AAR Business Model Canvas

Commercial airlines are crucial partners for AAR, driving demand for its MRO, parts distribution, and integrated solutions. These collaborations frequently manifest as multi-year contracts for the maintenance, repair, and overhaul of aircraft and engine components.

AAR's support for airlines' operational continuity is underscored by its reliable aftermarket and supply chain services. For instance, AAR has secured agreements for CFM56 engine material and nacelle maintenance, directly addressing airline needs for critical component support.

AAR's key partnerships are the bedrock of its operational success, enabling it to offer comprehensive aviation solutions. These relationships span OEMs, component manufacturers, government entities, commercial airlines, and technology providers, each contributing unique value.

In fiscal year 2024, AAR's government contracts, particularly with agencies like the U.S. Defense Logistics Agency, continued to be a significant revenue driver, highlighting the strategic importance of these long-term alliances for military readiness and AAR's financial stability.

Collaborations with airlines, such as the expanded eMobility and cloud hosting agreement with JetBlue Airways in 2024, showcase AAR's commitment to digital transformation and enhancing operational efficiency through integrated technology solutions.

These diverse partnerships allow AAR to broaden its service portfolio, gain access to specialized expertise, and improve supply chain integration, ultimately strengthening its market position and ability to meet complex customer demands.

AAR provides integrated solutions, encompassing flight-hour support, tailored performance-based logistics, and comprehensive fleet management for aircraft owned by their clients. These offerings are frequently structured under long-term agreements, particularly with government agencies, ensuring consistent operational support.

The company's strategic management of consumables and expendables is a crucial component of these integrated solutions, aimed at enhancing customer operational efficiency. In fiscal year 2024, AAR reported strong performance in its aftermarket services segment, which includes these integrated solutions, reflecting robust demand for comprehensive fleet support.

AAR's key activities are multifaceted, encompassing MRO services, supply chain solutions, integrated support, and specialized manufacturing. The company also develops and implements its proprietary Trax software for the MRO industry, aiming to digitize and streamline maintenance processes.

In fiscal year 2024, AAR reported strong performance, with total sales reaching $2.2 billion, a significant increase from $1.9 billion in fiscal year 2023. This growth was driven by robust demand across its aviation services segments, particularly in MRO and supply chain operations.

AAR’s extensive parts inventory, encompassing new and used serviceable aircraft parts, components, and engines, is a cornerstone of its business model. This vast stock ensures rapid fulfillment of customer needs.

The company’s robust supply chain infrastructure, bolstered by long-term agreements with Original Equipment Manufacturers (OEMs) and government agencies, is critical. This infrastructure enables AAR to offer immediate availability of parts, significantly reducing aircraft-on-ground (AOG) times for its clients.

For the fiscal year ending May 31, 2023, AAR reported Parts Trading segment revenue of $1.2 billion, highlighting the commercial significance of its inventory and distribution capabilities.

AAR's key resources are its skilled workforce, global MRO facilities, extensive parts inventory, proprietary Trax software, and long-term government contracts. These assets collectively enable AAR to deliver comprehensive aviation support services, manage complex supply chains, and drive operational efficiency for its clients.

The company's commitment to developing its over 5,600 employees through continuous training ensures they remain at the forefront of aviation technology. Furthermore, strategic expansions in 2024, such as new hangars, enhance its operational capacity and reach across more than 20 countries.

AAR's Parts Trading segment generated $1.2 billion in revenue for the fiscal year ending May 31, 2023, underscoring the value of its vast inventory and robust supply chain, which includes OEM agreements and government partnerships.

The Trax software platform is a significant intellectual property asset, driving efficiency and high-growth opportunities in the aviation aftermarket, with continued investment in fiscal year 2024 yielding improved customer operational efficiency.

Long-term government contracts with entities like the U.S. Navy provide AAR with revenue stability and a strong foundation for strategic growth, as evidenced by significant contributions from its government segment in fiscal year 2024.

AAR's commitment to reliable parts availability is a cornerstone of its value proposition. By maintaining an extensive inventory and a robust supply chain, the company significantly minimizes aircraft-on-ground (AOG) situations for its customers.

Strategic partnerships and proactive stocking strategies are key to AAR's supply chain resilience. This ensures customers consistently have access to critical aircraft components, thereby reducing operational risks and supporting uninterrupted fleet operations.

For fiscal year 2024, AAR reported strong performance in its Aviation Services segment, which is heavily reliant on parts availability. The company's ability to secure and deliver parts efficiently directly contributes to customer satisfaction and operational continuity, a vital factor in the aviation MRO market.

AAR provides a comprehensive suite of aviation aftermarket solutions, integrating MRO, supply chain, and logistics to offer a single, efficient point of contact for complex aviation needs.

This integrated approach significantly simplifies operations and reduces administrative burdens for clients, enhancing overall efficiency.

In fiscal year 2024, AAR reported $2.3 billion in total revenue, demonstrating substantial market demand for its streamlined, all-inclusive service model.

AAR's value proposition centers on boosting customer operational efficiency, minimizing disruptions, and reducing costs through optimized MRO processes and advanced supply chain management, as seen with their Trax software which helps clients achieve significant cost reductions.

This focus on efficiency directly contributes to improved customer profitability and performance, with fiscal year 2023 revenue reaching $3.0 billion, highlighting AAR's ability to deliver tangible value.

AAR's Performance-Based Logistics (PBL) programs forge deep customer relationships by centering on outcomes. For defense clients, this means AAR is accountable for achieving specific aircraft readiness rates, directly tying our success to their mission effectiveness. This focus on tangible results, rather than just parts or repairs, builds immense trust and a shared commitment to operational success.

AAR cultivates deep customer relationships through a blend of strategic partnerships, dedicated support, and outcome-focused programs. Their commitment to reliability and operational efficiency, often formalized in multi-year agreements, underpins these enduring connections. In 2024, AAR's emphasis on tailored support and rapid AOG solutions directly contributed to strong customer retention and loyalty.

AAR's integrated supply chain and its network of distribution centers are fundamental channels for its parts sales and logistics services. This robust infrastructure facilitates the efficient sourcing, warehousing, and global delivery of aircraft components, ensuring customers receive necessary parts promptly to maintain their operations.

In fiscal year 2024, AAR reported strong performance in its Parts Supply segment, underscoring the effectiveness of its distribution network. The company's ability to manage a complex global supply chain allows it to provide critical support to commercial airlines and government customers, ensuring minimal downtime and operational continuity.

AAR's channels are multifaceted, encompassing direct sales, a global MRO network, integrated supply chain logistics, established government contracts, and digital software platforms. These diverse avenues ensure comprehensive service delivery and market reach.

The company's direct sales force actively pursues new business, while its MRO facilities provide hands-on service. The supply chain network ensures timely parts delivery, and government contracts are vital for defense sector revenue. Digital platforms like Trax streamline operations.

In fiscal year 2023, approximately 60% of AAR's revenue was generated through government contracts, highlighting the significance of these established procurement channels. The company's sales and business development teams contributed to a 15% year-over-year increase in new business acquisition in 2024.

AAR actively engages with foreign governments and military organizations through Foreign Military Sales (FMS) programs, providing critical aviation aftermarket support. These international partners rely on AAR for essential services like aircraft maintenance, spare parts procurement, and efficient logistics, mirroring the needs of U.S. defense customers. This segment significantly broadens AAR's global footprint and contributes to international aviation readiness and security.

AAR serves a diverse customer base, with commercial airlines representing a significant portion of its business, accounting for 71% of total sales in fiscal year 2025. The U.S. Government and Defense Entities are also crucial, with government contracts making up approximately 53% of revenue in fiscal year 2023. Furthermore, AAR partners with Original Equipment Manufacturers (OEMs) and other Maintenance, Repair, and Overhaul (MRO) providers, acting as a vital link in the aviation aftermarket ecosystem.

Labor and personnel expenses are a significant component of AAR's cost structure, reflecting its nature as a service-intensive business. These costs encompass salaries, wages, benefits, and the ongoing training required to maintain a highly skilled workforce. In 2024, AAR's commitment to its approximately 5,600 employees and 500 contractors underscores the substantial investment in human capital necessary for its operations.

AAR's cost structure is primarily driven by its Maintenance, Repair, and Overhaul (MRO) operations, which include facility costs, specialized equipment, and utilities. The significant expense of aircraft parts and components, both new and used serviceable material, is a major factor, as seen in its $2.5 billion cost of sales in FY2023. Labor and personnel, encompassing salaries, benefits, and training for its workforce, are also substantial. Additionally, Selling, General, and Administrative (SG&A) expenses, totaling $344.8 million in FY2024, cover essential corporate functions and growth initiatives.

AAR generates revenue by offering tailored supply chain management and logistics services, including parts pooling, to commercial airlines, government agencies, and defense clients. These services are designed to boost material availability and operational efficiency through performance-based contracts.

This revenue stream encompasses AAR's comprehensive solutions, such as flight-hour support, which directly contributes to client operational continuity and cost management.

AAR's revenue is diversified across several key areas. The company earns significantly from its Maintenance, Repair, and Overhaul (MRO) services, which are crucial for aircraft operational readiness. Additionally, AAR generates substantial income from the sale and distribution of new and used aircraft parts. Its supply chain management and logistics services, including flight-hour support, also contribute to its revenue base by enhancing client efficiency.

The company's digital solutions, particularly the Trax software, represent a growing revenue stream through licensing and subscription fees. Furthermore, government contracts form a substantial and stable income source, underscoring AAR's importance in supporting military aviation. For fiscal year 2024, AAR's Repair & Engineering segment, which includes MRO, and its Parts Supply segment each reported $1.1 billion in revenue.