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Press release

September 20, 2001

AAR Announces First Quarter Results

WOOD DALE, Ill., /PRNewswire/ -- AAR (NYSE: AIR) today reported diluted earnings per share of $0.02 and net income of $0.5 million for the first quarter of Fiscal 2002, which ended August 31, 2001. Sales for the quarter were $203.0 million. These results are consistent with the Company's preliminary earnings report released on September 10, 2001. A copy of that press release is available on the Company's web site,

The Company is comprised of a balanced portfolio of businesses serving many aspects of the commercial and military aviation/aerospace industry. Supporting commercial airlines is a major element of AAR's business. Accordingly, in view of the Company's recent results and in light of the unprecedented tragedy and its impact on the commercial airline industry, AAR has taken immediate steps to reduce its indirect, selling, general and administrative cost structure in excess of $12 million annually. These savings will be obtained through a combination of workforce reductions, facility consolidations and reduction of non-strategic spending.

"Despite this industry upheaval, we are encouraged by the dialogue that we have had with our airline customers as they look for effective alternatives to navigate their way through these uncertain times," said Storch. "We see our role in the industry as a cost reduction resource for our customers. We also support the U.S. Government's initiative to provide financial assistance to the commercial airline industry, which is a vital link to worldwide economic well being."

The Company expects to see an increased demand for products and services in support of the U.S. Military. AAR provides a broad range of military support capabilities including rapid deployment products, aircraft maintenance, and spare parts repair and supply. Sales in support of the U.S. Government represented approximately 16% of the Company's sales during the past twelve months.

"AAR's strong financial condition, broad array of cost effective products and services, and our diverse and worldwide customer base will enable us to progress these trying times as we have done many times before in our fifty year history," said Storch.

AAR would like to express its deepest sympathies to those affected by last week's tragic events. The Company extends its gratitude to all men and women who are assisting in the World Trade Center relief effort. AAR fully supports the efforts of President Bush, his administration, and the worldwide coalition to combat terrorism. "Our hearts go out to the families and friends of those lost or injured," said AAR President and CEO David P. Storch. "We would like to further express our condolences to the United Airlines and American Airlines extended families."

AAR will hold its quarterly conference call at 10:00 AM (CST) on Thursday, September 20, 2001. The conference call can be accessed via dial-in (1-719-457-2641; conference code 490850). A replay of the call will be available (1-719-457-0820; conference code 490850) until 12 AM on Thursday, September 27, 2001.

AAR (NYSE: AIR) is the preeminent provider of products and value-added services to the worldwide aerospace/aviation industry. Products and services include proprietary inventory management and logistic support services, encompassing supply, repair and manufacture of spare parts and systems. Headquartered in Wood Dale, Illinois, AAR serves commercial and government aircraft fleet operators and independent service customers throughout the world. Further information can be found at .

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on beliefs of Company management as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors, including: general economic conditions, implementation of information technology systems, integration of acquisitions, marketplace competition, economic and aviation/aerospace market stability and Company profitability. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control. The Company assumes no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.



                          AAR CORP. and Subsidiaries

    Comparative Statement of Earnings             Three Months Ended
    (In thousands except per share data)               August 31,
                                                  2001           2000

    Sales                                      $202,993       $224,888
    Pass through sales                                0         16,882
    Total sales                                 202,993        241,770
    Gross profit                                 29,140         34,415
    SG&A                                         23,695         24,544
    Operating income                              5,445          9,871
    Interest expense                              5,544          5,988
    Interest income                                 747            506
    Pretax income                                   648          4,389
    Net income                                      486          3,159
    Earnings Per Share-Basic                      $0.02          $0.12
    Earnings Per Share-Diluted                    $0.02          $0.12
    Average shares outstanding-Basic             26,945         26,859
    Average shares outstanding-Diluted           27,209         26,962

    Balance Sheet Highlights                 August 31,        May 31,
    (In thousands except per share data)        2001             2001
                                             (Unaudited)    (Derived from
                                                           audited financial

    Current assets                             $540,105*      $485,856
    Current liabilities                         172,398*       125,392
    Working capital                             367,707*       360,464
    Total assets                                758,503        701,854
    Long-term debt                              189,920        179,987
    Stockholders' equity                        340,147        340,212
    Book value per share                        $ 12.62        $ 12.63
    Shares outstanding                           26,958         26,937

    *  Reflects the recent issuance of $75 million of long-term notes in
       anticipation of repayment of $65 million of notes maturing in November

    Sales and Gross Profit By Segment
    (In thousands)                 Three Months Ended August 31,
                                   2001                       2000
                                (Unaudited)                (Unaudited)
                             Sales     Gross Profit    Sales      Gross Profit

    Aircraft & Engines     $84,079       $11,149      $97,673       $15,246
    Airframe & Accessories  96,959        15,929      104,209        16,264
    Manufacturing           21,955         2,062       23,006         2,905
                          $202,993       $29,140     $224,888        34,415
    Pass Through Sales           0             0       16,882             0
                          $202,993       $29,140     $241,770       $34,415



CONTACT: Timothy J. Romenesko, Vice President, Chief Financial Officer of AAR, +1-630-227-2090,

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