The impact of IFRS 16 on airline companies: an exploratory study in the Middle East
by Enas Alabood; Murad Abuaddous; Hanady Bataineh
International Journal of Economics and Business Research (IJEBR), Vol. 18, No. 1, 2019

Abstract: The announcement of the IFRS 16 came with a fundamental reformation of lease contracts. The scope of operating lease was narrowed by the IFRS 16 to a degree that could significantly influence a large number of firms worldwide. Accordingly, this study focuses on three airline companies which are operating in the Middle East to investigate the impact of the IFRS 16's adoption. The study explores the expected outcome from capitalising the operating lease in terms of its impact on financial position and key financial ratios. Each of the three studied companies adopted different operating lease strategies which showed high 77%, moderate 21% and low 0% reliance on operating lease. This generates three different scenarios that have been explored in this study. The compatibility between Imhoff et al. (1991)'s model and the IFRS 16's requirements for lease capitalisation allowed for an adoption of siht model for the current study. Finding suggests that the IFRS 16's adoption will bring many challenges for airline companies. The results can provide an insight about the expected market's reaction to some radical changes in numbers caused by the adoption of the IFRS 16, as well as, the management's reaction for such adoption.

Online publication date: Sat, 06-Jul-2019

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Economics and Business Research (IJEBR):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email