Maintenance

Capacity reductions at US airlines, including United Airlines’ June announcement that it will remove 94 Boeing 737 Classics from its fleet, have negatively impacted AAR’s maintenance, repair and overhaul (MRO) operation, but the firm is moving aggressively to replace the lost business.

During a conference call today to discuss AAR’s earnings for the 2008 fiscal fourth quarter ended 31 May, company chairman and chief executive David Storch revealed that AAR’s MRO facility in Indianapolis, Indiana is no longer providing heavy maintenance for United. Furthermore, the company has seen a reduction in volume at other facilities in Miami and Oklahoma City.

However, of the three heavy maintenance lines left vacant in Indianapolis by United’s 737 grounding, two have already been filled, says Storch. While he does not name the customer, the AAR chief confirms that the firm has been working with Southwest Airlines, FedEx and UPS to generate new business and that “one of them have filled that United space”.

AAR is also pursuing opportunities with new and existing customers to replace the last remaining United line and other available openings.

AAR’s MRO business is one of four company segments. The others are: structures and systems; aviation supply chain; and aircraft sales and leasing. During the fiscal fourth quarter, AAR recorded a net profit of $22 million, up 23% over last year, and saw its consolidated sales grow 28% to $391.7 million.

For the company’s fiscal year 2008, sales were a record $1.4 billion, an increase of 31% over the prior fiscal year, and net income increased 28% to $75.1 million. Each operating unit achieved double digit sales growth during the 12-month period.

“We achieved superior sales and earnings growth powered by market share gains through solid execution across our business and broad market acceptance of the Company’s value proposition,” says Storch

“We also increased our liquidity, diversified our business and expanded our customer base.”

Source: Air Transport Intelligence news