AAR wraps up $725m acquisition of Triumph Group’s product support business

In a significant move within the aerospace sector, AAR CORP. (NYSE: AIR) has finalized the acquisition of Triumph Group‘s (NYSE: TGI) Product Support business for a substantial $725 million in cash, an announcement that underscores the growing consolidation within the aviation services industry. This acquisition not only signifies AAR’s expansion in its repair capabilities and geographical reach but also emphasizes its commitment to enhancing global customer service in the aviation sector. This transaction, which was initially disclosed on December 21, 2023, was financed through a combination of AAR’s $550 million notes offering and borrowings under its amended revolving credit facility, highlighting the strategic financial planning undertaken by AAR to facilitate this acquisition.

AAR, a global leader in aerospace and defense aftermarket solutions, is set to substantially benefit from this acquisition. By integrating Triumph Group’s Product Support business, AAR significantly scales its repair capabilities, particularly in the APAC region, thereby fortifying its global service provision. John M. Holmes, AAR’s Chairman, President, and CEO, remarked on the acquisition, stating, “The completion of this acquisition scales AAR’s repair capabilities, expands our footprint in the APAC region, and enhances our ability to serve our global customers.” The addition of over 700 skilled employees from the acquired business is poised to bring a wealth of expertise to AAR’s team, further enhancing its service offerings in the aviation industry.

For Triumph Group, the sale of its Product Support business represents a strategic pivot towards debt reduction and focusing on its core competencies. With the net after-tax proceeds expected to be approximately $700 million, Triumph aims to accelerate its deleveraging process, thereby strengthening its balance sheet. Dan Crowley, TRIUMPH’s chairman, president, and chief executive officer, highlighted the transformative nature of this divestiture, stating, “This transaction enables TRIUMPH to greatly accelerate our deleveraging progress while placing our third-party Product Support business with a market-leading MRO company that has a proven track record of customer support.” This move is indicative of Triumph’s strategic reorientation towards its OEM component, spares, and IP-based aftermarket business, aiming for profitable growth in its target markets.

This acquisition is poised to have a significant impact on the aerospace MRO market, with AAR bolstering its position as a market leader. The integration of Triumph Product Support’s specialized maintenance, repair, and overhaul capabilities, especially for critical aircraft components in both commercial and defense markets, is expected to enhance AAR’s service offerings.

The acquired business, with its projected revenue of approximately $280 million and EBITDA of $55 million for the fiscal year ending March 31, 2024, represents a strategic addition to AAR’s portfolio, promising to deliver substantial value to AAR’s stakeholders.

The acquisition of Triumph Group’s Product Support business by AAR CORP. is a testament to the dynamic nature of the aerospace services industry, reflecting the strategic maneuvers companies are making to enhance their market position and service capabilities. As AAR integrates this business, the synergy between the two companies’ expertise and operations is likely to create a more robust service offering for their global customer base, underpinning AAR’s growth trajectory in the aerospace and defense aftermarket solutions market.