BRIAN DUNN / MONTREAL
Cash-raising move follows share offer cancellation as Canadian company seals 10-year global Airbus deal
CAE is considering a sale and leaseback of simulators to raise cash after cancelling a planned share offering last month. The move comes as CAE secures a 10-year deal with Airbus to develop a global network of training centres and recent new airline business worth C$50 million ($31.4 million).
Last week the company reported net earnings of C$37.4 million for the first quarter ending 30 June, against C$33 million a year ago. Revenue increased 14% to C$275.8 million, while the order backlog rose to C$2.5 billion from C$2.4 billion last year. Training now contributes 40% of its revenues, from 15% two years ago.
CAE chief executive Derek Burney says that the company decided not to proceed with a $250 million share offering last month because of poor market conditions. Instead it will consider other options, including long-term sale leasebacks for up to seven simulators for about C$125 million. "We're not pressed for funds. With our [now cancelled] listing on the New York Stock Exchange, we wanted to broaden our shareholder base in the US and get added coverage from US analysts," he adds.
Under the 10-year renewable agreement with Airbus, CAE will provide equipment, facilities and advanced training technologies while Airbus will provide its courseware and training expertise. The result will be 10 training centres - Airbus's Miami and Toulouse facilities combined with CAE's in Brussels, Denver, Dubai, Madrid, Rome, Sao Paulo, Singapore and Toronto - which should double CAE's C$30 million Airbus business within five years. CAE's Airbus tie-up comes as Boeing and FlightSafety move to dissolve their five-year partnership (Flight International, 30 July - 5 August).
The Toronto-based company has also secured an exclusive 10-year, C$25 million deal with LanChile to train its Airbus A320 and A340 pilots. This follows a number of recent deals worth approximately C$25 million, including a 10-year agreement with Air New Zealand.
In an effort to gain a larger share of the US military market, CAE has recruited a retired US army general to chair its American subsidiary and has added a retired air force chief of staff and a retired admiral.
Source: Flight International