Xe sells aviation unit to AAR for $200 million

[March 26, 2010]  RALEIGH, N.C. (AP) -- The security company formerly known as Blackwater shed its aviation division Thursday, selling the unit for $200 million to AAR Corp in a bid to strengthen the firm's balance sheet.

Wood Dale, Ill.-based AAR will get two aviation units that operate under the umbrella name of Aviation Worldwide Services. That division has a fleet of 58 aircraft, many of which were used under U.S. government contract in Afghanistan for Blackwater, which now operates under the name Xe Services.

"This sale allows for Xe, and its new management team, to move forward on a firmer economic basis while continuing to focus on its core competency of providing the highest quality training for its customers," Xe spokesman Mark Corallo said.

AAR Chairman and CEO David P. Storch said in a statement that the market for government aviation "represents a tremendous growth opportunity." The company anticipates that the new business line will generate approximately $175 million of revenue annually.

"This acquisition represents a significant milestone in the expansion of AAR's value-added capabilities for government customers," Storch said in a statement. Aviation Worldwide Services includes two subsidiaries, Presidential Airways and STI Aviation. AAR said that Presidential Airways has flown more than 70,000 missions worldwide, transported 270,000 personnel and delivered 50 million pounds of cargo and mail since 2005.

While Blackwater got its start training military and law enforcement at its compound in Moyock, N.C., company officials had cited its aviation division as a point of focus as recently as early 2009, hoping it would help carry the firm toward $1 billion annual revenues. Executives said in an interview with The Associated Press at the time that they saw growing demand for services in hotspots such as Afghanistan and West Africa, where bad infrastructure increased demand for aviation support.

Those executives, however, are no longer with the company, leaving in a management shakeup that took place last year. Corallo declined to comment further about the company's reasons for entering the deal.

"Xe Services LLC is proud of the exemplary work Aviation Worldwide Services and Presidential Airways have done in support of the United States government and the company worldwide," he said.

[Associated Press; By MIKE BAKER]

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