AAR Corp. reported a sharp rise in third-quarter earnings, as strong demand for aircraft parts and maintenance services continued to offset supply constraints in new aircraft deliveries while the integration of its acquisitions are reported to be progressing well.
The US-based aviation services provider posted sales of $845m for the fiscal quarter ended February 28, up 25% year-on-year, while adjusted diluted earnings per share rose 26% to $1.25. Net income reached $68m on a GAAP basis, compared with a loss of $8.9m in the same period last year, which had been impacted by a one-off charge related to the divestment of its landing gear overhaul business.
Adjusted EBITDA rose 26% to $102m, with margins improving slightly to 12.1%. Operating cash flow totalled $75m, helping reduce net leverage to 2.17x, within the company’s target range of 2.0x to 2.5x - leaving flexibility to continue funding its growth
Growth was driven by AAR’s core aftermarket activities, with its parts supply segment increasing sales by 45%, supported by strong demand for new parts distribution, particularly from government customers. The company’s Repair & Engineering business also recorded higher volumes across hangar and component repair operations, reflecting continued utilisation of ageing aircraft fleets.
Chief executive John Holmes said the company delivered “another outstanding quarter”, highlighting broad-based growth across parts, repair and software activities. He added that demand for aftermarket solutions remains resilient, underpinned by strong air travel and limited availability of new aircraft.
Industry-wide delivery delays have forced airlines to keep older aircraft in service for longer, boosting demand for maintenance, repair and spare parts. However, sourcing aircraft and engines for teardown has become increasingly difficult, as operators retain assets to support flying schedules.
AAR said integration of its recently acquired HAECO Americas MRO business is progressing ahead of schedule, with expected synergies supporting future margin expansion. HAECO is an MRO business based in Hong Kong.
The company is also seeing strong performance from its ADI acquisition, particularly in government-related product lines, and remains on track to complete its acquisition of A-R-T later this year.
Looking ahead, Holmes said AAR sees “significant opportunity for continued profitable growth”, supported by sustained demand across the aviation aftermarket despite ongoing geopolitical and fuel price uncertainties.