AAR Corp. (AIR) — ESG & Values Scores

Environment story

AAR Corp. discloses minimal environmental metrics and lacks a credible net-zero target or comprehensive Scope 3 emissions disclosure. The company acknowledges climate change as a business risk factor affecting aviation industry demand and regulatory costs, but does not present quantified operational decarbonization initiatives or renewable energy commitments. No evidence of physical infrastructure investment in decarbonization; no carbon offset programs disclosed. The company is exposed to Scope 3 emissions through its customers (commercial airlines and defense operations) and supply chain, but does not quantify or manage these dependencies. Environmental score reflects absence of verified commitments and heavy reliance on customer-driven sustainability rather than corporate action.

Criticisms on file

No disclosed climate targets or net-zero commitment; no quantified Scope 1, 2, or 3 emissions baseline or reduction pathway.
Source: AIR_10k.txt - Item 1A Risk Factors; MD&A contains no environmental metrics or targets.
Exposure to aviation industry carbon regulation and potential carbon taxes/fees, but no company-level mitigation strategy disclosed beyond acknowledging regulatory risks.
Source: AIR_10k.txt - Item 1A Risk Factors: 'Actions may be taken in the future by the U.S. government...to regulate the emission of greenhouse gases by the aviation industry.'

Disclosed initiatives

Climate Risk Acknowledgment

Company identifies climate change and environmental regulation as material business risks affecting aviation industry demand, fuel costs, and regulatory compliance.

Social story

AAR Corp. demonstrates moderate social governance with documented workforce unionization status, labor cost pressures, and competitive talent retention challenges. The company has approximately 4% of workforce covered by collective bargaining (200 employees in Expeditionary Services segment). CEO-to-median-worker pay ratio not disclosed. Diversity metrics not disclosed in filing; no mention of executive or board diversity targets. The company acknowledges increased unionization interest and labor market tightness but does not disclose specific wage equity, supply-chain labor audits, or diversity initiatives. Recent labor activity in aviation industry (Boeing strikes) noted as a risk factor. No major strikes, union-suppression litigation, or documented supply-chain human-rights violations flagged in the 10-K.

Criticisms on file

CEO-to-median-worker pay ratio not disclosed; unable to assess executive compensation alignment.
Source: AIR_10k.txt - MD&A and Note disclosures do not include named executive officer compensation or CEO-to-worker pay metrics.
No diversity metrics (gender, race/ethnicity) disclosed for workforce, leadership, or board; no DEI initiatives or targets mentioned.
Source: AIR_10k.txt - Full 10-K search yields no diversity statistics or diversity programs.
Increased unionization interest noted; company acknowledges potential negative impact of union organizing on business culture and operational flexibility.
Source: AIR_10k.txt - Item 1A Risk Factors: 'Employees in certain locations have shown increased interest in unionization...If a significant portion of our employees were to become unionized, our labor costs could increase.'
Supply-chain labor audit or human-rights due diligence not disclosed; no mention of conflict minerals, cobalt sourcing, or labor standards in supplier agreements.
Source: AIR_10k.txt - No supply-chain ethics or labor audit disclosures identified.

Disclosed initiatives

Labor Force Management

Company acknowledges competition for skilled aviation mechanics and management personnel; notes wage inflation and labor market tightness as operational pressures.

Governance story

AAR Corp. demonstrates moderate governance controls with documented compliance frameworks for government contracting, cybersecurity risk management, and financial covenants. Board independence percentage not explicitly disclosed; share structure is described as single-class common stock (no dual-class supermajority voting identified). Annual lobbying expenditure not disclosed. Company reports compliance with financial covenants under debt agreements. However, company has faced regulatory investigations: (1) Foreign Corrupt Practices Act (FCPA) investigation resulting in settlement and $54.8 million FCPA-related charge in fiscal 2025; (2) periodic government audits and cost accounting inquiries typical of defense contractors. No evidence of antitrust litigation or consumer-fraud proceedings. Governance score reflects regulatory discipline on contracting and cybersecurity, offset by FCPA enforcement action and lack of board independence transparency.

Criticisms on file

FCPA Investigation and Settlement: Company settled Foreign Corrupt Practices Act investigation; $54.8 million charge in fiscal 2025. Filing notes 'pending proceedings' under FCPA in Note 18.
Source: AIR_10k.txt - MD&A: 'Selling, general and administrative expenses increased $35.5 million...primarily due to increased costs of $54.8 million related to the previously disclosed FCPA investigation and settlement.' Item 1A Risk Factors references 'pending proceedings' under FCPA.
Board independence percentage not disclosed; unable to verify compliance with governance best practices (75% or higher independence target).
Source: AIR_10k.txt - Proxy statement referenced but board composition and independence percentages not provided in 10-K filing.
Annual lobbying expenditures not disclosed; unable to assess potential climate-regulation or consumer-protection deregulation advocacy.
Source: AIR_10k.txt - No lobbying expenditure disclosure identified in 10-K or MD&A.
Export licensing delays and trade restrictions: Company notes two instances in current U.S. administration where export license applications placed on hold; Section 232 investigation initiated by Commerce Department in May 2025 regarding commercial aircraft imports—outcome uncertain but could have material impact.
Source: AIR_10k.txt - Item 1A Risk Factors: 'For example, there have been two instances in the current U.S. federal administration where license applications have been placed on hold...In May 2025, the Secretary of Commerce initiated an investigation...under Section 232 of the Trade Expansion Act of 1962.'

Disclosed initiatives

Cybersecurity Risk Management Program

Company maintains cybersecurity risk management program to monitor and mitigate threats and incident response plan; has obtained insurance coverage for certain cybersecurity incidents.

Designed to prevent/mitigate data breaches and operational disruptions; ongoing costs expected to continue.
Government Contract Compliance Framework

Company subject to Federal Acquisition Regulations (FAR), Defense Federal Acquisition Regulations, Cost Accounting Standards, and export control compliance (ITAR, EAR, OFAC).

Mandatory compliance; failure results in contract termination, debarment, or suspension from government business.
Financial Covenant Compliance

Company maintains compliance with leverage and interest coverage covenants under Credit Agreement and Senior Notes; no defaults reported as of May 31, 2025.

These are Missionomics' own editorial scores — directional signals built from disclosed facts under a published method, not certifications or definitive ratings of AAR Corp.. Coverage and confidence vary by data point, and figures can lag real-world changes. Read the full Methodology for sourcing, scoring, and correction details — or open AAR Corp. in the app for interactive charts and portfolio building.

More in Industrials

Space Exploration Technologies Corp. (SPCX) Caterpillar Inc. (CAT) GE Aerospace (GE) RTX Corporation (RTX) Union Pacific Corporation (UNP) The Boeing Company (BA)