AAR (AIR) Begins MRO Facility Expansion in Oklahoma City

Core Viewpoint - AAR Corp. has initiated the construction of a new maintenance, repair, and overhaul (MRO) facility in Oklahoma City, which is expected to enhance its operational capacity and profitability in the growing aircraft MRO market [1][2][4]. Project Details - The new airframe MRO facility will be located near AAR's existing facility at Will Rogers World Airport and is anticipated to be operational by January 2026 [2]. - The facility will add over 80,000 square feet of hangar and warehouse space, capable of accommodating all variants of Boeing's 737 jets, including the 737-10 models [2]. Industry Prospects - The global commercial aircraft MRO market is projected to grow at a compound annual growth rate (CAGR) of 4.9% from 2024 to 2029, with North America being the largest contributor to this growth [3]. - AAR Corp. is positioned to benefit from this growth as the largest independent MRO provider in North America, with a reported 18% increase in sales to commercial customers in the third quarter of fiscal 2024 compared to the previous year [3]. Recent Acquisitions and Expansions - In March 2024, AAR acquired Triumph Group's Product Support business, enhancing its specialized MRO capabilities for critical aircraft components [4]. - AAR currently operates seven MRO facilities worldwide and has begun construction of another facility in Miami, which will increase its maintenance capacity by 33% [4]. Peer Moves - HEICO's Flight Support Group reported that repair and overhaul parts and services accounted for 22% of its sales in the first quarter of fiscal 2024, with a long-term earnings growth estimate of 17.6% [5]. - Airbus Group's MRO services are designed to provide integrated aviation services, with a long-term earnings growth estimate of 12.4% [6]. - MTU Aero Engines reported revenues of $4.65 billion in 2023 for its MRO segment, reflecting a 17% increase from the previous year, with a projected 38.9% improvement in 2024 sales [7]. Price Performance - Over the past three months, AAR Corp.'s shares have increased by 8.3%, while the industry has seen an 11.8% growth [8].