Aviation company AAR (NYSE: AIR) is shutting down its Duluth aircraft maintenance base, according to KBJR TV. In 2014, AAR said the facility makes a $47 million annual economic impact on the area economy.
Company officials confirmed Wednesday they will not be reopening, and have laid off staff, KBJR is reporting on its web page. The company began operating in Duluth during 2012.
Tom Werner, the Executive Director of the Duluth Airport Authority, told KBJR the loss will have a "big impact on the aviation sector and the region as a whole."
"The DAA will continue to work hard to support our existing aviation partners and air service. We have a strong aviation sector and new infrastructure that will put us in a good position for when new opportunities arise," Werner said.
When originally built by Northwest Airlines, the massive facility employed about 400 persons. The property was turned over to the City of Duluth in 2007 as a stipulation in NWA's bankruptcy settlement. AAR has previously said its Duluth pay scale ranged from $30,000 to $80,000 per year.
As of July 2019, the company employed more than 300 people at its 180,000-square-foot Duluth facility. Northwest operated from the structure until 2005. Cirrus later used the base but moved out in September of 2009.
Just last July, AAR extended its maintenance hangar lease with the city of Duluth and the Duluth Economic Development Authority, which own the structure. But the COVID-19 pandemic has substantially changed the market for commercial aircraft maintenance as people stopped flying. According to the trade publication Avionics International, maintenance, repair and overhaul (MRO) providers are facing the possibility of a steep drop in global demand for MRO services this year because of the outbreak. It noted that commercial MROs may face greater declines than MROs that have a higher proportion of business aviation clients.
The corporation's stock, at $45.73 on Feb. 20, closed at $17.76 Wednesday.
AAR also operates U.S. maintenance bases in Indianapolis, Miami, Oklahoma City and Rockford.