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AAR (AIR), OTTO Extend Partnership in Electronics Distribution
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AAR Corp. (AIR - Free Report) recently enhanced its electronics distribution partnership with OTTO Engineering Inc. (OTTO) through a territorial extension agreement. This expansion will now enable AAR to bolster the availability of its electromechanical product in the Asia-Pacific (“APAC”) region.
Per the terms of the contract, AAR will supply the defense and commercial industries with OTTO's full range of electromechanical switches, grips and joysticks. With this arrangement, AAR can provide a wider selection of products.
AAR’s Focus on Aircraft MRO Services
Due to the growing socio-political unrest worldwide, nations are spending heftily these days to secure their borders, with fighter jets playing a key role in defending a country’s safety. This, along with growing commercial air traffic in recent times, has been boosting the demand for commercial and fighter jets. As demand for new aircraft is rising, so is the need for maintenance, repair and overhaul (MRO) services.
The market for aircraft MRO in the APAC region is particularly witnessing solid growth trends in recent times, driven by factors like rapidly recovering air traffic in key aviation markets of China and India, as well as an aging jet fleet in both commercial and defense space. To this end, the Mordor Intelligence firm projects the Asia-Pacific Aircraft MRO market to witness a CAGR of 5.7% during the 2024-2029 period.
Such solid growth opportunities offered by the APAC aircraft MRO market must have prompted AAR Corp., which is a renowned provider of aircraft MRO solutions to the commercial and defense aircraft, to bolster its operations over the APAC region. Its latest partnership extension with OTTO Engineering seems to be in line with this strategy of AIR.
Earlier, In March 2024, AAR completed the purchase of Triumph Group's Product Support unit. Considering the fact that in February 2024, this business unit won a five-year award from an APAC operator to provide MRO services for multiple Boeing fleets, the acquisition is expected to further enhance AIR's market reach in the APAC aircraft MRO market.
Peer Prospects
Apart from AAR Corp., other aerospace stocks like RTX Corp. (RTX - Free Report) , Airbus Group (EADSY - Free Report) and Boeing (BA - Free Report) are making significant efforts to gain from the APAC aircraft MRO market, leveraging their solid presence in this space.
RTX’s subsidiary, Pratt & Whitney, announced the official opening of the 48,000-square-foot expansion of its Singapore-based engine center, Eagle Services Asia, in February 2024. The facility will grow its GTF engines’ manufacturing capacity by two-thirds in 2024. This facility expansion is expected to improve MRO performance for RTX’s GTF fleet.
RTX’s long-term (three to five years) earnings growth rate is pegged at 10.6%. The Zacks Consensus Estimate for RTX’s 2024 sales implies an improvement of 6.2% from the prior-year reported figure.
In November 2023, Airbus partnered with Hindustan Aeronautics Limited in a bid to strengthen its footprint in the aircraft MRO industry in India. Per the terms of the partnership, Airbus is set to provide the A320 family tool package and offer specialized consulting services to Hindustan Aeronautics Limited to set up an MRO.
EADSY has a long-term earnings growth rate of 17.9%. The Zacks Consensus Estimate for the company’s 2024 sales implies an improvement of 8.2% from the prior-year figure.
Boeing has been steadily investing in Southeast Asia, with its Commercial Market Outlook forecasting the airplane fleet in this region to witness growth of 5% by 2040. This is projected to result in solid commercial aviation services, thereby boosting the demand for MRO in this region.
BA’s long-term earnings growth rate is 25.5%. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 2% from the prior-year reported figure.
Price Movement
In the past three months, shares of AIR have risen 7.1% compared with the industry’s growth of 6.6%.
Image: Shutterstock
AAR (AIR), OTTO Extend Partnership in Electronics Distribution
AAR Corp. (AIR - Free Report) recently enhanced its electronics distribution partnership with OTTO Engineering Inc. (OTTO) through a territorial extension agreement. This expansion will now enable AAR to bolster the availability of its electromechanical product in the Asia-Pacific (“APAC”) region.
Per the terms of the contract, AAR will supply the defense and commercial industries with OTTO's full range of electromechanical switches, grips and joysticks. With this arrangement, AAR can provide a wider selection of products.
AAR’s Focus on Aircraft MRO Services
Due to the growing socio-political unrest worldwide, nations are spending heftily these days to secure their borders, with fighter jets playing a key role in defending a country’s safety. This, along with growing commercial air traffic in recent times, has been boosting the demand for commercial and fighter jets. As demand for new aircraft is rising, so is the need for maintenance, repair and overhaul (MRO) services.
The market for aircraft MRO in the APAC region is particularly witnessing solid growth trends in recent times, driven by factors like rapidly recovering air traffic in key aviation markets of China and India, as well as an aging jet fleet in both commercial and defense space. To this end, the Mordor Intelligence firm projects the Asia-Pacific Aircraft MRO market to witness a CAGR of 5.7% during the 2024-2029 period.
Such solid growth opportunities offered by the APAC aircraft MRO market must have prompted AAR Corp., which is a renowned provider of aircraft MRO solutions to the commercial and defense aircraft, to bolster its operations over the APAC region. Its latest partnership extension with OTTO Engineering seems to be in line with this strategy of AIR.
Earlier, In March 2024, AAR completed the purchase of Triumph Group's Product Support unit. Considering the fact that in February 2024, this business unit won a five-year award from an APAC operator to provide MRO services for multiple Boeing fleets, the acquisition is expected to further enhance AIR's market reach in the APAC aircraft MRO market.
Peer Prospects
Apart from AAR Corp., other aerospace stocks like RTX Corp. (RTX - Free Report) , Airbus Group (EADSY - Free Report) and Boeing (BA - Free Report) are making significant efforts to gain from the APAC aircraft MRO market, leveraging their solid presence in this space.
RTX’s subsidiary, Pratt & Whitney, announced the official opening of the 48,000-square-foot expansion of its Singapore-based engine center, Eagle Services Asia, in February 2024. The facility will grow its GTF engines’ manufacturing capacity by two-thirds in 2024. This facility expansion is expected to improve MRO performance for RTX’s GTF fleet.
RTX’s long-term (three to five years) earnings growth rate is pegged at 10.6%. The Zacks Consensus Estimate for RTX’s 2024 sales implies an improvement of 6.2% from the prior-year reported figure.
In November 2023, Airbus partnered with Hindustan Aeronautics Limited in a bid to strengthen its footprint in the aircraft MRO industry in India. Per the terms of the partnership, Airbus is set to provide the A320 family tool package and offer specialized consulting services to Hindustan Aeronautics Limited to set up an MRO.
EADSY has a long-term earnings growth rate of 17.9%. The Zacks Consensus Estimate for the company’s 2024 sales implies an improvement of 8.2% from the prior-year figure.
Boeing has been steadily investing in Southeast Asia, with its Commercial Market Outlook forecasting the airplane fleet in this region to witness growth of 5% by 2040. This is projected to result in solid commercial aviation services, thereby boosting the demand for MRO in this region.
BA’s long-term earnings growth rate is 25.5%. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 2% from the prior-year reported figure.
Price Movement
In the past three months, shares of AIR have risen 7.1% compared with the industry’s growth of 6.6%.
Image Source: Zacks Investment Research
Zacks Rank
AAR Corp. currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.