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Press release

September 17, 2003

AAR Reports First Quarter Fiscal Year 2004 Results

WOOD DALE, Ill., /PRNewswire-FirstCall via COMTEX/ -- AAR (NYSE: AIR) today reported net sales of $152.1 million and a net loss of $2.0 million or $.06 per share for the first quarter ended August 31, 2003. During the first quarter, the Company generated $9.0 million of cash flow from operations primarily due to a reduction in inventory. For the first quarter of last fiscal year, the Company reported net sales of $151.2 million and a net loss of $4.9 million or $0.15 per share.

"The operating environment in our industry improved as the first quarter progressed and sales in August were the highest monthly sales since August 2001. Additionally, each of our segments reported a year over year increase in profitability as we benefited from improved gross margins and lower costs," said AAR President and CEO David P. Storch. "We experienced strength in our parts trading, airframe maintenance and Mobility Systems businesses and we saw significant improvement in profitability at our industrial turbine business and our distribution business where we achieved higher sales to our airline customers. We continued to experience softness in our component repair operations where we took additional actions to lower our operating costs. These actions contributed to severance expense in the quarter of $0.6 million pre-tax, which will result in lower ongoing operating expenses beginning in our second quarter. Although we experienced lower sales in our cargo systems business, our backlog has increased and we expect improved results for the remainder of the fiscal year at this business."

Storch added, "We are starting the second quarter with a lower cost structure, enhanced liquidity and an improved balance sheet. We have increased our backlog by 20% since the beginning of the fiscal year and in addition have won several significant new orders which we expect to announce shortly. We anticipate that our operating performance will continue to improve as the worldwide economy and the airline industry recover and we continue to focus on our customers' needs for low-cost, value-added solutions."

AAR (NYSE: AIR) is the leading provider of aftermarket support to the worldwide aviation/aerospace industry. Products and services include customized inventory management and logistics programs, 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

AAR will hold its quarterly conference call at 10:30 AM (CDT) on September 17, 2003. The conference call can be accessed via dial-in (1-312-461-1932; conference code 721319). A replay of the call will be available (1-719-457-0820; conference code 721319) until 12 AM on September 23, 2003.

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, including those factors discussed under Item 7, entitled "Factors Which May Affect Future Results", included in the Company's May 31, 2003 Form 10-K. 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. For additional information, see the comments included in AAR's filings with the Securities and Exchange Commission.

                          AAR CORP. and Subsidiaries

     Comparative Statement of Operations                  Three Months Ended
     (In thousands except per share data)                     August 31,
                                                          2003          2002
     Sales                                             $152,114      $151,165
     Cost of sales                                      130,998       133,400
     Gross profit                                        21,116        17,765
     SG&A                                                19,648        20,781
     Operating income (loss)                              1,468        (3,016)
     Interest expense                                     4,913         4,867
     Interest income                                        375           376
     Pretax loss                                         (3,070)       (7,507)
     Benefit for income taxes                            (1,074)       (2,628)
     Net loss                                            (1,996)       (4,879)
     Loss per share-Basic                                ($0.06)       ($0.15)
     Loss per share-Diluted                              ($0.06)       ($0.15)
     Average shares outstanding-Basic                    31,850        31,866
     Average shares outstanding-Diluted                  31,850        31,866

     Balance Sheet Highlights                          August 31,     May 31,
     (In thousands except per share data)                 2003         2003
                                                      (Unaudited)   (Derived
     Cash and cash equivalents                       $   31,929    $   29,154
     Current assets                                     387,141       396,412
     Current maturities of recourse LTD                  24,454        24,000
     Current maturities of non-recourse LTD*             32,322        32,527
     Current liabilities (excl current maturities)      131,085       147,048
     Working capital                                    199,280       192,837
     Net property, plant and equipment                   91,322        94,029
     Total assets                                       676,345       686,621
     Bank lines & notes payable                          21,614        35,729
     Recourse long-term debt                            174,735       164,658
     Stockholders' equity                               290,455       294,988
     Book value per share                               $  9.12       $  9.26
     Shares outstanding                                  31,850        31,850

     * On June 20, 2002 the Company purchased the equity interest in an
       aircraft joint venture from its partner for nominal consideration as
       disclosed in the Company's May 31, 2003 Form 10-K. As a result, the
       book value of the aircraft and the associated non-recourse debt were
       recorded on the Company's consolidated balance sheet. The debt is
       currently being serviced by the underlying aircraft lease.

     Sales By Business Segment                            Three Months Ended
     (In thousands)                                           August 31,
                                                         2003          2002
     Inventory & Logistics Services                     $61,737       $61,299
     Maintenance, Repair & Overhaul                      53,425        46,926
     Manufacturing                                       25,170        27,987
     Aircraft & Engine Sales & Leasing                   11,782        14,953
                                                       $152,114      $151,165


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

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