AAR Corp. Acquires MRO Holdings for $4 Billion

AAR CORP. is significantly expanding its aviation aftermarket capabilities through a definitive agreement to acquire a 65% controlling stake in MRO Holdings. This strategic move, valued at an enterprise value of $4.0 billion, is designed to solidify AAR's position as a premier integrated Parts, Repair, and Software platform within the global aviation sector.

The acquisition injects substantial scale into AAR's operations, with MRO Holdings contributing over $1 billion in annual revenue. This influx is expected to elevate AAR's consolidated adjusted EBITDA margins from approximately 12% to a projected 16% before accounting for anticipated synergies. The deal is structured to be accretive to adjusted earnings per share within the first full fiscal year post-completion, signaling immediate financial benefits.

MRO Holdings brings over four decades of expertise in aircraft maintenance, repair, and overhaul (MRO), boasting a workforce of roughly 10,000 professionals and extensive airframe maintenance capacity across facilities in the Americas, including locations in El Salvador, Mexico, Colombia, and the United States. Approximately 90% of its current sales are to U.S. airline customers, aligning seamlessly with AAR's existing client base.

John M. Holmes, Chairman, President, and CEO of AAR, highlighted the transformative nature of the acquisition. "Heavy maintenance is a foundational element of our platform, driving revenue to all other areas of the Company," Holmes stated. "Through the acquisition of MRO Holdings, we will create the largest heavy maintenance MRO in the world, servicing a combined total of nearly 3,000 aircraft per year." He further emphasized the synergistic benefits, including increased volume for component MRO, enhanced OEM distribution relationships, and richer data collection for their software division.

Financially, MRO Holdings is projected to generate approximately $1.0 billion in sales and $285 million in adjusted EBITDA for calendar year 2026, reflecting a robust adjusted EBITDA margin of around 27%. The target company also demonstrates a strong cash flow conversion, with an expected conversion of approximately 70% of adjusted EBITDA into operating cash flow in calendar year 2025. This financial strength is a key driver for AAR's strategic objectives.

Looking ahead, AAR is targeting an adjusted EBITDA margin of approximately 19% to 20% within three to four years, a significant increase from its current standalone FY 2026 results. This upward revision is fueled by an estimated $75 million in run-rate cost synergies, achievable through operational optimization, procurement efficiencies, and SG&A streamlining. The transaction also allows AAR to maintain financial flexibility, enabling rapid deleveraging and continued strategic investments.

Roberto Kriete, Chairman of MRO Holdings, expressed enthusiasm for the partnership, stating, "AAR is the right partner." He noted that the combination will enhance their value proposition and support ongoing investments in people, capabilities, and facilities. Both companies share an ambition for sustained growth, with MRO Holdings' existing shareholders, including Bain Capital and The Pritzker Organization, retaining a minority stake and participating in the future expansion.