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AAR Corp's Airlift Service Renewed

Zacks Equity Research

AAR Corp. (AIR), a world-renowned supplier of aerospace, defense products and services, recently declared that it has been chosen by U.S. Transportation Command (:USTRANSCOM) to extend its airlift support services for the U.S. Department of Defense operations based in Afghanistan through May 31, 2013. The renewal option offered to AAR is valued at $104 million and it will be considered as the extension of the service order won by the company in June, 2010.

According to the renewal contract, AAR will carry on its services to meet the U. S Military’s Airlift requirement through using its 15 fixed-wing aircraft. Additionally, the company will continue supporting the U.S. NATO operations in Afghanistan and U.S. Department of Defense engaging its airlift operating entity by providing rotary-wing aircraft as well as fixed-wing support services. The aircraft allocated by AAR are specifically designed to transport personnel, cargo and mail while the support process offers personnel, tools and maintenance services.

The company has already established itself successfully within the U.S. Government and its associates in Afghanistan, serving transport and logistics requirement of the nation’s defense forces. Thus, this renewal option is expected to bolster the company’s influence within the U.S. Transportation Command and Department of Defense.

Illinois based AAR Corp.'s provides a wide range of high-quality, and cost-effective technical services. The company’s airlift unit is engaged in offering expeditionary airlift and specific aircraft services to assist national security, safety and humanitarian relief operations in various regions. The company competes directly with its peers such as Hexcel Corp. (HXL), Rolls Royce Holdings plc (RYCEY) and Lockheed Martin Corporation (LMT).

We currently hold an ‘Underperform’ recommendation on the stock. AAR Corp. has a Zacks #3 Rank, implying a short-term ‘Hold’ rating (1-3 months).

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