AAR: FAA Reopens Landing Gear Facility

| About: AAR Corporation (AIR)

AAR, Corp. (NYSE: AIR), which had its landing gear operations shut down temporarily last week, has gotten approval from the FAA to reopen their Miami facilities.

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AAR Corp. provides products and services to the aviation, aerospace, and defense industries worldwide.

It operates in four segments: Aviation Supply Chain; Maintenance, Repair, and Overhaul (NYSE:MRO); Structures and Systems; and Aircraft Sales and Leasing.

Through its Aviation Supply Chain and MRO segments, AAR provides everything from aircraft parts, maintenance and logistics support, to the actual maintenance and repair of aircraft at its 4 MRO facilities at various locations throughout the U.S.

In addition, through its Structures and Systems segment, AAR provides vital products and services to the U.S. military including specialized construction of mobile shelters and pallets, as well as support and products for various military aircraft and aircraft support, storage and maintenance functions.

Finally, through its Sales and Leasing segment, AAR buys, sells and leases used aircraft for itself, on behalf of others, and through joint ventures.

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  • Read: My first post about the FAA shutting down AAR’s landing gear facilities here.
  • OR: My latest company analysis and quarterly earnings breakdown here.
  • OR: Read why I recently added to my AAR position by clicking here.

FAA Returns AAR’s Landing Gear Services Repair Station Certificate

In a previous post, I outlined the recent shutdown of AAR’s Landing Gear affiliate in Miami because of recent troubles with the FAA.

Those that have been following the situation might recall that in mid/late 2008 there was a controversial letter sent by the FAA to AAR claiming that some of the maintenance that they were performing on certain landing gear elements was not up to spec, and might be in violation of certain FAA mandates.

You can read the entirety of that post and get the full scoop by clicking here.

The part in question is called a landing-gear truck beam.

The truck beam is the main component of the landing gear. It goes across the entire component from axle to axle, and looks like an upside-down T.

This vertical bar acts as a shock absorber and is very important in terms of landing stability and strength of the entire mechanism.

The FAA’s notice refers to an enamel paint applied to the inside, or “bore,” of the horizontal bar, and the potential for that paint to obstruct a drainage hole in the beam, thus masking potential corrosion and preventing proper drainage.

You can read my entire take on the situation, including some possibly disturbing news on a plane that collapsed while refueling that was serviced using one of the AAR’s truck beams here.

At any rate, Friday after the market closed, AAR issued a press release stating that the Federal Aviation Administration (NYSEARCA:FAA) has returned AAR Landing Gear Services’ repair station certificate enabling the facility to resume full operations.

AAR further commented that per the consent order, AAR will perform liquid penetrant inspections for Boeing aircraft landing gear on a going-forward basis, in addition to the magnetic particle inspections that it had been performing previously.

It appears that the maintenance and repair checks that AAR had been performing previously weren’t quite good enough for the FAA’s liking, and left AAR open to a possible shutdown as a result.

Additionally, in accordance with recent Boeing guidance applicable to all persons performing maintenance and overhauls on Boeing aircraft landing gear, AAR will re-inspect the Boeing aircraft landing gear currently at its facility using the liquid penetrant inspection process before releasing it to customers.

I am not sure what exactly this means, but it sounds rather important, and perhaps like something that should have been done all along, no?

Hopefully, this little episode will be put to rest now, and because this affiliate only represents about 6% of AAR’s revenues, it won’t impact the bottom or top lines much.

However, what disturbs me, and what I have issue with, is that perceptions might change, and in fact, several airline carriers were quoted recently as saying that they are evaluating their options, and other landing gear repair centers as a result of the temporary shutdown as well as the overall perception that AAR might not be performing the repairs and maintenance on these parts as they should have been all along.

Let’s hope that this is the last that we hear about this incident, and that AAR has tucked its tail between its legs, and is taking care of business as it should have been all along.