You’ve been with AAR for nearly 25 years. Tell us about your motivations for joining and staying at this company for so long?
I joined AAR at a very critical time, accepting the job on the night of September 10th, 2001, and resigning from my previous job in Finance the morning of 9/11. The company, industry, and world were dramatically impacted. I was hired to do strategy and M&A but instead found myself helping the Company through crisis and survival mode, which allowed me to work across multiple areas of the Company. Those experiences shaped my knowledge of AAR and the aftermarket space and brought me into a team and Company culture that still motivates me every day.
How are AAR’s commercial offerings and customers evolving alongside market demands?
We focus on three main areas: selling parts, repairing aircraft and aircraft parts, and integrating these capabilities into long-term supply chain contracts, which we call integrated solutions or commercial programs. Our parts business is divided into two categories: factory new parts, where we work with OEMs like Eaton and GE to distribute parts they manufacture, and used parts, where we buy, repair, and resell parts from aircraft and engines. These used parts, once overhauled, offer significant savings to airlines while maintaining the same form, fit, and function as OEM parts.
In the repair business, we handle both whole airframe maintenance and individual aircraft component repairs. We’re also the largest in the world for used parts, and this has been particularly appealing to airlines focused on going green. By reusing and repairing parts, we’re not only providing cost-effective solutions but also contributing to sustainability initiatives.
As AAR expands its operations, where have you identified as the places with the most growth potential going forward?
We see growth potential globally. We’ve had a component repair facility in Amsterdam for more than 50 years and continue investing in it. Earlier this year, we made the largest acquisition in the company’s history by buying Triumph Product Support, which includes a major presence in Thailand - our first significant brick-and-mortar maintenance operation in Asia, a region where we see substantial opportunities due to the number of aircraft slated to be delivered. We’re also focusing on expanding our wide-body aircraft capabilities, particularly in Europe and Asia, where we see demand for servicing aircraft like the 787 and A350.
The democratization of flight and rising incomes across Asia have driven demand for air travel. As airlines in these regions mature, they become more open to lower-cost aftermarket solutions like those AAR offers. We’ve seen significant growth not just in MRO services but also in our parts supply business, selling both used and new materials. As the aviation industry in Asia continues to develop, we believe there will be a permanent shift towards using more aftermarket parts, especially given the ongoing OEM supply chain challenges.
Given the ageing workforce and the labour-intensive nature of MRO, how is AAR addressing workforce recruitment and retention challenges?
We recognized the tightening labor market well before COVID and started focusing on workforce development early on. In my first year as CEO in 2018, we noticed that our hangars, which were highly seasonal, struggled to find talent when we needed to ramp up after the summer lull. This labor shortage led to us missing our numbers, a harsh lesson that spurred us into action. We began partnering with high schools, trade schools, and colleges to get students excited about aviation and developed scholarship, mentorship, and apprenticeship programs. The benefits of these programs extend beyond AAR and across the industry. Aviation maintenance is an exciting career field, and continued growth, like our expansions in Miami and Oklahoma City, creates additional opportunities in communities.
Thanks to our workforce development efforts, we are in a great position from a staffing perspective. However, it is a competitive labor market, so we are always recruiting new talent. We are also proud of the work we have done to retain talent by providing training, listening to their feedback, and ensuring the AAR culture is top-tier.
How does the impact of supply chain problems manifest on AAR’s operations?
Supply chain challenges pushed airlines to seek alternative solutions, particularly in sourcing parts. With Boeing and Airbus unable to produce aircraft at the expected rates due to supply chain issues, airlines are holding onto older aircraft longer, leading to additional maintenance checks, which AAR provides. Flying aircraft longer also requires more parts than anticipated. Airlines are turning to used serviceable material as an alternative, which is where AAR, the largest in the world for used parts, comes in.
However, switching from new to used parts isn't straightforward for airlines. They need to ensure that the used parts are from legitimate vendors like AAR, with proper documentation and quality checks. The adoption of used parts has accelerated, and we believe this shift towards using more aftermarket material will be permanent, even after supply chain issues are resolved, because they are more cost-effective and equally safe.
Given recent scandals and intensifying concerns around safety, as a company offering ‘used’ parts, what are you doing to ensure the highest levels of quality control?
For us, there is nothing more important than quality and safety. “Quality first. Safety always.” is a core Company value. The recent industry scandals have served as a reminder of the importance of acquiring parts from reputable companies. AAR was the first used material organization in the industry, and we’ve been around for decades, which gives us a strong reputation for quality and safety.
Airlines have increasingly prioritized their spending with us because of our reputation and robust quality-centric processes. All parts we handle must meet FAA standards, which include rigorous checks and balances both within AAR and across the industry. This ensures that every part we supply or repair is airworthy and safe for use.
Looking forward to the next 2-5 years, what do AAR’s growth plans look like?
First, we’re driving volume through our Triumph Product Support business acquisition. Another major focus is on the digital side, particularly with Trax, the software company we acquired in 2023; Trax is a maintenance ERP system used by over 100 airlines worldwide, supporting about 5,000 aircraft. By combining Trax’s software with our hardware offerings, we can create a powerful ecosystem.
We’re also exploring AI to make our operations more efficient, augment the capabilities of our mechanics, and better determine our customers’ parts needs. Additionally, we’re working to reduce the paper-intensive nature of the maintenance business, which will save time, and resources, and improve overall efficiency in our hangars.
