On much more than a wing and a prayer, AAR provides a wide variety of products and services primarily for the aerospace and defense industries. The company supplies commercial customers and the US government 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 1955, when it was founded as Allen Aircraft Radio.
AAR operates through more than 60 locations in 17 countries. It has a presence in the Americas, EMEA (Germany, France, Sweden, Norway, the United Arab Emirates, and the UK), the Asia/Pacific, and Australia. Maintenance facilities reside in Indianapolis; Oklahoma City; Duluth, Minnesota; and Miami.
In 2013 AAR streamlined its organizations from four segments into two. Aviation Services (its main segment representing 75% 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 Technology Products segment makes and repairs transportation pallets, containers, shelters, mobility systems, and control systems used in support of the deployment of military and humanitarian activities. The segment also makes transportation pallets and containers used by commercial airlines.
Sales and Marketing
Customers include airlines, business aircraft operators, cargo carriers, aviation OEMs, and militaries; the US government accounts for about 35% of sales.
AAR has enjoyed unprecedented growth over the last three years. Revenues jumped nearly 4% from $2.06 billion in 2012 to reach $2.14 in 2013, a new historical milestone.
The growth for 2013 was attributed to an uptick in sales to commercial customers coupled with strong organic growth (5%) in Aviation Services. Previous acquisitions also accounted for the rise in revenue. Technology Products saw revenues decrease slightly due to lower sales of shelters and containers as a result of the drawdown of the war effort in Afghanistan and lower spending from the Department of Defense.
Profits decreased 18% from $68 million in 2012 to $55 million in 2013 as a result of a $174 million increase in cost of services and a $30 million pre-tax charge on a support contract.
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.
Franklin Resources, an investment firm, owns around 10% of AAR.