AAR said early March 27 it was awarded a nearly $1 billion contract from the U.S. Air Force for the Landing Gear Performance-Based Logistics One program.
AAR’s win was a blow to gear leader Héroux-Devtek, the Canadian incumbent, according to National Bank of Canada Financial Markets analysts. They downgraded their investor recommendation of the company, saying the contract and associated parts manufacturing represents $30 million in annual revenue.
“The loss of the USAF contract, which will more fully impact fiscal 2019, means that absent any major new contract wins or mergers and acquisitions, we do not expect to see a meaningful acceleration in revenue growth until fiscal 2020 and beyond,” the analysts said.
Under the $909,394,297 fixed-price contract, AAR said it will provide supply chain management--including purchasing, remanufacturing, distribution and inventory control--to all Air Force depot and field-level, foreign military sales, other services, and contractor requisitions received for all C-130, KC-135 and E-3 landing gear parts.
The repair work, through 2032, will be done at AAR’s Landing Gear Services facility in Miami. Inventory supply and management will be handled via offices and warehouses in Wood Dale, Illinois, and Ogden, Utah.