As the whole world and government gears up to defend itself and prepare their aerospace and defense industries to shield against looming terrorism, AAR Corp. (AIR), one of the most trustworthy companies named by Forbes magazine, has been chosen to Extend Airlift Support for the Department of Defense (DoD) operations of U.S. Military.
The United States Transportation Command (USTRANSCOM) has exercised two renewal options for AAR to provide airlift support in Afghanistan through October 2012. The first option, valued at $99 million, is a part of the order awarded to AAR in October, 2010. The second option has a value of $51 million and is an extension of the task order awarded to AAR in August, 2011.
The United States NATO operations in Afghanistan has been supported over time by AAR’S Airlift operating unit, providing rotary-wing aircraft as well as support structures. The aircrafts are used to transport personnel, cargo and mail whereas the support structures provide personnel, equipment and maintenance services.
According to the contract, AAR will now further serve the U. S Military Airlift requirement; using three Bell 214ST, seven Sikorsky S-61 and two Sikorsky S-92 helicopters, which were acquired to fulfill the initial contract award.
The U.S. Government and its allies have already been aware of AAR Corps’ capabilities toward serving transportation and logistics requirement of the nation’s defense forces. This renewal reflects the confidence from both the U.S. Transportation Command and Department of Defense on the company’s services, which they have earned with time.
We believe such client confidence reflected in the company’s series of contract wins over time, will help investors retain their buoyancy on the stock for a longer period.
Based in Wood Dale, Illinois, AAR Corp. provides various products and services to the aviation and defense industries worldwide. With facilities and sales locations around the world, AAR uses its close-to-the-customer business model operating in four segments viz. Aviation Supply Chain; Maintenance, Repair, and Overhaul; Structures and Systems; and Government & Defense Services.
The company competes directly with its peers, such as Goodrich Corp (GR), Boeing Co (BA), and Lockheed Martin Corporation (LMT).
We currently hold a Neutral recommendation on the stock. AAR Corp. has a Zacks #3 Rank, implying a short-term Hold rating (1-3 months).
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