On much more than a wing and a prayer, AAR provides a wide range of products and services for the aerospace and defense industries. The company's Government and Defense Services segment supplies the US government and its contractors with aircraft components, while the Aviation Supply Chain does the same for the commercial market; it also sells and leases used jets. Structures and Systems makes in-plane cargo loading and handling products, while Maintenance, Repair, and Overhaul (MRO) provides engineering services to commercial and military customers. Customers include airlines, business aircraft operators, cargo carriers, aviation OEMs, and militaries; the US government accounts for about 43% of sales.
Aviation Supply Chain specializes in new and overhauled engine and airframe parts, as well as instruments for avionics, electronics, fuel, and other aircraft functions. The segment also provides services that include material planning, sourcing, logistics, information and program management, and parts component repair and overhaul. Operating four FAA licensed repair stations, the segment distributes products for more than 100 aviation manufacturers.
Similar to Aviation Supply Chain's mission, Government and Defense Services serves its military customers with new and overhauled engine and airframe parts. The segment also provides airlift services for government customers through AAR Airlift Group, which has a fleet of fixed-wing and rotary aircraft. The segment additionally offers logistics services for the Department of Defense (DoD) and foreign governments. Other services include aircraft modifications and engineering, design, and integration. The segment also operates an FAA licensed repair station.
Included among the wide variety of operations served by Structures and Systems' containers and shelters are armories, supply and parts storage, refrigeration systems, tactical operation centers, laundry and kitchen facilities, and water treatment plants. Structures and Systems operates one FAA licensed repair station. Services provided by Maintenance, Repair, and Overhaul include painting, line maintenance, exterior and interior refurbishment, and structural repairs. The segment specializes in the repair and overhaul of landing gears, wheels, and brakes. The segment operates five FAA licensed repair stations.
Revenue rose 14% in fiscal 2012 compared with 2011 thanks in part to strong growth in the Aviation Supply Chain and Maintenance, Repair and Overhaul segments and the contributions of two acquisitions, Telair and Nordisk. By segment Aviation Supply Chain increased 26% in fiscal 2012 vs. 2011 to meet more demand from the commercial airline market, among other factors. The segment's gross profit rose 39% over the same period as the result of a good product mix. Government and Defense Services fell 3% in fiscal 2012 compared with 2011 due in part to weakened demand in the defense logistics market. Gross profit for the segment plummeted about 25% because of deficiencies in the availability of aircraft and a contract adjustment.
Maintenance, Repair, and Overhaul headed up 7% during the same period with the support of strong activity at heavy maintenance facilities. The segment's gross profit fell about 1% as the result in part of lower sales of high margin engineering services. Structures and Systems soared about 34% in fiscal 2012 vs. 2011 with the contribution of Telair and Nordisk. Gross profit for the segment surged 13%, but gross profit margin fell from 18% in 2011 to about 16% in fiscal 2012 because of factors that included start-up costs on new programs for precision machining and restructuring charges. The company's net income fell 3% over the same period due in part to increased selling, general, and administrative expenses and lower gross profit in the Government and Defense Services segment.
As sales to government and defense customers decrease, but business with commercial customers rises, AAR has been making acquisitions that boosts its operations in the civilian sector. In 2011 the company acquired Telair, which makes cargo loading systems for wide-body and narrow-body Airbus and Boeing aircraft; Nordisk, a maker of heavy-duty pallets and lightweight cargo containers for commercial airlines; and Airinmar, which provides aircraft component repair management services. In fiscal 2012 sales to commercial customers surged 32% while sales to global government and defense customers -- challenged by budget deficit pressures -- declined about 2% in fiscal 2012 vs. 2011.