Used parts market activity is steadily increasing as more older aircraft and engines are sold and parted out for their used serviceable material (USM), bolstered in part by manufacturers getting new-aircraft delivery volumes back on track, AAR executives said.

“We are seeing loosening in the USM, and we were able to deploy capital throughout our” fiscal year 2023, which ended May 31, AAR President and CEO John Holmes said on a recent earnings call, adding that the company is already seeing “some unique opportunities” in the current fiscal year. 

“We have a significant focus on engines, and we are talking to all areas of market, whether that’s lessors that are going through portfolio changes, airlines that are going [through] fleet changes, or even other brokers in the market that have assets available that meet contracts that we have to support,” Holmes said.

Long known as an airframe maintenance specialist, AAR has raised its profile in both the new and used parts distribution market in recent years. The company earlier in July revealed it will change the way it classifies its businesses, breaking out “parts supply” as a stand-alone reportable unit, alongside repair and engineering, integrated solutions, and expeditionary services. Under the new classifications, parts supply accounted for 40% of the company’s $2.0 billion in sales, while repair and engineering and integrated solutions were nearly even as the next largest, at about 27% each.

While cutting exclusive deals with parts manufacturers has been a key plank in AAR’s growth platform, its USM business is seen as a promising growth opportunity feeding both commercial and defense customers.

“We remain optimistic about the demand for our services,” Holmes aid. “Specifically, we expect interest in USM to remain robust. Although supply is constrained, it has been improving, and we expect it to continue to improve as airlines take delivery of new aircraft and retirements increase.”

A recent analysis by consultancy Naveo using Aviation Week Network Fleet Discovery data shows year-to-date retirements of mainline and regional aircraft including commercial turboprops stood at 212 as of early July. The figure is roughly on pace with 2022 and 2021, when a total of 922 aircraft were removed from the fleet, and pales in comparison to recent high-water marks, including 2020 (816 retirements), 2016 (826), and 2012 (897). Naveo’s figures show that annual retirements totaled at least 500 from 2008 through 2020, before the recent two years’ dip.

The figures suggest retirements will need to pick up significantly before USM dealers begin worrying about over-supply and lower prices on the parts market.

“We do not expect additional USM supply to negatively impact our profitability,” Holmes said. “Instead, we believe it will lead to more growth as the availability of USM is currently a growth constraint.”