AAR at Jefferies Global Industrials Conference 2026: growth, margins

On 9th September 2026, AAR held the Jefferies Global Industrials Conference to outline its restructured business model. The report highlighted three main areas of focus: parts distribution, repair services, and software. Management shared impressive growth and margin figures, but also voiced concerns about ongoing integration and profit conversion. The stock price dipped 3.99% to $125.51 following the conference, yet it had delivered a remarkable 77% return over the past year, despite its recent volatility.

AAR has transformed into a more focused aftermarket provider after years of mergers and acquisitions. The company reported 14% organic revenue growth in fiscal 2026, with guidance for about 12% growth in fiscal 2027. Heavy maintenance capacity is expanding while hangars are close to being fully utilized. Trax software, acquired for $25 million, has expanded to a $100 million run-rate business.

Management sees potential for further growth in all three business segments and believes the medium-term growth targets may be conservative if market conditions remain favorable. CEO John Holmes emphasized that AAR aims to become the leading independent provider of aftermarket aviation services within three to five years. The company's current portfolio is split roughly 30% government and 70% commercial.

AAR's financial profile is strong with improving leverage. They reported annual revenue of about $3.5 billion and EBITDA of $400 million. The medium-term organic growth target is between 8% and 12%, with a long-term EBITDA margin goal of mid-teens. The company's leverage ended at 2.0x for Q4 2026, with a target range of 2.0x to 2.5x.

AAR's parts distribution segment has become a significant growth engine, built around exclusive two-way relationships with original equipment manufacturers (OEMs). It now generates about $1.1 billion to $1.2 billion in revenue, accounting for roughly 31% to 34% of total company revenue.

Heavy maintenance remains a critical business for AAR, with long-term customer contracts and full hangars. The company is the third-largest heavy maintenance provider globally, primarily serving narrow-body aircraft like 737s and A320s. Hangar capacity is set to increase by 15% over the next six to 12 months as all major customers have signed long-term agreements.

Turnaround times for C-check maintenance are significantly faster than industry standards, and AAR is undergoing an integration process following its acquisition of HAECO in November.