Spotlight on AAR as opportunities abound

Several companies are starting to look well-positioned to benefit from what is, according to some analysts, a looming downturn in the industry. AAR appears to be one of those firms.

Headquartered in Wood Dale, Illinois, AAR operates four segments – aircraft sales and leasing; aviation supply chain; maintenance, repair and overhaul (MRO); and structures and systems. All four units achieved double-digit sales growth in the 2008 fiscal third quarter. During an earnings conference call last week executives said they sees opportunities going forward.

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In the aircraft sales and leasing segment, as the US faces a liquidity and credit crunch, AAR is “aware that there are owners of aircraft who have liquidity concerns, problems I should say and we believe we’re in a good position to benefit from that”, says chairman and CEO David Storch.

Most of AAR’s activity has been in the Boeing 737 classic family, such as the prior acquisition of 18 737s from Malaysian Airlines. Storch says that while the firm has not yet moved into the next generation arena, it is “looking today at opportunities in that market”.As airlines face heightened regulatory scrutiny of their maintenance programs, AAR is highlighting its record as a MRO provider that is fully concentrated on the safety chain. Storch says quality providers “will be in a very good position to benefit”, should the US FAA instigate tougher reviews on maintenance providers.

He adds that there are “some folks who are not necessarily as adept or as detail-oriented as this business requires”.

Another area that holds much promise for AAR is its composites business, which is part of the structures and systems unit. Last month AAR announced it is leasing the 90,000 sq ft (8,910 sq m) facility located at the former McClellan Air Force Base in Sacramento, Calif. This will be a growth vehicle for AAR.

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Jobs and workloads at AAR’s composites facility in Clearwater, Florida will not be threatened as a result of the company’s recent lease. AAR president and chief operating officer Timothy Romenesko says: “Now we might get that plan started by shifting some work elsewhere from AAR into the facility, at least, [to get it] off and running. But once we get over the early stages, we do expect to attract new business.”

AAR, which says Boeing 787 composites work is of potential interest, is already involved in a number of composites projects. Here’s the list:

Lockheed Martin:
* F-22 Structures – 30 parts currently and expect more. Autoclave process
* Advanced Composite Cargo Aircraft (ACCA) – Structures for composite demonstrator. Autoclave process.
* Falcon Program – re-entry space vehicle prototype – configured floor panel structure. Press molding process.

Northrop Grumman:
* Guardian Program – aircraft anti-missile defense housing – design, certify & manufacture. Autoclace process.
* Mark VIIE Talon – night vision system housing.

BAE Systems:
* F-22 Countermeasures structures. RTM & compression molded processes
* MH-47 Helicopter Countermeasures structures – comp. molded process

Sikorsky:
* S-92 Interiors – VIP, Search & Rescue (SAR) – design, certify & manufacture. Autoclave process.
* CH-148 SAR Interior – design, certify & manufacture. Autoclave process.

Cessna:
* CJ-3 & CJ-4 structures. RTM process.

Spirit Aerosystems:
* Prototype demonstrator. RTM process

B/E Aerospace:
* Flat panels for their A380 interiors. Press molding

AAR also produces mobility products. I know this topic is off the Runway Girl beaten track, but check out this cool shot.

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One Response to Spotlight on AAR as opportunities abound

  1. RobH March 24, 2008 at 5:25 pm #

    Great job. The stock (AIR) is doing very well this morning and the fundamentals look pretty good.

    Could we be seeing the Kirby version of the ‘Colbert Bump’?

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