...February 27, 2026 This report does not constitute a rating action. Market dynamics remain favorable. We view AAR's Parts Supply and Repair & Engineering segments as well-positioned to benefit from the increasing supply of new aircraft as original equipment manufacturers seek to catch up with demand. The company's new parts distribution has recently been leading its growth, while its component repair volumes have also been strong due to aging fleets. We believe AAR could expand organically, given that it has experienced strong renewal numbers with its existing customers, and secure additional business as it expands closer to capacity at supply and repair shops. Multiple factors could lead to modest EBITDA margin expansion. AAR has reduced its headcount without impacting its top-line revenue, enabling it to increase its profitability through lower costs, including the elimination of duplicative positions as part of the acquisition integration process. We expect EBITDA margins in the 11.0%-11.5%...
