(By Balaseshan) AAR Corp. (NYSE: AIR), a supplier of avionics products, and its joint venture partner have agreed to sell 10 Boeing 737-400 aircraft to Malaysian Airline System Berhad (MAS).
The transaction is expected to be completed during AAR's 2013 fiscal third quarter with net cash proceeds of about $20 million, and will record a slight gain. Due to joint venture accounting, there will be no impact on sales.
The aircraft have been on lease to MAS since they were acquired by the joint venture in July 2007. The sale is consistent with the company's stated goal to reduce its investment in aircraft leasing.
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At its peak in 2007, the company held 31 aircraft in joint ventures and 11 aircraft in its wholly-owned portfolio. Upon completing the sale to MAS, AAR's portfolio will include six aircraft held in joint ventures and two aircraft that are wholly-owned.
While AAR has reduced its portfolio of leased aircraft, it will remain active in the aircraft sales and re-marketing business where the company has an established market presence and a successful track record.
AAR is a diversified provider of products and services to the worldwide aviation and government and defense markets. The company operates in four business segments: Aviation Supply Chain; Government and Defense Services; Maintenance, Repair and Overhaul (MRO), and Structures and Systems.
The company conducts its business activities through seven principal operating subsidiaries: AAR Parts Trading Inc., AAR Aircraft & Engine Sales & Leasing Inc., AAR Services Inc., AAR Aircraft Services Inc., AAR Manufacturing Inc., AAR Airlift Group Inc., and AAR International Inc.
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AIR closed Wednesday's regular session up 3.02% at $15.35. The stock has been trading between $10 and $23.67 for the past 52 weeks.