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AAR signs 20-year lease with DEDA

With runway construction wrapping up and a contract with United Airlines, AAR commits to 20 more years in Duluth

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People gather as Mayor Emily Larson speaks during a celebration announcing AAR's 20-year lease agreement with DEDA on Thursday afternoon. Tyler Schank / tschank@duluthnews.com
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Brian Loomer, regional vice president and general manager of AAR Corp., said a new 20-year lease between the airline maintenance company and the Duluth Economic Development Authority is a commitment to the region.

“The attention we get from Duluth, the government, the officials and DEDA is just amazing,” Loomer told the News Tribune after a celebration of the lease at its maintenance hangar on the north side of the Duluth International Airport. “They want us to be here, and we want to be here. So we have no desire or intention to run anywhere.”

The new 20-year lease, which took effect July 1, 2019, sets monthly rent at $36,500 for use of about 80% of the 190,000 square foot building. The lease also includes the opportunity for three five-year extensions.

The company has operated out of the former Northwest Airlines maintenance facility in Duluth since 2012, beginning with a five-year contract repairing Air Canada’s fleet of Airbus A320s then moving to a contract repairing United Airlines’ fleet of the same plane.

Speakers said the new lease was a milestone in the city’s economic development efforts considering how difficult it was to fill the space after Northwest left the facility in 2005.

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“That sounds like a great marriage,” Nancy Norr, DEDA board member and director of regional development at Minnesota Power, said of the lease between DEDA and AAR. “I think we have silver anniversaries and other things coming up that we can celebrate.”

Currently, AAR employs 340 people at its Duluth location and has been servicing three airplanes at a time, but Loomer announced Thursday that AAR would add another line in Duluth, allowing the company to service one additional plane.

That fourth line will require AAR to hire 40 more technicians to staff it in the face of an inherent workforce shortage of trained mechanics.

The lease could help with that. For five years, $50,000 of AAR’s annual rent to DEDA will be spent on for the recruitment and training of AAR employees.

Those efforts will fall mostly to Lake Superior College, which trains technicians and mechanics for AAR.

“I think we've done a pretty good job of producing the workforce so far,” said Daniel Fanning, the college’s director of institutional advancement. “Now we know you're going to be here for hopefully at least 20 years, and we need to step up engagement efforts.”

AAR’s seven years in Duluth hasn’t been without challenges.

In 2016, the potential for a two-month closure of the Duluth International Airport’s main runway for reconstruction would have made it impossible for Air Canada's planes to land in Duluth, AAR said.

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At the time, Mark Ketterer, then AAR's vice president of operations in Duluth, warned the Duluth Airport Authority that if AAR had to close down, it could leave Duluth, taking hundreds of jobs with it.

“It could have been a tragic situation for us,” Loomer said.

But a solution emerged in the 11th hour: the runway would be completed in segments over several years and the entire runway would only need to be shut down for several weeks as construction crews worked around the clock on its middle segment..

And after another delay in 2018 to accommodate AAR’s schedule, work on the runway is finally wrapping up this summer.

While Air Canada has since left Duluth for AAR's facility in Trois-Rivieres, Quebec, the contract with United is providing plenty of work for the Duluth hanger.

Now that the future of AAR in Duluth is firmer, Loomer said the facility could see an expansion beyond its current footprint and up to 100 more employees.

“Maybe another building, another hanger down the road,” Loomer said.

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Jimmy Lovrien covers energy, mining and the 8th Congressional District for the Duluth News Tribune. He can be reached at jlovrien@duluthnews.com or 218-723-5332.
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