In the April 2008 edition of the Empire Club of Canada forum, former chairman of the International Accounting Standards Board (IASB) Sir David Tweedie famously said: ‘One of my great ambitions before I die is to fly in an aircraft that is on an airline’s balance sheet.’
This quote, likely said in a jocular manner, is frequently mentioned in any conversation about IFRS 16 – a new amendment to the International Financial Reporting Standards that radically changes the method in which operating leases are dealt with.
Making this point using the airline industry is understandable, given that it is common practice for airlines to operate aircraft under short-term leases that are not reflected on their balance sheets. As IFRS 16 took effect on 1 January 2019, Sir Tweedie has finally realised his lifelong desire. Companies will now have to recognise the financial commitment that accompanies lease agreements on their