In less than a year, AAR Corp. has spent $845 million on two acquisitions. Both companies increase its capabilities as well as its operating margin—and both deals happened in March. Could there be another acquisition in March 2025?
AAR purchased Triumph Group’s product support business on March 1 for $725 million. The deal included repairs for about 10,000 part numbers in Air Transport Association chapters and five facilities—four in the U.S. and one in Thailand. The Thailand facility gives AAR its first wholly owned MRO in Asia.
On March 20, 2023, it acquired Trax, an MRO software company, for $120 million to improve its internal efficiencies and develop new digital sources of revenue.
“AAR has been really focused on improving the margin profile of our company,” including introducing efficiencies in the hangar, says John Holmes, AAR’s president and CEO.
The growth in the parts business has been a big part of its record margins.
“Triumph coming in is immediately accretive to our margins,” and it should help AAR continue “to move up into the right from an operating margins perspective,” Holmes says.
Since Holmes became CEO six years ago, “This was literally the fourth written offer that I sent to Dan Crowley, the CEO of Triumph, offering to acquire that business because we felt for a lot of reasons that represented a great fit,” he says.
AAR courted Trax over a decade before they made the match.
Should the industry expect AAR to acquire another company next March, following these two acquisitions?
“We’ve deployed more capital than ever, in terms of inorganic growth at the company, so the focus right now is to absolutely make sure that these investments are a success and the integration goes well,” Holmes says.
However, AAR does have a list of companies that it watches—and updates.
While AAR is focused on integrating Triumph over the next 12-18 months, the board did think about “if we’re going to be heads-down focused on this for a while,” could it miss an opportunity that is on its list?
“We’re pretty confident that anything that we would be super, super interested in is going to be a little bit further out, so we think that the timeline of doing this deal relative to other opportunities” should “work out pretty well,” Holmes says.
Right now, the company is evaluating repair capabilities at AAR and the former Triumph business and determining what repairs will be done at which sites.
The longer element is deciding where it wants to develop new capability or move capability to where it currently does not exist and “where we have to build new test stands or new test cells,” he says. That is what will take the 12-18 months to complete.
Being part of an MRO instead of an OEM “is a fantastic fit for our capabilities,” says Jim Berberet, AAR senior vice president for component services, who was the president of Triumph’s product support group before the acquisition. “Our culture matches very, very well—it’s a good group of people we’re matching up with, so we’re looking forward to the global expansion for our MRO capabilities.”
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