial liabilities

March 31,2021

December 31,
2020

March 31,2020

$ 67,774,114$ 68,883,667$ 86,097,609

100,771,675

112,324,305

104,043,586- 43 -

Sensitivity analysis
The sensitivity analysis below was determined based on the Group’s exposure to interest rates
for both derivatives and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A one yard
(25 basis) point increase or decrease was used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
Had interest rates increased one yard (25 basis points) and all other variables been held constant,
the Group’s pretax profit for the three months ended March 31, 2021 would have decreased by$62,982 thousand.
Had interest rates increased one yard (25 basis points) and all other variables been held constant,
the Group’s pretax profit for the three months ended March 31, 2020 would have decreased by$65,027 thousand.
c) Other price risk
The Group was exposed to fuel price risk on its purchase of aviation fuel. The Group enters into
fuel swaps contract to hedge against adverse risks on fuel price changes.
March 31, 2021
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
Amount
NTD2,260

Maturity
2021.7.312021.9.30

Forward Rate
USD68.20-USD76.10

Line Item in
Balance Sheet
Financial assets forhedging

Carrying AmountAsset
Liability
$

4,798

$

-

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity which belongs to each hedging item (fuel payments) was$2,260 thousand.
December 31, 2020
Hedging Instrument
Cash flow hedges fuel options

Currency

USD

Notional
AmountMaturity

Forward Rate

-

-

-

Line Item in
Balance Sheet

Financial assets forhedging - current/
liabilities for hedging current

Carrying AmountAsset
Liability

$

-

$

-

Hedge accounting continues to be applied to the abovementioned hedging instruments. The
carrying amount of other equity for each hedging item (fuel payments) was $0.
March 31, 2020
Hedging Instrument
Cash flow hedges - fueloptions

Currency
USD

Notional
Amount
NTD75,257

Maturity

Forward Rate

2020.6.302020.12.31

USD49.65-USD78.50

Line Item in
Balance Sheet
Financial assets forhedging

Carrying AmountAsset
Liability$620$ 75,877

Hedge accounting is continued to be applied to the abovementioned hedging instruments. The
carrying amount of other equity which belongs to each hedging item (fuel payments) was$(75,257) thousand.

- 44 -

For the three months ended March 31, 2021
Hedging Gain
(Loss)
Recognized in
Other
Comprehensive
IncomeComprehensive Income
Cash flow hedges - fuel options
Note:

$

2,260

AmountReclassified toProfit and Lossand theAdjusted Line
Item
$

-

(Note)

Increase in operating costs.

For the three months ended March 31, 2020

Comprehensive Income
Cash flow hedges - fuel options
Note:

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

$ (80,781)$ (1,802)(Note)

Increase in operating costs.

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

$

-

$

(2,260)(2,260)$-$ (104,677)(114,314)

2) Credit risk
The goal, policies and procedure of credit risk management are same as the consolidated financial
statements for the year ended December 31, 2020. Related illustration can be referred to in Note 32.

- 45 -

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

$ 20,694,327

Liquidity and interest rate risk 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.
March 31, 2021
The Weighted
Average
Effective
Interest Rate(%)
Finance leaseliabilities
Floating interest rate
liabilities
Derivative instruments
Bonds payable

2.3020%Less than 1Year$0.9583%3.0521%
0.9588%3,512,867

1 to 5 Years

Over 5 Years$$

9,876,067

7,940,094

20,762,065
9,221,894
6,307,714

56,340,681
25,150,304
9,148,751

16,043,825
1,158,792
1,261,984$ 39,804,540$ 100,515,803$ 26,404,695- 46 -

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

Less than 1Year1.1128$3,494,299

1.62693.04922.4622

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

Less than 1Year

1 to 5 Years

Over 5 Years

3,351,176$ 11,052,170$

1.1232

3,923,432

11,165,529

14,363,237

1.13683.11331.070912,100,000
10,070,758
7,329,913

35,000,000
38,679,892
19,360,504

5,173,331
3,335,338$ 36,775,279$ 115,258,095$ 30,022,363

March 31, 2020
The Weighted
Average
Effective
Interest Rate(%)
Finance leaseliabilities
Floating interest rate
liabilities
Fixed interest rate
liabilities
Derivative instruments
Bonds payable

2.4225$

7,150,457

32. TRANSACTIONS WITH RELATED PARTIESThe transactions between subsidiaries (obtain business) relationship with China Airlines, Ltd., remaining
account balance, revenue and expense are eliminated when combined, which is not disclosed in the note.
Unless otherwise stated, the transactions between the merged company and other business related parties
are as follows:a. The related parties’ names and relationships
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

Associate
Associate
Associate
Associate
Associate
Joint venture investment
Joint venture investment(Continued)- 47 -

Name

Relationship with the Company

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

Account Items

Related Party TypeFor the Three Months Ended
March 31
2021
2020

Other income

Major shareholders of the Company
Associates
Joint venture investments

$
$
$

5,412
4,690

$ 5,097$8$ 10,415

c. Purchases

Related Party TypeFor the Three Months Ended
March 31
2021
2020

Major shareholders of the Company
Associates
Joint venture investments$$$

12,51092,634
61,201$ 11,417$ 77,664$ 330,901

d. Accounts receivable - related parties (generated by operations)
March 31,2021

Related Party Type
Major shareholders of the Company
Joint venture investments

December 31,
2020

March 31,
2020

$

1,220
1,632

$

1,667

$

169
7,515

$

2,852

$

1,667

$

7,684

The receivables are not guaranteed, and there is no allowance for doubtful accounts related to accounts
receivable - related parties. The payment period of such accounts was within 30 to 90 days, and there
are no overdue payments.
e. Accounts payable - related parties (generated by operations)
March 31,2021

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

$

2,816
38,687
61,947$ 103,450- 48 -

December 31,
2020$

52,18776,380$ 128,567

March 31,2020$

35,607335,312$ 370,919

The remaining balance of notes and accounts payable - related parties will be paid in cash if they are notsecured.
f. Leases
The Company has signed a lease contract with the China Aviation Industry Development Foundation
for pilot trainings. The Company has leased the flight trainer and simulator, and the rental was
calculated based on use hours. As of March 31, 2021 and 2020, the rental paid was $12,510 thousand
and $11,417 thousand, respectively.
g. Endorsements and assurances
March 31, 2021
Total Amount Amount Used

December 31, 2020
Total Amount Amount Used

March 31, 2020
Total Amount Amount Used

$ 3,850,000
2,671,771$ 1,782,980
266,577$ 3,850,000
2,656,591$ 1,892,540
265,062$ 3,850,000
2,825,136$ 2,046,400
482,3222,000,000

1,366,500

2,000,000

1,336,000

2,000,000

1,301,327

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

h. Compensation of key management personnel
For the Three Months Ended
March 312021
2020
Short-term employee benefits
Post-employment benefits

$

9,336
590

$

9,481
637

$

9,926

$

10,118The remuneration of directors and key executives was determined by the remuneration committee basedon the performance of individuals and market trends.

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

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

March 31,2021

December 31,
2020

March 31,2020

$ 33,316,314
57,790,916
385,058$ 34,170,076
59,861,537
302,807$ 29,067,660
68,591,872
157,148$ 91,492,288$ 94,334,420$ 97,816,680

The above restricted assets included pledged time deposits and demand deposits due to loan agreements.

- 49 -

34. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIESThe Group had commitments and contingent liabilities (except for those mentioned in other notes) as
follows:
a. Taiwan Air Cargo Terminal Co. (TACT) signed a terminal construction contract with the Civil
Aeronautics Administrations (CAA) on January 14, 2000. The chartered operation period (COP) is 20
years from the date of transfer of the chartered operation rights from CAA to TACT. The terminal
expansion and improvements and the equipment installation and upgrade in the Taiwan Taoyuan
International Airport cargo terminal and Kaohsiung cargo terminal were expected to be completed in
the first 10 years of the COP. This construction project was approved by TACT’s board of directors in
2003. 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 March 31, 2021, TACT had signed the following construction contracts with unrelated parties:

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

Contract Title
Cargo terminal expansion construction consultant
contract
Cargo terminal expansion and enhancement
construction
TACT warehouse management system integrated
revision contract

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

As of March 31, 2021, the consultant service expense and construction equipment amounted to$487,645 thousand (VAT included) and $5,415,362 thousand (VAT included), respectively. Uponcompletion of the projects, the amounts of $468,754 thousand (VAT included) and $5,312,792 thousand(VAT included) were reclassified to property, plant and equipment. The remaining cumulative
payments were recognized under construction in progress.
Assets acquired from cargo terminal improvements, equipment acquisition and subsequent equipment
acquisition and replacement will be transferred to the government without any compensation when thechartered operating license expires.
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 nonoperating
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 once with a 20-year extension.

- 50 -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 fee.
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 assignation 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 period of the eleven aircraft ranges from 2024 to 2026. As of March
31, 2021, the list price has been paid in the amount of US$32,578 thousand (recognized as prepayments
for aircraft). In October 2019, the Company signed a contract with International Aero Engines
Company to purchase four backup engines of A321neo. The total list price of the four engines is
US$60,289 thousand, for details please refer to Note 21.
d. In July and August 2019, the Company signed a contract with the Boeing Company to purchase three
777F aircraft and exercised the option to purchase three 777F aircraft. The total list price of the six
aircraft is US$2,282,012 thousand, and the expected delivery periods are from 2020 to 2023. As of
March 31, 2021, the list price had been paid in the amount of US$118,090 thousand (recognized as
prepayments for aircraft).
e. In September 2019, Tigerair Taiwan Co., Ltd. signed a contract with Airbus S.A.S. to purchase sevenA320neo aircraft and an option to purchase two A320neo aircraft. The total list price of the sevenaircraft is US$729,746 thousand, and the list price of the option to purchase two aircraft is US$208,499
thousand. The expected delivery periods of the seven aircraft are from 2025 to 2027. As of March 31,
2020, the list price of the seven aircraft had been paid in the amount of US$18,549 thousand(recognized as prepayments for aircraft). In addition, in December 2019, Tigerair Taiwan Co., Ltd.
signed a contract with International Aero Engines Company to purchase two backup engines ofA320neo aircraft. The total list price of the two engines is US$27,345 thousand. As of March 31, 2021,
the list price had been paid in the amount of US$2,988 thousand (recognized as prepayments foraircraft), for details please refer to Note 21.

- 51 -

35. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
Since the outbreak of the Covid-19 in January 2020, the coronavirus has become a pandemic. The
pandemic has now spread around the world and most countries have not removed their travel restrictions.
Because the number of inbound and outbound passengers has decreased significantly, the Group adjusts the
proportion between passenger aircraft and cargo aircraft used in operations to comply with thegovernment’s epidemic prevention policy and cater to market demand. The Company reduces the frequencyof passenger air services that have been severely affected, uses the passenger aircraft to support the cargoflight arrangement and expands the function of all-cargo aircraft to maximize the opportunities from air
cargo business. Since March 2020, cargo has become the main source of revenue for the Group.
The Group continues to adjust the response measures according to the situation. In addition, to ensure theadequate liquidity, the Group also implements measures for human resource management such as
postponing the hiring of newcomers, relaxing the application of special leave, loosening the restrictions onleave without pay, encouraging employees to take leave, adjusting working hours and salaries, etc. The
Group’s policies to control spending include suspension of non-urgent capital expenditures, reduction inand postponement of payments.
Also, the Group received several relief measures such as government subsidy for operation and reduction
on rent. For the three months ended March 31, 2021, because of the COVID-19 pandemic, the Group
received subsidy of $182,959 thousand for the airport landing fees and parking fees, etc. The subsidy for
housing and land rental, and salary expenses of $171,862 thousand was recognized as deduction from otherincome and expenses. The Group has obtained relief loan from the government. Refer to Note 19 for details
on the amount of loan and its allocation.
Due to the recent pilot’s infection, the Group has undergone contact tracing efforts, expands screening tests
and fulfils other requirements to cooperate with the Central Epidemic Command Center. The Group has
properly responded to and flexibly adjusted its flight schedules. Currently, the operation is mainly based on
cargo flights, and passenger flights will be adjusted according to the status of crews’ dispatch.

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

Exchange Rate

Carrying
AmountFinancial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

- 52 -

641,441
17,284
236,1363,860,686
377,306

28.571433.44483.66970.25744.3459$ 18,326,876
578,061
866,549
993,741
1,639,733(Continued)

Foreign
Currencies

Exchange Rate

Carrying
AmountFinancial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

$

2,154,151
6,378
66,767
3,054,320
110,21328.571433.44483.66970.25744.3459$ 61,547,099
213,297
245,015
786,182
478,976(Concluded)

December 31, 2020
Foreign
Currencies (InThousands)

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

Exchange Rate

Carrying
AmountFinancial assets
Monetary items
USD
EUR
HKD
JPY
RMB

$

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

$

- 53 -

584,082
15,390
194,538
3,142,554
498,926

30.211533.3333
3.90170.27874.2680$ 17,646,000
512,983
759,030
875,837
2,129,419(Continued)

Foreign
Currencies

Exchange Rate

Carrying
AmountFinancial liabilities
Monetary items
USD
EUR
HKD
JPY
RMB

$

2,366,374
7,851
73,1175,050,494
151,07630.211533.3333
3.90170.27874.2680$ 71,491,698
261,686
285,280
1,407,579
644,794(Concluded)

For the three months ended March 31, 2021 and 2020, net foreign exchange losses were $127,657 thousand
and $79,114 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by eachsignificant foreign currency due to the variety of the foreign currency transactions and functional currenciesof the entities in the Group.

37. SEPARATELY DISCLOSED ITEMS
a. Following are the additional disclosures required by the Securities and Futures Bureau for the Company
and its investees:
1) Financing provided: Table 1 (attached)2) Endorsements/guarantees provided: Table 2 (attached)
3) Marketable securities held: Table 3 (attached)4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%of the paid-in capital: None
5) Acquisitions of individual real estate at costs or price of at least NT$300 million or 20% of thepaid-in capital: None
6) Disposals of individual real estate at cost or prices of at least NT$300 million or 20% of the paid-in
capital: None
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of thepaid-in capital: Table 4 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: Table 5 (attached)9) Names, locations, and related information of investees over which the Company exercises
significant influence: Table 6 (attached)10) Derivative financial transactions (Notes 7 and 31)
b. Investments in mainland China: Table 7 (attached)c. Business relationships and important transactions between China Airlines, Ltd. and its subsidiaries:
Table 8 (attached)d. Information of major shareholders: Table 9 (attached)- 54 -

38. SEGMENT INFORMATIONThe Group mainly engages in air transportation services for passengers, cargo and others. Its major
revenue-generating asset is its aircraft fleet, which is used jointly for passenger and cargo services. Thus,
the Company’s sole reportable segment is its flight segment. For operating segment reporting in the
consolidated financial statements, the reportable segment of the Company and its subsidiaries comprises theflight and the non-flight business departments. The accounting policy applied for reportable segments is
consistent with the policy mentioned in Note 4.
For the three months ended March 31, 2021 and 2020, financial information of reportable segments is listed
below:For the Three Months Ended March 31, 2021
Air
Adjustments
Transportation
Othersand Write-offs

Total

Operating revenue$ 26,857,874$

1,803,484$(833,702)$ 27,827,656

Operation profit and loss
Interest revenue
Investment income accounted for using
the equity method
Revenue
Financial costs
Expenses$$(151,484)$(20,916)$(296,778)(81,674)
54,816(657,383)(219,582)

Gain before income tax
Identifiable assets
Investments accounted for using theequity method
Assets(469,178)
41,153$$ 194,406,269$ 14,752,152$(6,051,311)(1,331,848)$ 203,107,110
1,889,627
65,523,034

Total assets$ 270,519,771
For the Three Months Ended March 31, 2020
Air
Adjustments
Transportation
Othersand Write-offs

Total

Operating revenue$ 31,322,443$

2,133,654$(898,967)$ 32,557,130

Operation profit and loss
Interest revenue
Investment income accounted for using
the equity method
Revenue
Financial costs
Expenses$$(58,585)$(21,363)$(2,890,908)(24,494)
74,703(820,672)(153,463)

Gain before income tax
Identifiable assets
Investments accounted for using theequity method
Assets(2,970,856)
88,300$$ 203,751,681$ 15,794,670$(6,347,490)(3,806,482)$ 213,198,861
2,173,929
79,863,403

Total assets$ 295,236,193- 55 -TABLE 1

CHINA AIRLINES, LTD. AND SUBSIDIARIESFINANCING PROVIDED TO OTHERSFOR THE THREE MONTHS ENDED MARCH 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 PeriodEndingBalance

ActualBorrowingAmountY$ 100,000$ 100,000$

57,143

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.

- 56 -

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

Allowance for
Impairment
Loss
$

-

Collateral
Item

Value

$

-

Financing
Limit for
Each
Borrower

Aggregate
FinancingLimit$ 144,951$ 289,903

Note

TABLE 2

CHINA AIRLINES, LTD. AND SUBSIDIARIESENDORSEMENTS/GUARANTEES PROVIDEDFOR THE THREE MONTHS ENDED MARCH 31, 2021
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Counter-party
Endorsement/
Guarantee
Provider

No.

0

Name

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

Taiwan Aircraft Maintenanceand Engineering Co., Ltd.

Nature of Relationship100% subsidiary
75.86% subsidiary bydirect and indirect
holdings
100% subsidiary

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

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

Maximum
Collateral/
Guarantee
Amounts
Allowable(Note 2)Endorsement/ Endorsement/ Endorsement/
Guarantee
Guarantee
Guarantee
Given by Parent
Given byGiven on Behalf
on Behalf of
Subsidiaries on of Companies in
Subsidiaries Behalf of Parent Mainland China$ 11,269,752
11,269,752$ 3,850,000
2,671,771$ 3,850,000
2,671,771$ 1,782,980
266,577

-

6.83
4.74

$ 28,174,380
28,174,380

Yes
Yes

No
No

No
No

11,269,752

2,000,000

2,000,000

1,366,500-

3.55

28,174,380

Yes

No

No

Note 1:

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

Note 2:

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

- 57 -TABLE 3

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

Holding Company Name

Marketable Securities Type and Issuer/Name

Relationshipwith theHoldingCompany

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

Everest Investment Holdings Ltd. - preferred shares-

Chung Hua Express Co.

-

Jardine Air Terminal Services
The Grand Hi Lai Hotel-

Mandarin Airlines

Cal-Asia Investment

SharesChina Airlines

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

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

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

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

Shares/Units

1,359,368$

100,070

13.59

135,937

10,007-

1,100,000

31,843

12,000,000
4,021

-

2,074,628

31,638-$110,077

Note

Note 1

-

-

11.00

31,843

-

15.00
0.02

-

-

-

31,638-19,411

2.59
5.45

19,411

Note 2
Note 2-25,26855,446----

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

Beneficiary certificatesFranklin Templeton SinoAm Money Market FundFSITC Money Market Fund-

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

2,421,170
308,094

25,26855,446

SharesTransAsia Airways-

Financial assets at fair value through profit or loss - current

2,277,786-

Dynasty Aerotech International
Corp.

Beneficiary certificates
Taishin 1699 Money Market Fund-

Financial assets at fair value through profit or loss - current

349,523

4,773

-

4,773

-

Kaohsiung Catering Services

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
4,493,628
1,106,807

86,281
70,94915,103-86,281
70,94915,103-Government bondTreasury Bill (Philippines government bond)-Financial assets at amortized cost

-

1,663

Not applicable

1,663

-

Sabre Travel Network (Taiwan)

Taiwan Airport Services

Tigerair Taiwan Co., Ltd.

0.40

(Continued)- 58 -

Note 1: The subsidiary’s net asset value was $110,077 thousand, which included ordinary shares and preference shares as of and for the year ended March 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 IFRS 9 regulated.
(Concluded)- 59 -TABLE 4

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

China Airlines, Ltd.
(“China Airlines”)

Related Party

Taiwan Air Cargo Terminal
Taoyuan International Airport Service

Nature of Relationship

Subsidiary
Subsidiary

Purchase/
Sale

AmountPurchase
Purchase$ 180,267
263,337- 60 -% of
Total

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

Abnormal Transaction
Payment Terms
30 days
40 days

Unit Price$--$ (70,466)(202,453)(4.01)(11.53)Note-

TABLE 5

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

Overdue
Company Name

Related Party

Nature of RelationshipEnding Balance

Turnover Rate

China Pacific Catering Services

China Airlines

Parent company$ 107,373

NoteTaoyuan International Airport Service

China Airlines

Parent company

202,453

5.04

Note:

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

- 61 -

Action Taken

Amounts Received
in Subsequent
Period--$ 107,373--

119,213

Allowance for
Bad Debts$-

TABLE 6

CHINA AIRLINES, LTD. AND SUBSIDIARIESNAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCEFOR THE THREE MONTHS ENDED MARCH 31, 2021
(In Thousands of New Taiwan Dollars/U.S. Dollars/Hong Kong Dollars/Japanese Yen)

Investor Company

China Airlines, Ltd.

Investee Company

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

Location

Main Businesses and Products

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

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

Investment Amount
December 31,
March 31, 2021
2020

Balance as of March 31, 2021
Number ofPercentage ofCarrying
SharesOwnership
AmountNet Income(Loss) of theInvestee$

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

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

150,000,000
188,154,025
135,000,000
2,614,500

100.0093.99
54.00
100.00$439,110147,000
US$
7,172
52,200439,110147,000
US$
7,172
52,20043,911,000
34,300,000
7,172,346
13,021,042

51.00
49.00
100.00
93.93

HK$

HK$

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

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

77,27011,550 Note 4(334,230) Notes 1 and 4
59,754(8,079) Note 2630,774
531,425
484,432
217,863(127,812)(145,434)
11,449(15,990)(65,184)(71,263)
11,449(15,020)

20.00
47.35
53.67
100.0055.00

250,420
177,894
489,950
407,423
141,441(136,550)(48,483)(36,869)
2,395(14,386)(27,310)(22,957)(22,976) Note 52,070 Note 4(7,912)-

77,270100.00146,698

10,05010,068 Note 426,265
20,4002,500
3,109,907
1,350,000

1,600,000
160
250,000
212,420,046
135,000,000

100.00
20.00
25.00
75.86
100.0010,2704,485
8,017
1,888,774
655,357(2,188)1,497(549,353)(44,442)- Note 4(438)374(416,761) Note 4(44,435) Note 437,97537,975

3,797,500

49.00

36,952(1,664)(815)-

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

5.51
1.08

137,224
4,046(549,353)(48,483)(30,279)(522)-

77,270JPY

Air transportation and maintenance of aircraft
Airport services

26,2658,000
2,500
3,109,907
1,350,000

JPY

1,616,583
889,127
1,615,887
1,186,712

Note

779 $
(355,601)
110,654(8,700)58,00012,289383,846
465,000
137,500$

Investment
Income (Loss)

Mandarin Airlines

Tigerair Taiwan Co., Ltd.
Taiwan Airport Services

Cal-Asia Investment

Eastern United International Logistics Hong Kong

Forwarding and storage of air cargo

HK$

3,329

HK$

3,329

1,050,000

35.00

53,979

8,126

2,844

Taiwan Airport Services

Taiwan Airport Service (Samoa)

Samoa

Airport services and investment

US$

5,877

US$

5,877

-

100.00381,9458,354

8,354 Note 3

Kaohsiung Catering Services

Delica International Co., Ltd.

Kaohsiung, Taiwan

Catering business

10,2001,020,000

51.00

7,871

-

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:

Difference caused by lease arrangement between consolidated entities.

Note 5:Difference cause by acquisition.

10,200- 62 ----TABLE 7

CHINA AIRLINES, LTD. AND SUBSIDIARIESINVESTMENTS IN MAINLAND CHINAFOR THE THREE MONTHS ENDED MARCH 31, 2021
(In Thousands of New Taiwan Dollars/Renminbi/U.S. Dollars)

China Airlines

Investee Company Name

Main Businesses andProducts

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

Investment Flows

Outflow

Inflow

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

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

Indirect(Note 1)$
119,599 $(US$4,186)

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

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

Indirect(Note 1)55,641
1,947)-(US$

Taikoo (Xiamen) Landing
Gear Services

Landing gear
2,374,000
maintenance services (US$ 83,090)

Indirect(Note 1)

61,463
2,151)-(US$

Taikoo Spirit Aerospace
Systems (Jinjang)Composite material

Indirect(Note 1)

18,171
636)

-

(US$

(US$

333,229
11,663)

Accumulated
Outflow ofInvestment
from Taiwan
as ofMarch 31, 2021

-

$

-

55,641
22,792
1,947) (RMB 5,238)

14.00

(US$

61,463
2,151)

-

2.59

-

(US$

18,171
636)

-

5.45

-

(US$

-

Limit on Investment$254,875(US$8,920)$621,443(Note 3)$33,809,257(Note 4)

Investment
Gain (Loss)

14.00

-

Investment Amounts
Authorized by Investment Commission,
MOEA

Accumulated
Carrying
InwardAmount as of Remittance ofMarch 31, 2021 Earnings as ofMarch 31, 2021$
119,599 $38,499(US$
4,186) (RMB 8,847)-

Accumulated Investment in Mainland
China as of March 31, 2021

% Ownershipof Direct orIndirect
Investment

Net Income(Loss) of
the Investee

$
(RMB

(RMB

5,518 $
244,408 $101,045
1,239) (RMB 56,239) (US$3,537)(Note 2)
3,042
138,168733) (RMB 31,793) (US$

-

(RMB

44,587
1,561)(Note 2)-

19,411
4,466) (US$10,186357)(Continued)- 63 -

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)$
114,810 $(US$
4,018)

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

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

Indirect(Note 5)

(US$

Remittance of Funds

Outward

Inward-55,0501,927)

Accumulated
Outward
Remittance forInvestment
from Taiwan asof March 31,
2021

$

-

-

$
114,810 $38,499(US$
4,018) (RMB 8,847)

14.00

55,05022,792
1,927) (RMB 5,238)

14.00

(US$

Accumulated Outward
Remittance for Investment in
Mainland China as of March 31, 2021

Investment Amounts Authorized by
Investment Commission, MOEA

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

$169,860(US$5,945)$169,860(US$5,945)$225,420(Note 6)Net Income(Loss) of theInvestee% Ownershipof Direct orIndirect
Investment

Accumulated
Carrying
Repatriation of
Investment
Amount as ofInvestment
Income (Loss)
March 31, 2021 Income as ofMarch 31, 2021$
(RMB

5,390 $
242,913 $
129,747
1,239) (RMB 55,894) (US$4,541)(RMB

3,191
138,220733) (RMB 31,804) (US$59,766
2,092)

Note 1: China Airlines, Ltd. the “Company” invested in Cal-Asia Investment, which, in turn, invested in a company located in mainland China.
Note 2: As of March 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 in return, invested in a company located in mainland China.
Note 6: The RMB and U.S. dollar amounts of assets are translated at year-end rates and those of gains (losses), at the average of the year-end rates of refer for the reporting period.
(Concluded)- 64 -TABLE 8

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

Company Name

Related Party

Natural of
Relationship(Note 1)

Financial Statement Account0

China Airlines, Ltd.

Taiwan Air Cargo Terminal
Mandarin Airlines
Taoyuan International Airport Service
Taoyuan International Airport Service
Mandarin Airlines

a
a
a
a
a

Other operating costs
Bonds payable - non-current
Accounts payable - related parties
Terminal and landing fees

1

Taiwan Air Cargo Terminal

China Airlines, Ltd.

b

2

Mandarin Airlines

China Airlines, Ltd.
China Airlines, Ltd.

3

Taoyuan International Airport Services

China Airlines, Ltd.
China Airlines, Ltd.

Amount(Note 2)

Transaction Criteria% of Total
Consolidated
Total Revenue
or Assets$ 180,267
107,373
202,453
263,337
125,000

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

0.65
0.04
0.73
0.95
0.05

Sales revenue

180,267

The same as ordinary transactions

0.65

b
b

Accounts payable - related parties
Financial assets at amortized cost

107,373
125,000

The same as ordinary transactions
The same as ordinary transactions

0.04
0.05

b
b

Airport service revenue
Accounts receivable - related parties

263,337
202,453

The same as ordinary transactions
The same as ordinary transactions

0.95
0.73

Note 1: Three kinds of business relationships between China Airlines, Ltd. and its subsidiaries were as follows:a. Parent to subsidiaries.
b. Subsidiaries to parent.
c. Subsidiaries to subsidiaries.
Note 2: Intercompany transactions were eliminated in the consolidated financial statements.
Note 3: The Company only discloses transaction amounts or balances of more than $100,000 thousand.

- 65 -TABLE 9

CHINA AIRLINES, LTD.
INFORMATION OF MAJOR SHAREHOLDERS
FOR THE THREE MONTHS ENDED MARCH 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

34.44
9.59

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

- 66 -