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AAR to Buy PFW Aerospace GmbH Assets

Zacks Equity Research

A wholly owned subsidiary of Illinois-based aerospace/defense products and services supplier AAR Corp. (AIR), Telair International GmbH, has plans to take over the cargo loading system assets of Germany-based PFW Aerospace GmbH.

Miesbach, Germany based Telair holds a leading position in designing as well as manufacturing of cargo loading systems. This unit is also known for its support services of cargo loading systems for wide-body and narrow-body aircraft, even for the most current and next-generation passenger and freighter models.

Hence, the acquisition, which is expected to be completed by the end of 2013, will boost Telair's market position as a supplier of cargo loading and baggage handling systems. The purchase will be funded from available cash on hand.

Telair also supplies standard container-based systems for Airbus A330/340 aircraft types and for the future Airbus A350, besides The Boeing Co.’s (BA) 747-800. Moreover, it provides the business manufactures systems and components for the Boeing 737 and Airbus A320 families of aircraft, and for converted Boeing 767-300s and 747-400s.

AAR has maintained a satisfactory competitive position through its market expertise as well as technical and financial capabilities across segments. The company recently reported mixed first quarter fiscal 2014 results. Its bottom line surpassed the Zacks Consensus Estimate driven by efficient cost management. However, a decline in sales at the Technology Products division hurt the top line. Again, sales to commercial customers declined 6.1% year over year during the first quarter of fiscal 2014. The company however expects it to return to growth in the second quarter of fiscal 2014.

Currently, AAR Corp. has a Zacks Rank #3 (Hold). However, other aviation companies like Alliant Techsystems Inc. (ATK) and Elbit Systems Ltd. (ESLT) are worth looking into now. Alliant Techsystems and Elbit Systems sport a Zacks Rank #1 (Strong Buy).

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