AAR's facility in Duluth, Minnesota AAR Corp.

AAR Buys Two Premier Aviation Facilities; Retains Air Canada Work

Airbus work will move from Duluth, but will be replaced with new customer.

AAR Corp. announced Sept. 19 a deal to acquire two MRO facilities from Canada's Premier Aviation and has struck separate agreements to perform heavy-check work for Air Canada on the carrier's Airbus A320-family aircraft and its Embraer E190s in one of them.

AAR is acquiring privately held Premier's facilities in Trois-Rivières, Quebec, and Windsor, Ontario. The Airbus and Embraer work will be done in Quebec under 10- and 5-year deals, respectively. 

"This is purely around capturing business in the Canadian market and retaining business they currently do" at Premier, says AAR CEO David Storch. "We're looking at this as a way to bolster our presence in the North American market, [to] strengthen our position here in North America."

The deals mean that Air Canada will bring its Airbus maintenance back to its home country some six years after the abrupt closure of Aveos, the former Air Canada Technical Services. Left without an Airbus heavy-check provider when Aveos went under in 2012, Air Canada turned to AAR, which set up at a former Northwest Airlines facility in Duluth. Minnesota, with support from state and local governments. 

The move triggered several lawsuits, including one from the Quebec government that sought to force Air Canada to keep work in the province per a 1988 agreement that privatized the carrier. The suits were later settled, paving the way for AAR to perform the Airbus work in the U.S.

 AAR began the work in Miami under a letter-of-intent that was later converted into a multi-year deal in Duluth. The new, 10-year agreement will see the Air Canada work shifted to Quebec. 

 AAR will not be losing work in Minnesota, however. The U.S.-based aftermarket specialist is poised to announce a new customer—a major U.S. carrier—for its Duluth facility.

 Premier landed Air Canada's E190 work in 2014. That work is also done in the 150,000-square-foot Quebec facility.

"One of the facilities is full of other customers in addition to Air Canada," says AAR President and COO John Holmes. "We plan to work with the existing customers to transition them either to the other Premier facility or other of AAR facilities as the A320 portion of the Air Canada work is pulled up" from Duluth.

"The [Premier] businesses were growing, and I think the timing was right for [Premier] and it was for us and it was for Air Canada," Storch adds. "So I think you can see there is a connection between the acquisition and the contract signing with Air Canada." 

Premier began operating in Windsor in 2012 in a new 143,000-square-foot hangar with full back-shop capability and capacity for six narrowbodies. It also has facilities in Quebec City and Rome, N.Y. 

Air Canada, an A320 operator since 1990, is revamping its mainline narrowbody fleet, cycling in Boeing 737 Maxs and Bombardier CS300s. The Maxs begin arriving later this year. The Airbuses will be phased out, but they won't go far: many of them are expected to be reconfigured and put into service with Rouge, Air Canada's low-cost operation. 

Rouge's 49-aircraft fleet includes 25 Airbus narrowbodies, the maximum amount allowed under the original labor agreement between Air Canada and its pilots. But the carrier on Sept. 14 announced that the 10-year labor deal had been modified. One of the new amendments: a deal to boost Rouge's narrowbody fleet based on "an agreed-upon formula by Air Canada's pilots that enables the airline to expand its presence in certain regional markets and to compete effectively with emerging North American ultra low-cost carriers," the carrier said.

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