Implications of IFRS 16 on Indian Airline Industry

Abstract

The introduction of IFRS 16 has given a new dimension for lease accounting as against IAS 17. As a result of this, the advantage of off-balance sheet financing under IAS 17 has been superseded and all the leased items now needs to be recognised as leased assets and leased liabilities and lease operations needs to be capitalised. This paper explores the prospective effects of IFRS 16 - Leases, on financial performance of airline industry particularly Indigo Ltd. Using financial statements for the year 2018-2019 as per IAS17 and 2019-2020 as per IFRS 16, this study tries to assess the impact of IFRS 16 in the financial ratios, financial indicators, and financial status of Indigo Ltd. The effect on total liabilities, total assets, EBITDA are also analysed. The implications of IFRS 16 for financial statement users were also addressed in this study.