Yahoo Finance AAR (AIR) Begins MRO Facility Expansion in Oklahoma City
AAR Corp. AIR recently announced that it has started construction of its maintenance, repair and overhaul (MRO) facility in Oklahoma City.
Details of the Project
The new airframe MRO facility, being constructed near AAR’s existing facility at Will Rogers World Airport, is anticipated to be operational in January 2026.
The facility will provide AAR with an added hangar and warehouse space of more than 80,000 square feet. It will be enough to accommodate all variants of Boeing’s 737 jets, including the 737-10 models.
AAR’s Prospects in Aircraft MRO
With a steady recovery witnessed in the demand for air travel over the past couple of years, overcoming the challenges of the pandemic and rising economic growth in emerging markets, demand for aircraft maintenance has increased manifold. To this end, the Mordor Intelligence firm expects the global commercial aircraft MRO market to expand at a compound annual growth rate (CAGR) of 4.9% during 2024-2029.
With North America constituting the largest share of this growth projection, AAR Corp. enjoys solid expansion opportunities as the company remains the largest independent MRO provider in this. In third-quarter fiscal 2024, AAR’s sales to commercial customers increased 18% over the prior-year quarter, primarily driven by strong demand for its MRO services.
To acquire more shares of the global commercial aircraft MRO market, in March 2024, AAR acquired Triumph Group’s Product Support business, a leading global provider of specialized MRO capabilities for critical aircraft components. AAR currently has seven MRO facilities worldwide and has been expanding. On Mar 27, 2024, AAR began construction of its MRO facility in Miami. Once completed, it will increase the maintenance capacity at AAR’s airframe MRO by 33%.
Such developments, along with the company’s latest expansion announcement in Oklahoma City, should increase AAR’s profitability in the coming days.
Peer Moves
Apart from AAR, aerospace players that have a solid presence in the global commercial aircraft MRO industry and thus may gain from the flourishing market prospects are as follows:
HEICO HEI: HEICO’s Flight Support Group (FSG) repairs, overhauls and distributes jet engine and aircraft components, avionics and instruments for domestic and foreign commercial air carriers and aircraft repair companies. In first-quarter fiscal 2024, repair and overhaul parts and services comprised 22% of FSG’s sales.
HEI’s long-term (three-to-five-years) earnings growth is pegged at 17.6%. The Zacks Consensus Estimate for fiscal 2024 sales implies a 29.7% improvement from the previous year.
Airbus Group EADSY: The company’s Airbus Services has a dedicated organization that has been created in order to deliver world-class and fully integrated aviation services to MRO organizations. Airbus collaborates with best-in-class MROs to provide end-to-end airframe maintenance services around the world. It offers services like real-time health monitoring, predictive maintenance, Flight Hour Services and many more.
EADSY’s long-term (three-to five-years) earnings growth is pegged at 12.4%. The Zacks Consensus Estimate for 2024 sales implies a 9.5% improvement from the previous year.
MTU Aero Engines MTUAY: MTU’s MRO business segment comprises commercial maintenance activities. It provides services for various aircraft platforms, including Airbus, Boeing, Bombardier, and Embraer. In 2023, the segment’s reported revenues totaled $4.65 billion, an increase of 17% over the previous year.
The Zacks Consensus Estimate for MTUAY’s 2024 sales implies a 38.9% improvement from the previous year. The Zacks Consensus Estimate for 2024 earnings per share implies an 8.7% improvement.
Price Performance
In the past three months, shares of AIR have gained 8.3% compared with the industry’s 11.8% growth.
Image Source: Zacks Investment Research
Zacks Rank
AAR Corp. currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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