AAR Corp. is facing staffing pressure and could increase wages to help retain and attract enough mechanics at its MRO shops—a move that would increase costs for customers.
"We experienced some labor pressure" at two MRO facilities "as the market is tightening for skilled technicians," AAR President John Holmes said on a recent earnings call. "We're working to get a handle on this situation, and we have a number of initiatives underway."
AAR has launched "recruiting initiatives" and is leveraging experienced workers to train new hires at the facilities that are most in need, Holmes said. He did not identify which shops are facing pressure.
The company's U.S. heavy maintenance facilities are in Duluth, Minn., Indianapolis, Miami, Oklahoma City, and Rockford, Ill. A review of the company's posted job openings shows it is recruiting at least a dozen technicians and several FAA-certified mechanics at each location.
While work to improve both training and hiring are underway, wages also will be evaluated.
"There are certain levels in the organization where we are looking into a compensation adjustments," Holmes said.
While nothing has been decided, Holmes said AAR is talking to customers about "about potentially having to adjust pricing as a result of the wage pressures.
"The customers are very aware of this," he added. "They all understand the dynamic."
MRO-market labor pressure is neither new nor unique to AAR, but it appears to be growing. As the largest independent heavy maintenance provider in the Americas, AAR is well-positioned to feel the pinch earlier than some competitors. AAR's 5,500-strong workforce includes 3,000 employees at its five U.S. heavy maintenance facilities.
A recent Oliver Wyman analysis projects that global demand for aircraft mechanics will out-strip supply by 2022. By 2028, industry is projected to need 10% more mechanics than it will have, based on current workforce trends.
In a related analysis done in collaboration with the Aeronautical Repair Station Association, Oliver Wyman found that the U.S. civil aviation maintenance industry—from parts distributors to overhaul facilities—employs 279,000 workers. The MRO segment makes up 75% of these, or about 212,000 workers, Oliver Wyman said.