According to the International Air Transport Association (IATA), the number of airline customers will be 8,200 million, double the current one, in 2037.
Boeing estimates that some 790,000 new pilots will be needed to meet this demand.
In this environment of potential growth, the Canadian CAE starts from a privileged situation: it manufactures 70% of the flight simulators in the world and has managed to position itself as a leader in pilot training commercial services (about 130,000 per year).
In addition, their training devices and programs are required by military pilots and executive jets.
“We work to offer excellence in training. From the beginning, we pursued the same mission: to create a safer world,” said Marc Parent, president and CEO of CAE, on August 14, at a shareholders meeting.
At that appointment, Parent announced that, in the first quarter of fiscal year 2020 [from April to June], CAE revenues increased by 14% over the same period of the previous year.
The Canadian firm employs about 10,000 people and has 160 centers – own or in collaboration with airlines – in 35 countries (Canada, United States, Spain, Italy, Colombia, Chile, South Africa and China, among others).
Last year, it had revenues of $ 3.3 billion (about 2,230 million euros). And its stock value doubled in the last three years.
Gavin Graham, an analyst at The Income Investor, recommended considering CAE for those looking to invest in the aviation industry because of the proven need to train thousands of pilots.
It should be noted that, two decades ago, 75% of the company’s revenues came from the sale of products. Currently, 60% arrive from training services.
In 1947, Ken R. Patrick, a former commander of the Royal Canadian Air Force, founded the Canadian Aviation Electronics (CAE) in Saint-Hubert (Quebec), with 18 workers. Initially, the firm was dedicated to repair communication equipment and install radar systems in the Arctic.
A few years later, he won a tender to build a simulator of the CF-100, a Canadian fighter plane. The company moved near the Montreal airport, where it has its headquarters; It has been listed on the Toronto Stock Exchange since 1961.
Over time, the company gained experience, made acquisitions and placed its devices in military and commercial aviation, becoming the benchmark in the global market of air simulators. He also started to open training centers.
At the beginning of the new millennium, CAE had to face various pitfalls. Technological advances caused other firms to enter the simulator business strongly. Another problem was the high value in those years of the Canadian dollar, making products more expensive than those of the competition.
In addition, CAE dragged debts for acquisitions.
“With its simulators, the company depended heavily on the number of orders. That added to instability,” says Mehran Ebrahimi, director of the Aeronautics and Civil Aviation Observatory at the University of Quebec in Montreal.
Marc Parent, a former Bombardier executive, arrived in CAE in 2004. In 2009, he took control of the company and accelerated diversification.
He sought more military projects, but above all he raised the training of civil pilots. The idea was to increase links with airlines that already bought their simulators and offer programs to those that required complete training.
In fact, CAE deals with the hiring of pilots for some companies.
“We think about the possibilities and consult various airlines. They showed us a lot of confidence to take care of the training of their pilots. We always had in mind to strengthen the collaboration with our partners on the subject in which we are experts,” explains Parent.
“Thanks to its centers, programs and products, you can work with airlines of different sizes. If you don’t have a training center, CAE is a solution.”
“Large companies, such as Air Canada, can buy simulators, but turn to CAE for updates and advice. Consider, for example, what happened with the Boeing 737 MAX,” adds Ebrahimi.
On this last point, Parent said on the day of the shareholders meeting that there will be a high demand for training for those planes when they fly again.
CAE received 47 orders for 737 MAX simulators; He still has 36 left to deliver.
Lufthansa, Alitalia, American Airlines, China Eastern, Southwest Airlines and Emirates, among other airlines, work with CAE.
“The world is getting smaller, in the sense that people can go to more places, but training a pilot is a long process. The challenge is to make this happen according to the highest standards,” says Nick Leontidis, president of CAE Civil Aviation Training Solutions.
Spain and Latin America are no exception. “We have centers in Madrid, Barcelona and Palma de Mallorca. Spain is a very important platform in our operations, both for the local and European markets. We work with Iberia, Vueling, Air Europa, Volotea ”, explains Leontidis.
“Our projects increase in Latin America. We recently extended the training agreement with Latam, we collaborated with Avianca and Aeroméxico. We have more than 30 simulators there. There is a growth of the middle class and ticket prices go down. This stimulates air traffic and, therefore, more training is needed,” says Parent.
Last March, CAE concluded the purchase of the Bombardier training division for executive jets pilots.
The transaction was for 645 million US dollars (about 580 million euros). In the meeting with the shareholders, Marc Parent informed of the signing of new contracts in the military sphere.
For example, with Lockheed Martin for projects with the United States Air Force, as well as other programs with Canada and Germany.
He also announced new initiatives in the health division, since for some years, CAE manufactures simulators for doctors and nurses.
Parent took the opportunity to mention the scholarship program that the firm launched to recruit more female talent, underlining that, currently, less than 5% of pilots in the world are women.