#1China Airlines 2020 Investor Conference August 26, 2020 TSE: 2610 CHINA AIRLINES →#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. First Half 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 First Half Year Financial Results for 2020#5Consolidated Financial Statistics 2019Q2 Operating Revenue Operating Performance - 2020Q2 TWD 100 Million YoY % -38.64% 2020Q2 428.92 263.16 Net Operating Income 5.73 27.48 379.58% Net Income(Loss) After Tax -2.91 22.53 Net Income(Loss) Attributable to -4.43 24.59 Owners of the company Earnings(Loss) Per Share (TWD) -0.08 0.45 Group Revenue TWD 100 Million 2019Q2 2020Q2 YoY % Passenger Revenue 282.06 15.13 -94.63% Cargo Revenue 109.56 234.42 113.96% Other Operating Revenue 37.3 13.61 -63.51% Total Group Operating Revenue 428.92 263.16 -38.64% CHINA AIRLINES 5#62019H1 Operating Revenue Operating Performance - 2020H1 Consolidated Financial Statistics TWD 100 Million YoY % -29.32% 2020H1 832.98 588.73 Net Operating Income(Loss) 13.34 -2.23 Net Loss After Tax -4.38 -15.58 Net Loss Attributable to -6.86 -13.14 Owners of the company Loss Per Share (TWD) -0.13 -0.24 Group Revenue TWD 100 Million 2019H1 2020H1 YoY % Passenger Revenue 554.56 202.42 -63.49% Cargo Revenue 211.18 345.37 63.54% Other Operating Revenue 67.24 40.94 -39.11% Total Group Operating Revenue 832.98 588.73 -29.32% CHINA AIRLINES 6#7Composition of Op. Revenue - Cl 2020H1 Passenger Revenue Cargo Revenue 64% 32% 4% Other Op. Revenue 2019H1 Passenger Revenue 66% Cargo Revenue 29% Other Op. Revenue 5% Passenger, Cargo and other operating revenue accounted for 32%, 64% and 4% respectively in 2020H1. CHINA AIRLINES 7#8Composition of Op. Expenses - Cl Handling Personnel Rental&Depreciation Maintenance 12.1% 16.5% 22.5% 19.1% Airport&Ground 2020H1 Fuel 21.8% 2.1% Others 3.5% Sales&General Adm. Pax Service 2.4% 2019H1 Fuel 30.5% Airport&Ground Handling 13.5% Personnel 13.8% Rental&Depreciation 16.8% Maintenance 13.4% Others 3.7% 4.3% 4.0% Pax Service Sales&General Adm. Fuel cost accounted for 21.8% of operating expenses due to COVID-19 pandemic in 2020H1. CHINA AIRLINES 8#9Financial Risk Management - Fuel (CI) Fuel Cost 2019H1 2020H1 YoY% Jet Fuel (MOPS) USD/BBL 78.05 45.01 -42.3% Fuel Consumption 10KBBL 854.58 664.63 -22.2% Fuel Expend TWD/100Million 219.23 114.43 -47.8% Hedging Loss TWD/100Million 0.07 0.26 271.4% Total Fuel Cost TWD/100Million 219.3 114.69 -47.7% Fuel Hedging Year Hedging% 2020.09-20201.08 0.8% CHINA AIRLINES 9#10Financial Risk Management- Currency of Revenue and Expenditure 2020H1 Rev. Exp. 100% 7% 15% 2% 16% 1% 7% 2019H1 Rev. Exp. 7% 2% 2% 7% 6% 6% 7% 12% 9% 5% 38% 42% 13% 15% 50% 49% 47% 45% 40% 0% TWD USD JPY CNY HKD Others CHINA AIRLINES 10#11CHINA AIRLINES Impact of COVID-19 Pandemic Industry Environment Update 11#12COVID-19: Severe Impact on the Global Airline Industry A slump in air travel demand due to COVID-19 pandemic which has forced airlines to cut flights. RPKs Air Passengers Airport Revenue Freighter Tonnes YOY% YoY% YoY% YOY% -55% -60% -57% -17% IATA forecasted airlines across the world are expected to lose USD 84.3 billion in 2020. CHINA AIRLINES Source: ICAO IATA ACI - UNWTO 12#132019 Level Recovered Only by 2024 • Five years to return to pre-pandemic level of passenger demand • 75% growth forecast for 2021 but RPKs still 36% below 2019 levels RPKs, trillion per year 12 10 00 CO 2 Global RPKs, trillion per year Pre-COVID19 baseline 0 2010 2012 2014 2016 2018 2020 2022 2024 CHINA AIRLINES Source: IATA/Tourism Economics 'Air Passenger Forecasts' July 2020 New baseline Range of uncertainty 13#14CHINA AIRLINES Impact of COVID-19 Pandemic Operational Performance Update 14#15Passenger Performance Revenue Composition by Region Australia/ TWD 47.76 Billion 2019H1 63.8% New Zealand Trans Pacific Ocean 21% 10% Europe TWD 17.27 Billion South East Asia 20% Mainland China 2020H1 7% 11% Hong Kon 4% North East Asia 27% Passenger revenue decreased by 63.8% to TWD 17.27 billion in 2020H1. Northeast Asia accounted for the largest share (27%) of revenue, followed by Trans Pacific Ocean with revenue share of 21%. CHINA AIRLINES 15#16Passenger Operation Index ASK (MN) Load Factor 25,821 ▼ 56.5% 11,227 Yield (TWD) 79.8% 2.32 2.34 ▼ 14.2ppt 65.6% ▲ 0.9% 2019H1 2020H1 2019H1 2020H1 2019H1 2020H1 ASK and load factor decreased by 56.5% and 14.2ppt respectively while yield increased by 0.9% in 2020H1. CHINA AIRLINES 16#17Impact on Passenger Traffic 5,000 4% 0% 4,000 -23% 3,240 3,253 3,128 3,229 3,271 3,194 2,984 3,000 -40% 2,309 -65% 2,000 1,000 -80% 1,150 -97% -98% -97% 89 53 86 -120% Round Trips Jan Feb Mar Apr May Jun 2019 2020 YoY change (%) 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. CHINA AIRLINES 17#18Passenger Impact-Skeletal Network Region Route Adjustments North America Los Angeles/San Francisco 2 Flights/wk Vancouver 1 Flight/wk New York 1-4 Flights/mth 、 、 Europe Oceania Amsterdam/Frankfurt/ London 1 Flight/wk Sydney/ Melbourne/ Brisbane 2 Flights/mth Northeast Asia Tokyo 1-2 Flights/wk Southeast Asia Mainland China (KHH departures included) . Jakarta/ Ho Chi Minh City 2-3 Flights/wk Yangon 2-4 Flights/mth Others routes 1-3 Flights/wk Shanghai 3-4 Flights/wk Xiamen 1-3 Flights/wk . Chengdu 1 Flight/wk Beijing 2 Flights/mth Hong Kong 4-5 Flights/wk CHINA AIRLINES 18#19Cargo Performance Revenue TWD 20.93Billion 2019H1 64.6% TWD 34.45Billion 2020H1 Composition by Region Europe 9% Australia/ New Zealand 2% North East Asia 5% Mainland China 7% Hong Kong 4% Trans Pacific South East Ocean 58% Asia 15% Cargo revenue totaled TWD 34.45 billion, a 64.6% increase, in 2020H1. 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) 3,852 3,894 1.1% 70.6% 65.8% 4.8ppt 8.25 ▲ 51.8% 12.52 2019H1 2020H1 2019H1 2020H1 2019H1 2020H1 FATK increased by 1.1% and load factor grew 4.8 ppt with a 51.8% rise in yield in 2020H1. CHINA AIRLINES 20 20#21CHINA AIRLINES Response to COVID-19 1 Passenger 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. Cacoo COLARE Operate selected routes to maintain network connectivity. Gradually resume flights to align with boarder reopening and regional business travel needs. CHINA AIRLINES Gain Taiwan domestic air travel market via CAL Group's subsidiaries Operate charter flights or repatriation flights to generate revenue 22 22#23Resuming Operation with Safety Procedures CAL is committed to providing passengers a safe and comfortable travel experience by implementing enhanced measures to ensure travel safety. Prepare for travel Clean Cabin Sky Boutique Pre-Order COVID-19 Service Information ⚫ Flight Messaging Service • • ㄨ At the Airport Wear face masks Temperature checks Social distancing • • • PA Announcement On board Cabin Crew Protective Equipment Inflight Supplies Fresh and recycled air quality Onboard Lavatory . Inflight Meal • CAL Lounges closed temporarily CHINA AIRLINES • Safe Airport Journey Plan . • Arrival Cabin Disinfection & Cleaning Meal Carts Disinfection Luggage Disinfection upon Arrival 23 23#24Expanding Cargo Service to Seize the window of Opportunity COVID-19 has significantly disrupted global supply chain, also led to air cargo capacity crunch stemming from the evaporation of the belly capacity of passenger aircraft. CARGO C . • Utilize CAL 18 747-400 freighters • Make the most of belly capacity of passenger aircraft Improve operational efficiency with upcoming 777F deliveries Monthly route review and flexible route adjustment • Priority for high-yield goods and regular project shipment for route profit boost • Pursue charter or BSA business to 鄭州。 南京。 上海 台北 廣州 *• 廈門 深圳 阿姆斯特丹《法蘭克福 盧森堡 德里 香港 河內 曼谷工 胡志明市 15 ho 吉隆坡日 新加坡 雅加達 Q馬尼拉 名古屋/ 大阪 東京 仁安克拉治 西雅圖 芝加哥 ·哥倫布 -舊金山 • 紐約 洛杉磯 *亞特蘭大 達拉斯• ○ 休士頓 二邁阿密 maintain load factor and revenue uplift 36 destinations with 101 flights per week for cargo service CHINA AIRLINES 24 24#25CHINA AIRLINES Post-COVID-19 Outlook 25 25#26New Normal of Air travel in Post-Covid-19 Age Market Domestic and regional air travel will recover first. 3rd/4th traffic rights will be dominant. Business travel will recover first, followed by family visit and leisure travel. Local staycation becomes popular. Passenger International travelers will most concern with safety. Wearing masks, checking temperatures, and cleaning hands throughout the journey will be required. Service Digital solution will be implemented to reduce touchpoints literally in the check-in and boarding process . CHINA AIRLINES 26 26#27Post-COVID-19 Cargo Market Outlook Potential Business · COVID-19 has led to a major change in consumer behavior toward online channels. Online demand for essentials and entertainment has increased. Work-from-home triggers a jump in demand for chips, laptops and network goods. Market Challenge Appreciation of TWD may have an adverse effect on exports. US-China trade war results in a slowdown in economic and industrial output growth. CHINA AIRLINES 27#2860 Anniversary G Proactive COVID-19 Response Strategies Reduce cost and conserve cash Create business resiliency Integrate sales and marketing strategy Rebuild passenger confidence in air travel Comply with regulations to promote safe travel Blow Jones Sustainability Indices AM GCSA FTSE4Good TCSA CHINA AIRLINES 28#29Thank you 2020.08 China Airlines | No.1, Hangzhan S. Rd., Dayuan Dist., Taoyuan City, Taiwan TEL | 03.399.8888 CHINA AIRLINES # We fly We fight # We will all be fine