Air New Zealand Limited – Annual report – 30 June 2023
Industry: airlines
10. Property, Plant and Equipment (extract)
Residual values and useful lives
Estimates and judgements are applied by management to determine the expected useful lives of aircraft related assets. The useful lives are determined based on the expected service potential of the asset and lease term for leasehold improvements. The residual value, at the expected date of disposal, is estimated by reference to external projected values and is influenced by external changes to economic conditions, demand, competition and new technology. Residual values are denominated in United States dollars and are therefore sensitive to exchange fluctuations as well as movements in projected values. The impact of decarbonisation and climate-related risks on the Group’s aircraft related assets has also been considered when assessing residual values and useful lives. Residual values and useful lives are reviewed each year to ensure they remain appropriate. During the year ended 30 June 2023 the residual values of the aircraft were reassessed and depreciation expense was increased by $13 million (30 June 2022: decreased by $6 million).
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