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Aviation training specialist CAE Inc. on Wednesday forecast strong growth in its defence unit in the second half of fiscal year 2022, after beating analyst estimates for quarterly profit on higher deliveries of its flight simulators.

CAE’s defence business is poised to significantly benefit from its $1.05 billion acquisition of L3Harris Technologies Inc’s military training division.

The company, however, flagged COVID-19-related headwinds to its international defence business during the year.

As the global aviation industry recovers and U.S. tourists return to Canada, civil pilot training demand is expected to return to pre-pandemic levels soon.

“In business aviation, demand has rebounded at a very rapid pace with current flight activity in the U.S. now exceeding 2019 levels,” CAE Chief Executive Officer Marc Parent said on a post-earnings call.

“This bodes very well for pilot hiring and business aviation training demand.”

Parent added that he expects good demand for 737 MAX simulators. The company reiterated its forecast to deliver more than 30 full-flight simulators in fiscal 2022.

The Canadian company expects a broader market recovery led by domestic air travel, mainly in regions with relatively high vaccination rates and cargo operations.

Canada has said it would allow fully vaccinated U.S. tourists to enter the country from Aug. 9, after an unprecedented 16-month ban imposed to curb the spread of the COVID-19 pandemic.

CAE reported first-quarter civil training centre utilization at 56%. The utilization rate is calculated by dividing the training hours sold on CAE simulators by the training capacity available.

Montreal-based CAE said deliveries of full-flight simulators rose to 11 units in the quarter, up from 2 units a year earlier.

Excluding items, the company earned 19 Canadian cents per share, above estimates of 17 Canadian cents, according to Refinitiv data.

Revenue rose 36.7% to C$752.7 million.

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