AAS teaches spelling through a phonics-based technique, so yes - it includes phonics, but from an encoding perspective, not a decoding perspective (like a reading program does). Many children learn how to decode (read) faster than they learn to encode (spell). My oldest is like this, so she went through her reading program FIRST, then we did AAS to reinforce phonics AND to teach encoding - which didn't follow naturally for her.
HTH! :)