1. Evaluate, taking an agency theory lens, whether any permitted impairment reversals are aligned with shareholders interests. Explicitly explain and apply agency theory within your discussion.

Background info

COVID-19 has caused severe disruptions to the economies. Many companies are operating under significantly different circumstances to those existing 2 yrs ago. Especially, the airline industry has been severely impacted. With international borders closed, and state borders unpredictably opening and closing for much of the COVID-19 pandemic, an airline company recognised large impairment expenses in 2020 and 2021. The airline eported an impairment expense in 2021 of $270 million and in 2020 of $1,456 million. For the reporting period ended 30 June 2021, the airline reported an underlying loss before tax of $1.823 billion and a statutory loss before tax of $2.35 billion. With the re-opening of international borders in November 2021 the airline industry has started to rebuild. Airlines are spending considerable amounts to retrain and re-certify pilots who have not flown for more than 90 days, and to service mothballed aircraft to make them ready and safe for flights.