China airline

CONTENTS
Financial Highlights
Preface by Chairman and President
The Members of the Board
Business Operations of 2012 and Perspectives of 2013
Enhancement of Flight Operation and Maintenance
The Trend for Environmental Protection
Financial Status Contents
Financial and Operating Analysis
2012 Financial Report
China Airlines | Annual Report 2012 |
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1 www.china-airlines.com
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| Financial Highlights |
Financial Statistics Unit 2012 2011 %Change
Operating Revenue (Million TWD) 132,609 132,240 0.3%
Passenger Revenue (Million TWD) 86,621 80,825 7.2%
Cargo Revenue (Million TWD) 40,809 46,388 -12.0%
Other Revenue (Million TWD) 5,179 5,027 3.0%
Operating Expenses (Million TWD) 132,266 133,805 -1.2%
Operating Profit (Million TWD) 343 -1,565 121.9%
Income after Tax (Million TWD) 59 -1,954 103.0%
Operating Margin (%) 0.3 -1.2 1.44 ppt
Net Margin (%) 0.04 -1.5 1.52 ppt
Balance Sheet
Assets (Million TWD) 190,325 202,690 -6.1%
Liabilities (Million TWD) 138,184 155,631 -11.2%
Stockholders’ Equity (Million TWD) 52,141 47,059 10.8%
Liabilities/ Assets (%) 72.6 76.8 -4.2 ppt
Return on Assets (ROA) (%) 0.94 -0.04 0.98 ppt
Return on Equity (ROE) (%) 0.12 -4.08 4.20 ppt
Book Value per Share (TWD) 10.03 10.16 -1.3%
Employee Productivity Unit 2012 2011 %Change
Revenue per Employee (1,000TWD/Person) 12,401 12,570 -1.3%
Capacity per Employee (ATK/Person) 991,206 1,116,510 -11.2%
Traffic per Employee (RTK/Person) 728,086 811,058 -10.2%
Operating Statistics Unit 2012 2011 %Change
Passengers Carried (1,000) 12,106 11,421 6.0%
Passenger Capacity (Million ASK) 42,511 40,773 4.3%
Passenger Traffic (Million RPK) 32,864 31,798 3.4%
Passenger Load Factor (%) 77.3 78.0 -0.7 ppt
Passenger Yield (TWD/RPK) 2.64 2.54 3.9%
Cargo Carried (1,000 kg) 634,642 668,498 -5.1%
Cargo Capacity (Million FATK) 6,772 8,076 -16.1%
Cargo Traffic (Million FRTK) 4,828 5,670 -14.9%
Cargo Load Factor (%) 71.3 70.2 1.1 ppt
Cargo Yield (TWD/FRTK) 8.45 8.18 3.3%
Overall Capacity (Million ATK) 10,599 11,746 -9.8%
Overall Traffic (Million RTK) 7,785 8,532 -8.8%
Overall Yield (TWD/RTK) 17.03 15.50 9.9%
Unit Cost (TWD/ATK) 12.48 11.39 9.5%
Break Even Load Factor (%) 73.3 73.5 -0.2 ppt
RPK Revenue Passenger Kilometer Number of revenue passengers carried multiplied by distance flown
ASK Available Seat Kilometer Number of seats available for sale multiplied by distance flown
Passenger Load Factor Revenue Passenger Kilometer divided by Available Seat Kilometer
FRTK Freight Revenue Tonne Kilometer Number of revenue tonnes of freight carrier multiplied by distance flown
FATK Freight Available Tonne Kilometer Number of tonnes of capacity available to carry freight multiplied by distance flown
Cargo Load Factor Freight Revenue Tonne Kilometer divided by Freight Available Tonne Kilometer
RTK Revenue Tonne Kilometer Revenue load (passengers and freight) in tonnes multiplied by distance flown
ATK Available Tonne Kilometer Number of tonnes of capacity available to carry revenue load (passengers and freight) multiplied
by distance flown

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| Preface by Chairman and President |
In 2012, the traditional carrier industry continued
to be impacted by the unstable economy worldwide, the
fluctuation of international fuel prices, and the expansion
of regional Low Cost Carriers (LCC). Against these
challenges inherent in the environment and from our
competitive rivals, China Airlines (CAL) excelled in creating
unique new values through a comprehensive, multi-faceted
planning and development effort.
We continued to review and update our company’s
fleet modernization plan. Fourteen Airbus A350-900
purchased earlier will be delivered beginning in 2016
for use on our long-haul, medium-capacity routes. Also
from 2014, CAL will gradually introduce the new Boeing
777-300ER aircraft to replace the older ones
used on our long-haul routes to Europe
and the Americas. These will increase
the competitiveness of our flight products
and reduce the impact of high fuel prices.
Additionally, to accommodate the growing
demand in the Asia-Pacific region, CAL will add
three Boeing 737-800 and one Airbus A330-300
aircraft in 2013. We monitor closely the regional
market and business climate, and will dynamically
supplement the medium to short range route capacity as
needed. All new aircraft in our fleet will feature designer
cabins with modernized seats and entertainment systems
to offer the passengers a more comfortable flight. CAL’s
long-term goal is to have up to one hundred aircraft by
2020.
With the recent development of government policies,
there exist new opportunities in the aviation industry.
Policies such as the establishment of Taoyuan Aerotropolis,
the designation of Taipei Songshan Airport as the “domestic
hub and capital business airport,” Taiwan-US Visa Waiver
Program, and Taiwan-Japan Open Skies Agreement, etc.,
are all favorable advances as are the growing popularity
of direct cross-strait links and free, independent travel for
mainland tourists. Taking advantage of the new Taiwan-
Japan air rights and the recovery of the Japanese markets,
we added new destinations in Kagoshima, Shizuoka, and
Toyama, and increased frequencies to Tokyo, Osaka,
Fukuoka, and Nagoya. Our new service to Gimpo, Korea
rounded out CAL’s complete flight network in Northeast
Asia. In terms of long haul routes, with the increasing
frequency of traveling among Taiwan, New Zealand, and
Australia, we extended Auckland route for daily flights
through Sydney. As for the long-cultivated US market,
CAL will reinstate nonstop flights between Taipei and
Hawaii in June, 2013 in anticipation of the Taiwan-US
Visa Waiver Program. We will continue to code-share with
other SkyTeam airlines to provide passengers with ample
choices for transfer flights connecting to cities in U.S.
It is worth noted that CAL, in coordination with the
SkyTeam alliance, has successfully implemented the
“SkyPriority” services on all CAL routes and destinations.
SkyPriority provides exclusive, priority services to
premium cabin passengers and SkyTeam elite flyers,
and is consistently offered across all alliance
member airlines. CAL also officially joined
SkyTeam Cargo and became the first
Taiwan-based airline to join an international
freight alliance. This not only strengthens
the SkyTeam’s freight operations in Asia but
also promotes Taiwan’s position as the Asian
transshipment center.In the future, we can offer
customers and cargo owners better products and
services through the seamless operations facilitated by
the SkyTeam alliance.
One of CAL’s operating principles is to work with
business partners to create values together. In early
2013, we launched the “Greater China Connection”
program with three other SkyTeam members in the
region: China Eastern Airlines, China Southern Airlines,
and Xiamen Airlines. This partnership provides additional
benefits to our frequent flyer members, strengthens the
cooperation between partner airlines, and solidifies our
competitive advantages in cross-strait routes. Through a
Memorandum of Understanding (MOU), we also teamed
up with Chunghwa Telecom to research and to develop
communication techniques applicable to the tourism and
travel services market to further promote efficiency and
qualities of services. Our efforts have paid off in many
areas such as online ticket purchase, seat assignment,
online check-in and mobile boarding passes, as well
as airport kiosks. These services enable passengers to
manage itineraries with ease, promote the efficiency of
airport services, and reduce the amount of paper used.
In the future, we will continue to work with our partners to
create a green travel environment.
An enterprise of happiness that creates values and sails to the future Environmental management is a critical focus
of CAL. On account of global sustainability, we
strive to be a safer and a more environment-friendly
new generation enterprise that provides the best
transportation services. Last year, we prepared
our in-flight meals using mostly local ingredients
to reduce the carbon dioxide generated through
the transportation process. We worked with noted
firms to produce vegetarian meals to provide
passengers with alternatives that are healthy and
environmentally worthy. Some meals are also
labeled with their corresponding carbon footprints
to promote passengers’ eco awareness. We are an
active participant of the Pacific Greenhouse Gases
Measurement (PGGM) project, which collects air
samples in the upper atmosphere for global academic
research. Lastly, CAL signed a five-year OnPoint
Fuel and Carbon Solution Agreement with General
Electric (GE), with the goal of reducing 2 to 3% fuel
consumption to minimize global warming.
In terms of management, we completed a
corporate reorganization in May, 2012, by adjusting
and rationalizing the positions within and amongst
the various departments without increasing personnel
counts and work load. We firmly believe that
human resource is the most important asset of the
company, and therefore we continuously invest in
the training and mentoring of all staff. We not only
task experienced managers and colleagues with
important assignments but also emphasize training of
the younger talents. Through inter-departmental job
rotation and dispatch, the younger personnel can gain
experiences for succession and advancement. CAL
has outstanding employees, and we intend to offer
them a stable and good working environment in our
pursuit of continuously growing the business.
We are grateful to our colleagues, passengers,
shareholders, and alliance partners for their support
and encouragement in this past year. Looking
ahead, there are still difficulties posed by economic
uncertainty and high fuel prices, as well as the ever
present competitors. Nevertheless, we are confident
that we are ready for all challenges. We will be steady
when faced with obstacles, grow and expand when
opportunities arise, and perform our best to meet
the expectations of our colleagues, passengers,
shareholders, and alliance partners. We hope to
create a wholesome enterprise of happiness for our employees
and spread that happiness to every passenger, shareholder,
alliance partner, as well as everyone in the society. We
believe we can outperform our rivals and achieve new highs in
operations in 2013!

| The Members of the Board |
• Chang, Chia-Juch / Former Chairman Resigned : February 18, 2013
• Wei, Hsing-Hsiung / Former director Resigned : June 15, 2012
• Lee, Shen-Yi / Former director Resigned : June 15, 2012
• Lo, Ta-Hsin / Former director Resigned : June 15, 2012
• Lin, Huan / Former Corporate Supervisor Resigned : June 15, 2012
• Lin, Su-Ming / Former Corporate Supervisor Resigned : June 15, 2012
• Chung,Lo-Min / Independent Director On board : June 15, 2012
• Liu,Shao-Liang / Independent Director On board : June 15, 2012
• Luo,Hsiao-Hsien / Independent Director On board : June 15, 2012
• Lin,Su-Ming / Director On board : June 15, 2012
• Huang,Hsiu-Gu / Director On board : June 15, 2012
Chairman
Sun, Huang-Hsiang
• Chairman, China Airlines Ltd.
• President, China Airlines Ltd.
• Managing Director, Taoyuan International
Airport Services Co., Ltd.
• Director, Mandarin Airlines, Ltd.
• Director, CAL-Dynasty International, Inc.
• Chairman, CAL Park Co., Ltd.
• Chairman, CAL Hotel Co., Ltd.
• Chairman, CAL-Asia Investment Inc.
• Chairman, Dynasty Properties Co., Ltd.
A Director
Ting, Kwang-Hung
• Standing Supervisor, Corporate Governance Committee,
China Airlines Ltd.
• Chairman, Central Trading & Development Corp.
• Chairman, Phu My Hung Corp.
• Chairman, Hiep Phuoc Power Co., Ltd.
• Chairman, Macro Technologies Inc. (Vietnam) Ltd.
G
Director
Lee, Cho-Ping
• Member of the Financial Risk Committee, China Airlines Ltd.
• Member of the Safety Committee, China Airlines Ltd.
• President, China Airlines Employee Union
• President, Federation of Aviation Employees, ROC
• Vice President, Chinese Federation of Labor
• Member of the Labor Standards Advisory Committee,
Council of Labor Affairs Executive Yuan
• Member of the Labor Pension Fund Supervisory Committee,
Council of Labor Affairs Executive Yuan
• President, Air Transport Workers Industrial Unions
• Municipal Advisory, Taipei City Government
H
Director
Lin, Su-Ming
• Member of the Corporate Governance Committee,
China Airlines Ltd.
• Member of the Financial Risk Committee,
China Airlines Ltd.
• Director, Commerce Development Research Institute
• Public Director, GreTai Securities Market
• Professor, Department & Graduate Institute of
Accounting National Taiwan University
L
Director
Ko, Tso-Liang
China Airlines Ltd.
China Airlines Ltd.
• Secretary General, China Airlines Employee
Welfare Committee
• Standing Director, China Airlines Employee Union
• Standing Supervisor, Federation of Aviation
Employees, ROC
I Independent Director
Chung, Lo-Min
• Standing Supervisor, Audit Committee,
China Airlines Ltd.
China Airlines Ltd.
• Member of the Remuneration Committee,
China Airlines Ltd.
• Chairman, China Steel Chemical Corporation
• Chairman, Universal eXchange Inc.
K
Director
Sung, Hong-Lei
• Member of the Safety Committee,
China Airlines Ltd.
• Corporate Supervisor, The Grand Hotel
JDirector
Charles C.Y.Chen
China Airlines Ltd.
• Chairman, Eyon Holding Group
• Vice Chairman, Taiwan Air Cargo Terminal Ltd.
• Vice Chairman, Taian Insurance Co., Ltd.
• Board Member, Epistar Corporation
• Board Director, Formosa International Hotels
Corporation
• Board Director, Ascendas Pte. Ltd.
• President, Chen-Yung Foundation
B
Director
Lai, Ching-Chyi
• Standing Supervisor, Financial Risk Committee,
China Airlines Ltd.
• Chairman, Taiwan Insurance Institute
• Chairman, The Insurance Anti-Fraud Institute of
the ROC
• Director, Taiwan Financial Services Roundtable
C
Independent Director
Liu, Shao-Liang
• Standing Supervisor, Remuneration Committee,
China Airlines Ltd.
• Member of the Audit Committee, China Airlines Ltd.
China Airlines Ltd.
• Chairman, China Venture Management Inc.
• Director, Taiwan Stock Exchange Corporation
• Executive Vice President, China Development
Financial Holdings
• Chairman, CDIB CME Fund Ltd.
D
Director
Huang, Hsiu-Gu
• Member of the Safety Committee, China Airlines Ltd.
• President, Chunghwa Telecom Co., Ltd. Enterprise
Business Group
• Director, Intelligent Transportation Society of TAIWAN
• Executive Director, Taiwan Energy Service Association
• Director, Taipei Computer Association
F
Independent Director
Luo, Hsiao-Hsien
• Standing Supervisor, Safety Committee, China Airlines Ltd.
• Member of the Audit Committee, China Airlines Ltd.
• Associate Professor and Director of General Affairs,
Tamkang University, Department of Transportation
Management and Institute of Transportation Science
• President, Taipei Society for Traffic Safety
• Managing Director, Taipei Rapid Transit Corporation
• Board Member, EasyCard Investment Holdings
Corporation and EasyCard Corporation
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| Business Operations of 2012 and Perspectives of 2013 |
Steadily Introducing Passenger Aircraft to
Strengthen Competitive Advantages
As of the end of 2012, the fleet of China Airlines
consisted of 72 aircraft, including 51 passenger aircraft
and 21 freighters with an average age of 9.6 years fleet-
wide. Notable changes include the return of one B747
freighter to our fleet in August due to expiration of the
lease to Yangtzu River Express Airlines Co., Ltd. We
also took delivery of three new leased A330-300 planes
in January, October, and December, respectively, and
returned one leased A330-300 plane in October and an-
other in November at the end of their respective lease
terms.
Aircraft Number
Boeing B747-400 passenger and cargo
aircraft
13 / 21
Airbus A340-300 passenger aircraft 6
Airbus A330-300 passenger aircraft 22
Boeing B737-800 passenger aircraft 10
Total 72
Pursuing Excellence by Assembling an
Optimal Fleet
CAL will introduce ten Boeing 777-300ER passenger
aircraft beginning in 2014. We have also purchased
14 Airbus A350-900 planes, which will enter services
beginning in 2016. These additions will strengthen
our fleet and increase our competitiveness. Further, in
response to direct cross-strait links and the expansion
of Taiwan-Japan routes, CAL will introduce three B737-
800 and one A330-300 planes in 2013 to supplement the
operations for short and medium range routes.
To pursue excellent passenger services, CAL
invested a hundred million US dollars to renovate the
cabin seats and entertainment systems on nine B747-
400 passenger aircraft in 2012. Among them, three have
a three-class cabin with first-class turndown services, a
first in Taiwan aviation industry.
Capturing New Business Opportunities and
Creating a Comprehensive Route Network
Taking advantages of the opportunities created by
the Taiwan-Japan Open Skies Agreement, CAL added
new Taipei-Kagoshima, Taipei-Shizuoka, and Tapei-
Toyama routes, increased flight frequencies to existing
destinations such as Tokyo, Osaka, Fukuoka, and
Nagoya, and formally offered the Kaohsiung-Osaka route
as a scheduled service. CAL also launched flights from
Songshan to Gimpo, Korea to round up the complete
flight network in Northeast Asia. For the cross-strait
routes, CAL worked with Mandarin Airlines to initiate the
Songshan-Wenzhou service. This is our second cross-
strait route from the Taipei Songshan Airport after the
initial Songshan-Hongqiao service. As for the long haul
routes, in view of increasing travel among Taiwan, New
Zealand, and Australia, CAL extended the original Taipei-
Sydney flight to Auckland. This daily flight between Taipei
and New Zealand offers passengers convenient one-
stop service. As of the end of 2012, CAL served 112
destinations in 28 countries, including cargo freight and
other code-shared services.
In 2013, in connection with the introductions of
new aircraft, CAL will inaugurate Taipei-Takamatsu route
and increase service frequencies on Taipei-Shizuoka,
Tapei-Toyama, Kaohsiung-Osaka, and Kaohsiung-Seoul
routes. In addition, we will reinstate nonstop Taipei-
Honolulu flight in anticipation of the potential Taiwanese
tourist boom brought on by the new Taiwan-US Visa
Waiver Program. We will continue to monitor closely the
market demand, and develop future cross-strait routes
accordingly to capture new business opportunities.
Pursuing Excellence and Maintaining Leadership of the Industry
2012 was full of challenges, but CAL steadily faced all the difficulties and kept the leadership role in
Taiwan’s aviation industry by strengthening its organizations. We further grew the Asian flight network by
adding new destinations and frequencies for the Japan, Korea, and Mainland China markets. As for the
long haul routes, CAL cooperated with Delta Airlines to boost the Taiwan-US traffic and increased the
flights to New Zealand. In 2013, CAL will follow the market trend closely to take advantage of opportunities
afforded by new measures such as the liberated amount of Mainland tourists to Taiwan and the Taiwan-
US Visa Waiver Program.
2012/03 CAL Launches Flights to Kagoshima and Shizuoka

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Leveraging Information Technologies to
Strengthen Cargo Services
CAL created a smartphone app “CAL CARGO”
to provide real-time freight information to cargo agents
and consignors. “CAL CARGO” has five main functions:
flight schedule, flight status, freight inquiry, my favorite,
and contact channels. Besides tracking flight schedules
and flight/freight updates, consignors can store specific
flights and booking numbers through the “my favorite”
menu to monitor the shipment’s real-time status including
U.S. customs declaration. The app also provides the
contact information of CAL’s global business stations and
customers can call or send messages to CAL worldwide
by a simply click.
CAL developed a new generation freight operating
system called CCNet. This system has been online since
July 3, 2012. Because it was developed in house, we
realized significant savings in software acquisition and
maintenance expenses. CCNet has an open architecture,
with the ability to connect immediately according to the
needs of the customers. The system is easy to operate
and has raised the efficiency of our internal work flow and
facilitated the training of new personnel.
Strengthened the Competitiveness of
International Freight Services
CAL has one of the world’s largest cargo fleets with
21 Boeing B747-400F cargo aircraft. We flew 84 cargo
flights every week, including 31 on transoceanic routes,
seven on European routes, 37 on Southeastern and
North Asian routes, and nine China routes. According to
data from International Air Transport Association (IATA),
CAL carried 5.4 billion ton-kilometers of freight in 2011
and ranked the eighth globally. In the future, CAL will
continue to build up our freight network and improve
the utilization of freighters, as well as cargo holds on
passenger flights. We will also step up cooperation with
alliance partners to strengthen the leadership role of our
cargo brand and to gain more international clients.
CAL joined SkyTeam Cargo on October 3, 2012
and significantly raised our international visibility. CAL
now works with alliance partners in terms of purchasing
and marketing, and jointly develops a complete offering
of four products: Equation, Cohesion, Variation, and
Dimension.
In terms of the cargo market in Mainland China,
CAL served 24 cities including Chongqing, Shanghai,
Guangzhou, Nanjing, and Xiamen. To improve freight
cabin utilization and enhance the quality of our services,
CAL signed a “Commercial Cooperation Agreement” with
China Cargo Airlines. This enables the exchange of cabin
berths on the Taipei-Shanghai route and acting as the
agent for each other. Further, CAL signed a “Preferred
Pricing Agreements” with Air China, China Southern
Airlines, China Postal Airlines, and China Eastern Airlines
. With respect to the Japan cargo market, we continued
to offer freight services from Osaka to both east and
west coasts of US via transoceanic passenger and cargo
aircraft routes. CAL also signed a “Business Cooperation
Agreement” with Nippon Cargo Airlines to exchange
cabin berths on the Taipei-Tokyo route and to market
jointly in other global markets. Finally, since April of 2012,
CAL has served as the ground agent for Tonlesap Airlines
and Palau Airways’ freight services on their B737-300
and B757-200 aircraft.
CAL was responsible for transporting many
special cargoes in 2012, including penguins, ant bears
(myrmecophaga tridactyla), and various precision
instruments. We also flew chartered cargo flights for
silicon wafers, Beaujolais, etc. In addition, CAL assisted
Taiwan Tourism Bureau to deliver lanterns as a gift to the
Malaysian Tourism Bureau and sponsored the delivery
project of the Annual Exhibition of Shaanxi Cultural
Relics.
Las Vegas
NingboNingbo
NanchangNanchang
三亞
YanchengYancheng
DalianDalian
QindaoQindao
ShenyangShenyang
BeijingBeijing
XianXian
ZhengzhouZhengzhou
WuxiWuxi
NanjingNanjing
FuzhouFuzhou
HangzhouHangzhou
ShanghaiShanghai
KaohsiungKaohsiung
TaichungTaichung
XiamenXiamen
SanyaSanya
GuangzhouGuangzhou
ShenzhenShenzhen
(Pudong,Hongqiao)(Pudong,Hongqiao)
HaikouHaikou
(Taoyuan,SongShan)(Taoyuan,SongShan)
ChongqingChongqing
WuhanWuhan
ChangshaChangsha
ChengduChengdu
TaipeiTaipei
WenzhouWenzhou
AucklandAuckland
ShizuokaShizuokaShizuoka
Toyama
Seoul
MacauMacau
(Incheon,Gimpo)(Incheon,Gimpo)
Phoenix
SacramentoSacramento
New OrleansNew Orleans
San Diego
Las Vegas
San Diego
Las Vegas
Effective date from 2012/10

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Touching Passengers’ Heart with Thoughtfulness
CAL offers the best services with thoughtful details. For
instance, during summer months, sunward window shutters
are kept closed on parked aircraft to offer a comfortable
cabin environment. In flight, cabin crew will share relevant
touring information on destinations, as well as information on
pre-ordering duty free items on the return flights. Similarly,
our ground-based staff offers heart-warming services to the
passengers. In 2012, approximately 18% of the accolades
received from customers were attributed to the ground
service group. This is a four-fold increase compared to the
previous years, showcasing CAL’s commitment to prioritized
customer services.
24-hour E-services and M-services world-wide
To provide services to global passengers, CAL offers
website in seven different languages (Chinese, English,
Japanese, German, Italian, Dutch, and Korean). We also
have a mobile app for smartphones (on three different
platforms of iPhone, Andriod, and Windows Phone7.5) that
was first launched in December, 2010. Passengers can enjoy
24-hour services via the "Flight Schedule", "Flight Status",
"Manage Travel", "Dynasty Member Services", "Promotions",
and " FB Travel Channel" functions offered by the China
Airlines App. New features added in 2012 include " Flight
Reservation" and mobile boarding passes. Except for a few
restricted routes, system-wide, nearly all passengers can
check in on CAL’s website or through the smartphone app, to
reduce the waiting times at the airports and make paperless
eco-journey a reality.
Initiating the Use of Mobile Boarding Passes
To provide passengers with more convenient check-
in service, CAL was the first Taiwanese airline to offer
mobile boarding passes at Frankfurt and Hong Kong
airports on March 26, 2012. This service was expanded
to Taoyuan International Airport in June and later, to 12
airports globally as of the end of 2012. Using Internet,
passengers can now check in online, select seats,
enter passport information, print boarding passes, and
download mobile boarding passes from the web or from
the China Airlines App. Passengers with no checked
luggage can enter the passport and security check lines
with the mobile boarding pass and head directly to the
gates. Mobile boarding passes on mobile phones are
easily and quickly scanned at the gate, taking no more
than 2 to 3 seconds. Passengers qualified to use the VIP
lounge will enjoy even more convenient airport services
as their lounge invitation will be shown on the mobile
boarding pass as well.
SkyPriority Service for Top Customers
As a member of the SkyTeam alliance, CAL began
offering SkyPriority services on all routes starting March
15, 2012. SkyPriority of SkyTeam provides a series of
special services for international premium passengers.
All passengers of Elite Plus, first class, and business
class can enjoy the services of priority check-in, priority
baggage, and advanced boarding. SkyPriority has been
implemented at more than 800 airports, and will be
available at over 1000 airports worldwide by early 2013.
Prioritized Customer-oriented Services for Passengers
CAL emphasizes every service detail to offer a prioritized, customer-oriented service.
From the convenience of web and mobile reservation and ticketing, to efficient boarding
with mobile boarding passes; from crew’s warm greetings to the enjoyment of Taiwanese
local cuisines on board, CAL provides prioritized services to every passenger.
2012/06 CAL Offers New Mobile Services

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Amazing Taste Experiences of Air Delicate
Cuisines
CAL actively works with well-known restaurants and
chefs to offer the best cuisines in air. Our selections include
such local favorites as the braised pork rice of Formosa
Chang, to dishes from the five-star Palais de Chine Hotel,
and from the modern cuisines of the famed Shanghai
Shanghai, to Taiwan’s own pride—Chef Wu, Pao-chun's
bread. Our flight attendants provide detailed information
of each served dish, enabling the passengers to feel the
Taiwanese culture while tasting the delicious foods. CAL
had recruited Michelin chefs to offer high-class dishes in
2012. We also began offering Asian vegetarian meals on all
flights departing from Taipei in September, 2012. This meal
is available in all cabin classes and was designed by the
celebrated vegetarian restaurant, Water Drop Teahouse. In
2013, CAL plan to unveil unique Chinese set meals created
exclusively by four of Taiwan’s most famous chefs, Jian-fa
Shih, Zhao-lin Chen, He-jin Chang, and Hong-che Kuo.
Using Local Food Ingredients to Cherish Our
Globe and Taiwan
The new menu being developed by Taiwan’s four
famous chefs will unite locally produced food ingredients
with expertise of China Pacific Catering Service. This
showcases CAL’s support to Taiwan’s agriculture and the
government’s environmental policy on energy conservation
In terms of tour products for overseas destinations,
CAL introduced new packages to Shizuoka, Toyama, and
Kagoshima in connection with the Taiwan-Japan Open
Skies Agreement. We also initiated a partnership with JR
Group’s Kyushu Railway Company to provide complete
rail services in Kyushu, Japan. As for the Mainland China
market, CAL added new tour destinations such as Sanya
and Haikou. By the end of 2012, Dynasty Package offered
tour products to 58 cities in 17 countries.
To further serve our passengers, CAL launched
online hotel reservation and booking systems, in April
and November, 2012, for passengers going abroad and
those visiting Taiwan, respectively. These systems assist
passengers in pre-trip planning via online booking. CAL
also developed a companion operating system for the
lodging retailers to simplify the procedures and to raise
product competitiveness and sales.
Various Value-added Services for Dynasty
Flyers
There are more than 2.1 million Dynasty Flyer
members, who enjoy special member privileges to foster
their brand loyalty. The most important benefit is the accrual
of reward mileages on all CAL flights, as well as flights on
partner airlines through alliance and joint ventures. In 2012,
we added new partners of Saudi Arabian Airlines (SV),
Middle East Airlines (ME), Aerolineas Argentinas (AR), and
Xiamen Airlines (MF).
In addition, CAL introduced discounts for rentals
from Hertz and Avis, mileage gift vouchers for room, meal,
and spa treatment at the Taoyuan Novotel Hotel, bonus
miles for stays in Regal Hotels and InterContinental Hotels
Group, and bonus miles for hotel bookings made on Ctrip,
the prominent online travel agent in Mainland China.
Other Dynasty Flyer benefits include first-class
upgrade awards, special upgrade awards on the Hong
Kong route, bonus miles on Taichung-Macau flights,
accommodation in first-class cabins for Emerald and
Paragon members purchasing full-price business class
tickets, discounts for Gold, Emerald, and Paragon members
to upgrade/renew membership, prize drawings for new
members, ticket discounts and prize drawing for members
who update their cell phone information online, mileage
vouchers for Dynasty Packages, ticket discounts for Gold,
Emerald, and Paragon, as well as SkyTeam Elite Plus
members’online purchases, and discounts for onboard
duty-free purchases.
Our integrated marketing partners include 18 airlines,
18 banks or credit card issuers, ten global and regional
hotel chains, two online booking centers, three global car
rental chains, and one telecommunication provider. Among
them, CAL cooperated with HSBC Bank to offer the China
Airlines Visa Infinite Card, which comes with discounts on
CAL ticket purchases and bonus mileage accrual on CAL
flights. Customers of HSBC’s global financial planning
services also enjoy discounts from CAL’s online ticket
purchase.
and carbon reduction. In addition, the VIP lounges at
Taoyuan Airport offer baked sweet potatoes, made by
specially grown yellow yams from Tainan’s Xinhua District.
The baked sweet potatoes have been certified by SGS and
the Environmental Protection Administration of their low
carbon content and bear the appropriate carbon footprint
labels.
Delicate Tour Products with Frequent Updates
CAL’s “Dynasty Package” welcomed more than 160,000
tourists in 2012, topping all rivals. To accommodate the
increased demand of free, independent travel for mainland
tourists, CAL added Nanjing, Hangzhou, Chongqing,
Chengdu, Guangzhou, Fuzhou, Shenzhen, and Xian to
our original three focus cities of Beijing, Shanghai, and
Xiamen. Tourists from these cities can purchase customized
packages to Taiwan including flights and lodgings.
Together with our current offerings from Southeastern and
Northeastern Asian destinations, Dynasty Package to Taiwan
is now available from 16 cities. It is worth mentioning that
our 2012 tour packages were numerous and varied than
ever to serve many niche markets. For example, we had
teamed with vendors to offer medical-themed packages for
comprehensive physical checkups or cosmetic surgeries, as
well as featured tours of Jiufen Bed & Breakfast and other
farm resorts. CAL was the exclusive sponsor of the rock
band Mayday’s new year’s eve concert held in Kaohsiung,
leading to a frenzy of ticket-buying across Mainland China
and Southeast Asia.
2012/12 CAL Press Conference showcase traditional culinary feast

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Diversified Operations to Maximize Group Efficiency
To nurture and deepen the value chain of the aviation industry, CAL Group employs diversified
operations to strengthen its competitiveness and to maximize its efficiency. The CAL Group controls
36 subsidiaries covering aviation, ground services, logistics, air cargo stations, catering services, bulk
laundry services, information network, and tourism.
Mandarin Airlines
Mandarin Airlines is a subsidiary company of CAL with
a fleet of eight single-aisle, 104-seat ERJ 190-100 aircraft. It
is based in Taichung, and operates international flights from
Taichung, Songshan, and Kaohsiung, as well as other scheduled
cross-strait routes and Taiwan domestic routes. CAL owns a
93.99% share of Mandarin and the two airlines share resources
including fleet, business, and management. They cooperate with
each other closely to pursue mutual interests and growth.
China Pacific Catering Service Ltd.
China Pacific Catering Service is a joint venture of CAL
(51%) and John Swire & Sons (H.K.) Ltd. (49%). It was founded
in 1996 and remains the most established catering service firm
in Taiwan. Our goal is to grow the firm into the best catering
service provider in Asia. This company employs more than 200
chefs and uses high-tech equipment to produce meals under the
most scrupulous sanitation standards. It served 27 international
passenger and cargo airlines in 2012.
In order to offer delicious and diverse meals, China Pacific
Catering Service partners with the famous Taiwanese baker, Wu,
Pao-chun, the Shanghai Shanghai, the Water Drop Teahouse
vegetarian restaurant, the five-starred Palais de Chine Hotel,
and the Michelin-starred China Blue restaurant in Conrad Tokyo.
The company continues to update and create novel menus.
Abacus Distribution Systems Taiwan Ltd.
Abacus Distribution Systems Taiwan Ltd. is a subsidiary,
with 93.93% shares held by CAL, established in October 9,
1990. It is a Taiwan-based marketing company of Abacus
International Pte Ltd of Singapore. The firm’s main business is
the sale of Abacus computer reservation system to domestic
travel agencies, plus other services including computer
software design and development, data processing, second-
tier communication services, and the sale, installation, and
maintenance of computer hardware.
In recent years, Abacus was also diligently involved in
the research and development of other ancillary products of
a reservation system. With CAL joining the SkyTeam, Abacus
cooperates with SkyTeam in marketing efforts, via various
social media networks. Moreover, Abacus is leveraging mobile
communication and cloud technology to provide customers with
multiple value-added services.

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China Pacific Laundry Services Ltd.
China Pacific Laundry Services Ltd., a joint venture of
CAL (55%) and John Swire & Sons ( H.K.) Ltd. (45%), was
established in September, 1997. By introducing commercial
washing services and technologies from abroad, China Pacific
Laundry Services Ltd. meets all international standards in
operations and service qualities. Its main business is to provide
bulk laundry services to airlines, hotels, and other gyms and
clubs. In recent years, the firm devoted significant efforts in
improving the laundry processes and will unveil new equipment
in 2013. It aims to improve efficiency, conserve energy, enhance
service quality, and grow the company ultimately.
Dynasty Hotel of Hawaii, Inc.
Dynasty Hotel of Hawaii, Inc. is located in Honolulu,
Hawaii and was acquired by CAL in 1973. It is a 16-story
building with 199 guest rooms. The hotel joined the Wyndham
Worldwide group in 2009 and carries the Ramada Plaza brand.
It was awarded the 2012 Certificate of Excellence Award by
TripAdvisor. The hotel’s restaurant is under renovation to
become a more Hawaiian-themed establishment. The renovation
should improve the quality of service to customers.
Taoyuan International Airport Services Co., Ltd.
Taoyuan International Airport Services Co., Ltd. was jointly
founded by the Ministry of Transportation and Communication
and CAL on December 1, 1978. It started its business operation
on February 26, 1979 with the opening of the original Terminal
One at Taiwan Taoyuan International Airport. The firm provides
professional ground services to all flights under the goals of
“safety, efficiency, and services.”
Taoyuan International Airport Services Co., Ltd. passed
IATA’s audit and became a certified ISAGO provider on February
11, 2012. ISAGO, the acronym for IATA Safety Audit for Ground
Operation, is the highest-level audit standard for aviation
industry suppliers. Taoyuan International Airport Services Co.,
Ltd. is the first Taiwanese ground services company to receive
this certification.
Hwa Hsia Company Ltd.
Hwa Hsia Company Ltd. established in 1989, is a
wholly-owned subsidiary of CAL. It was founded for the
purposes of lowering the operating costs of CAL and
achieving overall profits for the entire enterprise group.
The work that Hwa Hsia took up in the early years only
included maintenance of air cargo containers, laundry,
headphone cleaning, and in-cabin cleaning. The firm has
since grown extensively, providing additional services
such as external aircraft cleaning, aircraft parts washing,
maintenance of air cargo containers and in-cabin service
carts, general cleaning of factories, office buildings,
and residences, disease control, and temporary labor
offerings. The number of employees increased to more
than 500 from the original count of 124. In the future,
Hwa Hsia will market aggressively to other partner
airlines to become a qualified service depot for cargo
containers, cargo pallet, cargo nets, and service carts.
Novotel Taipei Taoyuan International Airport
Novotel, another CAL’s wholly-owned subsidiary,
is the first internationally-branded hotel in Taoyuan.
Opened in 2009, it is Accor Group’s flagship airport hotel
in Taiwan. The overall design of the hotel emphasizes
the concepts of environmental protection and natural
harmony. The hotel has 360 fashionable guest rooms,
plus other facilities such as heated swimming pool,
steam rooms, fitness center, and beauty salon. It boasts
a grand ballroom with lofty five-meter high ceilings and
five multifunctional conference halls to serve all business
meetings and wedding parties. Novotel has been LPGA’s
official hotel two years in a row. The “Wei Fang” Chinese
restaurant in Novotel received award as one of the best
restaurants in Taiwan due to its exemplary services and
distinctive design. Novotel is truly the best international
hotel in Taoyuan.
2012/2 Taoyuan International Airport Services (TIAS) Receives International Air
Transport Association (IATA) ISAGO Certification

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Human Resources as the Fuels for Growth
Motivated employees are what fuel the growth and expansion of an enterprise. Through
continuous modernization and innovations, CAL aims to stimulate the employees and raise our
competitiveness. As CAL joined SkyTeam, we have developed new products and introduced a new
fleet. CAL is stepping into a new era and we need the best talents to fuel our continued growth.
Diverse Learning to Ingrain Brand Spirit into
Employees’ Heart
CAL adopts a diverse employee training regime to
ingrain superior moral spirit and corporate values into
employees’ heart. We expect these values to guide the
employees in their conducts at the workplace, as well
as in their daily lives. Our training and education regime
include online learning and assessments, case studies in
“CAL Employee Newsletter,” workshops and seminars,
and polls for poster design. These activities aim to raise
the employees’ consciousness to carry out CAL’s brand
spirit and sustain our corporate culture.
Electing Model Employees to Stimulate
Devotion
CAL held an election of model employees in
2012 to motivate employees in service devotion and to
strengthen work ethics. Six new awards were added
to the existing prizes, including “Award for Best Public
Welfare Affair,” “Award for Best CAL Employee,” “Award
for Best Environmental Protection Practitioner,” “Award
for Best Public Relation Practitioner,” “Award for Best
Safety Goalkeeper,” and “Award for Best Team Spirit.”
The election was open to all employees and the winners
inspired all to work harder in the future.
All New Trophies for Senior Employees
Trophies for Senior Employees mark the mutual
growth of the employees and the company and
symbolize the employees’ efforts and devotion. The
trophy had been designed on the basis of gold plum
blossoms, with a wooden pedestal, to symbolize the
stable and dependable management styles. In 2012, CAL
redesigned an all-new trophy for senior employees with
transparent crystal along with elegant red plum blossoms
to show the company’s updated, sustainable growth, as
well as our resolute spirits and beliefs.
2012/12 Senior Employees were awarded in the 53rd
Anniversary
2012/12 CAL Unveils Newly-designed Trophy for Senior Employee

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A Corporate Citizen for Taiwan’s Future
CAL is keenly aware of its responsibility as a corporate citizen and actively engages in public welfare
activities. We assist in promoting tourism, culture and art experiences, sporting events, environmental
protection awareness, and so on. Because we have dreams, we wish Taiwan to shine on the world
stage; because we have love, we pray for a better world tomorrow.
Being Outstanding Internationally
CAL has long been devoted to Taiwan tourism and
we vigorously market Taiwan internationally in support
of government policies. In 2012, CAL continued to
participate in domestic and international travel fairs and
sponsored many activities hosted by the Tourism Bureau
and the Taiwan Visitors Association (TVA). These include
the Taiwan Lantern Festival in Changhwa, Sand Sculpture
Art Festival in Fulong, and the Taiwan Culinary Exhibition
in Taipei. CAL also assisted the Tourism Bureau and the
Centers for Disease Control in disseminating important
news bulletins via onboard announcements or short films.
We participated in the printing and distribution of the
“Taiwan Tourism Hotel & Restaurant Guide” published by
TVA. For our effort, TVA awarded CAL the “2012 Special
Award for International Tourism Marketing” in the aviation
category.
Repeat Winner at the U.S. Rose Parade
Rose Parade of Los Angeles, California is a major
event that attracts global attentions every January. The
theme for the 2012 parade was “Just Imagine.” CAL, in
cooperation with the Ministry of Foreign Affairs and the
Tourism Bureau, won the international first prize with a float
entry named “Spirit of Prosperity and Harmony.” CAL’s floats
have appeared in Rose Parade in 26 consecutive years
and won the prestigious prize 21 times. This year’s theme
of “Spirit of Prosperity and Harmony” was inspired by the
Book of Changes. The float featured a vividly designed floral
dragon, spitting smokes with animated head movements.
Beautiful ambassadors, dressed in Taiwanese, Hakka, and
aboriginal costumes, greeted the parade audience and
attracted millions of global viewers. CAL’s float in Rose
Parade showcased Chinese culture to the world, brought in
the New Year of Dragon, and prayed for a prosperous world.
2012/01 "Spirit of Prosperity and Harmony" Float Wins International Trophy at the U.S. Rose Parade

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2012 was China Airlines’ first year in our sustained
campaign for environmental protection. During the year,
CAL Volunteer Club members conducted two beach-
cleaning drives to tidy up the coastal areas of Taoyuan’s
Zhuwei Fishing Harbor. CAL also held a “Bike Festival”
that had thousands of participants from our employees,
their family members, and staff members of various
domestic and international tourism bureaus. All the
bikers experienced a fun ride and, at the same time,
demonstrated their resolves in energy saving, carbon
reduction, and earth loving.
Cultivation of Taiwan’s Culture and
Development of Branding Diplomacy
CAL actively participates in domestic and
international art and sporting events to promote national
images of Taiwan and to develop international diplomacy
through culture exchanges. In 2012, we sponsored
activities such as “The Stunning Pop-up Books” and
“The Dawn of Dinosaurs” hosted by the United Daily
News Group, and the annual exhibit “Qing Dynasty and
Western Court Jewelry” and “The Cultural Granderur
of the Western Zhou Dynasty” held at the National Palace
Museum. CAL also sponsored other culture exchange
activities held by the government, universities, foundations,
and visiting international missions.
CAL is an energetic sponsor and supporter of various
international games. We are particularly proud of the
achievements of Taiwanese athletes. In 2012, CAL
sponsored the following events: 2012 OEC Taipei Ladies
Open, athletes of Chinese Taipei Sailing Association to
Asian Windsurfing Championship in Thailand, 2012 Chinese
Track and Field Game in the Bay Area of San Francisco,
and ESPN’s “Cheers for Jeremy Lin.” For its efforts, CAL
was awarded the “Best Sports Promoter” honor by the
Executive Yuan in 2012.
Charter Flights that Fulfill Every Mission
CAL has abundant experiences with air charters, and
the best example is our mission of charter flights in 2012
for the President and Vice President to visit friendly nations
in Africa and transit in U.S. With discreet and professional
services, CAL provided the safest and the most comfortable
trips for the President, Vice President, and other VIPs.
The Continual Growth of Love
As the leader of the aviation industry in Taiwan, CAL
has long been devoted to public welfare and humanitarian
aid to fulfill its social responsibility as a corporate citizen.
In particular, after the establish of the CAL Volunteer Club
in 2011, CAL has participated actively in caring for the
disadvantaged, watching out for our neighbors, protecting
the environment, and contributing to the society in
general. We truly believe in repaying the society for what
we have received.
To support local families, CAL’s Volunteer Club and
Taoyuan Fishermen's Association held a “Surrounding
the Stove” activity for nearly 200 orphans in Taoyuan
County on the Eve of Chinese New Year. In addition,
CAL volunteers taught English at Zhuwei Elementary
School and shared their aviation experiences with the
schoolchildren. Volunteers also periodically visited the
orphanages to donate goods and to arrange visiting
activities for children.
Caring for the disadvantages, CAL was a sponsor
in numerous activities including the “Touching the
World with Love from Taiwan” held by Chou, Ta-kuan
Foundation, “Cross-Strait Bike Trips” held by Xin-yin
Orphanage in Yun-lin County, and “Dream-realizing
Project” of R.O.C. Make-a-wish Foundation. CAL also
assisted in transporting patients of rare diseases, such
as spinal muscular astropy, cerebral hypoxia, and
congenital lymphedema, for international rescues and
medical treatments. In addition, CAL sponsored the
delivery of humanitarian aids for various campaigns
conducted by international volunteer organizations.
Examples include Tzu Chi Foundation’s “Volunteer
Doctors for Beijing Flood,” Fu Jen Catholic University's
“Tanzania International Volunteers,” and Chihlee Institute
of Technology’s “Burkina Faso International Volunteers.”
Finally, CAL delivered guide dogs for the Taiwan Guide
Dog Association, donated salvaged aircraft parts and
materials, and participated in charity fund raisings, with
the hope to appeal others’ support and pass on the
humanitarian love.
2012/06 CAL Flight Attendants Teach Course of Aviation and English at Zhuwei Elementary School 2012/04 President Ma, Ying-jeou visits Africa on China Airlines Chartered Flight

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| Enhancement of Flight Operation and Maintenance |
Endless Efforts for Aviation Safety
Aviation safety is CAL’s utmost mission, and each and every employee is fully committed to it by
integrating safety consciousness into our operations, system design, and organization. CAL forms
its own safety culture by carefully managing and controlling the risks of aviation safety.
CAL implements a safety management system and
strictly controls the risks of all operations. CAL follows
safety management policies mandated by the Civil
Aeronautics Administration and International Aviation
Transportation Association (IATA) to train seed instructors
and to carry out the required safety trainings. In addition,
CAL continues to implement aviation security projects to
prevent any security incidents both in the air and on the
ground.
CAL’s Safety Management System (SMS), as required
by IATA and the Civil Aeronautics Administration, began
operation in 2009. In 2012, we continued to develop and
maintain the SMS, installed the Safety Action Group, and
integrated SMS into the work of all departments. By the
end of June, CAL completed the setup and implementation
of SMS Phase III. In December, 2012, the Civil Aeronautics
Administration conducted reviews and audits of our SMS
with the goal of attaining the highest safety level.
Of note is CAL’s systematic management of aviation
risks in all operational areas such as flight operations, in-
flight services, and ground handling. We have a safety
report policy that encourages employees to quickly and
honestly report all identified incidents and hazards. This
has resulted in a reduced frequency of safety incidents,
as evident in the 130% more positive reports in 2012
than 2011.
CAL is the first airline in Taiwan to receive the IOSA
(IATA Operational Safety Audit) certification. The IOSA
program is an internationally recognized and accepted
evaluation system designed to assess the operational
management and control systems of an airline. All
IATA members are IOSA registered and must remain
registered to maintain IATA membership. CAL gained
IOSA certificate for the first time in 2005. After that, CAL
successfully passed the recurring audits in a 24-month
cycle. In fact, audits in 2006, 2008, 2010, and 2012 had
identified zero defects at CAL. Our current IOSA registry
is valid until February 25, 2013 and will be extended to
February 25, 2015.
The IOSA certification shows that CAL’s setup
and implementation of SMS and its sub-systems are
recognized and approved by IATA. CAL will continue the
efforts and demand every employee of every department
to take up the responsibilities for safety. We will actively
identify and manage the risk of operations through SMS
and prevent accidents from occurring again.
2012/12 CAL Maintenance Facility Receives ISO 14001 Certification
Implementation of Safety Management to Raise
the Overall Safety

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| Enhancement of Flight Operation and Maintenance |
The corresponding training material is designed with
the requisite course syllabi and fully employs audio-visual
media to enrich the training contents. This has raised the
efficiency of flight crew training and lowered operational
risks.
CAL’ flight crew training system was approved
by 2012 IOSA. Aviation Quality Services (AQS), the
accredited audit organization that had conducted the
audit on CAL, was very positive about CAL’s continual
improvements of training system to reach the international
standard.
Using LOSA to Reform the Flight Operations
Line Operations Safety Audit (LOSA), developed by
the University of Texas, is a critical organizational strategy
aimed at developing countermeasures to operational
errors. LOSA uses highly trained observers to collect data
about flight crew behavior and crews’ strategies for
managing threats, errors and undesirable states. CAL
first deployed LOSA in 2004 and improved our flight
operations according to the audit report. A second LOSA
was conducted in 2011 and the results showed that CAL
performed significantly better than the first one, as well as
better than other competitors. CAL continued to improve
flight operations in 2012 based on the LOSA audit,
and had implemented many safety measures such as
minimizing the operational pressure during flight crew’s
pre-flight check, strengthening the prompts during take-
off and landing phases, and integrating LOSA data into
EBT database for future training. Most importantly, the
audio-visual training material for flight crews’ prompts and
other trainings on leadership, communications, cross-
checking, management of work load, assertiveness,
inquiry and advocacy, etc. are all included in the CRM
training courses and will be continually implemented in
2013.
Expert Maintenance Capabilities for Flight
Safety
CAL’s advanced professional aircraft maintenance
center is the largest of its kind in Taiwan. CAL has aircraft
maintenance licenses certified by the United States, the
European Union, China, and Hong Kong. Our advanced
hangars allow simultaneous work on five large planes. In
addition, CAL built 120,000-pound Engine Test Cells to
satisfy the needs for engine testing. CAL provides high-
quality maintenance services for its passenger and cargo
fleet, as well as those from more than 40 global clients.
Our expert maintenance capability is evident from CAL’s
higher than average dispatch reliability rate in the aviation
industry.
CAL’s maintenance missions are “safety, reliability,
and trustworthiness,” and we continue to improve the
work flow and procedures in our daily business. In 2012,
CAL completed the implementation of the Maintenance
Performance Toolbox developed by the Boeing Company.
We successfully integrated the information on
aircraft structure management and maintenance
programs, resulting in optimum maintenance plans,
increased dispatch reliability, and lowered frequencies
of cancellation and delays. In 2013, CAL will introduce
additional advanced material management system and
facility maintenance system. These are aimed to further
raise maintenance efficiency, improve the utilization
of time and resources, increase service qualities and
operational efficiency, and lower maintenance costs.
Excellent Flight Training for Top Aviation
Safety
CAL’s flight operations department continues raising
the qualities of flight crew by implementing training in a
systematic and scientific manner. Our training for flight
crew and instructors is based on information gathered
from training, testing, initial performance, internal and
external audits, and various observation reports.

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| The Trend for Environmental Protection |
The First Year of Environmental Protection -
CAL’s Initiation of Green Aviation
CAL designated 2012 as the first year of environmental protection to turn our love for the globe into
actions instead of slogans. We included environmental management as an important objective of
our operations and made every effort to conserve energy and reduce carbon emissions. Every flight
should be a green flight that is friendly to our earth.
Environmental Management as an Important
Focus for Operations
In response to the environmental risk brought by
global climate changes, CAL established a formal corporate
organizational structure to implement environmental
management programs based on ISO 14001. At the
highest level, there is an environmental committee headed
by the president. This committee oversees all strategic
planning, coordinates resource utilization, and sets up
environmental management committees and action
groups at various departmental levels. In addition, our
environment management systems are conducted via the
PDCA management cycle and are evaluated using annual
management performance indexes. They cover various
operational areas including aircraft maintenance, services,
flight operations, administration, etc.
CAL’s environmental protection objective is guided by
our six environmental policies. They are “complying with
laws and fulfilling the responsibilities for environmental
protection,” “establishing environmental management
systems and performance indices,” “carrying out eco
education and fostering employees’ consciousness for
environmental protection,”
“promoting eco flights and green supply chains,”
“constructing a low-carbon operational environment and
raising the general eco efficiency”, and “supporting green
research and activities for sustainable development.”
Continuous Monitoring and Verification of
Greenhouse Gas Emissions
In accordance with ISO/CNS 14064-1, CAL
examined and reported the greenhouse gas emissions
generated in 2011 from our flight operations, ground
services, and administrative services. As an independent
check, CAL retained bsi Taiwan Branch to conduct a
third-party validation and verification. We received a
certificate of “Reasonable Assurance” that attests to
the accuracy and credibility of CAL’s greenhouse gas
emissions data.
CAL’s greenhouse gas emission in 2011 (including
scopes 1 and 2) was 6,628,363 metric tons of CO2e. Of
these, scope 1 had 6,603,107 tons, mainly from aircraft
fuel. This is CAL’s fourth year in reporting and we will
continue the effort in the future.
Nonstop Efforts for Energy Conservation and Carbon Reduction
Despite CAL’s continuing effort in fuel saving and carbon reduction, the global economic depression in 2012 resulted in
reduced Revenue Tonne Kilometer (RTK) than 2011. As such, the fuel saving efficiency per RTK is lower by 0.0114 and the
carbon reduction efficiency per RTK is lower by 0.0359. The details are listed as follows.
The List of Aircraft Fuel Saving and Carbon Reduction
2012 2011 Comparison
Fuel Consumption (Kg) 1,973,248,428 2,065,257,969 Down 92,009,541
Production of CO2 (Kg) 6,215,732,548 6,505,562,602 Down 289,830,054
RTK 7,785,419,370 8,532,333,689 Down 746,914,319
Fuel/RTK 0.2535 0.2421 Down 0.0114
(CO2/RTK) 0.7984 0.7625 Down 0.0359

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CAL’s Maintenance certified by ISO 14001
CAL’s maintenance received ISO 14001
Environment Management System certification in
December 2012. CAL is the first airline in Taiwan to
receive this certification and it is a significant milestone
for us. The occasion brought Taiwan’s airline industry
in line with international practices of sustainable
environmental management.
Annual Carbon Reduction Worth 86 Daan
Forest Park
CAL actively implemented various environment-
related projects across all operational areas including
ground services, maintenance, flights, and customer
services. We also set up key performance indicators (KPI)
to control and monitor the projects. In 2012, there were
64 KPIs for environmental management in total, and the
annual goal was to reduce carbon emission by 5%. When
compared to 2011, the results for some major categories
were: jet fuel decreased 20,978,870 pounds, gasoline
decreased 208,676 liters, electricity reduced 2,023,868
units, water reduced 3,672 units, and paper usage
decreased 1,915,014 sheets. The total amount of carbon
reduction was 31,719 metric tons of CO2e, equivalent to
86 Daan Forest Park.
Carrying out Pacific Greenhouses Gases
Measurement (PGGM)
CAL participated in the Pacific Greenhouse
Gases Measurement (PGGM) research conducted
by the National Central University and Environmental
Protection Administration. CAL’s Airbus A340-300
aircraft numbered B18806 was installed with the IAGOS
(In-service Aircraft for a Global Observing System)
instrument and was officially launched on June 26,
2012. CAL is the first Asian airline participating in the
PGGM project and the first to operate an IAGOS-
equipped flight for taking atmospheric measurements
on trans-Pacific routes. In the second half of 2012, CAL
helped collect upper air samples on 428 flights (including
64 on the Taipei-Vancouver route).
2012/06華航全球首架跨太平洋氣候觀測機正式啟航
Carrying out EU ETS Project
According to Monitoring Plans approved by EU
Emissions Trading Scheme (EU ETS) and Dutch
Emission Authority (NEA), CAL completed the 2011
annual report and invited BUREAU VERITAS to serve as
a third party assurance agent. The results showed that
CAL’s flights to the European area (including flying to and
from or in the EU area) emitted approximately 840,000
metric tons of carbon dioxide.
NEA notified CAL in December, 2012 that, because
ICAO will establish a global, consistent emission
exchange system in September, 2013, EU currently only
monitors the emission of intra-EU flights. Monitoring of
emission outside of European areas is postponed for one
year. CAL is closely watching the latest developments in
anticipation of future reporting requirements.
86 Daan Forest Park
2012/06 CAL Launches the World's First Trans-Pacific Climate Observation Flight

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Promoting Eco Education and Awareness
CAL promotes environmental education
through a variety of channels. The cultivation of
employee environmental awareness helps to form an
environmental consensus within the company. These
channels include: using the Weekly Letter and the "Let's
Eco Together" internal website to promote a different
environmental issue every week; using the internal
e-learning platform to support environmental education
classes such as the Importance of Environmental
Management, Dimensions of Environmental
Management and Energy-saving and Carbon Reduction
Measures. Our goal is to keep employees up to date on
international environmental trends, inform them about
environmental challenges for the aviation industry,
as well as teach them about CAL's environmental
governance and the ISO 14001 environmental
management system.
Investments in Environmental Protection
CAL invested NT 13.87 million dollars and
associated human resources to promote eco affairs
and education. Our environmental efforts are varied
and numerous, including purchasing eco hardware
(equipment for prevention and control), purchasing
green supplies, establishing ISO 14001 environmental
management system, assisting Pacific Greenhouse
Gases Measurement, carrying out EU ETS project,
conducting audits on greenhouse gas emission,
redesigning CSR eco web pages, and so on.
Devotion to Eco Public Welfare Activities
CAL has long been devoted to eco, non-profit
activities to show our love for Taiwan and the Earth. CAL
volunteers conducted beach cleanups at Taoyuan Zhuwei
Fishing Harbor. CAL joined “Earth Hour Taiwan” held by
the Society of Wilderness on March 31, 2012 and turned
off all nonessential lighting for one hour (20:30 to 21:30).
We also participated in the demonstration and promotion
of electric vehicles with the Industrial Technology
Research Institute. Our actions demonstrated our love
toward the earth and our resolve to save energy and
reduce carbon footprint.
CAL received an Outstanding Achievement Award
of 2012 “Energy Conservation and Carbon Reduction
Action Mark” from the Environmental Protection
Administration, Executive Yuan. In 2012, CAL also
received the “Super Green Judges’ Award” and the first
prize in the Transportation category of the “2012 Green
Brand Survey” conducted by Business Next Magazine.
2012/03 Business Next Presents CAL with Top Super Green Transportation Award
Realization of Eco Trips
CAL has successfully implemented E-services such
as online check in, mobile boarding passes, self-printed
boarding pass, airport kiosks, and self-printed baggage
tags. We are making paperless trips come true. CAL
uses mostly local ingredients to prepare snacks served
in the VIP lounges to reduce carbon emission. We also
purchase bottled drinks of larger volume to reduce the
amount of bottles or packaging, and we sort and recycle
waste categorized by food residuals, papers, and plastic
bottles.
Our service products and procedures also follow
the principles of environmental protection to promote
Eco services. For example, the headrest covers and
pillowcases used in premium cabins are made of 35%
coffee yarn and 65% recycled yarn made from plastic
bottles; amenity kits in business class are made of non-
woven fabric and contain decomposable toothbrush
made from corn starch; toilet bags in economy class
used innovative seals; and the elimination of the plastic
bags for onboard slippers. In addition, in terms of
reducing weight and fuel consumption, CAL now uses
all-aluminum meal carts that are three kilograms lighter
than the old one. On long haul routes, the 30 meal carts
onboard can save 31 kilograms of fuel every flight. Also,
utensil in the economy class is now 69 grams lighter than
before.
CAL worked with the Industrial Technology
Research Institute to calculate and highlight the carbon
footprint of the main dishes served on the Taipei-Frankfurt
route. The business-class menu on this flight was printed
with soy ink on recycled paper. Flights on this route also
served the light-weight Yes mineral water with reduced
plastic contents of 23% and 45%, for the bottle and the
cap, respectively.
2012/12 CAL' 53rd
Anniversary Celebrations - The Carbon Footprint Menu
Experience

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Financial Status Contents
36 Financial and Operating Analysis
36 Operating Profit and Net Profit
36 Operating Revenues
39 Operating Costs and Employee Productivity
40 2012 Financial Report
| Financial and Operating Analysis |
Operating Profit and Net Profit
In 2012, China Airlines’ operating profit was NT$ 343 million (operating margin 0.3%), a increase of NT$1,907 million over
2011. Net profit reached NT$ 58 million (net margin 0.04%), an increase profit of NT$ 2,012 million over 2011.
Operating Revenues
In 2012, total operating revenue reached NT$132,608 million, an increase of 0.3% over 2011. Total operating cost decreased
by 1.2% to NT$132,265 million. Passenger revenue raise by 7.2% to NT$86,621 million and cargo revenue decay by 12.0% to
NT$ 40,809 million, respectively. Other revenue raise by 3.0% to NT$ 5,179 million.

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Passenger Business
Passenger revenue was NT$86,621 million in 2012, an increase of NT$5,796 million or 7.2% over 2011. According to the
breakdown of passenger revenue by routes, North America represented the prime market contributing 24.7%, followed by
Southeast Asia, Northeast Asia and China, with the contribution of 19.2%, 18.6% and 15.6%, respectively.
Compared with those in 2011, passenger capacity (ASK) increase by 4.3%, passenger traffic (RPK) increase by 3.4%, and
passenger yield increase by 3.7% to 2.64 (TWD/RPK). Passenger load factor goes down by 0.7ppt to 77.3%.
Cargo Business
Cargo revenue was NT$40,809 million in 2012, an decrease of NT$ 5,579 million or 12.0% over 2011. North America, the
largest portion of cargo revenue, operated 56.4% of the cargo revenue, followed by Southeast Asia 15.5% and Europe 14.7%.
In 2012, cargo capacity (FATK) decrease by 16.1% yoy. Cargo Traffic (FRTK) decrease by 14.9% yoy, and cargo yield increase
by 3.3% to 8.45(TWD/FRTK). Cargo load factor goes up by 1.1 ppt to 71.3%.

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Operating Cost and Employee Productivity
Operating expense was NT$132,266 million in 2012. The three largest cost items were fuel (46.2%), airport & ground handling
charge (12.3%), and Labor cost (10.3%). In 2012, unit cost was up by 9.5% yoy to 12.48 (NT$/ATK), Without fuel cost, unit
cost was up by 12.4% yoy.
As of December 31st
2012, the number of average employees for 2012 was 10,693. Employee productivity, measured by ATK
per employee, RTK per employee, and revenue per employee, proved with a negative trend compared to 2011.
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and the Stockholders
China Airlines, Ltd.
We have audited the accompanying balance sheets of China Airlines, Ltd. as of December 31, 2012 and
2011 and the related statements of income, changes in stockholders’ equity and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by
Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those
rules and standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to above present fairly, in all
material respects, the financial position of China Airlines, Ltd. as of December 31, 2012 and 2011 and the
results of its operations and its cash flows for the years then ended, in conformity with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business
Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting
standards, and accounting principles generally accepted in the Republic of China.
We have also audited the consolidated financial statements of China Airlines, Ltd. and its subsidiaries as
of and for the years ended December 31, 2012 and 2011 on which we have issued an unqualified opinion
in our report dated March 29,2013.
March 29, 2013
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of
operations and cash flows in accordance with accounting principles and practices generally accepted in
the Republic of China and not those of any other jurisdictions. The standards, procedures and practices
to audit such financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the auditors’ report and the accompanying financial statements have
been translated into English from the original Chinese version 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 auditors’ report and financial
statements shall prevail.
| 2012 Financial Report |

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CHINAAIRLINES,LTD.
BALANCESHEETS
DECEMBER31,2012AND2011
(InThousandsofNewTaiwanDollars)
2012201120122011
ASSETSAmount%Amount%LIABILITIESANDSTOCKHOLDERS’EQUITYAmount%Amount%
CURRENTASSETSCURRENTLIABILITIES
Cashandcashequivalents(Notes2and4)$9,011,3645$8,947,3974Short-termloans(Notes13and27)$1,600,0001$--
Financialassetsatfairvaluethroughprofitorloss-current(Note2,5and23)1,253,61513,278,7392Derivativefinancialliabilitiesforhedging-current(Notes2,23and24)23,703-47,076-
Available-for-salefinancialassets-current(Notes2,6and23)62,738-96,131-Accountspayable337,538-536,479-
Derivativefinancialassetsforhedging-current(Notes2,23and24)52,767-108,668-Accountspayabletorelatedparties(Note25)1,185,3431965,5951
Receivables:Accruedexpenses(Notes2and25)9,597,896512,253,6346
Notesandaccounts,net(Notes2,3and7)7,058,81849,723,6205Advanceticketsales(Note2)7,168,39948,771,2814
Notesandaccounts-relatedparties(Note25)385,058-282,809-Bondspayable-currentportion(Notes2,14,23and25)6,130,000312,200,0006
Otherreceivables(Note8)391,992-510,901-Loansanddebts-currentportion(Notes15,23and26)16,671,452918,047,7629
Inventories,net(Notes2and9)8,521,79248,587,2924Capitalleaseobligations-currentportion(Notes2and16)840,208-1,185,6391
Deferredincometaxassets-current(Notes2and20)212,169-152,994-Othercurrentliabilities2,029,06511,774,4661
Othercurrentassets1,366,99111,233,9521
Totalcurrentliabilities45,583,6042455,781,93228
Totalcurrentassets28,317,3041532,922,50316
LONG-TERMLIABILITIES,NETOFCURRENTPORTION
LONG-TERMINVESTMENTSDerivativefinancialliabilitiesforhedging-noncurrent(Notes2,23and24)11,429-25,325-
Financialassetsatfairvaluethroughprofitorloss-noncurrent(Notes2,5Bondspayable-noncurrent(Notes2,14,23and25)16,205,000916,550,0008
and23)--374,085-Loansanddebts-noncurrent(Notes15,23and26)63,749,3923369,385,61034
Derivativefinancialassetsforhedging-noncurrent(Notes2,23and24)759---Capitalleaseobligations-noncurrent(Notes2and16)248,664-1,135,0671
Financialassetscarriedatcost-noncurrent(Notes2,10and23)371,367-371,367-
Investmentsaccountedforbytheequitymethod(Notes2and11)9,310,86459,255,1825Totallong-termliabilities,netofcurrentportion80,214,4854287,096,00243
Otherfinancialassets-noncurrent13,659-12,980-
OTHERLIABILITIES
Totallong-terminvestments9,696,649510,013,6145Accruedpensioncosts(Notes2and17)6,900,73246,378,7173
Deferredprofitsonsale-leaseback(Note2)4,735,67535,312,8533
PROPERTIES(Notes2,12and26)Others749,087-1,061,014-
Cost
Land1,678,78311,688,2831Totalotherliabilities12,385,494712,752,5846
Buildings7,245,11747,260,0914
Machineryandequipment4,103,11424,159,8962Totalliabilities138,183,58373155,630,51877
Flightequipment198,224,033104198,271,14398
Furniture708,947-693,434-STOCKHOLDERS'EQUITY
Leasedflightandotherequipment14,056,268714,291,7357Capitalstock,NT$10.00parvalue;authorized-5,200,000thousandshares;
Leaseholdimprovements1,044,5531996,380-issuedandoutstanding-5,200,000thousandsharesin2012and4,631,622
Revaluationincrement41,298-41,298-thousandsharesin201152,000,0002746,316,22423
Totalcostandrevaluationincrement227,102,113119227,402,260112Capitalsurplus1,405,3941422,101-
Accumulateddepreciation102,287,5215492,020,66845Retainedearnings
124,814,59265135,381,59267Legalreserve316,010-799,630-
Constructioninprogressandprepaymentsforequipment(Note27)8,740,85855,150,7833Specialreserve3,873,37025,162,0713
Unappropriatedearnings(accumulateddeficit)58,804-(1,772,321)(1)
Netproperties133,555,45070140,532,37570Totalretainedearnings4,248,18424,189,3802
Otherequity
INTANGIBLEASSETSCumulativetranslationadjustments(2,599,694)(1)(1,598,197)(1)
Computersoftware,net(Note2)408,222-385,726-Netlossnotrecognizedaspensioncost(2,917,215)(2)(2,325,184)(1)
Deferredpensioncost(Note2)59,136-118,271-Unrealizedvaluationlossonfinancialinstruments(182)-50,010-
Unrealizedrevaluationincrement41,298-41,298-
Netintangibleassets467,358-503,997-Companysharesheldbysubsidiariesreclassifiedtotreasurystock(36,554)-(36,554)-
Totalotherequity(5,512,347)(3)(3,868,627)(2)
OTHERASSETS
Deposits(Note27)10,196,933510,521,7945Totalstockholders'equity52,141,2312747,059,07823
Deferredincometaxassets-noncurrent(Notes2and20)6,834,27346,695,4233
Restrictedassets-noncurrent(Notes25and26)545,460-660,980-
Otherassets(Note2)711,3871838,9101
Netotherassets18,288,0531018,717,1079
TOTAL$190,324,814100$202,689,596100TOTAL$190,324,814100$202,689,596100
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
CHINA AIRLINES, LTD.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2012 AND 2011
(In Thousands of New Taiwan Dollars, Except Earnings [Loss] Per Share)
2012 2011
Amount % Amount %
REVENUES (Notes 2 and 25)
Passenger $ 86,621,265 65 $ 80,825,429 61
Cargo 40,808,925 31 46,388,470 35
Others 5,178,641 4 5,026,570 4
Total revenues 132,608,831 100 132,240,469 100
COSTS (Notes 9, 21 and 25)
Flight operations 81,912,308 62 83,461,996 63
Terminal and landing fees 19,379,015 15 18,894,391 14
Passenger services 8,286,577 6 7,904,359 6
Aircraft maintenance 11,001,675 8 11,882,485 9
Others 2,846,879 2 2,872,199 2
Total costs 123,426,454 93 125,015,430 94
GROSS PROFIT 9,182,377 7 7,225,039 6
OPERATING EXPENSES (Notes 21 and 25)
Marketing and selling 6,251,334 5 6,178,062 5
General and administrative 2,587,953 2 2,611,841 2
Total operating expenses 8,839,287 7 8,789,903 7
OPERATING INCOME (LOSS) 343,090 - (1,564,864) (1)
NONOPERATING INCOME AND GAINS
Interest income 180,921 - 159,157 -
Investment income recognized under the equity method (Notes 2
and 11) 652,849 1 662,566 1
Dividend income (Note 2) 186,901 - 97,529 -
Gain on disposal of properties, net (Notes 2 and 25) 7,388 - 41,505 -
Valuation gain on financial instruments, net (Notes 2 and 5) 472,167 - 6,057 -
Foreign exchange gain, net 3,556 - 189,217 -
Others 612,480 1 541,251 -
Total nonoperating income and gains 2,116,262 2 1,697,282 1
NONOPERATING EXPENSES AND LOSSES
Interest expense (Note 25) 2,163,563 2 2,244,708 2
Others 160,446 - 235,944 -
Total nonoperating expenses and losses 2,324,009 2 2,480,652 2
PRETAX INCOME (LOSS) 135,343 - (2,348,234) (2)
INCOME TAX EXPENSE (BENEFIT) (Notes 2 and 20) 76,539 - (393,963) (1)
NET INCOME (LOSS) $ 58,804 - $ (1,954,271) (1)
2012 2011
Before Tax After Tax Before Tax After Tax
EARNINGS (LOSS) PER SHARE (NEW TAIWAN DOLLARS;
Note 22)
Basic and diluted $ 0.03 $ 0.01 $ (0.51) $ (0.42)
The accompanying notes are an integral part of the financial statements.

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CHINAAIRLINES,LTD.
STATEMENTSOFCHANGESINSTOCKHOLDERS'EQUITY
YEARSENDEDDECEMBER31,2012AND2011
(InThousandsofNewTaiwanDollars)
UnrealizedCompanyShares
RetainedEarnings(AccumulatedDeficit)(Notes2and18)ValuationGainHeldby
UnappropriatedCumulativeNetLossNotorLossonUnrealizedSubsidiaries
CapitalStockIssuedandOutstandingEarningsTranslationRecognizedasFinancialRevaluationReclassifiedintoTotal
SharesCapitalSurplus(AccumulatedAdjustmentsPensionCostInstrumentsIncrementTreasuryStockStockholders'
(InThousands)Amount(Note18)(Notes2and18)LegalReserveSpecialReserveDeficit)Total(Note2)(Note2)(Note2)(Notes2and12)(Notes2,18and19)Equity
BALANCE,JANUARY1,20114,631,622$46,316,224$392,822$-$-$7,996,300$7,996,300$(3,370,031)$(2,621,974)$(64,422)$50,335$(36,554)$48,662,700
Appropriationofthe2010earnings
Legalreserve---799,630-(799,630)-------
Specialreserve----5,162,071(5,162,071)-------
Cashdividends-NT$0.4pershare-----(1,852,649)(1,852,649)-----(1,852,649)
Translationadjustmentsoninvestmentsinsharesofstocks-------78,226----78,226
Translationadjustmentsonaforeignoperatingentity-------1,693,608----1,693,608
CashdividendsreceivedbysubsidiariesforholdingtheCompany's
shares--1,156---------1,156
Compensationrecognizedforemployeestockoptions--28,123---------28,123
Netlossin2011-----(1,954,271)(1,954,271)-----(1,954,271)
Changeinunrealizedvaluationlossonavailable-for-salefinancialassets---------(17,583)--(17,583)
Changeinunrealizedgainoncashflowhedgingfinancialinstruments---------124,072--124,072
Revaluationincrementtransferredtootherincomeondisposalof
revaluedassets----------(9,037)-(9,037)
Changeinnetlossnotrecognizedaspensioncost--------348,467---348,467
Unrealizedgainonfinancialinstrumentsofequity-methodinvestees---------7,943--7,943
Netlossnotrecognizedaspensioncostofequity-methodinvestees--------(51,677)---(51,677)
BALANCE,DECEMBER31,20114,631,62246,316,224422,101799,6305,162,071(1,772,321)4,189,380(1,598,197)(2,325,184)50,01041,298(36,554)47,059,078
Appropriationofthe2011earnings
Legalreserve---(483,620)-483,620-------
Specialreserve----(1,288,701)1,288,701-------
Issuanceofcommonstockforcash-February10,2012568,3785,683,776983,293---------6,667,069
Translationadjustmentsoninvestmentsinsharesofstocks-------(62,809)----(62,809)
Translationadjustmentsonaircraftrequiredtobetreatedasforeign
operatingentity-------(938,688)----(938,688)
Netincomein2012-----58,80458,804-----58,804
Changeinunrealizedvaluationlossonavailable-for-salefinancialassets---------(27,716)--(27,716)
Changeinunrealizedgainoncashflowhedgingfinancialinstruments---------(18,371)--(18,371)
Changeinnetlossnotrecognizedaspensioncost--------(546,675)---(546,675)
Unrealizedlossonfinancialinstrumentsofequity-methodinvestees---------(4,105)--(4,105)
Netlossnotrecognizedaspensioncostofequity-methodinvestees--------(45,356)---(45,356)
BALANCE,DECEMBER31,20125,200,000$52,000,000$1,405,394$316,010$3,873,370$58,804$4,248,184$(2,599,694)$(2,917,215)$(182)$41,298$(36,554)$52,141,231
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 58,804 $ (1,954,271)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income taxes 16,541 (458,618)
Depreciation and amortization 10,889,199 10,403,689
Provision for doubtful accounts - 72,017
Compensation cost of employee stock options - 28,123
Valuation gain on financial instruments, net (472,167) (6,057)
Investment income recognized under the equity method (652,849) (662,566)
Cash dividends received from equity-method investees 502,442 436,190
Loss on inventories, properties and idle properties 125,259 298,396
Gain on disposal of properties (7,388) (41,505)
Gain on disposal of idle properties, net (22,929) (75,159)
Amortization of deferred profit on sale-leaseback (577,178) (629,707)
Amortization of deferred credits (66,414) (66,414)
Net changes in operating assets and liabilities:
Financial assets and liabilities held for trading 2,871,376 (2,972,745)
Notes and accounts receivable 2,664,802 1,640,821
Notes and accounts receivable - related parties (102,249) 215,403
Other receivables 118,909 109,726
Inventories (5,030) (2,047,680)
Other current assets (32,798) (874,121)
Accounts payable (198,941) 228,393
Accounts payable - related parties 219,748 (104,262)
Accrued expenses (2,500,579) (7,949)
Advance ticket sales (1,602,882) 121,461
Other current liabilities 254,599 (16,565)
Accrued pension cost 34,474 139,409
Other liabilities (231,853) (177,667)
Net cash provided by operating activities 11,282,896 3,598,342
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for by the equity method (30,409) (200,000)
Increase in other financial assets - noncurrent (679) -
Acquisition of properties (6,437,786) (5,762,965)
Proceeds of the disposal of properties 206,590 218,310
Increase in computer software (61,313) (58,430)
Proceeds of the disposal of idle properties 27,861 93,165
Decrease in refundable deposits 324,861 764,204
Increase in deferred charges (8,870) (23,430)
Decrease in restricted assets 115,520 344,964
Net cash used in investing activities (5,864,225) (4,624,182)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans 1,600,000 (1,100,000)
Decrease in short-term bills payable - (1,249,625)
Proceeds of long-term debts 12,668,866 17,476,748
Repayments of long-term debts and capital lease obligations (19,838,897) (16,518,938)
Issuance of bonds payable 5,785,000 6,000,000
Repayment of bonds payable (12,200,000) (3,500,000)
Increase (decrease) in guarantee deposits received (13,660) 26,070
Decrease in deferred profits on sale-leaseback - (186,997)
Cash dividends - (1,852,649)
Issuance of common stock for cash 6,667,069 -
Net cash used in financing activities (5,331,622) (905,391)
EFFECT OF EXCHANGE RATE CHANGES (23,082) 81,648
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 63,967 (1,849,583)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,947,397 10,796,980
CASH AND CASH EQUIVALENTS, END OF YEAR $ 9,011,364 $ 8,947,397
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 2,157,303 $ 2,267,516
Less: Capitalized interest 90,300 75,309
Interest paid (excluding capitalized interest) $ 2,067,003 $ 2,192,207
Income tax paid $ 65,345 $ 67,179
NONCASH FINANCING ACTIVITIES
Current portion of long-term loans and debts $ 16,671,452 $ 18,047,762
Current portion of capital lease obligations $ 840,208 $ 1,185,639
Current portion of bonds payable $ 6,130,000 $ 12,200,000
The accompanying notes are an integral part of the financial statements.

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NOTES TO FINANCIAL STATEMENTS
(In New Taiwan Dollars, Unless Stated Otherwise)
1. ORGANIZATION AND OPERATIONS
China Airlines, Ltd. (the “Company”) was founded in 1959 and its stocks are listed on the Taiwan Stock Exchange. The Company primarily
provides air transport services for passengers and cargo. Its other operations include (a) mail services; (b) ground services and routine aircraft
maintenance; (c) major maintenance of flight equipment; (d) communications and data processing services to other airlines; (e) sale of aircraft parts,
equipment and entire aircraft; and (f) lease of aircraft.
The major stockholders of the Company are the China Aviation Development Foundation (CADF) and the National Development Fund (NDF),
Executive Yuan. As of December 31, 2012 and 2011, CADF held 35.91% and 39.10% of the Company’s shares, respectively, and NDF held
9.99% and 11.22% of the Company’s shares, respectively. The Company had 10,866 and 10,578 employees as of December 31, 2012 and 2011,
respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by
Securities Issuers, the Business Accounting Law, Guidelines Governing Business Accounting and accounting principles generally accepted in the
Republic of China. Significant accounting policies are summarized as follows:
Foreign Currencies and Foreign Operations
The Company maintains its accounts and expresses its financial statements in New Taiwan dollars. Nonderivative foreign-currency transactions
are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange differences arising from the
settlement of foreign-currency monetary assets and liabilities are recognized in profit or loss in the settlement period.
At the balance sheet date, foreign-currency monetary assets and liabilities are revalued using prevailing exchange rates and the exchange differences
are recognized in profit or loss.
At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities which are measured at fair value, are
revalued using prevailing exchange rate. For a nonmonetary financial asset with the changes in fair value recognized as an adjustment to
stockholders’ equity, exchange differences are recognized as an adjustment to stockholders’ equity. For a nonmonetary financial asset at fair value
through profit or loss, exchange differences are recognized in the income statement. Foreign-currency nonmonetary assets and liabilities that are
carried at cost are reported using the historical exchange rate on the date of transaction.
Equity-method investments in foreign subsidiaries/affiliates are recorded in New Taiwan dollars using the rates of exchange in effect on acquisition
dates. On the balance sheet date, the investments and the related equity in net income or net loss are restated at the prevailing exchange rates and
weighted-average rates, respectively, and resulting differences are recorded as translation adjustments under stockholders’ equity.
Under a regulation by the Securities and Futures Bureau, the carrying amount of an aircraft acquired and the related U.S. dollar-denominated
obligation incurred for the acquisition are accounted for as an investment in a foreign operating entity if the Company’s use of the aircraft results in
generating revenues and incurring expenses mainly in U.S. dollars. On the balance sheet date, the carrying amount of the aircraft and the related
liability are restated at balance sheet date rates. The difference is recognized in stockholders’ equity as translation adjustment.
Accounting Estimates
Under the above guidelines, law and principles, certain estimates and assumptions have been used for the allowance for doubtful accounts,
allowance for loss on inventories, depreciation of properties, impairment of assets, accrued expenses - frequent flyer program, pension cost, income
tax, loss on pending litigations, bonuses of employees, etc. Actual results could differ from these estimates.
Current and Noncurrent Assets and Liabilities
Current assets include cash, cash equivalents and those assets held primarily for trading purposes or to be realized, sold or consumed within one
year from the balance sheet date. All other assets such as properties and intangible assets are classified as noncurrent. Current liabilities are
obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as
noncurrent.
Cash Equivalents
Cash equivalents, consisting of commercial paper, are highly liquid financial instruments with maturities of three months or less when acquired and
with carrying amounts that approximate their fair values.
Financial Instruments at Fair Value Through Profit or Loss
Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (FVTPL) include financial assets or
financial liabilities held for trading and those designated as at FVTPL on initial recognition. Financial instruments at FVTPL are initially
measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities at FVTPL are
remeasured at fair value, with changes in fair value recognized directly in profit or loss in the year in which they arise. Cash dividends received
subsequently (including those received in the year of investment) are recognized as income for the year. All regular way purchases or sales of
financial assets are recognized and derecognized on a trade date basis.
Derivative instruments that do not meet the criteria for hedge accounting are classified as financial assets or liabilities held for trading.
Fair values are determined as follows: (a) listed stocks - at closing prices as of the balance sheet date; (b) beneficial certificates (open-end funds) -
at net asset value as of the balance sheet date; and (c) convertible bonds - at values determined using valuation techniques.
Hybrid instruments are financial assets designated as at fair value through profit or loss, and these are measured at fair value on initial recognition.
Fair value of hybrid instruments is estimated using valuation techniques incorporating estimates and assumptions that are consistent with prevailing
market conditions.
Available-for-sale Financial Assets
Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition or
issuance. When fair value is remeasured, the changes in fair value are excluded from earnings and reported as a separate component of
stockholders’ equity. The accumulated gains or losses are recognized as earnings when the financial asset is derecognized from the balance sheet.
A regular way purchase or sale of financial assets is recognized and derecognized using transaction date accounting.
Cash dividends are recognized as investment income on ex-dividend dates but are accounted for as reductions of the original cost of investment if
these dividends are declared on the investees’ earnings attributable to periods before the purchase of the investments. Stock dividends are recorded
as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated on the basis of the new number
of shares.
Hedge Accounting
The Company enters into some derivative transactions that aim to manage interest rates, exchange rates, fuel prices, and other factors affecting gains
or losses on assets and liabilities. The hedging transactions are defined as cash flow hedge. When entering into hedging transactions, the
Company has prepared official documents that describe the hedging relationship between hedging instruments and items been hedged, objective of
risk management, hedging strategy, and the way to evaluate the effectiveness of the hedging instrument.
Under cash flow hedge accounting, the profit or loss on the hedging instrument is recognized as profit or loss in the same period when the profit or
loss on the hedged item is affected. The profit or loss on the hedging instrument is recognized as an adjustment to stockholders’ equity and
reclassified to current profit or loss when forecast transactions that are being hedged affect profit or loss. If a hedge of a forecast transaction
subsequently results in the recognition of a financial asset or a financial liabilities, the associated gains or losses that were recognized directly in
equity shall be reclassified to profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss.
If a hedge of a forecast transaction subsequently results in the recognition of a nonfinancial asset or a nonfinancial liability, it removes the
associated gains and losses that were recognized directly in equity and includes them in the initial cost or changed carrying amount of the asset or
liability. However, if an entity expects that all or a portion of a loss recognized directly in equity will not be recovered in one or more future
periods, it shall reclassify the amount that is not expected to be recovered into profit or loss.
If the hedging instrument expires, is sold or terminated or no longer meets the hedge accounting criteria, the cumulative profit or loss on the hedging
instrument that is effective and directly recognized as an adjustment to stockholders’ equity is still recognized as an adjustment to stockholders’
equity before forecast transactions occur and then reclassified to current profit or loss when forecast transactions occur.
Financial Assets Carried at Cost
Equity investments, such as non-publicly traded stocks, with fair value that cannot be reliably measured, are carried at original cost. Cash
dividends are recognized as investment income on ex-dividend dates but are accounted for as reductions of the original investment costs if these
dividends are declared on the investees’ earnings attributable to periods before the purchase of the investments. Stock dividends are recorded as an
increase in the number of shares held and do not affect investment income. The cost per share is recalculated on the basis of the new number of
shares. If there is objective evidence that a financial asset is impaired, a loss is recognized. However, the recording of a subsequent recovery of
fair value is not allowed.
Impairment of Accounts Receivable
On January 1, 2011, the Company adopted the third time revised of Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial
Instruments: Recognition and Measurement.” One of the main revisions is that the impairment of receivables originated by the Company is
subject to the provisions of SFAS No. 34. The Company should evaluate accounts receivable for individual and collective impairment at the end
of each reporting period. When there is objective evidence of a decrease in the estimated future cash flow of accounts receivable as a result of one
or more events that occurred after the initial recognition of the accounts receivable, the accounts receivable are deemed to be impaired.
The Company has a short average collection period; thus, the impairment loss recognized is the difference between the carrying amount of accounts
receivable and estimated future cash flows, without considering the discounting effect. Changes in the carrying amount of the allowance account
are recognized as bad - debt loss, which is recorded in operating expenses - general and administrative. When accounts receivable are considered
uncollectable, the amount is written off against the allowance account.
Impairment of Assets
Statement of Financial Accounting Standards No. 35 - “Impairment of Assets” requires the Company to determine on each balance sheet date if
properties, intangible assets and other assets (including a cash-generating unit) have been impaired. If there is impairment, then the Company must
calculate the recoverable amount of the asset or the cash-generating unit. An impairment loss should be recognized whenever the recoverable
amount of the asset or the cash-generating unit is below the carrying amount, and this impairment loss is either charged to accumulated impairment
or used to reduce the carrying amount of the asset directly. If the Company revalues properties as required by law, an impairment loss on revalued
properties should be charged to unrealized revaluation increment on properties, and if the capital surplus - revaluation increment on properties is not
enough, the portion that exceeds the balance will be recognized as loss in the statement of income. After the recognition of an impairment loss, the
depreciation (amortization) charged to the asset should be adjusted in future periods for the revised asset carrying amount (net of accumulated
impairment), less its salvage value, and calculated on a systematic basis over its remaining service life. If asset impairment loss (excluding
goodwill) is reversed, the increase in the carrying amount resulting from reversal is credited to current income. However, loss reversal should not
be more than the carrying amount (net of depreciation) had the impairment not been recognized.
Inventories
Inventories are primarily expendable and nonexpendable parts and materials, supplies used in operations and items for in-flight sale. These parts,
materials and supplies are valued at the weighted-average cost less allowance for obsolescence. Items for in-flight sale are stated at the lower of
cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The
costs of inventories sold or consumed are determined using the weighted-average method.

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