December 11, 2007, Taipei, Taiwan ¡V The Board of Directors of China Airlines today approved to sign a Letter of Intent (LOI) with Airbus for the purchase of twenty A350-900s, a brand-new generation of medium-capacity long-haul jetliners. The move re-affirms CAL¡¦s determination to improve and modernize its fleet, expand its markets, and meet passenger demand, in order to strengthen its position as a national carrier and to enhance Taiwan¡¦s role as a regional Asia-Pacific aviation hub.

The LOI signed by China Airlines includes fourteen firm orders and six options, at a total list price of US$4.2 billion. These advanced modern airplanes will be introduced from 2015 to 2020, replacing the current A340-300 fleet and expanding our mid-haul and long-haul services.

The new jetliners will be powered by the latest technology British Rolls-Royce Trent 1883 engines. For pilot operation, the A350-900 has high commonality with CAL¡¦s A340 and A330 aircraft, which will save substantial training costs through a pilot transitioning program.

The new jetliners will provide a two-class service, including Business and Economy class, with a higher capacity of revenue passenger volume than the Airbus 340 and 330, and providing a new experience of comfort for our passengers.

China Airlines began its aircraft evaluation process in early 2007, as it sought replacements for its medium-capacity long-haul fleet. Flight safety, marketing, service and finance all played a major role in this timely decision by China Airlines.

¡¨Safety, discipline, innovation, service and spirit of teamwork are CAL¡¦s core values,¡¨ said Ringo Chao, Chairman and President of China Airlines. ¡§China Airlines is committed to providing its passengers with the best possible service and flight safety.¡¨

Currently, CAL¡¦s fleet totals 68 aircraft, including 48 passenger aircraft and 20 freighters, with an average age of just 5.6 years. Its passenger aircraft fleet consists of 15 B747-400s, 11 B737-800s, 6 A340-300s and 16 A330-300s. As for cargo operations, CAL deploys the largest fleet of Boeing 747-400F freighters in the world. By the end of the year, the China Airlines passenger and cargo network will cover 68 destinations in 25 countries.

In 2006, China Airlines totally carried 8570,000 passengers. For cargo, it reached 62.9-billion Freight Revenue Tonne Kilometer (FRTK). CAL¡¦s passenger operation was ranked as the 21st largest in the world, and its cargo operation was 6th largest in the world in 2006, according to IATA statistics report.