AAR CORP (AIR) as of February 28, 2026 presents a deeply negative liquidation posture under standard recovery haircuts, consistent with a heavily intangible and goodwill-laden balance sheet layered against face-value debt obligations. Total reported assets of $3.33B compare to total liabilities of approximately $1.69B (current $653M + noncurrent $1.04B), implying book equity of $1.64B. Under liquidation haircuts, the picture deteriorates materially. Cash of $78.5M recovers at par. Receivables of $426.2M (net of $13.3M allowance) recover ~90-95%, yielding roughly $383-405M. Inventory of $958.2M at 60% yields ~$575M — materially impaired by the in-period $4.9M write-down related to the exit of the consumables/expendables product line, signaling further reserve risk against the $781M finished goods component. PP&E net of $163.2M at 50-70% yields $82-114M, noting the Wood Dale HQ building was sold in Q3 for $26M with a $9.8M gain — that asset has exited. ROU assets of $192.8M receive zero recovery under the lens; operating lease liabilities of $91.4M noncurrent remain face-value obligations. Goodwill of $552.3M and intangibles net of $288.6M are zeroed in liquidation. The $552.3M goodwill alone represents a one-for-one reduction in recoverable asset value. Total tangible asset recovery approximates $1.15-1.25B versus face-value liabilities of ~$1.69B, yielding an estimated negative recovery to equity of approximately $440-540M — in the range of MFFAIS's reported CLV of -$1.55B (which likely applies more conservative haircuts or captures off-balance-sheet items). The debt stack is the dominant liability: $888.3M long-term debt noncurrent, composed of $550M 6.75% Senior Notes due 2029 issued March 2024 plus $150M tack-on issued August 2025 (total $700M face), plus $195M drawn on the $825M revolving facility. The tack-on issuance added $150M to the liability stack in Q2 FY2026 with proceeds partly funding the ADI ($137.1M) and HAECO Americas ($78M) acquisitions. HAECO Americas generated a $35.7M bargain purchase gain (preliminary fair value of identifiable assets exceeded purchase price), partially offsetting goodwill-additive M&A. Total goodwill grew from prior periods driven by these acquisitions. The $43.8M deferred revenue balance related to a $50M customer prepayment received in Q3 is a current liability that survives liquidation at face. The A220 performance guarantee contingency (customer claim of at least $32M, no cap, no accrual) and the Russian litigation residual ($2.1M accrued) are not separately XBRL-tagged beyond what appears in TAG_CONTEXT but are disclosed in MD&A/footnotes as unquantified contingent liabilities — the A220 guarantee in particular represents a potentially material unaccrued obligation that would increase face-value liabilities in a wind-down scenario. Filing does not separately tag the A220 contingent liability in XBRL.
▼ Community Notes