Aar Corp (NYSE: AIR)

AAR Corp operates as a leading independent provider of solutions to the global aviation aftermarket. The company offers a broad line of products and services to commercial and government aerospace customers, operating globally in over 20 countries through four business segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services. AAR Corp has been optimizing its products and services portfolio to position itself for continued strong growth, responding to the industry's increased demand for aftermarket services. The company has seen significant improvements in profitability, driven by double-digit sales growth in new parts distribution activities and the integration of recent acquisitions.

AAR Corp generates revenue through the sale and leasing of used serviceable material (USM) and aftermarket distribution of new, original equipment manufacturers (OEM) supplied replacement parts. The company also provides airframe maintenance and component repair services, fleet management, and integrated software solutions. Key products and services include the PAARTSsm Store, Trax software, and a range of transportation pallets and containers. AAR Corp's customer base includes domestic and foreign passenger airlines, cargo airlines, regional and commuter airlines, business and general aviation operators, OEMs, aircraft leasing companies, aftermarket aviation support companies, the Department of Defense (DoD), the Department of State (DoS), and foreign military organizations or governments.

• Parts Supply: This segment primarily consists of sales and leasing of USM and aftermarket distribution of new, OEM-supplied replacement parts. The Parts Supply segment accounted for approximately 40% of AAR Corp's sales in fiscal 2025. The company has established formal distribution relationships with OEM suppliers of aircraft components, which are utilized by aircraft operators and aircraft repair and maintenance operations. AAR Corp is a leading independent distributor of factory new aircraft parts for the aftermarket. The segment also includes the online PAARTSsm Store, which facilitates the electronic fulfillment of orders. USM is an important category of the aviation aftermarket in which parts removed from engines or airframes can be refurbished to be utilized as replacement parts. AAR Corp utilizes a network of third-party repair facilities to perform this work. The segment also distributes new OEM-supplied replacement parts to aircraft operators, airlines, government customers, and other MRO companies across the world. The company is an authorized distributor for more than 30 product lines, which include parts from over 300 Federal Supply Class codes sourced from over 20 leading OEMs. The business activities in this segment are primarily conducted through AAR Supply Chain, Inc.; AAR Aircraft & Engine Sales & Leasing, Inc.; and AAR International, Inc.

• Repair & Engineering: This segment primarily provides airframe maintenance and component repair services. The Repair & Engineering segment accounted for approximately 32% of AAR Corp's sales in fiscal 2025. The company's airframe maintenance services include major airframe inspection, MRO, painting services, line maintenance, airframe modifications, structural repairs, avionics service and installation, exterior and interior refurbishment, and engineering services and support for many types of commercial and military aircraft. Component repair services include MRO services for structural components, engine and airframe accessories, and interior refurbishment. The segment also develops Parts Manufacturer Approval (PMA) parts for aftermarket applications and designs proprietary designated engineering representative (DER) repairs. The Repair & Engineering business primarily supports narrow-body Airbus, Boeing, and Embraer regional aircraft for customers, as well as U.S. government defense agencies. The segment operates six airframe maintenance facilities and six component repair facilities. The business activities in this segment are primarily conducted through AAR Aircraft Services, Inc.; AAR Allen Services, Inc.; AAR International, Inc.; AAR Component Services (Thailand) Ltd.; AAR Component Services – Hot Springs, LLC; and AAR Component Services – Grand Prairie, Inc.

• Integrated Solutions: This segment primarily consists of fleet management and operations of customer-owned aircraft, customized performance-based supply chain logistics programs in support of the U.S. Department of Defense (DoD) and foreign governments, flight hour component inventory and repair programs for commercial airlines, and integrated software solutions including Trax. The Integrated Solutions segment accounted for approximately 25% of AAR Corp's sales in fiscal 2025. Fleet management and operations of customer-owned aircraft are performed for the U.S. Department of State (DoS) under the INL/A WASS contract. The company is the prime contractor on this ten-year performance-based contract, which began in fiscal 2018. Services under the contract include operating and maintaining the global DoS fleet of fixed- and rotary-wing aircraft. Supply chain logistics programs are primarily comprised of material planning, sourcing, logistics, information, and program management, and parts and component repair and overhaul. Flight hour component inventory and repair programs for commercial airlines are primarily comprised of outsourcing programs for airframe parts and components, including warranty claim management in support of airline customers' maintenance activities. The integrated software solutions are primarily comprised of the Trax software, which the company acquired in fiscal 2023. Trax has the first fully cloud-based electronic enterprise resource platform for the MRO industry and also offers a full suite of "paperless" mobility apps that are in the process of automating MRO workflows with artificial intelligence. Through Trax, AAR Corp is a leading provider of maintenance software for airlines, other aircraft operators, and MROs. Through its eMRO and eMobility products, Trax provides comprehensive software solutions for aircraft maintenance designed to increase efficiency, improve asset utilization, streamline the information flow among interested parties during the maintenance process, and create the required regulatory system of record required by airline and lessor customers. The business activities in this segment are primarily conducted through AAR Supply Chain, Inc.; AAR Government Services, Inc.; AAR Aircraft Services, Inc.; AAR International, Inc.; Trax USA CORP.; and AAR Airlift Group, Inc.

• Expeditionary Services: This segment primarily consists of products and services supporting the movement of equipment and personnel by the U.S. and foreign governments and non-governmental organizations. The Expeditionary Services segment accounted for approximately 3% of AAR Corp's sales in fiscal 2025. The company designs, manufactures, and repairs transportation pallets and a wide variety of containers and shelters used in support of military and humanitarian tactical deployment activities. The containers and shelters are used in numerous mission requirements, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters. Shelters include both stationary and vehicle-mounted applications. The segment also provides engineering, design, and system integration services for specialized command and control systems. The business activities in this segment are primarily conducted through AAR Manufacturing, Inc. and Brown International Corporation.

AAR Corp maintains a strong position within the aviation aftermarket industry, competing with OEMs, service divisions of large commercial airlines, and other independent suppliers of parts, repair, and overhaul services. The company's competitive advantages include its responsiveness to customer needs, attention to safety and quality, unique portfolio of high-quality solutions with lower cost to the customer, combination of market expertise and deep technical knowledge, long-standing customer relationships, and integrated, connected business model. AAR Corp's key competitors include GA Telesis, which acquired the company's Landing Gear Overhaul (LGO) business.

AAR Corp's principal customers include domestic and foreign passenger airlines, cargo airlines, regional and commuter airlines, business and general aviation operators, OEMs, aircraft leasing companies, aftermarket aviation support companies, the DoD and its contractors, the DoS, and foreign military organizations or governments. The company's sales to government and defense customers are subject to competitive bidding and government funding, which can fluctuate based on various factors such as troop deployment, government funding, and geopolitical events. AAR Corp's contracts with government agencies often include options for extension or expansion, and the company is entitled to recover allowable costs incurred through the date of termination in the event of contract termination for convenience.