Change in accounting rules could affect operating leases

AviaAM Leasing has warned that airlines may have to list operating leases on their balance sheet, once new financial reporting standards come into effect in 2019. Under existing rules, only finance leases are shown on the balance sheet. However, AviaAM Leasing said the International Accounting Standards Board (IASB) adopted new IFRS 16 accounting standards in 2016, which mean IFRS-compliant companies will have to bring their liabilities, including operating leases, onto their balance sheets. With almost 40% of the world fleet on lease, the new rules could burden airline balance sheets by US$500b or more, compared with an industry-wide profit of just $30b. The lessor said the change may bring more transparency to airline cost structures. <br/>