After AAR Corp. (NYSE: AIR) reported earnings and hosted their analyst conference cal, I had the pleasure of speaking with AAR’s CEO David Storch in wide ranging interview that is now available for you to listen to.
The interview covered a broad range of topics from what AAR does, to how AAR is coping with the recent slowdown in the airline industry and how this downturn compares to previous downturns.
I’ve posted the interview in its entirety at the end of this post.
New to the AAR story?
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 ((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.
- Read: My latest company analysis and quarterly earnings breakdown here.
- OR: My first post about the FAA shutting down AAR’s landing gear facilities here.
- OR: my second post detailing how AAR was cleared to reopen those facilities here.
- OR: Read why I recently added to my AAR position by clicking here.
Broad Ranging Interview Covers Many Topics
Here are some of the topics that were discussed at length in the 30 min. interview:
- A Brief Breakdown of the Business
- What the U.S. troop withdrawal from Iraq means for AAR’s Structures and Systems business segment, and the rest of the company
- Why the U.S. could be AAR’s next big customer for their Structures and Systems unit for border patrol
- What “inning” are we in when it comes to the airline slowdown, and how is it impacting AAR?
- When demand resumes, will airlines fill that demand by servicing older aircraft, or purchasing new ones? How will this affect AAR?
- Why does David feel that AAR is weathering this cyclical downturn better than previous ones?
- Was the loss of FedEx and United at AAR’s Indianapolis MRO facility a result of slowing consumer demand, higher fuel prices, or both? Will these companies return to AAR for MRO anytime soon?
- Why is AAR deemphasizing their Sales and Leasing segment, when as little as 2 years ago, it was showing great promise and strength? What’s changed?
- How is AAR positioned in terms of liquidity, debt and repayments on their debt? Will AAR be cash flow positive this fiscal year?
- Will AAR have to write down their book value because of slowing demand and lower valuations on aircraft and parts?
- Why is AAR’s stock price so low, other than the market malaise?
- Is David planning on purchasing more stock in the company at these depressed levels?
(Update: David purchased an additional 10,000 shares in AAR stock on March 20th for $11.92 each)
I invite you to listen to my interview with David Storch below so that you can better understand the AAR story and get to know management.