Joint Ventures	9 Months Ended
Feb. 29, 2024
Joint Ventures
Joint Ventures	Note 11 – Joint Ventures Investment in Indian Joint Venture Our investments in joint ventures include $9.8 million for our 40% ownership interest in a joint venture in India to operate an airframe maintenance facility. The facility received certain regulatory approvals and commenced airframe maintenance operations in the second quarter of fiscal 2022. We guarantee 40% of the Indian joint venture’s debt and have recognized a guarantee liability of $9.4 million as of February 29, 2024. Each of the partners in the Indian joint venture also has a loan to the joint venture proportionate to its equity ownership. In addition to the net equity investment of $6.3 million, our investment in the Indian joint venture includes $3.5 million for our loan to the joint venture as of February 29, 2024. We account for our share of the earnings or losses of the Indian joint venture using the equity method with a reporting lag of two months, as the financial statements of the Indian joint venture are not completed on a timely basis that is sufficient for us to apply the equity method on a current basis. Our share of the Indian joint venture’s losses for the three-month periods ended February 29/28, 2024 and 2023 were $0.1 million and $1.2 million, respectively. There were no shared earnings or losses for the nine-month period ended February 29, 2024 and our share of the losses for the nine-month period ended February 28, 2023 was $2.0 million. We are currently evaluating a potential exit from our investment in the Indian joint venture. Investment in AAR Sumisho Aviation Services (ASAS) Our investments in joint ventures include a 50% ownership interest in a joint venture to provide aviation aftermarket supply chain solutions to Japanese defense and global commercial markets. Each of the partners in the ASAS joint venture have provided financial guarantees to third-parties to guarantee the payments for ASAS’s financing arrangements, including inventory purchases. No liabilities have been recognized on the outstanding guarantees. We are unable to estimate our maximum exposure under these guarantees as they are largely dependent on the volume of inventory purchase orders outstanding. Our sales to the ASAS JV, including service fees earned by us on providing support to the ASAS JV, were $3.5 million and $4.1 million during the three- and nine-month periods ended February 29, 2024, respectively, and $0.2 million and $0.7 million during the three- and nine-month periods ended February 28, 2023, respectively. Investments in Aircraft Joint Ventures Under the terms of servicing agreements with certain of our aircraft joint ventures, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide evaluation and inspection services prior to the purchase of an aircraft and remarketing services with respect to the divestiture of aircraft by the joint ventures. Our sales to joint ventures for these services were $0.3 million and $1.1 million during the three- and nine-month periods ended February 29, 2024, respectively, and $0.3 million and $0.6 million during the three- and nine-month periods ended February 28, 2023, respectively.

Joint Ventures

9 Months Ended

Feb. 29, 2024

Note 11 – Joint Ventures

Investment in Indian Joint Venture

Our investments in joint ventures include $9.8 million for our 40% ownership interest in a joint venture in India to operate an airframe maintenance facility. The facility received certain regulatory approvals and commenced airframe maintenance operations in the second quarter of fiscal 2022.

We guarantee 40% of the Indian joint venture’s debt and have recognized a guarantee liability of $9.4 million as of February 29, 2024. Each of the partners in the Indian joint venture also has a loan to the joint venture proportionate to its equity ownership. In addition to the net equity investment of $6.3 million, our investment in the Indian joint venture includes $3.5 million for our loan to the joint venture as of February 29, 2024.

We account for our share of the earnings or losses of the Indian joint venture using the equity method with a reporting lag of two months, as the financial statements of the Indian joint venture are not completed on a timely basis that is sufficient for us to apply the equity method on a current basis. Our share of the Indian joint venture’s losses for the three-month periods ended February 29/28, 2024 and 2023 were $0.1 million and $1.2 million, respectively. There were no shared earnings or losses for the nine-month period ended February 29, 2024 and our share of the losses for the nine-month period ended February 28, 2023 was $2.0 million. We are currently evaluating a potential exit from our investment in the Indian joint venture.

Investment in AAR Sumisho Aviation Services (ASAS)

Our investments in joint ventures include a 50% ownership interest in a joint venture to provide aviation aftermarket supply chain solutions to Japanese defense and global commercial markets. Each of the partners in the ASAS joint venture have provided financial guarantees to third-parties to guarantee the payments for ASAS’s financing arrangements, including inventory purchases. No liabilities have been recognized on the outstanding guarantees. We are unable to estimate our maximum exposure under these guarantees as they are largely dependent on the volume of inventory purchase orders outstanding.

Our sales to the ASAS JV, including service fees earned by us on providing support to the ASAS JV, were $3.5 million and $4.1 million during the three- and nine-month periods ended February 29, 2024, respectively, and $0.2 million and $0.7 million during the three- and nine-month periods ended February 28, 2023, respectively.

Investments in Aircraft Joint Ventures

Under the terms of servicing agreements with certain of our aircraft joint ventures, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide evaluation and inspection services prior to the purchase of an aircraft and remarketing services with respect to the divestiture of aircraft by the joint ventures. Our sales to joint ventures for these services were $0.3 million and $1.1 million during the three- and nine-month periods ended February 29, 2024, respectively, and $0.3 million and $0.6 million during the three- and nine-month periods ended February 28, 2023, respectively.