#1China Airlines 2021 Investor Conference April 14, 2021 TSE : 2610 CHINA AIRLINES KAM.#2Legal Disclaimer The information contained in this presentation, including all forward-looking information, is subject to change without notice, whether as a result of new information, further events or otherwise, and China Airlines (the "Company") undertakes no obligation to publicly update or revise the information contained in this presentation. No guarantees regarding the completeness, accuracy, and reliability of information contained are made explicitly or implicitly. They are not intended to represent complete statement of the Company, industry or future development. CHINA AIRLINES 2#3Agenda 1. Full Year Financial Results for 2020 1) Operating Performance 2) Composition of Op. Revenue & Cost 3) Financial Risk Management 2. Impact of COVID-19 Pandemic 1) Industry Environment Update 2) Operational Performance Update 3) Response to COVID-19 3. Post-COVID-19 Outlook CHINA AIRLINES 3#4CHINA AIRLINES Full Year Financial Results for 2020 4#5Consolidated Financial Statistics 2019FY Consolidated Operating Performance-2020FY TWD 100 Million YoY % 2020FY Operating Revenue Net Operating Income 1,684.44 1,152.5 -31.58% 26.66 21.84 -18.08% Net Loss After Tax -6.75 -2.80 58.52% Net Income (Loss) Attributable to -12.00 1.40 Owners of the company Earnings (Loss) Per Share (TWD) -0.22 0.03 Group Revenue TWD 100 Million 2019FY 2020FY YoY % Passenger Revenue 1,114.13 257.04 -76.93% Cargo Revenue 437.93 819.18 87.06% Other Operating Revenue 132.38 76.28 -42.38% Total Group Operating Revenue 1,684.44 1,152.5 -31.58% CHINA AIRLINES 5#6Operating Performance -2020FY Financial Statistics 2019FY TWD 100 Million YoY % 2020FY Operating Revenue 1,463.72 1,063.27 -27.36% Net Operating Income 0.80 48.85 Non-Operating Loss -12.67 -47.14 -272.06% Net Income (Loss) After Tax -12.00 1.40 Earnings (Loss) Per Share (TWD) -0.22 0.03 CI Revenue TWD 100 Million 2019FY 2020FY YoY % Passenger Revenue 961.77 205.08 -78.68% Cargo Revenue 434.06 816.93 88.21% Other Operating Revenue 67.89 41.26 -39.23% Total Operating Revenue. 1,463.72 1,063.27 -27.36% CHINA AIRLINES 6#7Composition of Op. Revenue - CI 2020 FY Passenger Revenue 19% Cargo Revenue 77% Other Op. Rev. 4% 2019 FY Passenger Revenue 66% Cargo Revenue 30% Other Op. Rev. 4% Passenger, Cargo and other operating revenue accounted for 19%, 77% and 4% respectively in 2020. CHINA AIRLINES 7#81.4% Composition of Op. Expenses - Cl Pax Service Others 3.8% Sales & General Adm. Airport & 2020FY Fuel 22.2% Ground Handling Personnel 16.5% Rental & Depreciation Maitenance 22.9% 19.4% 12.3% 1.5% 2019FY Fuel 30.7% Airport & Ground Handling 13.6% Personnel 13.5% Rental & Depreciation 16.5% Maitenance 13.4% Sales & General Adm. Pax Service Others 3.8% 4.5% 4.0% Fuel cost accounted for 22.2% of operating expenses due to the decrease in fuel price and consumption during COVID-19 pandemic. CHINA AIRLINES 8#9Financial Risk Management - Fuel (CI) Fuel Cost 2019FY 2020FY YoY% Jet Fuel (MOPS) USD/BBL 77.25 44.82 -41.98% Fuel Consumption 10KBBL 1,759.04 1,424.65 -19.01% Fuel Expend TWD/100Million 449.61 224.87 -49.99% Hedging Loss TWD/100Million 0.19 0.60 215.79% Total Fuel Cost TWD/100 Million 449.80 225.47 -49.87% Fuel Hedging Year Hedging% 2021.04-2022.03 0.4% CHINA AIRLINES 6#10CHINA AIRLINES Impact of COVID-19 Pandemic Industry Environment Update 10#11. RPK Path Depends on New Variants and Policy Response Air travel recovery in 2020 stalled after the summer, RPKs ended year down 70% : domestic -43%, international -85% yoy in 2020. According to IATA's data released on February 24, 2021 RPKs might only grow 13% to average 38% of 2019 levels. Billions per quarter 2500 2000 1500 1000 500 Global RPK Forecast December forecast 2021: +50% y-o-y COVID variant scenario 2021: +13% y-o-y 0 2019 2020 2021 CHINA AIRLINES Source IATA Economics 11#12Recovery in Cargo Capacity Impacted by Groundings of Passenger Aircraft Available cargo tonne-kilometres (FATKs) in February 2021 were lower by 14.9% vs. the pre-crisis levels, February 2019 because of variants of the virus of COVID-19. Global Available Passenger and Cargo Tonne-km flown (ASK/FATK) Indexed, Jan 2019 = 100 120 100 80 60 40 20 0 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Source IATA Economics Dec-19 CHINA AIRLINES Cargo capacity Passenger capacity Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 12#13Drivers of Air Cargo Demand Remained Generally Supportive • Global manufacturing PMI was at 53.5 in January 2021, where anything above 50 indicates expansion. • International cargo tonne-kilometres (FRTK) in February 2021 was 9.6% higher comparing with the same month in 2019. Monthly Data From Manufacturing PMIs International FRTK Growth versus The Same Month in 2019 New export orders* Legend: >50 and rising = green; >50 but stable or falling = yellow; <50 = 2020 2021 Industry Feb 2021 Jan 2021 9.6% 4.2% World Developed Markets European Union Germany Japan Korea UK US Emerging Markets Brazil China India Indonesia Mexico Russia Highly supportive Partly supportive Least supportive CHINA AIRLINES Africa 44.2% 22.4% N. America 17.4% 15.3% Asia Pacific 10.5% 0.1% 8.8% Middle East 6.8% 4.7% Europe 1.3% L. America -20.5% -17.5% -30% -20% Source IATA Economics, IATA Markit -10% 0% 10% 20% 30% International cargo tonne kilometres (% year-on-2019) 40% 50% 13#14CHINA AIRLINES Impact of COVID-19 Pandemic Operational Performance Update DD 14#15Passenger Performance Revenue Composition by Region TWD 96.18 Billion 2019 FY ▼78.7% Trans Pacific Ocean 22% Australia/ New Zealand 9% Europe 12% Hong Kong 4% South East Asia TWD 20.51 Billion North East 21% Asia 23% Mainland China 2020 FY 9% Passenger revenue decreased by 78.7% to TWD 20.51 billion in 2020. Northeast Asia accounted for the largest share (23%) of revenue, followed by Trans Pacific Ocean and South East Asia with revenue share of 22% and 21% respectively. CHINA AIRLINES 15#16Passenger Performance Index Load Factor ASK (MN) 52,671 Yield (TWD) 2.55 80.8% ▲ 12.8% ▼72.4% ▼25.5ppt 2.26 55.3% 14,545 2019FY 2020FY 2019FY 2020FY 2019FY 2020FY ASK and load factor decreased by 72.4% and 25.5ppt respectively while yield increased by 12.8% in 2020. CHINA AIRLINES 16#17Impact on Passenger Traffic 5,000 4% 0% 4,000 23% 3,240 3,128 3,253 3,229 3,271 3,331 3,315 3,194 3,157 3,247 3,214 2,984 3,091 3,000 -40% 2,309 -65% 2,000 1,15 -91% -89% -90% -80% 1,000 -97% -98% -97% -95% -94% -93% 89 53 86 156 187 232 286 346 325 -120% Round Jan Feb Mar Apr May Jun Trips 12019 2020 Jul Aug Sep Oct --YOY% Nov Dec CAL provided a minimum passengers-carried schedule to meet market demand. Our frequencies between April and June plunged more than 97% compared to the same period last year; however there is slowly recovering with essential travelling. CHINA AIRLINES 17#18Passenger Impact- Skeletal Network Region North America Europe Oceania Northeast Asia Southeast Asia Mainland China (KHH departures included) Hong Kong (KHH, RMQ departures included) Route Adjustments Los Angeles/San Francisco 3 Flights/wk, Vancouver 1-2 Flights/wk, New York 1 Flights/fortnightly Amsterdam 1-2 Flights/wk, Frankfurt/ London 1 Flight/wk Sydney/ Brisbane 1 Flight/wk, Melbourne 3(0) + 4 (1) Flights/mth, Auckland 1 Flight/mth Tokyo 2-3 Flights/wk, Seoul 1-2 Flights/wk, Osaka/ Fukuoka/ Nagoya 1 Flight/wk Jakarta 7(0) + 4~6(1) Flights/wk, Vietnam 2~3(0) + 11~12 (1) Flights/wk, Manila 3(0) + 6 (1) Flights/wk, Bangkok 2(0) + 4 (1) Flights/wk, Kuala Lumpur 2 Flights/wk, Penang 1-2 Flights/wk, Singapore/ Phnom Penh 1 Flight/wk, Yangon 1 (0) + 3~4 (1) Flights/fortnightly, Palau 1 Flight/mth / Shanghai 9 Flights/wk, Xiamen 3 Flights/wk, Chengdu 2 Flights/wk, Beijing 1 Flight/wk 7(0)11 (1) Flights/wk CHINA AIRLINES 18#19Cargo Performance Revenue TWD 43.41 Billion, 88.2% 2019FY TWD 81.69 Billion 2020FY Composition by Region Europe 9% Australia/ New Zealand 3% Hong Kong 4% North East Asia Mainland 5% China 6% Trans Pacific Ocean 58% South East Asia 15% Cargo revenue totaled TWD 81.69 billion, a 88.2% increase, in 2020. Trans Pacific Ocean accounted for the largest share (58%) of revenue, followed by Southeast Asia and Europe with revenue share of 15% and 9% respectively. CHINA AIRLINES 19#20Cargo Performance Index Load Factor FATK (MN) Yield (TWD) 8,828 8,006 ▲ 10.3% 72.1% 67.0% 5.1ppt ▲ 58.6% 8.09 12.83 2019FY 2020FY 2019FY 2020FY 2019FY 2020FY FATK increased by 10.3% and load factor grew 5.1 ppt with a 58.6% rise in yield in 2020. CHINA AIRLINES 20 20#21CHINA AIRLINES Tylan Response to COVID-19 - Passenger Cargo ICHINA AIRLINES 100000000000 CHINA AIRLINES CARGO 21 24#22Flight Schedule Adjusted in Line with Market Demand Operations remain active in adapting to the dynamic changes of the market landscape and governments regulations. 台北台帛琉 泡泡 Operate selected routes to maintain network connectivity, taking advantage of sixth traffic rights after open for transit through TPE. Gradually resume flights to align with boarder reopening, regional business travel needs and travel bubble. Cacoo TLDRENER Increase Taiwan domestic air travel market via CAL Group's subsidiaries. GO BASE CHINA AIRLINES Operate charter flights to generate revenue. 22 22#23• • Biosecurity for Air Transport Contactless travel is a key element of IATA Travel Pass -making travel easier & more sanitary. CAL has launched biometric self-check-in services in Hong Kong, New York and San Francisco. A layered approach to biosafety: departure airport John Smith YOUR FLIGHTS DOCUMENTS CERTIFICATES PRIVACY + 1 2 3 1 Thermal imaging technology. Physical distancing - HH HH ②Self-service check-in and more hands-free, or automated, processes. 3 Self bag drop encouraged. or temperature screening, for passengers and crew at the entrance. When proven and available at scale, testing for COVID-19, anti-body testing, or immunity passports could also be included as temporary biosafety measures. CHINA AIRLINES 資料來源:IATA 4 Physical distancing 4 Contactless and orderly boarding process IATA 23#24Air Cargo Market Demand Persists . Pre-pandemic Around 50% ~80% cargo worldwide used to be transported by passenger aircraft based on IATA's estimations. • During the COVID-19 crisis CAL adjusting some of the passenger aircraft and putting them to use in freight transportation. Freighter Preighter Passenger TTL FLTS FLTS (sector) 100% 8,000 7,000 80% - 6,000 5,000 60% T 4,000 40% 3,000 - 2,000 20% 1,000 0% 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN 2020 2021 CHINA AIRLINES 24#25CAL Expands Cargo Service CAL leverages Taiwan's strategic position and cargo capacity during the pandemic, reaching 117 schedule flights per week or 120-125 flights including charter flights per week in 2021. ANA 43058CK . Utilize CAL 18 747-400 freighters Make the most of belly capacity of passenger aircraft Improve operational efficiency with 3 777F deliveries Monthly route review and flexible route adjustment • Priority for high-yield goods and regular project shipment for route profit boost Pursue charter to maintain load factor and revenue uplift CHINA AIRLINES 阿姆斯特丹法蘭克福 盧森堡 鄭州。 南京 上海 台北 廣州 深圳: P 香港臺 大阪 東京 台北 河内 AR 曼谷 胡志明市 O 吉隆坡 新加坡 雅加達 馬尼拉 二安克拉治 西雅圖 舊金山 e洛杉磯 達拉斯• 芝加哥 哥倫布 • 紐約 ·亞特蘭大 ▶休士頓 仁邁阿密 25#26CHINA AIRLINES Post-COVID-19 Outlook 26#27Proactive COVID-19 Response Strategies 01 Conserve cash-flow & lower the cost 02 Maintain business continuity and stability 03 Integrate sales and marketing strategy 04 Rebuild passenger confidence in air travel CHINA AIRLINES 05 Comply with regulations to promote safe travel 27#28Work Together with All Stakeholders to Create Greater Value 2016-2020 Member of Dow Jones Sustainability Indices Powered by the S&P Global CSA FTSE4Good TCSA GCSA TAIWAN INDEX PLUS Dow Jones Sustainability Indices CAL was also the only transportation company in Taiwan to be included in the DJSI Emerging Market Index for five years in a row. 2016-2020 FTSE4Good Emerging Index 2014-2020 Taiwan Corporate Sustainability Awards 2019-2020 Global Corporate Sustainability Awards Reporting (World Class) 2017-2020 GCSA TCSA Taiwan High Compensation 100 Index (HC 100) Taiwan Employment Creation 99 Index (EMP 99) CHINA AIRLINES 28#29Operating Fleet as of March 2021 As of March 2021, CAL operates 83 aircraft, including 62 passenger aircraft and 21 freighters, and 43 of which are self-owned and 40 are operating leased. CHINA AIRLINES Aircraft Type Owned Leased 777-300ER 10 A350-900 14 A330-300 8 15 737-800 15 747-400F (Freighter) 18 777F (Freighter) 3 - Number of aircraft in fleet 43 40 29 29#30Thank you 2021.04 China Airlines | No.1, Hangzhan S. Rd., Dayuan Dist., Taoyuan City, Taiwan TEL | 03.399.8888 CHINA AIRLINES KAM. # We fly We fight # We will all be fine