WOOD DALE, Ill. - AAR CORP. (NYSE: NYSE:AIR), an aviation services provider, has entered into a multi-year agreement with Chromalloy to become the exclusive distributor of certain engine parts. The deal, announced today, focuses on the distribution of Chromalloy's Parts Manufacturer Approval (PMA) turbine blades used in CF6-80C2 engines, a widely utilized model in commercial aviation.
Under the terms of the agreement, AAR will distribute the high pressure turbine (HPT) Stage 1 and Stage 2 blades to the global aftermarket, although some exclusions apply due to Chromalloy's existing customer commitments. The initial term of the partnership is three years, and AAR has already placed an initial order to ensure immediate availability for global distribution.
Chromalloy's CEO, Chris Celtruda, remarked on the long-standing relationship between the two companies, emphasizing the synergy of Chromalloy's engineering and manufacturing capabilities with AAR's extensive aero-engine channel access. Sal Marino, AAR's Senior Vice President of Parts Supply, expressed the company's enthusiasm for expanding their aftermarket offerings with Chromalloy's parts, highlighting AAR's commitment to providing a comprehensive range of solutions for engine repair facilities.
AAR, headquartered near Chicago, operates in over 20 countries, offering a variety of services across four segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services. Chromalloy has a history of over 70 years in the aerospace sector, providing engineering and manufacturing services, and is recognized for its FAA-certified PMA and DER solutions.
This agreement is expected to enhance AAR's product offerings and reinforce Chromalloy's position in the aftermarket parts industry. The collaboration aims to make PMA solutions more accessible to operators and repair stations globally.
The press release also included forward-looking statements regarding the potential benefits and activities anticipated from the new engine parts supply agreement. These statements are based on current management expectations and are subject to risks and uncertainties that could cause actual results to differ.
The information provided in this article is based on a press release statement from AAR CORP.
In other recent news, AAR Corporation reported a strong start to fiscal 2025, with first-quarter sales increasing by 20% to reach $662 million, driven equally by the commercial and government sectors. Notably, operating margins expanded, with adjusted margins rising from 7.3% to 9.1%. Despite challenges in the Used Serviceable Material (USM) market, AAR projects an 18% to 22% sales growth for the second quarter while maintaining stable operating margins.
In a significant contract development, AAR, in partnership with Delta TechOps, secured a $1.2 billion contract previously held by StandardAero. Benchmark, an analyst firm, reiterated its Buy rating on AAR shares, highlighting AAR's recent contract achievements and the ongoing integration of Triumph Products as reasons for investors to consider AAR for aerospace aftermarket exposure.
In other company developments, AAR's subsidiary, Airinmar, extended its service agreement with Singapore Airlines (OTC:SINGY), a partnership since 2005. This extension will enable Airinmar to continue providing comprehensive repair cycle management services to the airline. Furthermore, AAR's acquisition of Triumph Product Support is set to enhance repair capabilities, with plans to expand into accessories and components. These are among the recent advancements for AAR Corporation, with the next update on financial performance scheduled for January with the second-quarter results announcement.
InvestingPro Insights
AAR CORP.'s recent agreement with Chromalloy aligns well with its current financial performance and market position. According to InvestingPro data, AAR has shown strong revenue growth, with a 16.09% increase over the last twelve months and a notable 20.37% quarterly growth. This expansion in product offerings through the Chromalloy partnership could further boost these positive trends.
InvestingPro Tips highlight that AAR's net income is expected to grow this year, and analysts predict the company will remain profitable. This outlook supports the strategic move to become the exclusive distributor for Chromalloy's PMA turbine blades, potentially enhancing AAR's market position in the aviation services sector.
The company's P/E ratio of 37.16 suggests that investors have high expectations for future growth, which this new agreement could help fulfill. Additionally, AAR's liquid assets exceeding short-term obligations indicate a strong financial position to support this expansion in its parts supply business.
It's worth noting that AAR's stock has shown significant returns over the last week, with a 12.55% price increase, possibly reflecting market optimism about developments like this partnership. However, potential investors should be aware that stock price movements are quite volatile, as another InvestingPro Tip points out.
For those interested in a deeper analysis, InvestingPro offers 5 additional tips for AAR CORP., providing a more comprehensive view of the company's financial health and market position.
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