AAR Corp. (NYSE:AIR) Q1 2024 Earnings Call Transcript

Joshua Sullivan: Hey, good evening.

John Holmes: Hey, Josh. How are you?

Joshua Sullivan: I’m doing well. On the forged parts issue that’s circulating through the industry here, is that — can that be a driver for Trax? Or is there a way to leverage the Trax franchise for that?

John Holmes: Yes, that’s a great question and something we’ve been talking about even before this, that being able to track the providence of parts digitally, and some people have talked about blockchain or other elements to do that is definitely something that we think the industry can benefit from. And unfortunately, this [indiscernible] that’s out there is highlighting that [indiscernible]. To do those things, take some time. And I would say it’s currently not part of the Trax platform. But given the technological capability that we acquired and with that company, this is definitely something that we could pursue. So the short answer to your question is yes, I think that could be part of the longer term solution here. And if we think there’s a market for Trax, we got the capability to make investments and go in that direction.

Joshua Sullivan: Got it. And then question on labor, given the demand that’s going to be out there for wrench turner’s and to address some of the RTX [ph] issues. Are you seeing any pressure on labor rates at this point?

John Holmes: It’s been stable. We’ve seen it, as I mentioned for the last couple of years, but it’s not at the accelerating rate that it had been before. Now we’re certainly aware of that, as the airline’s work to continue to negotiate their contracts with unions, et cetera. Obviously, we’ve been focused on pilots to the extended day, move on to mechanics and other constituencies that could create a downstream effect to our non-union team. But it would be the same dynamic that we’ve been dealing with for the last few years is, which is to the extent that we see an increase in our costs. We need to seek relief from our customers so that we can continue to provide the services they come to rely on.

Joshua Sullivan: Got it. Thank you for the time.

John Holmes: Great. Thanks, Josh.

Operator: I’m showing no further questions in the queue. I would now like to turn the call back over to management for closing remarks.

John Holmes: Well, we really appreciate everybody’s time and interest and we look forward to being back here for the Q2 earnings call. Thank you.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect. Good bye.