GRAHAM WARWICK / WASHINGTON DC
Canadian company forecasts sales of 10-12 simulators for the year after collapse of market and move into training
CAE says its earnings will fall by 10-15% for the year ending 31 March 2003, following a collapse in commercial flight simulator sales. The Canadian company now forecasts sales of 10-12 full-flight simulators (FFS) for the full year, down from 22 in fiscal year 2001-02.
The downturn has been exacerbated by CAE's move into the civil aviation training market, with some simulator sales being converted into long-term training contracts. The company cites its recent deal with Mesa Air Group, under which CAE is due to install two regional jet simulators in return for a training contract with the US airline, worth around C$50 million ($31 million) over 10 years.
Economic uncertainties have also slowed growth in the company's business aviation training activities. CAE is a major provider of training to Bombardier, which is halting business jet production for up to four months because of a slump in sales. As a result, the company is cutting capital expenditure for the year by C$60-75 million from the originally planned C$300 million. Last month, CAE raised C$80 million through the sale and leaseback of four simulators in its Dallas and Denver training centres.
CAE had forecast double-digit growth in earnings, following a 42% increase for FY01-02 to C$149 million, and a 13% increase in the 2002-03 first quarter. "Instead of an expected airline recovery, we have witnessed a relapse affecting notably US carriers and some aircraft manufacturers," says chief executive Derek Burney.
According to CAE, there was a pick up in civil training demand in September. "Our guidance is now based on a reduction in projected FFS orders, maintenance of overall training demand at the September level, and continued growth in both our military and marine business units," Burney adds.
Source: Flight International