Background: On January 1, 2019, IFRS 16 replaced the previous accounting standard IAS 17. This shift has introduced a significant change in lease accounting, particularly for sectors such as the airline industry. The new standard requires that all lease contracts be reported on the balance sheet, which has had a notable impact on several key financial ratios.

Purpose: The purpose of this study is to investigate how the implementation of IFRS 16 has influenced financial ratios such as EBITDA, EBIT, ROE, ROA, and the debt ratio for European airlines, with consideration given to the effects of the Covid-19 pandemic.

Method: This study applies a quantitative method based on data collected from 20 European airlines for the fiscal years 2016 to 2023. The data were obtained from established databases including Retriever Business, Orbis, and publicly available annual reports. The data were then analysed using relevant statistical models.

Results: The study indicates that IFRS 16 has had a considerable impact on the financial ratios of European airlines. The findings reveal an increase in the debt ratio, EBIT, and EBITDA, along with a decrease in ROA. No statistically significant change was observed for ROE. During 2020–2021, both EBITDA and ROA declined markedly, coinciding with the Covid-19 pandemic.

Conclusion: This study addresses a research gap by examining the long-term effects of IFRS 16 in relation to the Covid-19 pandemic. It emphasises the importance of considering external events when evaluating the impact of changes in accounting standards.