AAR provides a wide variety of aviation services and technology products primarily for the aerospace and defense industries. The company supplies commercial customers and government agencies and its contractors with aircraft components such as transportation pallets, containers, shelters, mobility systems, and control systems used in support of the deployment of military and humanitarian activities. AAR also provides inventory management and parts distribution; aircraft maintenance, repair and overhaul; and expeditionary airlift services. The company traces its historical roots to 1951, when Allen Eichner began selling aircraft radios and instruments.
AAR operates through two primary segments. Aviation Services (its main segment representing almost 85% of total sales) provides inventory management and parts distribution; aircraft maintenance, repair and overhaul; and expeditionary airlift services. It sells and leases new, overhauled, and repaired engine and airframe parts to commercial and defense customers. The segment also acts as a distributor for 80 aviation product manufacturers.
AAR's Expeditionary Services segment (nearly 15%) consists of businesses that provide products and services supporting the movement of equipment and personnel by the DoD, foreign governments, and non-governmental organizations. Expeditionary airlift services provide fixed- and rotary-wing flight operations.
AAR operates through more than 60 locations in 20 countries and has customers in more than 110 countries. It has a presence in the Americas, EMEA (Germany, France, Norway, the United Arab Emirates, and the UK), and Asia/Pacific regions. Maintenance facilities reside in Indianapolis; Oklahoma City; Duluth, Minnesota; and Miami.
Sales and Marketing
Customers include airlines, business aircraft operators, cargo carriers, aviation OEMs, and militaries; government entities collectively account for about 40% of sales.
AAR's earnings statement has fluctuated over the years. After falling sharply in 2015, revenues jumped 4% in 2016 due to an 8% bump in Aviation Services sales. The segment's growth was fueled by higher sales to government and defense customers. AAR's net income skyrocketed by 368% from $10 million in 2015 to $48 million in 2016 due to the higher net sales and an absence of impairment charges in 2016.
AAR's Airlift division got a lift from the Department of the Navy in September 2014 when it was awarded a $49 million contract to provide personnel recovery airlift services in West Africa. AAR Airlift provides expeditionary airlift services in support of contingency operations worldwide, in such areas as Afghanistan, Africa, and the Western Pacific.
The company has focused on being an independent services provider to the global commercial, government, and defense aviation markets by divesting most of its manufacturing businesses. The company sold the Telair Cargo Group for $725 million and intends to sell its Precision Systems Manufacturing businesses as well.
Ira Allen Eichner began selling aircraft radios and instruments out of his car in 1951; in 1955 he incorporated his business as Allen Aircraft Radio. He opened a maintenance facility in Oklahoma City in 1959 and moved into aircraft overhaul. The firm entered Europe in 1965, became AAR in 1966, and went public the next year.