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AAR CORP. (NYSE: AIR) is a leading provider of aviation services, specializing in aftermarket support for commercial and government operators, maintenance, repair, and overhaul (MRO) facilities, and original equipment manufacturers (OEMs). The company offers a wide range of products and services, including inventory management, component repair, airframe maintenance, and mobility solutions. AAR serves a global customer base, including commercial airlines, government agencies, and foreign governments, with operations spanning North America, Europe, Africa, and Asia.
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Parts Supply - Provides new parts distribution and used serviceable material (USM) for commercial and government customers, supporting over 30 product lines and 300 Federal Supply Class codes.
- New Parts Distribution - Supplies OEM-certified parts for aviation needs.
- Used Serviceable Material (USM) - Offers cost-effective, high-quality used parts for aircraft maintenance.
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Integrated Solutions - Delivers supply chain management and flight hour component inventory and repair programs for commercial and government customers, including warranty claim management.
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Repair & Engineering - Offers maintenance, repair, and overhaul (MRO) services, including airframe maintenance, component repair, landing gear overhaul, and engineering solutions for commercial and military aircraft.
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Expeditionary Services - Designs and manufactures mobility products such as transportation pallets, containers, and shelters, primarily for military and humanitarian missions.
| Name | Position | External Roles | Short Bio | |
|---|---|---|---|---|
John M. Holmes ExecutiveBoard | Chairman, President, and Chief Executive Officer | None | Joined AAR in 2001; became CEO in 2018 and Chairman in 2023. Previously held roles such as COO and Group VP of Aviation Services. Key leader in strategy and capital allocation. | View Report → |
Christopher A. Jessup Executive | Senior Vice President and Chief Commercial Officer | None | Joined AAR in 2008. Held leadership roles in MRO Services and became Chief Commercial Officer in 2017. Focuses on global sales and commercial strategy. | |
Eric S. Pachapa Executive | Vice President, Controller, and Chief Accounting Officer | None | Joined AAR in 2015 as Controller. Promoted to VP and Chief Accounting Officer in 2016. Previously worked at Glanbia plc and Ernst & Young. | |
Jessica A. Garascia Executive | Senior Vice President, General Counsel, Chief Administrative Officer, and Secretary | None | Joined AAR in 2020 as General Counsel. Promoted to Chief Administrative Officer in 2022. Previously Deputy General Counsel at USG Corporation. | |
Sean M. Gillen Executive | Senior Vice President and Chief Financial Officer | None | Joined AAR in 2019. Previously VP and Treasurer at USG Corporation and VP at Goldman Sachs. Oversees financial operations and compliance. | |
Anthony K. Anderson Board | Director | Director at Avery Dennison Corp., Exelon Corp., and Marsh & McLennan Companies | Director since 2012. Former Vice Chair at Ernst & Young. Expertise in accounting, finance, and corporate governance. Will not stand for re-election at the 2024 Annual Meeting. | |
Billy J. Nolen Board | Director | Chief Regulatory Affairs Officer at Archer Aviation Inc. | Director since 2023. Former Acting Administrator of the FAA. Expertise in aviation safety and regulatory affairs. | |
Duncan J. McNabb Board | Director | Co-Founder and Managing Partner of Ares Mobility Solutions Inc. | Director since 2017. Retired U.S. Air Force General. Former Commander of U.S. Transportation Command. Expertise in logistics and government contracting. | |
Ellen M. Lord Board | Director | Director at Parsons Corporation | Director since 2021. Former Under Secretary of Defense for Acquisition and Sustainment. Expertise in defense, aerospace, and strategic planning. | |
Jennifer L. Vogel Board | Director | Director at Sun Country Airlines Holdings, Inc. | Director since 2016. Former General Counsel at Continental Airlines. Expertise in governance, M&A, and risk management. | |
John W. Dietrich Board | Director | Director at First Horizon Corp.; Chairman of NDTA; Board Member at IATA, A4A, and Liberty City Optimist Club | Director since 2023. Former CEO of Atlas Air Worldwide. Expertise in aviation, logistics, and risk management. | |
Marc J. Walfish Board | Lead Independent Director | Founding Partner of Merit Capital Partners | Director since 2003. Founding Partner of Merit Capital Partners, a mezzanine investor. No other public company directorships. | |
Peter Pace Board | Director | None | Director since 2011. Retired General, U.S. Marine Corps. Former Chairman of the Joint Chiefs of Staff. Expertise in leadership and government affairs. | |
Robert F. Leduc Board | Director | Director at JetBlue Airways Corporation and Howmet Aerospace, Inc.; Advisor at Advent International | Director since 2020. Former President of Pratt & Whitney and Sikorsky Aircraft. Expertise in aerospace and talent management. |
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Can you elaborate on the potential conflicts that might arise with your OEM partners, like Unison, as you expand into PMA parts manufacturing, and how you plan to manage these relationships moving forward?
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Given that Parts Supply EBITDA margins decreased due to lower-margin whole asset sales, what strategies are you implementing to address margin compression in this segment?
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With the recent uptick in availability of whole assets for your USM business, how sustainable do you believe this trend is, and what risks do you see in relying on situational asset availability for growth?
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Considering the questions around the long-term viability of low-cost carriers and your current limited exposure to this segment, how might industry shifts impact your commercial sales, and what is your strategy to mitigate potential risks?
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In light of rising interest rates and your current net leverage ratio, how are you balancing your deleveraging objectives with your appetite for future M&A opportunities, and what is your long-term view on optimal net leverage levels?
Competitors mentioned in the company's latest 10K filing.
| Company | Description |
|---|---|
The company has established distribution and supply agreements for both new parts and used serviceable material (USM) with this entity, which is an OEM supplier. These agreements are part of the company's strategy to enhance its commercial market offerings. | |
MTU Maintenance | The company has entered into distribution and supply agreements with this entity, which is an OEM supplier, to support its commercial market activities. |
Ontic | The company has secured distribution and supply agreements with this OEM supplier to expand its offerings in the commercial market. |
Cebu Pacific | The company has been awarded distribution and supply agreements with this airline, enhancing its commercial market presence. |
ASL Airlines | The company has been awarded a multi-year, flight-hour component support contract with this airline, which is part of its commercial programs activities. |
The company acquired the Product Support business from this entity, which is a leading global provider of specialized MRO capabilities for critical aircraft components in the commercial and defense markets. This acquisition enables the company to scale its component services and expand its footprint in the Asia-Pacific region. |
| Customer | Relationship | Segment | Details |
|---|---|---|---|
U.S. Government (DoD, DoS, etc.) | Contracts for fleet support, MRO, and supply chain services | All | $576.1 million in FY 2024 (24.8% of total sales). |
Notable M&A activity and strategic investments in the past 3 years.
| Company | Year | Details |
|---|---|---|
Triumph Group, Inc. Product Support Business | 2024 | AAR CORP. completed the acquisition on March 1, 2024, for a net purchase price of $720.0 million, funded through $550 million in 6.75% Senior Notes due 2029 plus a Revolving Credit Facility; the deal enhances AAR’s specialized MRO capabilities and expands its footprint in the Asia-Pacific region with key assets such as proprietary DER repairs and PMA parts, and intangible assets including customer relationships and developed technology. |
Trax USA Corp. | 2023 | The acquisition, completed on March 20, 2023, was executed for $120 million in cash plus up to $20 million in contingent consideration tied to revenue targets and employee retention; funded by proceeds from AAR’s Revolving Credit Facility and cash on hand, the deal strategically expands AAR’s aviation aftermarket and MRO software offerings, supporting approximately 5,000 aircraft operations. |
Recent press releases and 8-K filings for AIR.
- Record Q3 sales of $678 million and adjusted EBITDA of $81.2 million representing a 20% and 39% increase, respectively, compared to Q3 FY24.
- Segment performance showed Parts Supply up 12% with sales of $270.7 million, and Repair & Engineering up 53% with sales of $215.9 million; Integrated Solutions sales declined slightly.
- Q4 guidance projects mid-single digit sales growth, adjusted operating margins between 9.7% – 9.9%, and a consistent net interest expense of approximately $18 million, with net leverage reduced sequentially to 3.06x.
- Record Q3 performance: Sales reached $678 million (up 20% YoY)
- Margin expansion: Adjusted EBITDA climbed to $81.2 million with a 39% increase
- EPS highlights: Reported a GAAP net loss of $9 million with GAAP EPS of $(0.25), while adjusted diluted EPS improved to $0.99
- Segment strength: Parts Supply led with $271 million in sales, with airframe MRO and integrated solutions further boosting margins
- New agreements & divestiture: Secured multiple new multi-year contracts (including Chromalloy and Unison) and advanced the planned $51 million divestiture of the Landing Gear Overhaul business
- Balance sheet & guidance: Net debt leverage improved from 3.17x to 3.06x; Q4 guidance targets mid-single digit YoY sales growth with adjusted operating margins of 9.7%–9.9% and steady net interest expense
- AAR Corp has extended its exclusive Serviceable Engine Products agreement with FTAI Aviation for the supply of CFM56 engine material through 2030.
- The agreement enables AAR to manage the teardown, repair, sales, and marketing of spare parts from over 450 engines in a growing global aftermarket.
- AAR has further strengthened its capabilities by acquiring additional global component repair facilities to support the extended program.
- Sales increased 20% to $678 million in Q3 FY2025, driven by growth in aftermarket services, notably in parts supply and repair & engineering activities.
- The company reported a GAAP net loss of $9 million with a GAAP EPS of $(0.25) and an adjusted EPS of $0.99.
- Adjusted EBITDA rose 39% to $81 million, with margins expanding to 12.0% compared to 10.3% in the prior year quarter.
- New business wins and progress on the integration of the Product Support acquisition, along with upcoming portfolio optimization through the sale of the Landing Gear Overhaul business, were highlighted.