AAR Corp. this week said that the first returns on 2010 show continued weakness in the commercial aftermarket while defense business has started the year strong.
The information came from AAR Chairman and CEO David Storch as part of a statement on the impact of Mesa's bankruptcy
on his company's business. Said Storch:
We have not yet seen the uptick in sales to commercial customers in January that we had expected. However, our defense business remains strong and after excluding the unfavorable impact of Mesa, we expect to achieve modest sequential earnings per share improvement in our Fiscal 2010 third quarter results. We also expect continued strong cash flow from operations in our third quarter.
Mesa filed for Chapter 11 bankruptcy protection
on Jan. 5. AAR said that sales to Mesa pre-bankruptcy totaled about $70 million per year. That's expected to drop to $45 million "based on [AAR's] current understanding of Mesa's requirements."
AAR has inked several deals with Mesa over the years. Among them: an August 2005, ten-year supply chain agreement to support Mesa’s fleet of Bombardier CRJ 700s/900s and Embraer ERJ 145s. In November 2005, AAR announced that the program would also include Mesa’s CRJ 200s. AAR also had a contract to provide Beech 1900D component services to now-defunct Mesa subsidiary Air Midwest.