AAR Corp's Strategic Expansion in Aerospace Aftermarkets: Unlocking Long-Term Value and Regional Growth

AAR Corp. (AIR) has emerged as a pivotal player in the aerospace aftermarkets, leveraging a dual strategy of securing long-term contracts and expanding its regional aviation footprint. For investors, the company's recent moves signal a compelling blend of stability and growth, positioning it to capitalize on both commercial and defense market dynamics.

Long-Term Contracts: Anchoring Revenue and Market Influence

AAR's ability to secure multi-year agreements with industry leaders and government agencies underscores its strategic importance in the aviation supply chain. In 2023, the company inked two transformative deals with Moog Inc.: one for global distribution of Moog products for mature aircraft platforms and another for reciprocal component repair servicesWhat is Growth Strategy and Future Prospects of AAR Company?^[4]. These agreements not only expanded AAR's product portfolio but also created a symbiotic relationship with Moog, enhancing efficiency in inventory delivery and repair capabilities.

The company's dominance in government contracts further solidifies its long-term value. In 2022, AAR became the first non-OEM to secure a 20-year base contract with the Defense Logistics Agency (DLA) AviationAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1]. This milestone was followed by a 2025 expansion of the DLA contract to include Unison parts, a critical move for supporting military aircraft platforms and mitigating supply chain volatilityAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1]. By integrating Unison's sole-source spare parts into its distribution network, AAR has positioned itself as an indispensable partner for defense logistics, a sector with predictable demand and high barriers to entry.

Recent data highlights the scale of AAR's government contract wins. In September 2025, the company secured an $85 million contract with DLA Troop Support for specialized shipping and storage solutions, featuring a base year with four optional extensionsAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1]. This contract aligns with AAR's strategy to balance commercial aviation's cyclical nature with the steady growth of defense markets.

Regional Aviation Growth: Expanding Capacity and Digital Capabilities

AAR's regional expansion strategy combines physical infrastructure investments with digital innovation. In March 2024, the company acquired Triumph Group's Product Support business, significantly bolstering its Component Services segment and expanding its Asia-Pacific footprintWhat is Growth Strategy and Future Prospects of AAR Company?^[4]. This acquisition, coupled with new hangar developments in Miami (operational by October 2025) and Oklahoma City (2026), is expected to add 15% to AAR's MRO network capacityAAR Corp Expands Partnerships in Aviation Services Through Key Agreements^[2]. Such expansions are critical for meeting rising demand in regional aviation, particularly in Asia-Pacific, where air travel is projected to grow at a double-digit rate over the next decadeWhat is Growth Strategy and Future Prospects of AAR Company?^[4].

Digital transformation has also been a cornerstone of AAR's growth. The 2023 acquisition of Trax, a leader in MRO software, enabled the company to deploy solutions like Airvolution® and PAARTS(SM), streamlining component repair and inventory managementAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1]. These tools enhance operational efficiency and customer service, differentiating AAR in a competitive market.

Financial Performance and Strategic Synergies

AAR's strategic bets are translating into robust financial results. In fiscal 2025, the company reported record sales of $2.8 billion, a 20% year-over-year increase, driven by its Parts Supply and Integrated Solutions segmentsAAR reports fourth quarter and fiscal year 2025 results^[3]. Adjusted earnings per share reached $3.91, reflecting improved operating efficiency and the scalability of its contract-driven modelAAR reports fourth quarter and fiscal year 2025 results^[3].

The recent $85 million DLA contractAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1] and multi-year agreements with defense partners like AmSafe BridportAAR adds Unison products under DLA Aviation Supplier Capabilities Contract^[1] further diversify AAR's revenue streams. These contracts, combined with its expanded MRO capacity and digital tools, create a flywheel effect: enhanced service offerings attract more customers, which in turn justify further infrastructure investments.

Conclusion: A High-Conviction Play in Aerospace Aftermarkets

AAR Corp's strategic expansion in aerospace aftermarkets is a masterclass in leveraging long-term contracts and regional growth. By securing exclusive partnerships with OEMs and government agencies, the company has insulated itself from short-term market fluctuations while capturing a larger share of the $1.5 trillion aviation services marketWhat is Growth Strategy and Future Prospects of AAR Company?^[4]. Meanwhile, its investments in physical and digital infrastructure position it to outperform peers in both commercial and defense sectors.

For investors, AAR represents a rare combination of defensive qualities (through stable government contracts) and offensive potential (via regional and digital expansion). As the aerospace industry navigates post-pandemic recovery and geopolitical tensions, AAR's diversified, contract-driven model offers a compelling path to sustained value creation.