AAR Wins Contract to Provide PBH, Component Management & Repair Services to South African Airways Technical
JV establishes AAR as strategic MRO and technology partner to support maintenance capabilities and grow third-party customers across Africa
JOHANNESBURG, South Africa – AAR (NYSE: AIR), a world leader in airframe maintenance and integrated supply chain solutions, has signed a five-year agreement to provide power-by-the-hour (PBH) component inventory management and repair services to South African Airways Technical (SAAT) Ltd. The contract is valued up to $125 million.
“This agreement marks a significant expansion of AAR’s aviation and supply chain services in emerging markets,” said David P. Storch, President, Chairman and CEO, AAR. “We are pleased to win the confidence of this leading airline customer in Africa.”
AAR has teamed with local joint venture partner, JM Aviation South Africa (Pty) Ltd., to support South African Airways’ (SAA) fleet with nose-to-tail component and repair management. JM Aviation will provide day-to-day, on-the-ground account management and technical support and will work closely with AAR’s global parts supply warehouse team in Brussels. Work officially began on October 1.
The joint venture also will focus on growing SAAT’s MRO services to third-party customers/airlines across the continent, and fulfills a key objective of the South African government to extend aviation services contracts to black-owned firms that, like JM Aviation, are certified BBBEE, or broad-based black economic enterprise businesses.
In addition, AAR will offer its industry-leading airframe and avionics skills training to SAAT and JM Aviation workers, facilitating a knowledge transfer to support the growth of black-owned businesses in Africa’s aviation sector, among the fastest-growing in the world.
“We’re excited to lend our award-winning experience to reduce costs to the airline and support growth of Africa’s air travel industry for years to come,” said John Holmes, Chief Operating Officer, Aviation Services, AAR.
“Africa is a dynamic and growing market full of potential. Working with SAAT not only is an opportunity for AAR to grow its presence in Africa, it is an opportunity for SAAT to create access to lucrative jobs and business opportunities for locals through the skills training that AAR will provide,” added Cheryle R. Jackson, President, AAR Africa.
SAAT will gain access to AAR’s operational analysis and technical assistance for MRO, as well as warehouse facilities and integrated IT solutions for MRO. AAR has a global reputation in the aviation sector for improving operational efficiencies and turn times, and lowering costs through its customer-centric solutions. AAR also will support expansion of SAAT’s component repair capabilities, including landing gear, and potentially support a new MRO facility in West and Central Africa to meet growing regional travel in sub-Saharan Africa and increasing international travel to the continent.
"We are excited to work with an industry-leading partner that not only will enable us to reduce costs and improve fleet readiness but will also fortify our workforce with mission-critical skills necessary to support future growth,” said Musa Zwane, CEO of SAAT.
The agreement represents a significant expansion of AAR in Africa, where the Company recently established a base of operations in Johannesburg and appointed Jackson its first president of AAR Africa. The Company has been solidifying its foothold in Africa the last two years, signing its first PBH component inventory management and repair services contract in 2014 with Kenya Airways to support its fleet of 737NGs. More recent deals include a PBH contract with fastjet, the award-winning, Africa-based low-cost airline, illustrating the global reach of AAR’s supply chain solutions.
South African Airways Technical (SOC) Ltd. (SAAT) is a full-service MRO organization, the largest in Africa. SAAT has held full and uninterrupted U.S. Federal Aviation Authority (FAA) certification since the late 1980s, serving a range of local and international airlines. SAAT was corporatized on April 1, 2000, and fully registered as SAA Technical (SOC) Ltd., to become a wholly owned subsidiary of SAA (SOC) Ltd.
SAAT is sole provider of aircraft maintenance to SAA, Mango and Comair/Kulula, who are the premier carriers in South Africa. SAAT also provides MRO services to a variety of regional and other airlines such as Air Namibia, Rwandair, TAAG, Arik Air, Trans Air Congo, Korongo Airlines, Air Zimbabwe, Air Mauritius, Air France, KLM and Turkish Airlines among others. Market segments include major airframe checks; engine overhaul; mechanical components; avionics; and line maintenance. SAAT’s main operational base is Johannesburg and it also services customers at Cape Town, Durban and other regional airports.
AAR is a global aftermarket solutions company that employs more than 6,000 people in over 20 countries. Based in Wood Dale, Illinois, AAR supports commercial aviation and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR’s Aviation Services include inventory management; parts supply; OEM parts distribution; aircraft maintenance, repair and overhaul; engineering services and component repair. AAR’s Expeditionary Services include airlift operations; mobility systems; and command and control centers in support of military and humanitarian missions. More information can be found at www.aarcorp.com.
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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 1A, entitled “Risk Factors”, included in the Company’s Form 10-K for the fiscal year ended May 31, 2018. 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 update 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.
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