AIR Teams with Kawasaki & ShinMaywa

AAR Corp. (AIR - Analyst Report) has recently been selected by the team of Kawasaki Heavy Industries and ShinMaywa Industries to manufacture cargo handling systems for the Kawasaki C-2 for supporting the Japanese Ministry of Defence transport requirements.

The Kawasaki C-2, formerly known as C-X aircraft, is Japan's next-generation military transport aircraft. AAR, according to the order, will be manufacturing systems for two initial production aircraft, slated to replace the ageing C-1 fleet. The delivery of the C-2 cargo handling system is expected to be completed in 2013 and run for ten years.

AAR has been working with Kawasaki Heavy Industries and ShinMaywa Industries since 2004, designing and developing the aircraft's cargo system. The recent order, extending the company's close co-operation with Kawasaki and ShinMaywa Industries, is expected to strengthen AAR's position further as a leading cargo systems provider to the global aerospace market. The company has also worked with Sojitz Aerospace, the international distributor for the C-2 program earlier.

AAR plans to acquire Telair International GmbH and Nordisk Aviation Products, known for their leadership position in the commercial cargo market as a strategy of expanding the company’s cargo systems business. The acquisition is expected to close during the first week of December.

Based in Wood Dale, Illinois, AAR Corp. provides various products and services to the aviation and defense industries worldwide. The company’s cargo systems are produced at AAR's Cargo Systems Division at its Goldsboro, North Carolina manufacturing facility.

With facilities and sales locations around the world, AAR uses its close-to-the-customer business model operating in four segments viz. Aviation Supply Chain; Maintenance, Repair, and Overhaul; Structures and Systems; and Government & Defense Services. The company competes directly with its peers, such as Goodrich Corp (GR - Analyst Report), Boeing Co (BA - Analyst Report), and Lockheed Martin Corporation (LMT - Analyst Report).

We currently hold a Neutral recommendation on the stock. AAR Corp. has a Zacks #3 Rank, implying a short-term Hold rating (1-3 months).

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