CAE is targeting the fast-growing aviation sectors in China and India, saying demand will be robust for flight simulators and pilot training.
Globally, the commercial airline industry will need to hire nearly 18,000 pilots annually over the next 20 years, as the civil market expands and pilots retire, CAE chief executive officer Marc Parent said Wednesday.
Montreal-based CAE has flight training centres in China and India, part of a worldwide network capable of training more than 1,800 new pilots annually. The company hopes to sell more of its flight simulators to carriers in those two countries, as well as increase business in Southeast Asia, the Middle East and South America.
"China and India have started from a very, very small base in civil aviation," Mr. Parent said after CAE's annual meeting in Toronto. "The growth is spectacular, but they don't have the indigenous population of pilots."
As part of its expansion strategy, CAE has partnered "with the government of India to train Indian nationals to become pilots," he noted.
Industry experts predict that there will be 400,000 pilots worldwide needed to fly commercial routes in 2030, or double the roster of 200,000 currently employed.
Mr. Parent said CAE will continue its pursuit of military contracts, noting that training in simulators is much cheaper than defence departments' past reliance on using actual planes and helicopters.
Simulator training is done inside a replicated cockpit of a sophisticated machine that mimics real aircraft. At just one-10th the cost of live training, simulation avoids the wear and tear inflicted on aircraft by novice pilots.
While flight simulators are widely used in commercial aviation, only 30 per cent of current military training in many markets involve simulators. But as defence budgets get scaled back, less-costly simulation training is expected to become increasingly attractive.
"What does the military do when they're not at war? They're training," Mr. Parent said.
CAE has underscored its positive outlook by raising its quarterly dividend to 4 cents from 3 cents a share. The company, founded in 1947, reported Wednesday that it posted a $39.4-million profit in its fiscal first quarter ended June 30, up from $27.2-million in the same period last year and in line with analysts' estimates. Revenue slid 4 per cent to $367-million.
First-quarter revenue in the civil segment was slightly higher than in the military portion, but defence contracts have grown rapidly in recent years.
Analysts say CAE has been on a steady course so far during the fiscal year that began April 1, in contrast to the rough ride in the previous fiscal year when its profit fell 28 per cent to $144.5-million.
Versant Partners Inc. analyst Cameron Doerksen said CAE is positioned to thrive with the rebound in commercial air traffic and growth in the military segment.
While simulators and pilot training still form CAE's core, Mr. Parent said he is encouraged by high-tech diversification into developing computer modelling programs in the health care and mining fields.
Brent Jang