AAR sells Telair Cargo Group for $725 million

Wood dale-based AAR Corp. has agreed to sell its Telair Cargo Group to TransDigm for $725 million in cash, subject to adjustments.

The Telair Cargo Group is comprised of Telair International, Telair U.S., and Nordisk Aviation Products. AAR also said it intends to sell its unprofitable Precision Systems Manufacturing business and will report it as a discontinued operation and record an impairment charge of approximately $40 million in the third quarter of fiscal year 2015.

"These transactions are an important strategic step positioning AAR as a pure-play, industry-leading global aviation services company and will allow us to focus our attention where we see the best opportunities for the company," said David P. Storch, AAR chairman and CEO. "We also expect the sale will create value for our shareholders by crystallizing our valuation, improving AAR's overall return profile, and reshaping our balance sheet while returning capital to shareholders."

Citi served as exclusive financial adviser and Winston & Strawn LLP as legal adviser to AAR on the sale of the Telair Cargo Group. They will also serve as advisers on the sale of Precision Systems Manufacturing.

The provider of aircraft and aircraft maintenance services said that as a result of the sale, the company will report quarterly results in two new segments, Aviation Services, comprised of Aviation Supply Chain and Maintenance, Repair and Overhaul and Expeditionary Services, comprised of Airlift & Mobility

"We are very pleased with the double-digit organic growth rate we are experiencing in our new Aviation Services segment and excited by our prospects going forward," torch said. "While revenues and earnings in our new Expeditionary Services segment have decreased significantly from the prior year, we have confidence in our industry-leading positions and see substantial opportunities ahead."

The company said its third-quarter results will be less than expected due to fewer flying positions in its Airlift operation, costs associated with this transaction, and bid costs for large government contracts.