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A technician operates a CAE-built A330-200 passenger plane flight simulator at the Lufthansa Flight Training (LFT) centre in Berlin, November 1, 2012. Montreal-based CAE announced the sale of five flight simulators on Wednesday as part of several new military and commercial contracts worth a total of $215-million. (THOMAS PETER/REUTERS)
A technician operates a CAE-built A330-200 passenger plane flight simulator at the Lufthansa Flight Training (LFT) centre in Berlin, November 1, 2012. Montreal-based CAE announced the sale of five flight simulators on Wednesday as part of several new military and commercial contracts worth a total of $215-million. (THOMAS PETER/REUTERS)

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CAE lands $215-million worth of contracts for simulators, training Add to ...

CAE Inc. announced the sale of five flight simulators on Wednesday as part of several new military and commercial contracts worth a total of $215-million.

The military contracts, valued at $130-million, include construction of a training facility for the Kuwait air force as well as training simulators for the Australian navy and U.S. air force.

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Meanwhile, the company also sold five full-flight simulators and other training equipment for airlines and aircraft manufacturers in Asia, Australasia, North America and Europe worth a total of $85-million.

The sale raises the number of full-flight simulators sold in its 2013 financial year to 35, in line with its guidance.

CAE said 60 per cent of simulator sales this year have come from customers in Asia and Australasia, 23 per cent in North America and 17 per cent in Europe.

The company didn’t identify the airlines or provide a breakdown of the individual civil contracts.

The military contracts include an MH-60 Sikorsky helicopter maintenance and weapons trainer that will be delivered in 2015 to the Australian navy.

Lockheed Martin has also exercised a contract option for CAE to design and manufacture an additional C-130J weapon systems trainer for the United States air force to be delivered in 2016.

The U.S. air force also awarded CAE a contract to perform operations and maintenance support for KC-135 boom operator training for eight years for a total of $55-million.

“Our position on key platforms such as the C-130J and MH-60 helicopters continues to provide a range of opportunities globally, including foreign military sale contracts through the United States government,” stated Gene Colabatistto, president of the military group.

Analyst Cameron Doerksen of National Bank Financial said CAE’s simulator orders in fiscal 2013 met expectations despite being two fewer than the prior year.

He added the outlook is positive for next year, driven by deliveries and up to 634 new aircraft orders announced by Airbus and Boeing. One simulator is typically required for every 20 to 30 new planes.

“We therefore expect a similarly strong level of full-flight simulator orders for CAE in fiscal 2014,” he wrote in a report.

CAE is expected to provide its guidance for orders next year when it releases its fourth-quarter results on May 16.

Although uncertainty remains in the military segment, especially for U.S. military contracts, Mr. Doerksen said only 41 per cent of CAE’s total revenues is military and only a third of that is related to the U.S.

The analyst downgraded CAE’s stock following its third-quarter results over military market uncertainty and expected soft civil training margins.

But he said the subsequent drop in its share price below $10 represents a buying opportunity for longer-term investors.

“Our long-term view remains positive on CAE as demand for full flight simulators should remain strong and a growing pilot shortage will position CAE for growth in pilot training.”

 
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