) has agreed to sell 10 of its 737-400 aircraft to Malaysian
Airline System, Berhad (MAS). The deal will be carried out
through AAR's joint venture. The transaction, which is expected
to be complete by the third quarter of fiscal 2013, would have an
approximate value of $20 million; and the payment would be made
The sale will record a slight gain in the company's account.
Also, since the sale is taking place through the joint venture
accounting, there will be no impact on the sales of the company.
Since their acquisition by the joint venture in 2007, the
aircraft have been on lease with MAS. The sale forms a part of
the strategy AAR is adopting to reduce its investment in aircraft
After the sale takes place, AAR's aircraft portfolio will
comprise 6 aircraft in joint venture and 2 aircraft in its wholly
owned portfolio. However, it can be seen as a considerable
decline from the peak year 2007, where the company was in
possession of 31 aircraft in joint venture along with 11 aircraft
which were wholly-owned.
Although the company is in the process of reducing its leased
aircraft portfolio, it will not forego the sales and re-marketing
of aircraft, where the company has a successful track record
along with an established market.
Illinois based AAR Corp. provides a wide range of
high-quality, and cost-effective technical services. We currently
hold an Outperform recommendation on the stock. AAR Corp. has a
Zacks #3 Rank, implying a short-term Hold rating (1-3 months).
The company competes directly with its peers such as
Lockheed Martin Corporation
), both holding a Zacks #3 Rank.
AAR CORP (AIR): Free Stock Analysis Report
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LOCKHEED MARTIN (LMT): Free Stock Analysis
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