AAR Corp. [AIR] March 25 announced it signed an agreement to acquire Aviation Worldwide Services (AWS), a provider of expeditionary airlift services and aircraft modifications to the United States and other government customers, from Xe Services LLC, formerly known as Blackwater Worldwide.
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 Defense and State Department deployments, and performs engineering and design modifications on rotary-wing aircraft for government customers.
It operates a fleet of 58 customized aircraft, of which 17 fixed-wing and 21 rotary-wing aircraft are currently deployed and 20 rotary-wing aircraft are available for future deployment.
“This acquisition represents a significant milestone in the expansion of AAR’s value-added capabilities for government customers,” said David Storch, chairman and CEO of AAR CORP. “We have a longstanding track record as a trusted provider of mission-critical products and services and are confident that the successful integration of AWS will strengthen AAR’s ability to support national defense priorities, nation building initiatives, humanitarian relief efforts and serve ‘smart power’ initiatives abroad.”
Once the acquisition is complete, AAR Corp.,plans to begin inculcating its values and culture into the new acquisition, which will have no links whatsoever with its controversial former parent company, Storch said in a an acquisition investor conference call Friday. AAR Corp. also will “rebrand” and “relocate” AWS from its current North Carolina base, and integrate the personnel into the company.
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 DoD. STI Aviation has significant engineering expertise and is currently modifying new-production Black Hawk 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 an 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.
“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 said. “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.
The new business will be led by Randy Martinez, senior vice president responsible for AAR’s Government and Defense Services organization and a retired Air Force colonel and command pilot.