Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyFlight firm CAE says defence deals, cost cutting to drive profit surgeDefence represents about 45 per cent of CAE’s revenues, but it now has the potential to grow faster than civil aviationAuthor of the article: You can save this article by registering for free here. Or sign-in if you have an account.CAE’s revenue of $1.3 billion was also slightly lower than analysts’ estimates in the fiscal third quarter ended March 31. Photo by Christinne Muschi/BloombergShares of CAE Inc. slipped the most in over three years after the flight simulator firm unveiled a plan to increase operating income by 30 per cent or more by 2030 under a strategy that includes a greater focus on defence clients.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe Montreal-based company is targeting as much as $1 billion in adjusted operating profit by that year, compared with $700 million to $750 million currently, chief executive Matthew Bromberg said in an interview Thursday.“Organic growth will drive roughly half of it. The other half can be driven by the transformation activities,” he said. The transformation strategy is expected to generate between $125 million and $150 million in annual run-rate savings.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInvestors were not convinced. CAE’s stock price dropped as much as 13 per cent in Toronto Friday — the most since August 2022. It then pared those losses slightly, trading down 12 per cent to $32.30 as of 12:19 p.m.“The longer-term outlook surprised, skewing more conservative and largely hinging on run-rate cost savings with more limited contribution from organic growth,” Bank of Montreal analyst Fadi Chamoun wrote in a client note.CAE’s revenue of $1.3 billion was also slightly lower than analysts’ estimates in the fiscal third quarter ended March 31. Adjusted earnings per share of 42 cents were in line with forecasts in a Bloomberg survey, but down 11 per cent from the same period last year.The quarter was impacted by disruptions caused by the Middle East conflict, which is affecting bookings and sales.In fiscal 2027, CAE expects revenue to increase by a low-single digit rate, with the civil aviation to be flat to slightly down while defence could grow by mid-single digits.CEO Bromberg, who joined CAE from Northrop Grumman Corp., was appointed in August. Browning West LP, an influential shareholder, said about a year ago that it expects the company can double its profits over three to four years.Under Bromberg, CAE announced a two per cent cut of its global workforce and the phase-out of some commercial airline simulators to cut costs. Last week, it said it was exploring all options, including a sale, for its aviation operations software Flightscape — the largest non-core business.The company is also planning investments to improve manufacturing productivity and potential acquisitions in core markets or share buybacks.“Our performance has been sporadic or spotty, and we want to be more consistent,” Bromberg said in the interview. “We want to grow our top line, we want to grow our margins, and we want to improve free cash flow.”Macroeconomic uncertainty and reduced aircraft deliveries due to supply-chain constraints have pressured the global aviation industry, leading to lower pilot hiring — weighing on CAE’s civil aviation business. In the meantime, geopolitical instability and NATO allies’ long-term commitment to spend five per cent of their gross domestic product on defence and security are unlocking opportunities for the company’s defence business, beyond the cockpit.“We’re exiting certain lines of business, or deemphasizing, as we try to go to higher-margin contracts,” Bromberg said. “We have a tremendous market opening up on us.”The defence unit represents about 45 per cent of CAE’s revenues, but it now has the potential to grow faster than civil aviation, he added, with the firm considering a push into training and simulation for airborne surveillance, submarines and land vehicles. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.