AAR Corp. is seeing strong demand for both airframe maintenance and parts, but executives are keeping an eye on broader economic variables that could create headwinds for airlines, and by extension, the aftermarket.
“While demand for domestic and European commercial travel continues to be very strong, global traffic recovery in total continues to be slower, and we are paying attention to the macroeconomic environment and its potential impact on the market for air travel,” CEO John Holmes said on a July 21 earnings call held to discuss the company’s fiscal 2022 financial performance.
Illinois-headquartered AAR boosted commercial sales 34% in the 12 months ended May 31. The company’s fiscal fourth-quarter commercial sales were up 28%. Both figures reflect the significant improvement in travel demand compared to the previous year, when COVID-19 restrictions were more prevalent, and long-haul traffic was practically nonexistent. The commercial performance helped offset 13% quarterly and full-year declines in defense business.
Looking ahead, demand for commercial maintenance repair and overhaul (MRO) “remains strong, and we expect the hangers to remain largely full throughout this fiscal year,” Holmes said. “For us, commercial parts demand should generally track the recovery in commercial flying. Within commercial parts activities, the growth of our used parts sales will also be impacted by the availability of supply, which remains tight for certain platforms.”
Demand for used serviceable material (USM) remains mixed, with a shortage of parts on some platforms and plenty of availability on others.
“With certain platforms where we see strong and consistent demand it’s a little bit more challenging to find the used material to service that demand,” Holmes said.
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