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Marc Parent, president and CEO of CAE Inc., poses in front of a flight simulator 737 destined for Malaysia, in Montreal. (Christinne Muschi For The Globe and Mail)
Marc Parent, president and CEO of CAE Inc., poses in front of a flight simulator 737 destined for Malaysia, in Montreal. (Christinne Muschi For The Globe and Mail)

Corporate Strategy

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When Iceland's volcanic ash shut down much of Europe's airspace, Marc Parent saw opportunities for his Canadian flight-simulator company to help the airline industry learn lessons from the crisis.

For Mr. Parent, who became CAE Inc.'s chief executive officer last October, the volcano's huge cloud of ash presented a chance to remind pilots about the steps needed to cope with an in-flight emergency, if a jet's engines were to ever stall or shut down, for whatever reason.

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Whether it's a giant plume of ash, sheet of rain or blanket of snow, CAE's flight simulators come equipped with software that is capable of throwing weather challenges at pilots who are either in training or maintaining their flying credentials.

The training is done inside the replicated cockpit of a sophisticated machine that mimics a real jet, giving pilots valuable flying experience in a controlled environment.

Montreal-based CAE sells flight simulators to airlines and trains pilots around the world, serving as a Canadian ambassador in the aviation industry in the process, Mr. Parent said in an interview. The company ramped up its diversification into military contracts five years ago, and it's a corporate strategy that Mr. Parent vows to nurture as he targets growing demand from defence departments for pilot training.

"For many individual Canadians, CAE is not really well known, but to me, it's a source of national pride. If you look around at the airplanes that are flying anywhere in the skies at any moment in time, there's a very good chance that the lion's share of the pilots have been trained in equipment designed and built by Canadians," he said.

While the Eyjafjallajokull volcano's ash has dissipated in Europe, Mr. Parent said the crisis with flight bans lasting nearly six days in mid-April underscored the important role that flight simulators can play in providing a realistic setting for commercial and military pilots to methodically overcome malfunctioning engines and other emergencies.

"It's not hard for us to simulate volcanic ash. Pilots learn how to recognize the degradation of performance of the engines, if engines conk out. It really goes back to the training that we do, how to restart the engines and how to descend to a safe altitude. Pilots must go through a strict regimen," he said.

As he gave a tour of CAE's Montreal assembly plant recently, Mr. Parent listed some of the company's diverse customer base, ranging from simulator buyers in the commercial aerospace sector, such as Malaysia Airlines, and military contracts that include training Canadian Forces crew on the CH147F Chinook helicopter.

CAE's diversification into securing more military contracts in recent years helped take some of the sting away from last year's recession, which hit civil aviation hard. Still, the company laid off 700 people in response to the slowdown in the commercial airline sector, cutting about 10 per cent of its work force. About 600 of the jobs were shed in Montreal, although staff has been added through recent acquisitions. Roughly half of CAE's current work force of 7,000 employees are based in Montreal.

Through the downturn, CAE remained profitable and is now positioned to ride along with the economy's recovery. For the nine months ended Dec. 31, 2009, CAE posted a $104-million profit, down from its $148.4-million profit in the same period in 2008. The company will be releasing its fourth-quarter and full fiscal year results on May 13.

Tasneem Azim, an analyst at UBS Securities Canada Inc., said CAE stands to benefit from planned production rate increases for Airbus and Boeing aircraft, though it remains to be seen how sustainable new orders will be amid the economy's gradual rebound.

CAE also has prospects in providing simulation services for the health care, mining and energy sectors, but those are long-term initiatives that still require much research and development.

Mr. Parent left aircraft maker Bombardier Inc. to join CAE in early 2005 after being recruited by CAE's CEO at the time, Robert Brown, formerly Bombardier's CEO.

Within the global aerospace sector, the CAE brand is strong, Mr. Parent said. One-third of the company's revenue comes from North America, one-third from Europe and the remainder from fast-growing aviation markets such as China and India.

"There has been a two-speed economic recovery going on. Europe is still depressed in civil aviation, but Asia and South America are going gangbusters," he said.

On the military side, Mr. Parent said conflicts around the world ensure "low-intensity warfare" for the foreseeable future, meaning demand from the military for ongoing training services in CAE-built simulators.

"In Britain, we do mission rehearsals and it's quite impressive. Every Thursday, we do a war. Crews get briefed in a room that looks like one that they would see in Afghanistan or Iraq. They go into a simulator, and the simulators are linked together. The crews talk to commanders, other aircraft and ground forces, and they're rehearsing. The mission is extremely realistic and that prepares them for what they'll see when they're flying in a wartime environment," he said.







Follow on Twitter: @brentcjang

 

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