March 26, 2010 - AAR CORP announced on Thursday that it has signed an agreement to acquire Aviation Worldwide Services (AWS), a leading provider of expeditionary airlift services and aircraft modifications to the U.S. and other government customers, from Xe Services LLC. AAR is acquiring the business as part of its long-term strategy to expand its products, services and capabilities in support of government customers in the United States and abroad. 

AWS, through its operating subsidiaries, Presidential Airways and STI Aviation, provides fixed- and rotary-wing flight operations, transporting personnel and cargo in support of worldwide U.S. Department of Defense and Department of State deployments, and performs engineering and design modifications on rotary-wing aircraft for government customers.

Since 2005, Presidential Airways has flown more than 70,000 missions worldwide, transported 270,000 personnel, and delivered 50 million pounds of cargo and mail. AWS, through its subsidiaries, holds FAR Part 125, 133 and 135 certificates to operate aircraft and an FAR Part 145 certificate to operate a repair station. Presidential Airways is Commercial Airlift Review Board (CARB) certified with the U.S. Department of Defense.  

STI Aviation has significant engineering expertise and is currently modifying new-production Blackhawk helicopters for delivery to the United Arab Emirates. AAR has successfully transformed from a supplier of aircraft parts and aftermarket services for commercial airlines into a leading, international provider of products and services to customers in both commercial aviation and government/defense markets.  

Since 2000, AAR increased its sales to government and defense customers at a compounded annual growth rate of 16.5 percent. In its current fiscal year, third-quarter sales to government and defense customers accounted for nearly half of the Company’s total sales. 

“The market for government aviation services represents a tremendous growth opportunity as our country provides resources and support for developing nations and other national interests,” Storch continued. “Further, we expect to improve the operational efficiency of the new business by leveraging our extensive supply chain, maintenance and export capabilities.” 

The purchase price of the acquisition is $200 million, funded through a combination of available cash, a new 270-day syndicated credit facility and a five-year term loan secured against certain aircraft. Based on the current operating fleet, the business is expected to generate approximately $175 million of revenue on an annual basis and be accretive to earnings and margins within its first year of ownership. The Company expects the acquisition to be completed during the month of April, subject to customary closing conditions.