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$314-million acquisition gets CAE into pilot sourcing business

Marc Parent, president and CEO of CAE Inc., is seen in this April 21, 2010 file photo. CAE's $314-million acquisition of Oxford Aviation Academy will increase its training capacity by 67 per cent and gets the Montreal-based company into the pilot courcing business.

Christinne Muschi/The Globe and Mail

CAE Inc. is expanding its global flight training capabilities and entering the pilot outsourcing business by acquiring Oxford Aviation Academy and a subsidiary for $314-million.

The Montreal-based company said Wednesday the addition of seven training centres will increase its global network to 42 sites that will train civil aviation pilots, cabin crew and maintenance personnel.

The leading manufacturer of flight simulators will also add 40 simulator units bringing their total to 211.

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The addition of four flight schools will increase its training capacity by 67 per cent to 1,500 cadets annually at 12 locations around the world.

Oxford's training facilities are located in Denmark, Norway, Sweden and the U.K., and its academies are in Britain, the U.S., Australia and Hong Kong.

CAE is also entering the pilot and maintenance crew sourcing business with the acquisition of Oxford subsidiary Parc Aviation. It has 1,200 employees on assignment with 50 airlines and leasing companies in 40 countries, primarily in Asia.

The new entity will be rebranded CAE Parc Aviation Personnel.

Chief executive officer Marc Parent said the acquisition enables CAE to offer its customers more locations, additional training capacity and a new pilot sourcing business.

"Civil aerospace market fundamentals are strong and we are increasing our position at an opportune time. With this acquisition, CAE responds to market demand with an increased footprint and a complete end-to-end solution for commercial aviation," he said Wednesday.

Oxford Aviation Academy had annual revenues of $280-million, split about evenly between training and pilot sourcing.

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CAE said the acquisition, funded with a new senior unsecured credit facility, will be accretive to earnings in fiscal 2014.

Oxford was previously owned by London-based private equity fund STAR Capital Partners and General Electric .

Benoit Poirier of Desjardins Capital Markets said the transaction reinforces CAE's strong position in the civil aviation training market.

"We anticipate this market should do well over the coming years, in light of the expected increase in the global aircraft fleet, increasing demand for simulation-based training and the need for younger pilots as older pilots near retirement," he wrote in a report.

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