Wings Magazine

CAE to expand training in emerging markets

Nov. 11, 2010, Montreal - Flight training and simulator manufacturer CAE Inc. expects to add more training devices to its stable as emerging markets continue to propel a recovery in the commercial aviation industry.

November 11, 2010  By The Canadian Press

Training has been the early beneficiary of the recovery with utilization
of training simulators increasing, but sales of full flight simulators
have also grown.

"In the period ahead we expect to see this positive momentum in our business to continue as the airline industry makes further
progress towards a recovery,'' CEO Marc Parent said Wednesday during a conference call.

The fundamentals of the industry are improving with airlines returning to profitability and starting to increase capacity.

CAE raised its forecast for simulator sales this fiscal year to the
mid-20s after the sale of eight devices in its fiscal second quarter
pushed sales so far this year to 16.


Parent said additional sales are needed to recall manufacturing employees laid off during the recession. Recent hirings in other
sectors and acquisitions have returned overall employment to the pre-recession level of 7,500.

The Montreal-based company reported that it earned $40 million, or 16
cents per share, for the period ended Sept. 30. That's up from
$39.1 million, or 15 cents a year earlier.

Excluding a $1.1-million restructuring charge booked in the same period last year, earnings were $39.9 million.

Revenues increased six per cent to $386.6 million from $364.5 million.

Analysts polled by Thomson Reuters had forecast that adjusted earnings would be 15 cents per share on $393 million of revenues.

"We had a good performance overall in the second quarter,'' Parent told analysts.

Recovery in the business aircraft market is taking longer than the
commercial side, with growth strongest for large cabin aircraft
and overseas markets.

The General Aviation Manufacturers Association said total business
aircraft shipments decreased by some 20 per cent during the first nine
months of the year.

Montreal-based Bombardier's shipments decreased 30 per cent to 25
business jets in the third quarter as it slipped behind rivals Dassault
Falcon and Gulfstream.

CAE's civil segment revenues increased eight per cent to $180.8 million
mainly due to the training and services segment. Simulator
revenues decreased two per cent to $62.8 million.

New markets for simulation services in health-care and mining reported $8 million in sales.

The military segment revenues increased four per cent to $205.8 million as training revenue grew 14 per cent to $68.6 million.

CAE says its offering of cost-saving training devices will help it to survive the penchant for governments to cut their military
budgets to reduce massive deficits.

Even though the British government is reducing defence spending by eight
per cent, CAE is well placed because of its involvement in
key programs like Puma and Chinook helicopters.

"No doubt the market has become more challenging for the defence
industry as a whole… (but) CAE remains well-positioned because we
offer a solution to achieving force readiness at a lower cost and
therefore we expect to see the benefits of an increased adoption of
simulation-based training over the long-term.''


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