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A flight simulator stands over the shop floor at the CAE factory in Montreal on Aug. 12, 2020.

Andrej Ivanov/The Globe and Mail

Canada’s CAE Inc. on Tuesday reported positive cash flow and earned a surprise adjusted quarterly profit, bolstered by a rebound in client usage of its civil aviation training centres since the start of COVID-19, lifting shares as much as 7.4 per cent.

The Montreal-based company expects a stronger second half of the fiscal year, compared with the first, and to generate positive free cash flow for the full year.

CAE, the world’s largest civil aviation training specialist, sees training opportunities with the now-grounded Boeing 737 Max, when the jet resumes flying following approval from regulators. The company is also looking for business from airlines that want to outsource their pilot training responsibilities.

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It said civil training centre utilization more than doubled since the low point of the first quarter, even as deliveries of flight simulators fell to 10 units in the quarter, from 18 units a year earlier, as the COVID-19 pandemic hit demand.

Demand for CAE’s flight simulators is linked to new aircraft deliveries by planemakers Boeing Co. and Airbus SE, which are seeing lower sales amid a slump in air travel.

CAE reported free cash flow of $44.9-million for the second quarter ended Sept. 30, buoyed by an adjusted profit of $34.2-million. Including $51.1-million in restructuring costs, the company would have recorded a quarterly loss.

The stock was up 4.9 per cent by late morning.

On an adjusted basis, CAE earned 13 cents a share in the quarter, beating analysts' expectation of a loss of 2 cents per share, according to IBES data from Refinitiv.

CAE’s net loss attributable to shareholders was $5.2-million, or 2 cents a share, in the quarter, compared with a profit of $73.8-million, a year earlier.

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