CAE Inc. has clinched a contract valued at about $250-million to provide aircrew training services for the Canadian government's new CH-147F Chinook medium-to-heavy-lift helicopter program.
The military contract is a major boost to Montreal-based CAE, a global leader in aircraft simulator technology and services, which has felt the negative impact of the recession on its civil aviation business.
The Chinook contract, as well as a similarly large contract announced last year for the new Hercules C-130J transport aircraft, help offset the slump in civil aviation, CAE president and chief executive officer Marc Parent said Tuesday at a ceremony in a hangar at the company's facility in a suburb of Montreal.
Federal Public Works Minister Rona Ambrose said the government is committed to maintaining and creating jobs in the domestic aerospace defence industry.
"This government has a military procurement policy that is very robust," she said at the event.
The Chinook contract to CAE was widely expected, but UBS analyst Tasneem Azim said in a note Tuesday that it "will be well received by investors as it reinforces CAE's market leadership in the military segment. CAE's strength in the military (typically defensive in nature) has partially offset weakness in the civil segment, and has contributed to CAE's earnings resilience through the downturn."
The contract announced Tuesday is for 15 Chinook helicopters that were purchased from Boeing Co. of Chicago in a transaction valued at $1.5-billion.
The CAE contract falls under the federal program known as Operational Training Systems Provider (OTSP).
The first phase is for the design and development of a Chinook training suite, including a weapons systems trainer, a tactical flight training device and other simulation systems.
In 2014, the second phase kicks in with a 20-year in-service support program for the aircrew training program.
About 240 jobs are expected to be created as a result of the Chinook project, with companies besides CAE - in Ontario, Quebec and Atlantic Canada - getting sub-contracts.
CAE's annual revenue tops $1.6-billion and it employs about 6,500 people.