“Neo and Max … Not Expected to Directly Impact Values” – Avolon

The publicly available analysis from the Irish lessor examines how values of previous generations of aircraft were impacted by new models, specifically the B737. By reviewing the behavior of B737-200ADV and DC9 values in the context of the launch and service entry of the B737-300 in the 1980s, the values of the former group were not directly affected by the newer model and indeed showed some strength. However, in the 1980s there was a notable upturn in the economic cycle with deregulation in the U.S. also accelerating the expansion of carriers. The significant fall in oil prices in 1986 also prompted a surge in activity and as such the older types were not economically disadvantaged by the newer models. The B737-200ADVs and DC9s in the mid to late 1980s were also the subject of modifications through hushkits which ensured continued compliance with new noise restrictions then coming into force in North America and Europe. However, in the 1990s the development of the B737NG and the rise in the price of fuel saw the B737-200ADVs and DC9s being increasingly replaced with newer models.