AAR and Ontic expand relationship with multiple long-term distribution agreements

Rhea-AI Summary

AAR (NYSE: AIR) has signed multiple long-term distribution agreements with Ontic, expanding their defense and commercial partnerships. These agreements enhance service offerings for the U.S. government and global commercial customers.

Under the first defense agreement, AAR will support U.S. government customers by including T55 engine components for the CH-47 helicopter. A second agreement adds part numbers for platforms like C-130, H-60, and E-2D, increasing Ontic offerings by over 33%. A third agreement involves distributing Ontic's thrust vector actuation systems motor.

Additionally, a long-term global exclusive commercial agreement covers parts for multi-channel satellite communication systems. These agreements aim to reduce lead times and increase parts availability.

Brian Sartain, COO at Ontic, emphasized that this partnership enhances supply chain management and operational planning. Frank Landrio, AAR's SVP of Distribution, highlighted the strategic alignment of both companies' strengths.

Positive

• AAR's agreements with Ontic expand defense and commercial partnerships, enhancing service offerings.
• The first defense agreement includes T55 engine components for the CH-47 helicopter.
• A second agreement increases Ontic offerings for the U.S. government by over 33%.
• A third agreement involves distributing Ontic's thrust vector actuation systems motor.
• A long-term global commercial agreement covers parts for multi-channel satellite communication systems.

Negative

• None.

Financial Analyst

The expansion of AAR's partnership with Ontic through multiple long-term distribution agreements is a strategically significant move that could positively impact AAR's financial performance. Here's why:

• The agreements broaden AAR's product portfolio, particularly in the defense sector, which could lead to increased revenue streams. The addition of T55 engine components for the CH-47 helicopter and parts for platforms like C-130, H-60 and E-2D expands AAR's offerings to U.S. government customers by over 33%.
• The exclusive global commercial agreement for multi-channel satellite communication systems parts opens up new market opportunities and potential revenue growth in the commercial aviation sector.
• Long-term agreements provide stability and predictability in revenue, which is favorable for financial planning and investor confidence.
• The partnership leverages AAR's global sales expertise and strategic footprint, potentially leading to operational efficiencies and cost savings.

While the financial terms of these agreements aren't disclosed, the expanded relationship with Ontic could contribute to AAR's top-line growth and potentially improve profit margins through economies of scale. Investors should monitor AAR's upcoming quarterly reports to gauge the impact of these agreements on the company's financial performance.

Aerospace Industry Expert

The expanded partnership between AAR and Ontic is a strategic move that could significantly strengthen both companies' positions in the aerospace aftermarket. Here's my analysis:

• The focus on critical components for military aircraft like the CH-47, C-130, H-60 and E-2D indicates a strong commitment to the defense sector, which often provides stable, long-term contracts.
• The inclusion of thrust vector actuation systems motor distribution showcases AAR's expansion into more specialized and high-value components, potentially improving profit margins.
• The agreement covering multi-channel satellite communication systems parts is particularly noteworthy, as it taps into the growing demand for advanced avionics and connectivity solutions in modern aircraft.
• By leveraging Ontic's global presence, AAR can potentially reduce lead times and increase parts availability, which is important in the time-sensitive aerospace industry where aircraft on ground (AOG) situations can be extremely costly.

This partnership aligns with the industry trend of consolidation and strategic alliances in the aerospace supply chain, aimed at improving efficiency and meeting the complex needs of both military and commercial customers. It positions AAR well to capitalize on the ongoing recovery in the commercial aviation sector while maintaining a strong foothold in the defense market.

WOOD DALE, Ill., July 24, 2024 /PRNewswire/ -- AAR CORP. (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, has signed multiple long-term distribution agreements with Ontic that expand the companies' existing defense and commercial partnerships and enhance service offerings for the U.S. government and worldwide commercial customers.

Under the first defense agreement, AAR will expand its support for U.S. government customers to include a specific list of T55 engine components applicable to the CH-47 helicopter. Under a second agreement, AAR will add part numbers for various platforms, including the C-130, H-60, and E-2D, to increase its Ontic offerings for direct sales to the U.S. government by more than 33%. Under a third agreement, AAR will expand on a current contract with Ontic to begin distributing a thrust vector actuation systems motor manufactured by Ontic.

Additionally, AAR and Ontic signed a long-term global exclusive commercial agreement for a specified list of parts for multi-channel satellite communication systems utilized on various platforms.

Collectively, these agreements add to AAR's robust offerings while leveraging Ontic's growing global presence to reduce lead times and increase availability of parts for customers.

Brian Sartain, Chief Operating Officer at Ontic said: "This the continuation of a strategic relationship for our two companies and offers our customers greater availability by adding these new parts to our distribution partnership with AAR. These additions to our agreement mean our customers will benefit from reduced lead times for parts, smoother supply chain management, and more efficient operational planning."

"AAR is pleased to expand our longstanding partnership with Ontic through additional multi-year distribution agreements," said Frank Landrio, AAR's Senior Vice President of Distribution. "This strategic partnership aligns AAR's global sales expertise, strategic footprint, and contracting strengths with Ontic's engineering experience to benefit our shared defense and commercial customers."

For more information on AAR's Distribution division, visit aarcorp.com.

About AAR
AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through four operating segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services. Additional information can be found at aarcorp.com.

About Ontic
Ontic is a leading global aerospace OEM, providing complex engineered parts and repair services for established aircraft in the defense and commercial market.  

Boasting a portfolio of 8,000+ top-level assemblies, Ontic is proud to work with our customers around the globe, with our team of experts delivering a wide variety of critical technologies, including fuel measurement systems, as well as a range of avionics, cockpit instruments and controls. 

With over 50 years of product manufacturing and aftermarket support experience, Ontic has operations across North America, UK & Europe, and Asia providing strategic worldwide support to civil and defense customers when and where it is needed. 

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, reflecting management's expectations about future conditions, including anticipated activities and benefits under the new and expanded distribution and commercial agreements. Forward-looking statements may also be identified because they contain words such as ''anticipate,'' ''believe,'' ''continue,'' ''could,'' ''estimate,'' ''expect,'' ''intend,'' ''likely,'' ''may,'' ''might,'' ''plan,'' ''potential,'' ''predict,'' ''project,'' ''seek,'' ''should,'' ''target,'' ''will,'' ''would,'' or similar expressions and the negatives of those terms. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. For a discussion of these and other risks and uncertainties, refer to "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Contact:
Media Team
+1-630-227-5100
Editor@aarcorp.com

 

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SOURCE AAR CORP.

FAQ

What did AAR and Ontic announce on July 24, 2024?

AAR and Ontic announced multiple long-term distribution agreements expanding their defense and commercial partnerships.

How will AAR support U.S. government customers under the new agreements?

AAR will support U.S. government customers by including T55 engine components for the CH-47 helicopter and adding part numbers for platforms like C-130, H-60, and E-2D.

What is the impact of the new agreements on AAR's offerings?

The agreements aim to enhance AAR's service offerings, reduce lead times, and increase parts availability for customers.

How much will the Ontic offerings increase under the second agreement?

The Ontic offerings for the U.S. government will increase by more than 33% under the second agreement.

What types of systems are covered under the global commercial agreement?

The global commercial agreement covers parts for multi-channel satellite communication systems.