AAR Corp., perhaps best known for its U.S.-based heavy commercial airframe maintenance business, has been busy diversifying its services, ramping up component support and parts-supply deals—with a notable focus on the Asia-Pacific region—and signaling that digital offerings will play a larger role in the near future.

AAR recently marked the one-year anniversary of a wide-ranging agreement with Air New Zealand (ANZ) by expanding the deal. In November 2016, the MRO specialist agreed to provide per-flight-hour support for ANZ’s 15-aircraft Boeing 777 fleet. That agreement covered 740 parts and included stocking in ANZ’s network. More significantly, it established ANZ as AAR’s exclusive Asia-Pacific repair provider and preferred supplier for “selected parts,” AAR said.

The expanded agreement, announced November 20, "significantly increases" the volume of contracted component repairs that AAR will push through the airline's shops, AAR explained. "With strong OEM relationships and vast airline operational experience, Air New Zealand’s workshops complement AAR’s workshops in Amsterdam and New York,” said Deepak Sharma, president, AAR integrated solutions-commercial.

For AAR, the ANZ partnership established a major presence in the Asia-Pacific region while further expanding an aggressive push into supply chain services, and component support, specifically. AAR struck several large fleet-support deals in 2017, including a five-year agreement with IndiGo to overhaul Airbus A320 landing-gear shipsets and component support deal for Allegiant Air’s growing A320 fleet. Both are new customers. It also added work with existing customers SkyWest, for Bombardier CRJ support, and BlueBird Cargo, for Boeing 737 Classic component support.

AAR has more than 1,600 aircraft under some kind of support deal, placing it among the industry’s top fleet-support providers. The ANZ agreement is part of a global expansion that also saw it open a parts warehouse at Dubai World Central (DWC) Airport in early 2017. That move helped balance AAR geographically—it has similar facilities in Asia, Europe, and North America—and could help in landing more regional customers beyond IndiGo and Flydubai, which has turned to AAR for both 737NG and Max component support.

The component support and parts-supply services augment a strong airframe maintenance business that continues to grow. AAR in September acquired two airframe MRO facilities from Canada's Premier Aviation and landed agreements to service Air Canada A320-family aircraft and Embraer E190s. It also won deals to service Air Canada's Boeing 767 fleet, which is being transitioned to the carrier's Rouge low-cost brand, as well as Republic Airline's 188 E170-family aircraft. In each case, the deals expanded on existing customer relationships.

Digital Support Services

As AAR broadens its supply-chain services and solidifies its core airframe MRO work, the company has been expanding in a related area: data-driven support services. Last October, AAR rolled out a new version of its PAARTS Store, which stocks some one million new and used parts. It also introduced AARLive, a portal tailored for its component-support customers. Among its features: access to required paperwork ahead of part shipment and tracking of orders in real time.

“These new digital services are the first results of AAR’s ongoing investment in an intelligent solutions team and related solution development to reimagine 'business as usual' and drive additional value for our customers,” said John Holmes, AAR president and COO. “AAR is working hard to extend our industry-leading supply chain services in the digital realm.”

AAR's next step into the digital realm—and arguably its boldest to date—came in December. It created the position of chief digital officer and announced the hiring of data science specialist and former Gogo executive Andrew Kemmetmueller.

“I joined AAR because we have a unique opportunity to layer digital capabilities and services into the company’s industry-leading aviation aftermarket services,”  explained Kemmetmueller. “Digitization is a new opportunity for AAR to partner with customers on innovations that create operational efficiencies and deliver more value.”

While AAR is primarily a commercial aviation company, it has significant defense-industry activity as well. Its Aviation Services, which includes supply chain and MRO services and makes up approximately 84 percent of its $1.8 billion in annual sales, generates 25 percent of its revenues from defense.

AAR has partnerships with more than 30 OEMs including Ametek, Crane, Eaton, Northrop Grumman, Pratt & Whitney, Unison and UTC Aerospace Systems, which help it supply military aircraft operators with parts. The company also has an extensive inventory of expendable, repairable, and overhauled parts for military aircraft. AAR provides spare components for many major aircraft, including the F-16, F-15, F-18, V-22, C-130, H-60, CH-47, CH-53, AH-64, and UH-1.

AAR generates 16 percent of its revenues from expeditionary services, including providing fixed- and rotary-wing lift in austere environments. About 80 percent of this business unit's revenues come from commercial work. The unit also supplies cargo services, including pallets and containers.