Point of view — Aviation implications of the new leasing standard

Published on: 14 Jan, 2016

IFRS 16 Leases has been published and is effective for periods beginning on or after 1 January 2019 (subject to EU endorsement).  This publication highlights issues from the new leasing standard that will be of interest to those in the aviation sector.

  • For lessees with operating leases an 'aircraft' (right-of-use) asset will come on balance sheet together with a lease liability.
  • Significant KPIs including ROCE will be affected - for some it will increase, for others decrease.
  • For foreign currency leases there will be increased profit and loss volatility as the lease liability is retranslated.
  • For a 'wet' lease only payments for the aircraft need to be recognised, the service element may be separated with the accounting unchanged.
  • The changes for an entity and the comparison with peers will need to be explained to stakeholders.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.