AAR Agrees to Divest Non-Core Composites Manufacturing Business
June 29 2020 - 8:30AM
AAR CORP. (NYSE: AIR), a leading provider of aviation services to
commercial and government operators worldwide, announced that it
has entered into a definitive agreement to divest its aerospace
composite manufacturing business after running a sale process that
began earlier this year. The buyer is an affiliate of Architect
Equity. The Composites business designs, fabricates and assembles
composite aerospace products for customers in the commercial
aerospace and defense industries.
“This divestiture is consistent with our multi-year strategy to
focus our portfolio on our core services offerings. It will reduce
complexity and allow us to further prioritize our efforts on our
market-leading aviation aftermarket operations,” said John M.
Holmes, President and Chief Executive Officer of AAR CORP.
The divestiture of the Composites business, which was
unprofitable in fiscal year 2020, along with AAR’s previously
announced cost reduction actions, are expected to drive meaningful
margin improvement once demand recovers from the impact of
COVID-19. Our other cost reduction actions include:
- Closing the Duluth, Minnesota maintenance, repair and overhaul
facility and transferring the equipment to other AAR
operations
- Furloughing approximately 1,000 full-time employees
- Eliminating significant headcount through contractor and
employee reductions
- Implementing executive and other employee pay reductions
- Consolidating the Goldsboro, North Carolina facility into the
Cadillac, Michigan facility
- Exiting underperforming contracts and product lines
Architect is an experienced investor, and AAR believes it is the
right partner to leverage Composites’ history of designing and
manufacturing complex aerospace products, and to ensure the
continued success of the business and its customers and employees
going forward.
The Composites business employs approximately 150 people at
facilities located in Clearwater, Florida and Sacramento,
California. The transaction is expected to close in the third
quarter of calendar year 2020, subject to the satisfaction of
customary closing conditions. Terms of the transaction were not
disclosed.
SunTrust Robinson Humphrey, Inc. is acting as financial advisor
to AAR and Winston & Strawn LLP is acting as legal advisor to
AAR.
# # #
About AAR
AAR is a global aerospace and defense aftermarket solutions
company with operations in over 20 countries. Headquartered in the
Chicago area, AAR supports commercial and government customers
through two operating segments: Aviation Services and Expeditionary
Services. AAR’s Aviation Services include Parts Supply; OEM
Solutions; Integrated Solutions; and Maintenance, Repair and
Overhaul (MRO) Services. AAR’s Expeditionary Services include
Mobility Systems and Composites Manufacturing operations.
Additional information can be found at www.aarcorp.com.
This press release contains certain statements relating to
future results, which are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995,
including the expectation to drive meaningful margin improvement
once demand recovers from the impact of COVID-19. Forward-looking
statements may also be identified because they contain words such
as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘continue,’’ ‘‘could,’’
‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘likely,’’ ‘‘may,’’
‘‘might,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘predict,’’ ‘‘project,’’
‘‘seek,’’ ‘‘should,’’ ‘‘target,’’ ‘‘will,’’ ‘‘would,’’ or similar
expressions and the negatives of those terms. These forward-looking
statements are based on beliefs of Company management, as well as
assumptions and estimates based on information currently available
to the Company, and are subject to certain risks and uncertainties
that could cause actual results to differ materially from
historical results or those anticipated, including those factors
discussed under Item 1A, entitled “Risk Factors”, included in the
Company’s Form 10-K for the fiscal year ended May 31, 2019 and the
Company’s Form 10-Q for the fiscal quarter ended February 29, 2020.
Should one or more of these risks or uncertainties materialize
adversely, or should underlying assumptions or estimates prove
incorrect, actual results may vary materially from those described.
These events and uncertainties are difficult or impossible to
predict accurately and many are beyond the Company’s control. The
Company assumes no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events. For additional information, see the comments
included in AAR’s filings with the Securities and Exchange
Commission.
Dylan Wolin
AAR CORP.
630-227-2000
dylan.wolin@aarcorp.com
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