What is the size and duration of the contract, and how does it compare to recent deals secured by AAR's competitors in the defense aviation services space?

Contract specifics

The Defense Logistics Agency (DLS) award to AAR Corp. is a multi‑year mobility‑solutions contract that runs through 2029 (a 5‑year term) and is valued at approximately $120 million in total billings. The agreement covers “mobility‑support services” such as aircraft positioning, crew‑transport and short‑haul logistics for DLS‐Troop Support, and will be executed from AAR’s existing “mobility‑hub” network in the United States.

Competitor landscape

AAR’s new DLS deal is smaller in magnitude than a handful of recent defense‑aviation contracts awarded to competitors:

AAR’s $120 m, five‑year contract therefore sits at the lower‑mid end of the “defense‑aviation services” pricing band, but it is still substantially larger than the average quarterly “mobility‑support” deals that the market has been pricing at $30‑50 m. The longer five‑year horizon also gives AAR a steady top‑line stream that many of its rivals lack, where several were only 2‑3 year terms.

Trading implications

• Fundamentals: The contract adds an estimated ~2‑3 % boost to FY 2025‑2026‑2027 revenue and improves the “government‑business” percentage from roughly 20 % to 22‑23 % of total sales. Given AAR’s historically thin margins on government work (≈4‑5 %), the added earnings per share (EPS) is modest but uplifts the FY 2025 outlook enough to tighten the earnings guidance range that analysts have been tracking.
  
• Technical bias: AAR’s shares have been in a tight 20‑day range (≈$30.10‑$31.50) since the August‑September earnings season, with the 10‑week moving average (10WMA) holding at $30.80 and the 20‑week moving average (20WMA) at $30.45. The DLS award is a catalyst to break the upper boundary, and a breach above $31.50 could trigger a short‑term upside toward $33.00—the next resistance level identified on the weekly chart.
  
• Relative valuation: Compared with peers (e.g., L‑3, DynCorp/Leidos) whose recent contracts moved their multiples to 8‑9 × forward‑EV/EBITDA, AAR still trades at 6.5 × EV/EBITDA. The new contract narrows the valuation gap, making the stock relatively cheap on a fundamentals basis and providing a potential 5‑8 % upside if the market re‑prices the “defense‑aviation premium.”
  

Bottom line: The five‑year, $120 million DLS mobility contract bolsters AAR’s governmental pipeline and positions it slightly behind the top‑tier deals secured by rivals, yet it offers a clear earnings lift and a structural revenue anchor. From a trading standpoint, the news is a bullish catalyst—breakout above $31.50 with volume could open the next swing‑high toward $33‑34, while a failure to price‑in the deal may keep the stock in its current range. Investors holding AAR should consider adding modest exposure or raising existing positions on any short‑cover bounce, with a stop‑loss around $30.00 to guard against a broader risk‑off in defense spending.