Emirates Airline: International Financial Recording Standards


Globally, most countries have accommodated the use of International Accounting Standards (IAS) as the primary source of guidelines for making effective financial statements for businesses at the end of every financial period. Many users of the financial reports rely on them to retrieve information that is critical in their decision-making processes hence the need for a uniform step-by-step guideline on the process of filling such information. The International Accounting Standards Board (IASB) provides the laws that guide accountants in recording financial events. It is under this motive that the International Financial Recording Standards Foundation (IFSB Foundation), in liaison with the International Accounting Standards Board (IASB), makes the International Financial Recording Standards (IFRS) provide leeway on the process of recording financial transactions. This report analyzes the use of IFSB guidelines (IFRS 12, IAS 24, IFRS 16, IFRS 7, IAS 19, and IAS 37) in the financial reporting of Emirates Airlines for the accounting year 2020.

Emirates airline’s Use of Financial Reporting Standards in its Statements of Financial Position

Background of Emirates Airline

Emirates Airline is among the most influential airlines in the world. It serves a large audience of travelers across 155 cities in 81 countries, and its headquarters are located in Garhoud, Dubai. It is a subsidiary of The Emirates Group, making it the largest airline business in the Middle East. The airline interacts with other companies and uses the IFRS in its financial accounting. Hence, Emirates Airline is suitable for the study and analysis of the application of the IFRS in the recording of financial records. This report analyzes various ways the business uses to meet transparency, accountability, and efficiency in delivering crucial information to its stakeholders. The use of IFRS in the accounting process of Emirates Airlines aids in having coherent and consistent reports that indicate the true nature of the business.


IFRS 12 is a financial standard that provides information on how a company should display its disclosure of its interests in subsidiaries, joint arrangements, associates, and unconsolidated structures with other entities. The rule was imposed by the IFRS Foundation in May 2011 and became effective for the financial period beginning on January, 1st, 2013. IFRS 12 indicates that disclosures are presentable as a series of objectives with detailed guidance on satisfying those objectives. Its main aim is to endure detailed information that aids the user of the financial reports in analyzing the risks associated with the business interests of other associates and indicating the impacts of those interests on its financial position, performance, and cash flow (Tsalavoutas et al., 2020). It is a requirement for companies whose financial reports do not meet the intended objectives of the IFRS 12 to provide any additional information that may help the user critically assess the implications of the relationship with other partners.

The wake of COVID- 19 in February 2020 reduced the number of travelers since many nations shut their borders to prevent the further spread of the virus. The pandemic affected entire the business world and contributed to the death of many people in society since there was no effective medicine or discovery of the vaccine within its early stages. Emirates and Dubai National Air Travel Agency (dnata) felt the pinch of the pandemic and did not because most of their customers ceased movement during the period. In 2020’s financial report, Emirates Airlines acknowledges that the two are independent entities and are not a group as the IFRS defines (The Emirates Group Annual Report, 2020). It emphasizes that the two companies are under similar management; hence the Management Section in the report refers to them as the Emirates Group. Under IFRS 12, the financial reporting of Emirates Airlines provides additional information about the relationship with dnata to help the users of the report in making wise decisions.


IAS 24 was issued in November 2009 and started being incorporated into businesses by the financial analysts on 1 January 2011. The law requires that companies disclose transactions and outstanding balances with their related parties. IAS 24’s main objective is to ensure that businesses avail all the information that draws attention to the impact of the existing affiliated company on its financial position (Tsalavoutas et al., 2020). According to the standard, an entity is an individual or a company partisan to the current reporting business.

The person may own some management roles in the entity; hence, their decisions alter the profitability and losses of the company. They may also have control or joint control over the business’ operations, therefore significantly affecting the reporting entity. Conversely, a business may be related to the reporting company if they are members of the same group. Another reason may be that one company is an associate or a joint venture of the other, or both are joint ventures of another similar third-party business. Many other conditions may result in a link between two companies, as explained by IAS 24. However, the ones above are critical in the relationship between Emirates Airlines and Dubai National Air Travel Agency (dnata) and help evaluate Emirates’ financial reporting on DNATA’s impacts on its economic position.

IAS 24

Both Emirates and dnata are joint ventures of a similar third party since they are under the same management. Thus, Emirates airlines refer to the relationship as the Emirates Group under the Management Review section. Dnata increased its total revenue by 2% to AED14.8 billion. The business generated a profit of AED618 million as companies under the same management; the independent actions of the two entities affect each other. Emirates understands that when dnata creates profits, the two companies report a joint financial report under the management financial statement. Hence, Emirates has to play a critical role by informing its stakeholders about dnata’s performance, considering they are a joint venture of similar third-party management. IAS 24 provides that all companies linked together under a third party have to acknowledge one another’s impact on the financial position since the third party makes its statements from the drawing s of the two associates. Emirates incorporates the performance of dnata, especially in the catering department, since an increase in the profits through raises its gains.


Additionally, IFRS 16 provides guidelines on the leases sector of a company. Its use came into effect on 1 January 2019 with permission for earlier use as long as the reporter adheres to IFRS 15. Its goal is to ensure that the reporter provides factual and truthful information revolving around equipment leasing (Houqe, 2018). The users of financial information assess the timing, the risks associated with leasing, and the amount that the lease pays to use the products. IFRS 16 is important for business use since it creates transparency within the organization. Emirates airlines reported leasing the 26 Boeing 777-300 ERs planes to facilitate its operations. The business identifies that leasing is expensive and has thus started a program to purchase its fleet deliverable from 2023. The company also recognizes the assets and liabilities that arise from the lease and reports them in the financial report.


On the other hand, IFRS 7 requires a constituting company to disclose complete information about financial instruments at its exposure, and it explains all the benefits and losses attributable to the use of the tool. It was issued by the IFRS Foundation in August 2005 and became effective on 1 January 2007. The disclosure requires the firm to provide quantitative and qualitative information to ensure that all parties receive first-hand information that aids them in investment decision-making. It entails two categories of information that the financial reporter must provide in their analysis. First, the reporter must indicate the nature of the financial instrument and the extent of the risk attached to the item. According to IFRS 7, the statement of a company’s financial position must disclose the importance of the financial instrument to its economic position and performance. Concerning this, Emirates airlines disclose all information essential for its development in the airline industry. It provides both mathematical and solid information about its assets and how they positively and negatively contribute to the growth of the profit, including the fleets and services it offers.

IAS 19

Moreover, Emirates airlines comply with the IAS 19, where the financial reporter of any existing entity must account for the employee benefits. The employee benefits may be long-term or short-term, whereas instant ones include wages, salaries, and post-payment benefits such as retirement. Conversely, the long-term benefits include long-service leaves and termination benefits (Tsalavoutas et al., 2020). The law states that the financial reporter must acknowledge the employment benefits once the employee earns them rather than when the company pays for them. Indicating these benefits once the employee makes them helps the business be up-to-date with the information regarding its financial position. Thus, the users of the accounting data may draw critical decisions based on their findings. Emirates understands its obligation to ensure that all its dependents receive the information regarding employee benefits on time through periodic reporting. Furthermore, the business identifies all the benefits attributable to its employees, including sustainability issues, in the annual report for the financial year 2019-2020.

IAS 37

Lastly, IAS 37 offers guidelines on an organization’s provisions, contingent liabilities, and contingent assets within its financial reporting. It ensures that the provisions are measurable at the best estimates of expenditure that the company requires to settle the present obligation. It evaluates the current value of the expenses that may pay the responsibility, with the time value of the money being a key area of concern. The standard started functioning on 1 January 1999 but was composed by the International Accounting Standards Board in 1998. Emirates Airline applied the law in its 2020 financial reporting to indicate the time value of the new fleets that it will acquire from 2023. Additionally, the airline places an order for 50 A350 XWB s and 30 Boeing 787 Dreamliner aircraft, worth two years of a successful partnership between Emirates and the Flydubai US$ 24.8bn. Thus, identifying the worth of the provisions is critical for all businesses during financial reporting.


To create uniformity in different sectors, businesses have to adhere to the financial reporting requirements in the International Financial Recording Standards and the International Accounting Standards. The uniformity enhances transparency, accountability, and efficiency in the delivery of the statements of financial position. The detailed records are essential for users of financial information such as employees, owners, potential investors, and suppliers, among other stakeholders that rely on the data to compute decisions regarding their relationship with the businesses. Some of the close regulations to accounting information are divided into various sections of the IFRS and IAS, such as IFRS 12, IAS 24, IFRS 16, IFRS 17, IAS 19, and IAS 37. The report above indicates how Emirates airlines adhere to these sections of financial reporting standards.


Houqe, N. (2018). A review of the current debate on the determinants and consequences of mandatory IFRS adoption. International Journal of Accounting & Information Management. Web.

The Emirates Group Annual Report2019-20. (2020). Web.

Tsalavoutas, I., Tsoligkas, F., & Evans, L. (2020). Compliance with IFRS mandatory disclosure requirements: A structured literature review. Journal of International Accounting, Auditing and Taxation, 40, 100338. Web.

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