Research
29 Feb 2016
Aircraft leasing sector
Implications of the new leasing standard
The International Accounting Standards Board (IASB) has published a new Standard, IFRS 16 Leases. For lessees the new Standard brings most leases on balance sheet under a single model similar to the existing finance lease model. However, lessor accounting with the distinction between operating and finance leases remains largely unchanged.
What does it mean for the aircraft leasing sector?
The new standard, in addition to bringing substantial new assets and liabilities onto airlines' balance sheets, will have an impact on reported profit and performance measures such as return on capital employed (ROCE). Perhaps most significantly the impact on individual airlines will depend on their particular financing and leasing structures and may be very different from the impact on their peers.
Airlines will need to assess early the impact on their results, and if possible on that of their peers, and to develop a plan for explaining this to their shareholders and other stakeholders.
