Move Opens The Door To Provide Aviation Services To Government Agencies

In an agreement signed Thursday, AAR Corporation acquired Aviation Worldwide Services (AWS), which provides expeditionary airlift services and aircraft modifications to the U.S. and other government customers, from Xe Services LLC. AAR says the acquisition is part of its long-term strategy to expand its products, services and capabilities in support of government customers in the United States and abroad.

AWS, through its operating subsidiaries, Presidential Airways and STI Aviation, provides fixed- and rotary-wing flight operations, transporting personnel and cargo in support of worldwide U.S. Department of Defense and Department of State deployments, and performs engineering and design modifications on rotary-wing aircraft for government customers. AWS operates a fleet of 58 customized aircraft, of which 17 fixed-wing and 21 rotary-wing aircraft are currently deployed and 20 rotary-wing aircraft are available for future deployment.

"This acquisition represents a significant milestone in the expansion of AAR's value-added capabilities for government customers," said David P. Storch, Chairman and Chief Executive Officer of AAR CORP. "We have a longstanding track record as a trusted provider of mission-critical products and services and are confident that the successful integration of AWS will strengthen AAR's ability to support national defense priorities, nation building initiatives, humanitarian relief efforts and serve 'smart power' initiatives abroad."

AAR says it has successfully transformed from a supplier of aircraft parts and aftermarket services for commercial airlines into an international provider of products and services to customers in both commercial aviation and government/defense markets. Since 2000, AAR increased its sales to government and defense customers at a compounded annual growth rate of 16.5 percent. In its current fiscal year, third-quarter sales to government and defense customers accounted for nearly half of the Company's total sales.

"The market for government aviation services represents a tremendous growth opportunity as our country provides resources and support for developing nations and other national interests," Storch continued. "Further, we expect to improve the operational efficiency of the new business by leveraging our extensive supply chain, maintenance and export capabilities."

The purchase price of the acquisition is $200 million is funded through a combination of available cash, a new 270-day syndicated credit facility and a five-year term loan secured against certain aircraft.  The Company expects the acquisition to be completed during the month of April, subject to customary closing conditions.

The new business will be led by Randy Martinez, Senior Vice President responsible for AAR's Government and Defense Services organization and a retired U.S. Air Force Colonel and Command Pilot. Martinez previously served as CEO of World Air Holdings, Inc., the largest provider of international passenger airlift services to the U.S. government.

FMI: www.aarcorp.com