AAR Corp.
AAR Corp. (NYSE: AIR) is a global aerospace and defense company providing aftermarket solutions, including parts supply, repair and engineering services, and mobility systems, to commercial aviation operators, government entities, maintenance, repair, and overhaul (MRO) providers, and original equipment manufacturers (OEMs).[1] Headquartered in Wood Dale, Illinois, the company operates facilities in over 20 countries and supports customers through specialized segments focused on enhancing aircraft efficiency, safety, and lifecycle management.[2] Incorporated in 1955 as Allen Aircraft Radio Inc., AAR has grown from its origins in supplying aircraft radio equipment to a multinational enterprise with approximately 5,600 employees and annual revenues exceeding $2.4 billion as of fiscal year 2025.[3][4][5] The firm emphasizes operational integrity under its "Doing It Right" philosophy, prioritizing quality and compliance in high-stakes aviation environments without notable public controversies impacting its core operations.[6]Company Overview
Founding and Early Mission
AAR Corp. was established by Ira A. Eichner in 1955 to supply aircraft radios and equipment amid the post-World War II expansion of commercial aviation.[2] Eichner, recognizing the sector's growing demands for reliable aftermarket components, incorporated the venture on August 25, 1955, as Allen Aircraft Radio Inc. in downtown Chicago, Illinois, initially operating as a modest one-man enterprise focused on quality and safety.[7] Although informal operations trace back to 1951 through trading used electrical and military surplus parts while Eichner studied at Roosevelt University, the company's formal structure and aviation-specific emphasis began with the 1955 incorporation.[3] The early mission emphasized fulfilling the aviation industry's emerging needs by distributing essential radios and ancillary equipment to airlines and operators transitioning toward jet aircraft.[2] This value-driven approach, rooted in entrepreneurial foresight rather than large-scale manufacturing, positioned AAR as a responsive supplier in a dynamic market characterized by rapid technological shifts and increasing air travel volumes.[7] By prioritizing direct customer support and inventory of hard-to-source parts, the firm established a foundation for aftermarket services that anticipated regulatory and operational challenges in aviation maintenance.[3]Core Business Model and Market Position
AAR Corp. operates a business model centered on integrated aftermarket services for the aerospace and defense sectors, structured around three core segments: Parts Supply, Repair and Engineering, and Integrated Solutions. The Parts Supply segment procures, distributes, and manages new, used, and repaired aircraft components, leveraging data-driven inventory optimization to enhance availability and minimize downtime for commercial and government customers. Repair and Engineering delivers specialized maintenance, repair, and overhaul (MRO) capabilities, including component-level repairs, engineering modifications, and sustainment programs for both fixed-wing and rotorcraft platforms. Integrated Solutions provides end-to-end logistics, program integration, and mobility services, often tailored for U.S. Department of Defense contracts, combining the company's segment strengths to offer comprehensive supply chain support that reduces total ownership costs.[8][9] This segment-driven approach prioritizes recurring revenue from aftermarket demand, with strategic investments in acquisitions, capacity expansion, and digital tools to capture growth in a fragmented market characterized by supply constraints and aging aircraft fleets. In fiscal year 2025, ending June 30, 2025, AAR achieved record consolidated sales of $2.78 billion, up 16% from $2.40 billion in fiscal 2024, with adjusted operating margins expanding to 9.6% from 8.3%, reflecting improved execution amid rising volumes. Commercial aviation accounted for approximately 70% of sales, bolstered by parts supply growth of 15% year-over-year in the fourth quarter, while government programs contributed stable, high-margin revenue through long-term contracts.[10][11][12] AAR maintains a solid market position as an independent provider in the $114 billion global MRO spend market as of 2024, differentiating through agility and customer focus rather than scale dominance by OEMs like Boeing or Airbus. The company's emphasis on used serviceable materials (USM) and rapid-response distribution has capitalized on persistent supply tightness, with recent acquisitions such as ADI Global Distribution for $146 million in September 2025 enhancing its parts ecosystem and regional footprint. Amid North American MRO projections reaching $65.3 billion by 2032 at a 1.6% CAGR, AAR's organic sales growth of 17% in the first quarter of fiscal 2026 underscores its leverage of industry tailwinds, including fleet utilization recovery and defense modernization, positioning it for sustained outperformance against peers reliant on narrower service lines.[13][14][15][16]Historical Development
Inception and Initial Growth (1951–1980s)
AAR Corp. traces its origins to 1951, when Ira Allen Eichner established the company in Chicago using borrowed funds to trade used electrical parts and surplus military aircraft components amid the post-World War II expansion of commercial aviation.[3][17] Initially operating as a small entrepreneurial venture, it supplied radio equipment and other essentials to the emerging airline industry, capitalizing on the demand for reliable aftermarket support as jet travel proliferated.[18] The firm maintained profitability from its outset, focusing on undiversified aviation services to build a foundation in parts distribution and repair.[19] Incorporated in 1955 as Allen Aircraft Radio Inc. with Eichner serving as chief executive officer, the company formalized its structure to support growing operations in aircraft electronics and communications gear.[3][17] By 1961, it secured its first equity financing through William Blair & Company, enabling further investment in inventory and facilities.[20] Reincorporated in Delaware in 1966 and renamed AAR Corp. in 1970, it expanded into aircraft distribution by partnering with Cessna, while Eichner transitioned to chairman in 1973.[21][3] This period marked initial diversification within aviation, including the 1979 formation of Aircraft Turbine Center, Inc., under David P. Storch, to handle jet engine maintenance—a critical step toward overhauling capabilities.[3][17] Through the 1980s, AAR achieved significant scale by listing on the New York Stock Exchange around 1980 and pursuing strategic acquisitions, such as Brooks & Perkins Corp. in 1981 for cargo handling systems, which bolstered its military and logistics segments.[22][17] Revenues climbed to $219 million by 1985, driven by aftermarket demand amid U.S. airline deregulation and rising air traffic, though the firm exited unprofitable general aviation distribution in 1986 following market contraction.[17][3] By decade's end, with approximately 2,500 employees across 25 facilities, AAR reported $444.8 million in sales and $25.6 million in profits, solidifying its position as a key independent provider through disciplined focus on high-margin repair and supply chain services.[3][17]Diversification and Expansion (1990s–2000s)
During the 1990s, AAR Corp. expanded its aviation aftermarket services through strategic acquisitions and contracts that diversified its offerings beyond core repair and leasing into inventory management and international operations. In 1993, the company secured a $20 million annual inventory management contract with GE in Wales and acquired Eastern Airlines' 45,000-part inventory, enhancing its parts distribution capabilities amid the airline industry's recovery from early-decade downturns.[3] By 1996, long-term contracts accounted for 30% of sales, reflecting a shift toward stable revenue streams.[3] Acquisitions accelerated diversification into specialized components and services. In 1997, AAR purchased Cooper Aviation Industries for $45 million, bolstering its repair portfolio, and acquired 14 Boeing 747 aircraft from British Airways for $22 million to support leasing and overhaul activities; fiscal 1997 revenues reached $589.3 million with profits rising 44% to $23 million.[3] The following year, it acquired Tempco Hydraulics for hydraulic systems expertise, AVSCO Aviation Service Corp. for additional aviation services, and ATR International Inc. for international reach, while divesting the non-core PowerBoss industrial unit to refocus on aerospace; revenues grew to $782.12 million.[3] In 1991, AAR Mobility Systems introduced rapid deployment shelters, marking entry into defense-related mobility solutions.[20] Entering the 2000s, AAR further broadened into parts distribution and OEM integration. In 2000, the company made two acquisitions to establish a new parts distribution business, incorporating select OEM products into its aftermarket network, coinciding with record revenues of $957.5 million despite a dip in net income to $35.2 million.[20][23] On September 29, 2000, it acquired substantially all assets of Hermetic, an aircraft component repair provider, expanding repair capabilities.[19] This period saw continued growth into government and defense sectors, with sales surpassing $1 billion by 2007 amid robust organic expansion and further acquisitions like Avborne Heavy Maintenance and Summa Technology in 2008, which integrated heavy maintenance and technology services.[7][24] These moves positioned AAR as a comprehensive provider in the expanding aerospace aftermarket, navigating industry cycles through diversified revenue sources.[25]Modern Era and Strategic Shifts (2010s–Present)
In the early 2010s, AAR Corp. pursued strategic acquisitions to diversify its portfolio and strengthen its position in government and defense markets amid recovery from the 2008-2009 financial crisis, which had reduced aviation demand. On April 7, 2010, the company completed the acquisition of Aviation Worldwide Services (AWS), a provider of expeditionary airlift services, to expand engineering content and government services capabilities.[26] This move contributed to a 46.1% increase in sales to government and defense customers in fiscal year 2011, driven by AWS integration and higher volumes.[21] Fiscal year 2010 sales totaled $1.352 billion, a 5% decline from the prior year, reflecting reduced aftermarket parts demand, though operating cash flow reached $153 million.[27] The company's long-term strategy emphasized balancing commercial and government segments while leveraging a close-to-customer model for global expansion.[27] Throughout the decade, AAR focused on operational efficiencies and selective growth, navigating aviation sector cyclicality. By the late 2010s, emphasis shifted toward maintenance, repair, and overhaul (MRO) enhancements, supported by incremental acquisitions totaling 13 deals since 2010, including four in the past five years as of 2025.[28] This period saw divestitures of six assets to streamline operations, aligning with a portfolio optimization approach that prioritized high-margin activities over non-core elements.[28] Sales rebounded progressively, setting the stage for accelerated digital integration in airframe MRO, which drove profitability improvements through process efficiencies.[29] In the 2020s, AAR intensified investments in software and integrated solutions to address supply chain challenges and capitalize on rising air travel demand. The 2023 acquisition of Trax, a provider of MRO and fleet management software, enabled scaling to serve major airlines and enhanced digital capabilities for predictive maintenance.[20] In August 2025, AAR acquired Aerostrat for $15 million to bolster web-based airline maintenance tools.[30] Complementing growth, the company divested its non-core Landing Gear Overhaul business to GA Telesis for $51 million in April 2025, aiming for immediate margin accretion.[31] These shifts supported record fiscal year 2025 sales of $2.8 billion and profitability, fueled by expanded parts distribution, government expertise, and value-added services to capture market share in commercial and defense aviation.[32][10]Products and Services
Supply Chain and Parts Management
AAR Corp. operates a comprehensive supply chain focused on aviation parts distribution and inventory management, serving commercial airlines, defense operators, and OEMs worldwide. As one of the largest independent distributors of factory-new OEM parts, the company supports aftermarket needs in commercial, military/defense, and business aviation sectors through strategic partnerships with numerous manufacturers.[33] Its Parts Supply segment emphasizes just-in-time delivery, data-driven inventory optimization, and enhancements to OEM aftermarket return on invested capital (ROIC) via global sales channels and value-added services.[33] The company's inventory includes over 1 million airframe parts items, encompassing rotables, landing gears, auxiliary power units (APUs), quick engine change (QEC) kits, line-replaceable units (LRUs), and accessories sourced from more than 250 manufacturers.[34] This stock extends to both factory-new components and used serviceable materials, enabling flexible options like exchanges, consignments, lease-backs, kitting, trading, and aircraft teardown/part-out programs to maximize asset recovery and availability.[34] A strategically distributed network of warehouses facilitates 24/7 aircraft-on-ground (AOG) support with 45-minute dispatch commitments, minimizing downtime for operators.[34] AAR Supply Chain, Inc., a key subsidiary, handles aircraft parts and components distribution under certifications such as AS9120B for quality management in aerospace distribution and ISO 9001:2015 for overall quality systems.[35] Digital enhancements, including the PAARTS Store launched in November 2016 for global online procurement of new parts, integrate with tools like ARRIVE for real-time tracking and efficiency.[36] These capabilities stem from AAR's origins as an aftermarket parts trader over 70 years ago, evolving into integrated solutions that prioritize aircraft uptime through customizable supply chain bundling.[37] Recent expansions bolster parts management scope; in September 2025, AAR acquired ADI American Distributors for $146 million, adding complementary electronics lines to its new parts portfolio and accelerating growth in distribution.[38] This move aligns with ongoing efforts to amplify OEM reach and provide one-stop inventory solutions amid rising demand for reliable aviation logistics.[33]Maintenance, Repair, and Overhaul (MRO)
AAR Corp. delivers airframe and component maintenance, repair, and overhaul (MRO) services to commercial airlines, regional operators, and government entities, emphasizing heavy checks, structural repairs, modifications, and specialized component overhauls. Airframe services include comprehensive inspections across all check levels, non-destructive testing (NDT), corrosion prevention, avionics and fuel efficiency upgrades, cabin interior modifications, and aircraft painting. These capabilities support narrow-body, wide-body, and regional aircraft such as the Airbus A320 family, Boeing 737 and 777 series, Embraer E-Jets, Bombardier CRJ variants, and McDonnell Douglas MD-80.[39][40] Airframe MRO operations occur at FAA- and EASA-approved facilities in Oklahoma City and Indianapolis (Oklahoma and Indiana), Miami (Florida), Rockford (Illinois), Trois-Rivières (Quebec, Canada), and Windsor (Ontario, Canada), with select sites holding TCCA approvals. The Indianapolis site maintains six certified hangars accommodating up to 15 aircraft concurrently, specializing in regional jets and narrow-body platforms. Component MRO addresses structural parts, engine accessories, APUs, avionics, hydraulics, nacelles, pneumatics, and interiors for both commercial and military platforms, including CH-47 helicopters and P-3 aircraft. Facilities for components span Grand Prairie and San Antonio (Texas), Hot Springs (Arkansas), Wellington (Kansas), Amsterdam (Netherlands), and Thailand, certified under FAA, EASA, CAAC, TCCA, AS9100, and AS9110 standards.[39][41][40] Key enhancements include the xCelle Americas joint venture, operational since 2024 as an FAA/EASA-licensed provider for LEAP-1A/1B nacelle MRO, combining airline and third-party expertise. AAR's 2023 acquisition of Triumph Group's Product Support business expanded repair capacities for engine/airframe accessories, interiors, wheels, and brakes. Facility growth features a 2024 expansion in Oklahoma City adding over 80,000 square feet for Boeing 737 maintenance and a new Miami site under construction. In September 2025, AAR secured a U.S. defense contract for logistics and mobility support, reinforcing military MRO delivery. As North America's largest independent MRO provider, AAR integrates engineering and digital tools for process optimization across seven global sites.[42][43][44][45][46]Software and Digital Solutions
AAR Corp. offers digital solutions tailored to the aviation aftermarket, emphasizing maintenance, repair, and supply chain optimization through cloud-based platforms and specialized software. These tools integrate with core services like MRO and parts management to enhance efficiency, visibility, and data-driven decision-making for airlines, MRO providers, and government operators.[47] The company's primary software suite, Trax, acquired in March 2023, provides comprehensive aircraft maintenance and fleet management capabilities via eMRO for desktop and mobile access, eMobility for real-time field operations, and modules covering continuing airworthiness management. Key features include digital signatures, paperless workflows with workpacks and manuals, RFID for logistics tracking, and biometric security, supporting approximately 5,000 aircraft worldwide among major airlines, cargo operators, and MRO facilities.[48][49] Trax generates over $50 million in annual revenue and has secured contracts with operators like Cathay Pacific for digital transformation, JetBlue for expanded eMobility and cloud hosting, and Amerijet for cloud-based maintenance.[50][51][52] In August 2025, AAR acquired Aerostrat, a maintenance planning software provider, to bolster Trax's long-range planning tools for airlines, MROs, and cargo firms, further enabling predictive analytics and operational streamlining.[53] Airvolution, launched in October 2018, is a cloud-based platform for component repair management that incorporates analytics, business intelligence, proactive workflows, unlimited document storage, automated quote processing, supplier management, and warranty claims handling. It reduces repair cycle times, operational costs, and improves component availability by integrating with existing systems for end-to-end visibility.[54] Complementary tools include the PAARTS Store, offering 24/7 online access to over 1 million new, overhauled, serviceable, and repairable airframe parts for real-time inventory visibility, and AARIVE, a self-service portal for Power-by-the-Hour customers to manage component support. These solutions collectively support AAR's strategy to digitize aviation aftermarket processes, prioritizing scalability, security, and integration with physical services.[47]Financial Performance
Revenue and Profit Trends
AAR Corp.'s consolidated sales have demonstrated consistent growth over recent fiscal years, increasing from $1.82 billion in fiscal year 2022 (ended June 30, 2022) to $2.78 billion in fiscal year 2025 (ended June 30, 2025), a compound annual growth rate of approximately 15%.[55][56] This upward trajectory reflects recovery in commercial aviation demand post-COVID-19, expansion in parts distribution, and contributions from acquisitions like Trax Technologies.[56] Year-over-year increases included 9.4% in FY2023, 16.5% in FY2024, and 20% in FY2025, with the latter driven by 25% growth in the company's newer parts distribution segment.[57][56] Profitability, as measured by GAAP net income from continuing operations, has been more variable, influenced by non-recurring items such as asset sales, restructuring costs, and legal settlements. Net income rose to $90 million in FY2023 from $79 million in FY2022, before falling to $46.3 million in FY2024 and $12.5 million in FY2025—the latter impacted by after-tax charges exceeding $100 million related to a Foreign Corrupt Practices Act resolution and other remediation efforts.[58][57][59] Adjusted metrics, excluding such items, reveal improving operational efficiency, with adjusted diluted earnings per share advancing from $3.33 in FY2024 to $3.91 in FY2025 and adjusted operating margins expanding from 8.3% to 9.6%.[56] GAAP operating income also strengthened, reaching $185.2 million in FY2025 from $129.2 million in FY2024, supported by higher sales volumes and margin enhancements in maintenance, repair, and overhaul (MRO) services.[56]| Fiscal Year | Sales ($ millions) | Net Income ($ millions) | Adjusted Diluted EPS ($) |
|---|---|---|---|
| 2022 | 1,820 | 79 | — |
| 2023 | 1,990 | 90 | — |
| 2024 | 2,319 | 46.3 | 3.33 |
| 2025 | 2,781 | 12.5 | 3.91 |
Key Financial Metrics and Investor Relations
AAR Corp. reported consolidated sales of $2,780.5 million for fiscal year 2025, ended May 31, 2025, marking a 20% increase from $2,318.9 million in fiscal year 2024.[56] Adjusted EBITDA for the year totaled $324.2 million, reflecting a 34% rise from the previous year and an adjusted operating margin expansion to 9.6% from 8.3%.[56] [60] Net income attributable to common shareholders was $12.5 million, with GAAP diluted earnings per share (EPS) of $0.35; adjusted diluted EPS reached $3.91, up 17% year-over-year.[56]| Metric | Fiscal Year 2025 Value | Year-over-Year Change |
|---|---|---|
| Sales | $2,780.5 million | +20% |
| Adjusted EBITDA | $324.2 million | +34% |
| Adjusted Operating Margin | 9.6% | +1.3 percentage points |
| Adjusted Diluted EPS | $3.91 | +17% |
Growth Strategies
Acquisitions and Mergers
AAR Corp. has executed numerous acquisitions to bolster its capabilities in aircraft maintenance, repair, overhaul (MRO), supply chain management, and digital solutions, with 13 total deals recorded as of 2025, including four in the preceding five years. These moves have targeted complementary technologies, repair expertise, and distribution networks, often funded through cash and stock issuances, enabling expansion into new OEM partnerships and global markets. Early acquisitions focused on manufacturing and repair diversification, while recent ones emphasize software integration and parts distribution to support aftermarket growth.[28] In the 1980s and 1990s, AAR laid foundational expansions through targeted purchases. In 1981, it acquired the assets of Brooks and Perkins Corp., establishing its manufacturing group specializing in cargo handling systems. This was followed in 1984 by Circament Coating Technology Inc., a firm repairing turbine engine parts. The 1997 acquisition of Cooper Aviation Industries for $45 million added aviation component supply capabilities. In 1998, AAR purchased Tempco Hydraulics, AVSCO Aviation Service Corporation (a former Aerospatiale division), and ATR International Inc., the latter focusing on composite structures, amid favorable market conditions from a depressed stock price.[3] The 2010s marked a shift toward defense and logistics enhancements. On April 7, 2010, AAR acquired Airlift, contributing to a 46.1% sales increase in government and defense segments that year. Later in 2010, it completed the purchase of Aviation Worldwide Services, expanding operational support services. In 2011, AAR bought Telair International GmbH and Nordisk Aviation Products AS, integrating cargo container and pallet solutions into its portfolio.[21][26][62] Recent acquisitions under the modern growth strategy have accelerated digital and repair expansions. On March 20, 2023, AAR acquired Trax USA Corp. for $120 million in cash plus up to $20 million earn-out, gaining MRO and fleet management software used by over 200 airlines. This was complemented by the March 1, 2024, completion of Triumph Group's Product Support business for $725 million, adding repair services for approximately 10,000 part numbers and deepening OEM relationships. In August 2025, AAR purchased Aerostrat for $15 million to enhance Trax's maintenance planning tools. Most recently, on September 25, 2025, it acquired ADI American Distributors for $146 million in cash, expanding new parts distribution with additional electronics lines and global OEM ties across the US, UK, and Singapore. These deals have driven revenue synergies, with the Triumph integration yielding strong performance by fiscal 2025.[63][64][53][65][56]Divestitures and Portfolio Optimization
In pursuit of portfolio optimization, AAR Corp. has divested non-core assets to concentrate resources on higher-margin segments such as supply chain management, parts distribution, and maintenance, repair, and overhaul (MRO) services, aiming to enhance overall profitability and operational efficiency.[66] This approach aligns with management's emphasis on disciplined capital allocation, where proceeds from sales fund investments in core capabilities and potential acquisitions that drive organic growth.[9] A notable divestiture occurred in 2020, when AAR sold its Aerospace Composites Division, which operated manufacturing facilities in Sacramento, California, and Clearwater, Florida, to Architect Equity. This move allowed AAR to exit specialized composite fabrication activities deemed peripheral to its primary aviation services focus.[67] More recently, on December 20, 2024, AAR announced the sale of its Landing Gear Overhaul business, including wheels and brakes operations, to GA Telesis for $51 million, with the transaction closing on April 3, 2025. The unit had historically pressured margins due to its lower profitability relative to AAR's core offerings, and its divestiture was projected to immediately boost adjusted operating margins by reallocating resources to higher-return areas.[66][31][68] Management described this as part of an ongoing evaluation of the portfolio to accelerate growth in aviation services, with the deal expected to be accretive to earnings per share.[69] These actions reflect AAR's broader strategy of refining its business mix, as evidenced in fiscal 2025 earnings discussions, where leadership highlighted portfolio streamlining alongside acquisitions to support revenue expansion and margin improvement amid rising demand in commercial and defense aviation.[70] The company continues to assess additional opportunities for optimization to sustain competitive positioning.[9]Government Engagement
Contracts with Defense and Commercial Sectors
AAR Corp. maintains significant contracts with the U.S. Department of Defense (DoD) and allied militaries, focusing on maintenance, repair, overhaul (MRO), logistics, and parts distribution for aircraft platforms. In September 2024, AAR secured a five-year follow-on contract with the Naval Air Warfare Center Aircraft Division (NAWCAD) to perform airframe maintenance for the U.S. Navy's P-8A Poseidon fleet, encompassing scheduled and unscheduled maintenance, in-service repairs, technical directive incorporation, airframe modifications, and logistics support. Earlier, in 2021, the company was awarded a 10-year, $365 million indefinite-delivery/indefinite-quantity (IDIQ) contract by the U.S. Air Forces in Europe (USAFE) for depot-level maintenance and modifications primarily on F-16 aircraft, with potential overflow support for other platforms. In September 2025, AAR's Mobility Systems segment obtained an IDIQ contract from the Defense Logistics Agency (DLA) Troop Support for mobility solutions, including containers, shelters, and accessories, featuring a one-year base period and four one-year options valued up to $85 million. Additionally, AAR holds a 20-year base Supplier Capabilities Contract with DLA Aviation, awarded in 2022 as the first to a non-original equipment manufacturer (OEM), enabling rapid distribution of OEM parts; this was expanded in March 2025 to include Unison products. The firm also signed an exclusive distribution agreement in August 2025 with AmSafe Bridport for restraint systems on KC-46 and C-40 platforms, targeting U.S. and foreign defense markets. Internationally, AAR received a two-year contract in 2022 to support logistics for the Royal Norwegian Air Force's P-8A fleet. In the commercial sector, AAR emphasizes supply chain management, parts distribution, and warranty services for airlines and OEMs, often through multi-year agreements rather than publicized mega-contracts. In 2023, AAR entered two multi-year commercial pacts with Moog Inc., one designating AAR as a global distributor of Moog products for mature aircraft platforms and another enhancing collaboration on actuation and control systems for commercial operators. Through its Airinmar subsidiary, AAR provides warranty management and value engineering services; in a recent agreement, Airinmar was selected by Malaysia Airlines to handle these functions for new aircraft, optimizing recovery of warranty claims and parts value. AAR supports major commercial carriers such as United Airlines, Delta Air Lines, Southwest Airlines, Allegiant Air, and Air Canada with integrated solutions for aircraft uptime, though specific contract details for these relationships are typically proprietary and not publicly itemized beyond general service provision. These commercial engagements complement defense work by leveraging shared MRO capabilities on derivative platforms like the P-8A, which is based on the Boeing 737 commercial airliner.Lobbying and Policy Influence
AAR Corp. engages in federal lobbying primarily through in-house and external firms, focusing on issues within the air transport sector, including defense procurement, aviation maintenance regulations, and supply chain policies.[71] The company's lobbying expenditures have increased over recent years, reflecting its reliance on government contracts in commercial and military aviation. In 2024, AAR spent $850,000 on lobbying, up from $820,000 in 2022 and $970,000 in 2023, with partial-year data for 2025 showing $450,000 as of mid-year.[71] [72] All of its 11 lobbyists in 2024 had previously held government positions, indicating reliance on the revolving door for policy access.[72]| Year | Lobbying Expenditures |
|---|---|
| 2022 | $820,000 |
| 2023 | $970,000 |
| 2024 | $850,000 |
| 2025 (partial) | $450,000 |
Legal and Ethical Issues
Foreign Corrupt Practices Act (FCPA) Investigations
In December 2024, AAR Corp., an aviation services provider, resolved parallel investigations by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) into alleged violations of the Foreign Corrupt Practices Act (FCPA) stemming from bribery schemes in Nepal and South Africa between 2015 and 2020.[76][77] The company self-reported potential code of conduct violations in July 2019, prompting an internal investigation and subsequent disclosures to U.S. authorities.[78] The Nepal scheme involved AAR's subsidiary, AAR Nepal Holdings Pte. Ltd., paying approximately $1.6 million in bribes to Nepalese government officials and Yeti Airlines executives to secure contracts for Airbus aircraft parts and services valued at over $10 million.[77] Bribes were funneled through a third-party distributor, disguised as commissions, to influence procurement decisions at Yeti Airlines, a carrier operating in Nepal.[76] Deepak Sharma, former CEO of AAR's Asia Pacific operations, admitted to conspiring in this scheme and resolved related charges separately, receiving probation without prison time.[79] In South Africa, AAR subsidiaries paid around $1.9 million in bribes to officials at South African Airways Technical (SAAT), a state-owned entity, to obtain a multi-year aircraft component support contract worth approximately $4.5 million.[77] Payments were routed via a third-party agent, Julian Aires, who pleaded guilty in July 2024 to FCPA conspiracy charges for facilitating corrupt payments to SAAT personnel in exchange for the award.[80] These actions generated illicit profits of about $29.2 million for AAR, according to SEC findings.[77] Under a DOJ non-prosecution agreement, AAR paid a $26.4 million criminal penalty and $18.6 million in administrative forfeiture, while the SEC settlement required $29.2 million in disgorgement and prejudgment interest.[76][77] The resolutions credited AAR's cooperation, voluntary disclosure, and remediation efforts, including termination of involved employees and enhancement of compliance controls, but did not impose an independent monitor.[81] No criminal charges were brought against the company itself, reflecting DOJ's assessment of its accountability measures.[76]Remediation and Compliance Efforts
Following the December 19, 2024, resolution of Foreign Corrupt Practices Act (FCPA) investigations with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC), AAR Corp. undertook remedial measures credited by both agencies for their effectiveness, which contributed to the avoidance of an independent compliance monitor.[76][77] These efforts included hiring a chief ethics and compliance officer and a compliance monitoring manager to oversee anti-corruption initiatives.[82] Under the terms of the DOJ's non-prosecution agreement (NPA), AAR committed to maintaining and enhancing a compliance program designed to prevent and detect FCPA violations across its operations, affiliates, agents, and third-party representatives.[83] This encompassed conducting a comprehensive analysis of its existing compliance framework and implementing extensive improvements, such as strengthened internal controls, risk assessments, and training protocols tailored to high-risk international activities.[84] AAR also agreed to periodic reporting to the DOJ on the status of its remediation and compliance program implementation over a two-year period.[85] The company's cooperation during the investigations, including voluntary self-disclosure (albeit delayed) and proactive remediation, was explicitly factored into the settlement terms by regulators, resulting in reduced penalties compared to potential outcomes without such actions.[86] AAR's Global Anti-Corruption Policy, which prohibits bribery of foreign officials and reimbursements for fines related to such violations, forms a core element of these ongoing compliance structures.[74] These measures aim to address the root causes of the violations involving former subsidiary executives in Nepal and South Africa, where improper payments secured contracts worth millions.[81]Leadership and Governance
Executive Team and Succession
John M. Holmes has served as Chairman, President, and Chief Executive Officer of AAR Corp. since January 2023, June 2018, and May 2017, respectively, making him the third CEO since the company's public listing in 1995.[87][88] At age 48, Holmes reports directly to the Board of Directors and oversees the senior leadership team, drawing on prior roles including COO and extensive aviation industry experience at AAR and Boeing.[89] The executive team comprises senior vice presidents managing core functions in aviation services, defense, supply chain, and technology. Key members include:- Sean M. Gillen, Senior Vice President and Chief Financial Officer, responsible for financial strategy and reporting.[90]
- John B. Cooper, Senior Vice President, Global Government and Defense, a retired U.S. Air Force Lieutenant General focusing on defense contracts.[90]
- Rahul S. Ghai, Senior Vice President and Chief Digital and Technology Officer, leading digital transformation initiatives.[91]
- Jessica A. Garascia, Senior Vice President, General Counsel, Chief Administrative Officer, and Secretary, handling legal, compliance, and administrative matters.[91]
- Christopher A. Jessup, Senior Vice President and Chief Commercial Officer, directing sales and customer relations.[91]