CHICAGO—AAR, taking another step in its effort to improve efficiencies and focus on core services, is closing its 60,000-sq.-ft. regional aircraft MRO facility in Hot Springs, Arkansas, and is moving the two lines of work—both from one customer—to its 300,000-sq.-ft. facility in Oklahoma City, Oklahoma.
“We were limited by what we could do” at the smaller Hot Springs facility, and the one in Oklahoma City, which also performs regional aircraft MRO, had additional capacity, AAR spokeswoman Kathleen Cantillon said.
AAR’s 2015 fiscal year—which ended May 31 and results of which will be released in July—evolved around a three-phase plan to streamline its operation and focus on aviation and expeditionary services, while providing a bigger return to investors. A big component of that centered on selling its Telair cargo business to TransDigm in March, which it used to reduce debt. AAR also put its Precision Systems Manufacturing business on the market in February, and is talking to potential investors now.
While AAR did not disclose the savings it expects to gain from closing the Hot Springs facility, it could do so during its year-end earnings call in July.
AAR will offer the 119 employees of Hot Springs jobs at its other MRO facilities.
AAR, like some other MROs in North America, has extra regional aircraft capacity. It also has the ability to consolidate, so the move to close Hot Springs comes as little surprise.
On the flip side, the demand for widebody MRO work in North America continues to edge up. AAR’s Lake Charles, Louisiana, facility is “booked for the foreseeable future,” according to Cantillon, and the MRO performs widebody work at its Indianapolis and Miami facilities as well. Construction of a 200,000-sq.-ft. next-gen widebody MRO hangar in Rockford, Illinois—west of Chicago—should conclude in 2016.