AAR Corp’s parts supply business posted 15% growth year-over-year while demand for its heavy maintenance services remains strong—two signals that capacity adjustments are not cutting deeply into its aftermarket demand.
“[New parts] distribution led the way this quarter with another quarter of 20-plus growth,” CEO John Holmes said on AAR’s fiscal 2025 fourth quarter earnings call, adding that the company had no sightings of tariff-related stock-ups. “It was relatively even order flow ... We saw that throughout the year.”
Quarterly revenue within its parts distribution business was roughly split between commercial and government customers. “We’ve been really pleased to see a return to growth in government distribution in the last couple of quarters,” Holmes said.
Citing the uncertain “macro environment,” Holmes said AAR is not providing full-year guidance, but its quarterly look-ahead sees more of the same from the leading segment in its parts business.
“Our new parts distribution business grew 25% organically [in fiscal 2025], which was significantly above market, and we expect that above-market growth to continue,” Holmes said.
While the company’s growing distribution business has been consistently strong, another major parts supply business line—used serviceable material (USM), continues to be “dynamic,” Holmes said.
Demand is there, but supply remains constrained, particularly on more popular platforms.
“We once again saw modest growth due to the constraints in asset availability,” Holmes said. Deals that are going through often involve whole assets—aircraft or engines—which can skew the financial picture from quarter-to-quarter.
“We hadn’t seen many whole asset transactions throughout the year because that material was not available,” Holmes said. “We were happy to get a few of those across the finish line in [the fourth quarter]. And I think what that demonstrates is, when there is supply, there is demand, and we’re in a good position in the market to match those things up and achieve growth.”
Parts supply makes up about 40% of AAR’s revenue.
On the airframe heavy maintenance side, demand continues to outpace supply. New capacity coming online in Miami and Oklahoma City, Oklahoma, has been snapped up by customers, and the company is not picking up signs of weakness at any of its other facilities.
“Our core customers have consistently reaffirmed their demand for our services,” Holmes said. “So, where we might see some of our competitors see some decline as a result of [airline] capacity cuts, etcetera, our core customers have been very straightforward with us that they’d remove maintenance work from others long before they would remove it from us.”
Airlines are trimming capacity to boost sagging demand in some markets and segments. Delta Air Lines, one of the carriers reducing seats, calculates that industry cuts from May-September amount to about 4%.
AAR saw [fiscal fourth quarter] sales total $755 million, up 15% while full-year sales totaled $2.8 billion, up 20%.
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