AAR buys, repairs, and resells the parts that keep aging aircraft flying, and performs maintenance work directly for commercial airlines and the U.S. military — a business it has grown fast through acquisitions even as free cash flow stays thin and volatile.
How AAR makes money
AAR keeps aging aircraft flying by buying and selling the parts that keep them airworthy, and by doing the maintenance work itself. It sells replacement parts to airlines and the U.S. military, performs aircraft maintenance and repairs, and collects fees and labor charges for both.
Parts Supply · Repair · Government
U.S. & allied governments 23.8%
Simplified. Source: 10-K FY2026, p.2–5, 11, 82–83.
Where the revenue comes from
Revenue by segment — FY2026
Legacy Commercial Programs — older third-party maintenance work — was slated for a 3–4 year wind-down as of Q4 FY2026. Source: 10-K FY2026, Note 15.
Source: 10-K FY2026, p.11–12.
Customers and competitors
No single commercial customer is disclosed above 10% of revenue, but the U.S. government as a category is effectively AAR's largest customer at 23.8%.
- HEICO Corporation — strong in-house design and certification of PMA (non-OEM) parts, giving it a higher-margin, design-based parts business than AAR's.
- StandardAero / Lufthansa Technik — direct competitors in heavy engine and airframe maintenance, with greater capital and global hangar capacity.
- OEM aftermarket arms (e.g., Boeing Global Services) — manufacturers expanding their own maintenance and parts services, encroaching on independents like AAR.
Source: 10-K FY2026, p.6.
The metric that matters most in this sector
Firm backlog — contracts already signed for future revenue — is the clearest forward indicator for a company this exposed to government and long-term contracts, showing how much of the next one to two years' revenue is already secured.
Firm backlog, four-year trend
Backlog fell in FY2025, then rebounded to a record in FY2026 on acquisitions and expanded government orders; 70% is expected to convert to revenue in FY2027, and 20% in FY2028. Source: 10-K FY2023–FY2026.
Leadership and ownership
CEO John M. Holmes joined AAR in 2001, became CEO in June 2018, and added the chairman role in January 2023 — a career internal promotion, with no founder involvement (the company was founded in 1955). Board and officer ownership is modest at 3.1%. The largest holders are institutional: BlackRock (14.4%), State Street (6.4%), and Vanguard funds (roughly 10.4% combined).
Source: 10-K FY2026, p.9–10; DEF 14A 2026, p.36–39.
Capital returns
AAR pays no dividend in any of the last three fiscal years, and buybacks are effectively symbolic — only $10.1M repurchased in FY2025 and $5.1M in FY2024 under a $150M authorization from 2021, with nothing repurchased at all in FY2026. In fact, capital allocation has moved the other way: in FY2026's second quarter, AAR issued 3.45 million new shares to raise $273.9M, growing shares outstanding from 45.3 million to 48.75 million. This is a company raising equity to fund acquisitions, not returning capital to shareholders.
Source: 10-K FY2026, p.37.
How this company could fail
- U.S. government budget dependency — 23.8% of revenue is defense- and state-department-related; budget cuts, contract non-renewals, or procurement-policy shifts flow straight through to results.
- Acquisition indigestion — four deals worth more than $270M closed in FY2026 alone, and goodwill grew from $530.8M to $580.3M in a single year; integration failures or further impairment in the wind-down Legacy Commercial Programs segment are real risks.
- Rising interest burden from added leverage — long-term debt ended FY2026 at $893.9M (total debt roughly $900M), up sharply from $98.9M two years earlier, with FY2026 interest expense alone at $72.1M.
Five-year financials
| FY22 | FY23 | FY24 | FY25 | FY26 | |
|---|---|---|---|---|---|
| Revenue | 1,820.0 | 1,990.5 | 2,318.9 | 2,780.5 | 3,308.0 |
| YoY growth | — | +9.4% | +16.5% | +19.9% | +19.0% |
| Operating income | 106.9 | 133.9 | 129.2 | 185.2 | 277.8 |
| Operating margin | 5.9% | 6.7% | 5.6% | 6.7% | 8.4% |
| Free cash flow | 57.9 | -6.2 | 13.9 | 1.4 | 62.1 |
| Long-term debt | 98.9 | 269.7 | 985.4 | 968.0 | 893.9 |
Sources: 10-K FY2026, p.45, 47–48, 50; 10-K FY2023, p.36–37, 42, 47. FCF = operating cash flow − capex.
What we still don't know
- Detailed country-level revenue breakdowns (e.g., China, Europe) are not disclosed at all.
- How much of FY2026's net-income jump is recurring versus one-time (bargain-purchase gain, asset-sale gain) requires checking recent earnings-call commentary for an adjusted figure.
- The eventual size of goodwill impairment tied to the Legacy Commercial Programs wind-down is not yet finalized.
Frequently asked questions
What does AAR Corp. do?
AAR buys, tears down, repairs, and resells aircraft parts, and performs maintenance work directly, selling to commercial airlines (72.1% of revenue) and the U.S. and allied governments (23.8%).
Is AAR's growth from new business or acquisitions?
Both, but acquisitions play a large role — AAR closed four deals worth more than $270 million in FY2026 alone, and goodwill grew from $530.8M to $580.3M in that single year.
What is AAR Corp.'s market cap?
As of this article's data (Sept. 11, 2026 close), AAR traded at $124.94 per share, for a market cap of roughly $4.92 billion.