Sustainable Development Strategies

We begin by focusing on the four key strategies of "fleet and network", "products and services", "brand awareness", and "group's business operations". By taking into consideration the resources available to the enterprise is limited, we continue to adjust our corporate resource allocation and attempt to create higher values for stakeholders, those values including "trust, human resources, cooperation, environment, and society". By creating values, we aim to fulfill our corporate vision of "becoming the preferred airlines in Taiwan", and upgrade ourselves to become the benchmark for Taiwan's sustainable enterprises.

Value Creation Model

As a leader in Taiwan's aviation industry, in order to make mutual prosperity with stakeholders, move towards sustainability and endeavor to create the sustainable value for all stakeholders, CAL develops Sustainability Strategy Framework to picture the sustainability context of CAL. To help all stakeholders understand the true value of CAL, CAL discloses its six capitals (Financial, Natural, Manufactured, Intellectual, Human, Social and Relationship) publicly.

True Value of China Airlines

CAL understands that externality measure is an important basis for valuing a company’s true earning and find out potential risks in future operations. Thus, in 2017, CAL introduced the True Value covered three dimensions such as economic value-add, environmental externality and social externality to evaluate its true earning of its overall operation(such as air transport, aviation maintenance, and passenger transport) from the value chain for monetizing the external environment and social costs and benefits.According to the result of the calculation, CAL's true earning in 2017 was around TWD 22 billion, showing an increase of TWD1.27 billion compared to traditional financial performance (EBITA). The benefit (positive) is TWD 17.7 billion more than cost (negative) which is TWD 16.4 billion. Due to the characteristics of the aviation industry,greenhouse gas (GHG) emissions and noise pollution were the main sources to generate the cost (negative). In the future, CAL will continue monitoring and view the True Value as an important tool for enforcing sustainable development.

Sustainable Development Goals

In our value creation model, we not only expect our corporate sustainable development strategies to bring about the growth of CAL, but also hope that the creation of value can fulfill our promises to the stakeholders. Among the 17 Sustainable Development Goals (SDGs) spearheaded by the United Nations, 12 of which are closely linked to our sustainable growth. We consider SDGs to be the long-term objectives of our sustainable strategy practices, and these goals will help us achieve our sustainable development commitments more efficiently.

Corporate Sustainability Management

CAL is deeply aware of the continuous and rapid changes of global environment. In the face of such challenging environment, it is CAL's responsibility to make a profit and promote economic, environmental, and social sustainability at national and international levels, and it is also the most important commitment CAL makes to stakeholders. In 2014, CAL established the Corporate sustainability Committee (see the figure below), the highest level of sustainability governing organization chaired by the President, to be responsible for sustainability development.

The committee was organized by six task forces which focus on sustainability improvement/implementation plan. The Committee holds at least two meetings every year and reports the implementation results for the year and the work plan for the following year to the Board of Directors on a regular basis.

The Risk Management Committee under the Board of Directors is then responsible for ruling on issues relevant to sustainability risks as well as opportunities. To improve CAL's competitiveness, the Board of Directors approved the Responsibility and Sustainable Development Best Practice Principles in 2016, which provides the highest guiding principles for the Company's sustainability development and applies to the Company's management of economic, environmental and social risks and effects. There are the progress of sustainability development in 2017:

  • The Chairperson appointed the Corporate Development Office take over the duty of Executive Secretary from Corporate Safety Office.
  • The committee was organized by six task forces based on business unit function and sustainability strategy which are Customer Relation, Human Resource, Supply Chain, Environment, Society and Corporate Governance. The Ground Service Division was included in Supply Chain task force in 2017 by considering labor service cooperation. The task forces are conducted by vice presidents and supervised by senior vice presidents which target to reinforce the relevance between sustainability and business.
  • CAL's sustainability strategy is echo to the UN's Sustainable Development Goals (SDGs).
  • CAL participated in initiatives taken by international organizations to learn industry trends and contribute to the amendments to national laws and regulations, further promoting sustainable development.
  • CAL updated the Corporate Social Responsibility and Sustainable Development Best Practice Principles according to the latest Corporate Social Responsibility Best Practice Principles released by Taiwan Stock Exchange (TWSE) and the Financial Supervisory Commission.

Governance Structure

Board of Directors

The Board of Directors is the highest governing body at China Airlines; it is responsible for developing and promoting major decisions and plans for the Company as well as its affiliated businesses. CAL convenes the meeting at least once per quarter according to Rules of Procedure for Board of Directors Meeting. Moreover, Directors are required to participate in relevant courses each year as required by the "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies" in order to keep abreast of the latest information and trends pertaining to corporate governance.

Note: Please refer to the 2016 China Airlines Annual Financial Report for the professional experience and other relevant information regarding Board members.

Personal Data of Directors of the Board

Board Diversity

Diversity Policy

China Airlines (Hereinafter “the Company”) advocates and respects director diversity policy, and is convinced that the diversity can improve the overall performance of the Company. Members of the Board of Directors shall be based on personal capability and the diversification from different aspects shall also be taken into consideration, including basic characteristics (e.g., age, gender, race, nationality, etc.), experience and skills (e.g., aviation, sea freight, transportation, finance and accounting, law and insurance, academia, electricity, technology, and public utilities), operation and management, leadership and decision-making, and crisis management ability.
To enhance capabilities among the Board of Directors for achieving ideal goals of corporate governance, the Company has set its "Rules for Corporate Governance" which clearly set forth that the Board as a whole should have the following capabilities:

1. The ability to make operational judgment.

2. The ability to perform accounting and financial analysis.

3. The ability to conduct management administration.

4. The ability to conduct crisis management.

5. Industrial knowledge.

6. Perspective of the international market.

7. The ability to lead.

8. The ability to make decisions.

Status of diversity among the Company's current Board members
Name of Board Member Gender Operations Management Perform Accounting And Financial Analysis Conduct Management Administration Conduct Crisis Management Industrial Knowledge Perspective Of The International Market Lead Make Decisions
Hsieh, Su-chien Male
Charles C.Y. ,Chen Male
Ting, Kwang-hung Male
Chen, Han-ming Male
Ko, Sun-ta Male
Wei, Yung-yeh Male
Lin, Su-ming Male
Wang, Shih-szu Female
Chung, Lo-min Male
Chang, Hsieh Gen-sen Female
Shen, Hui-ya Female

Note: ○ indicates has some capability.

Functional Committees of the Board

The Board of Directors is the highest governing body at CAL, it is responsible to supervise, evaluate, and resolve on material issues and guide management. CAL convenes the Board meeting at least five times every year and may convene extraordinary meetings in case of emergencies. Directors are required to attend related training courses each year as required by the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies to keep abreast of the latest trends and resources regarding corporate governance and stay competitive.

General Audit Office

To enforce corporate sustainability, the General Audit Office carries out audits of the corporate governance system regularly or from time to time to prevent fraudulent activities and corruption. The results of audits are continually followed and required to be corrected by the given time limit. The audited cases in 2017 are summarized below by category. All of the cases have been corrected and reported to the General Audit Office for approval.

The General Audit Office also establishes a whistle-blowing mechanism to report fraudulent activities and unethical conducts.If finding that an employee of CAL or affiliates is misusing his/her position to take bribes or behave in violation of his/her duties for the purpose of obtaining unlawful benefits for himself/herself or others, which causes loss of CAL's property or reputation, an employee or an external partner, such as supplier, is encouraged to report through the management mechanism or independent mailbox published on the website (Stakeholder Contact-Business Conduct) and annual report (Corporate Governance Report-Corporate Governance).

Audited Cases in 2017

Type of Cases Number of Cases Audited Number of Comments Number of Corrections
Head Office 13 89 89
Branch 49 291 291
Subsidiary 16 103 103
Transaction in Derivative Products 12 None,all complying with regulations -
Procedures for Lending Funds and Making Endorsements / Guarantees 4 None,all complying with regulations -
Subsidiary Supervision and Management 1 None,all complying with regulations -
Information and Communication Security Inspection 1 None,all complying with regulations -
Procedures for Meetings of Board of Directors / Audit Committee / Remuneration Committee 3 None,all complying with regulations -
Procedures for Non-periodical Checks of Cash/Bills 6 None,all complying with regulations -
Total 105

CAL Group's Operation Achievements

After the cabin crew member strike and rounds of collective bargaining in 2016, CAL management and employees continuously strengthen the operating constitution through a variety of improvement strategies and integration of group business. With excellent performance of China Airlines, Mandarin Airlines and Tigerair Taiwan, the overall business of the Group was improved in 2017. The Group generated TWD156.12 billion for consolidated operating revenue, which was composed of TWD 102.22billion from passenger transport, TWD 43.33 billion from freight transport, and TWD10.57 billion from others. The consolidated net profit before tax was TWD 3.52 which deducted from TWD 53 billion impairment of Assets from selling old aircraft. CAL has profited before tax for three consecutive years.

Historical Financial Performance

  2015 2016 2017
Passenger revenue
94.96 95.28 102.22
Cargo revenue
40.29 35.72 43.34
Other revenue
9.8 10.08 10.57
Total operating revenue
145.06 141.08 156.12
Pretax profit
7.13 1.88 3.52
Operating revenue
133.44 127.52 139.82
Operating cost
115.82 112.25 121.85
Operating expense
9.74 10.80 10.61
Income tax expense
1.07 0.97 0.88
Salary expenses
14.19 14.18 15.18
An analysis of employee benefits expense by function
19.12 19.72 21.22
Post-employment benefits
0.72 1.05 1.24

Unit:TWD million