EXHIBIT 10.1

                               FIRST AMENDMENT TO
                          AAR CORP. STOCK BENEFIT PLAN

     WHEREAS, AAR CORP., a Delaware corporation (the "Company") maintains the
AAR CORP. Stock Benefit Plan as amended and restated effective October 1, 2001
(the "Plan"); and

     WHEREAS, the Company has reserved the right to amend the Plan and now deems
it desirable to do so to discontinue the automatic, non-discretionary award of
non-qualified stock options to Non-Employee Directors and replace it with a
discretionary award.

     NOW THEREFORE, the Plan is hereby amended, effective June 26, 2003, as
follows:

          1.   The second paragraph of Section 1 shall be amended to read as
     follows:

          "Non-Employee Directors shall participate in the Plan through
     discretionary grants of NSOs pursuant to Section 5 hereof. Key Employees
     who have been selected by the Committee to receive an Award shall
     participate in the Plan. The Committee shall determine, within the limits
     of the express provisions of the Plan, those Key Employees and Non-Employee
     Directors whom, and the time or times at which, Awards shall be granted. In
     making a determination concerning the granting of Awards, the Committee may
     take into account the nature of the services the Key Employees and
     Non-Employee Directors have rendered or that the Committee expects they
     will render, their present and potential contributions to the success of
     the business, the number of years of effective service they are expected to
     have and such other factors as the Committee in its sole discretion shall
     deem relevant. The Committee shall also determine, with respect to Awards
     to Non-Employee Directors and Key Employees, the number of Shares to be
     subject to each Award; with respect to Key Employees, the type of Awards
     (Restricted Stock, Options or Stock Appreciation Rights (SAR)); the type of
     Options for Key Employees (ISO or NSO); the duration of each Option; the
     exercise price under each Option; the time or times within which (during
     the Term of the Option) all or portions of each Option may be exercised;
     whether cash, Shares, Options or other property may be accepted in full or
     partial payment upon exercise of an Option; the restrictions to be imposed
     on shares of Restricted Stock; and any other terms and conditions of such
     Awards."

          2.   Section 5 shall be deleted and Sections 6 through 29 renumbered
     accordingly.

          3.   Current Section 6, renumbered as new Section 5, shall be amended
to read as follows:

          "5.  Grants of Options



          5.1  Subject to the terms of the Plan, the Committee may from time to
     time grant Options, which may be Non-Qualified Stock Options, or Incentive
     Stock Options if granted to Key Employees, and must be Non-Qualified Stock
     Options if granted to Non-Employee Directors. Unless otherwise expressly
     provided at the time of the grant, Options granted to Key Employees under
     the Plan will not be ISOs. Notwithstanding the foregoing, outstanding NSOs
     granted to Key Employees may be converted to ISOs at the discretion of the
     Committee in accordance with, and to the extent, allowed by law.

          5.2  Each Option shall be evidenced by a written Option Agreement
     specifying the type of Option granted, the Option exercise price, the terms
     for payment of the exercise price, the duration of the Option, the number
     of Shares to which the Option pertains and, in the case of grants to Key
     Employees, the terms of any related Stock Appreciation Right Award or
     Restricted Stock Award. An Option Agreement may, in the sole discretion of
     the Committee, also contain a vesting schedule, a non-competition
     agreement, a confidentiality provision, provisions for forfeiture and such
     restrictions, conditions and other terms as the Committee shall determine
     in its sold discretion. Option Agreements need not be identical.

          5.3  Each Option shall expire and all rights to purchase Shares
     thereunder shall cease on the date fixed by the Committee in the Option
     Agreement, which shall not be later than the tenth anniversary of the date
     on which the Option was granted, except as otherwise required under Section
     6.4 hereof. Further, if provided in the Option Agreement, any Option
     granted pursuant to the Plan shall expire and all rights to purchase Shares
     thereunder shall cease, if (a) the Non-Employee Director or the Key
     Employee violates a non-competition or confidentiality agreement, any
     Company policy, or any other conditions set forth in the Option Agreement
     or in a separate document, (b) the Key Employee violates an employment
     agreement, (c) the Non-Employee Director's service on the Board terminates
     as provided in Section 12, or (d) the Key Employee's employment terminates
     as provided in Section 12.

          5.4  Each Option shall become exercisable at the time, and for the
     number of Shares, fixed by the Committee in the Option Agreement. Except to
     the extent otherwise provided in or pursuant to Section 13, or in the
     proviso to this sentence, no Option shall become exercisable as to any
     Shares prior to the first anniversary of the date on which the Option was
     granted; provided that (a) the Committee may provide, at the time of grant
     or subsequently that an Option granted to a person who is or becomes
     subject to taxation under any applicable law that would tax such person
     upon the grant of such Option, shall be exercisable from and after the date
     of grant or (b) the Committee, in its discretion, shall have the power at
     any time to accelerate the dates for exercise of any or all Options, or any
     part thereof, granted to a Non-Employee Director or a Key Employee under
     the Plan."

          4.   The first sentence of current Section 8, renumbered as new
     Section 7, shall be amended to read as follows:



          "Each NSO granted to a Grantee shall be in such form and subject to
     such restrictions and conditions and other terms as the Committee may
     determine at the time of grant, subject to the general provisions of the
     Plan, the applicable Option Agreement, and the following specific rules:"

          5.   Clause (e) of current Section 15.2, renumbered 14.2, shall be
     amended to read as follows:

          "(e) in the case of a Grantee,  by such other medium of payment as the
     Committee,  in its  discretion,  shall authorize at the time of grant, or"


     IN WITNESS WHEREOF, this First Amendment has been executed on this 27th day
of June, 2003.

                                           AAR CORP.


                                           By: /s/ DAVID P. STORCH
                                               --------------------------------
                                               David P. Storch, President