AAR (NYSE: AIR), a leading provider of aviation services to commercial and government operators worldwide, today announced that certain of its subsidiaries expect to receive $57.2 million from the U.S. Treasury Department through the Payroll Support Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The funds are expected to consist of a $48.5 million grant and an $8.7 million loan, and will be used exclusively to pay salaries, wages and benefits of employees in AAR’s U.S. airframe and landing gear maintenance, repair and overhaul (MRO) operations.
“We thank Congress (CACOX) and the Administration for passing legislation that recognizes the essential service that our MRO team provides to the aviation industry. We are also grateful to our employees for their tireless support of our airline customers,” said John M. Holmes, President and Chief Executive Officer of AAR. “We appreciate the Treasury Department’s collaborative approach to identifying the AAR businesses that are eligible for assistance under the Payroll Support Program and are grateful to be able to keep the current workforce of these businesses in place.”
The loan portion of the funding is a ten-year, low-interest note that may be prepaid at any time at par. AAR will not issue warrants or other equity or equity-like securities in conjunction with the program.
The program requires AAR to refrain from involuntary furloughs, layoffs and reductions in employee pay rates and benefits at our U.S. airframe and landing gear MRO operations from the date of signing until September 30, 2020. Additionally, the program obligates AAR to eliminate dividends and share repurchases until September 30, 2021 and to limit executive compensation until March 24, 2022.