The aim of this chapter is to provide an understanding of airline financial statements. The statements that are covered are the profit and loss or income statement, the balance sheet, and the cash flow statement. The value added statement and also cash value added (economic value added) are also explained, although they are not widely used by airlines. While there are a number of introductory texts on financial statements, they do not show examples using actual airline data or address specific airline industry aspects such as the treatment of frequent flyer programmes and aircraft leases. These will be discussed in this chapter, with the following chapter addressing the evaluation of airline performance by means of financial ratios.