CAE President and CEO Marc Parent said demand for the company’s pilot training services fell in the last quarter, partly because of lower travel to Europe due to the Paris Olympics. A drop in hiring at some major airlines was also noted by Parent.
The Olympics and the European Football Championship have “changed the normal behavior of travelers” to and from the continent, Parent said. The decrease in the need for aviator training in Europe is due to supply constraints in the airline industry and special events, he told analysts on a conference call Wednesday.
Carriers including Air Canada, Delta Air Lines and Air France all reported that the Summer Games hurt their seasonal sales as travelers chose to avoid France, where parts of central Paris were closed for the entire event.
CAE, which makes flight simulators and trains commercial pilots, said a broader short-term decline in demand led to a 26% year-over-year decline in profit in the quarter ended June 30.
Major U.S. airlines had cut hiring by 80% year over year in June, Parent said. He pointed to delays at manufacturers such as Boeing, where production issues have delayed fleet expansion and pilot training at some carriers. Others have finally filled the hiring gap caused by the recovery in travel after the COVID-19 pandemic.
PHOTO GRAHAM HUGHES, CANADIAN PRESS ARCHIVES
Marc Parent, in 2018.
“The airline industry is currently managing what we believe to be the peak of narrowbody supply headwinds,” Parent said.
For 2024, CAE has forecast operating profit growth of around 10% for its civil segment, lower than previous expectations.
However, Mr. Parent remained optimistic about the flight simulator maker’s long-term prospects.
“The demographic realities of an aging pilot population, mandatory age-based retirements and the continued growth outlook for air travel are immutable and truly underpin our continued confidence in CAE’s long-term prospects.”
Boeing and Airbus, the two aerospace giants, have predicted that the number of commercial airplanes will roughly double over the next two decades, he noted.
CAE is already seeing an increase in training bookings for the third and fourth quarters, as pilot hiring, on hold at American Airlines and Southwest Airlines, resumes at some carriers next year.
The Montreal company recorded nearly $1.2 billion in total orders in the first quarter, representing a record adjusted order book of $17 billion, up more than 50% from the previous year.
Much of the increase in the order book is due to CAE’s $4.7 billion share of a 25-year aircrew training contract with the Royal Canadian Air Force.
On Tuesday, the company reported net income attributable to shareholders of $48.3 million for the quarter ended June 30, down from $65.3 million a year earlier. It said revenue rose 6% from a year earlier to $1.07 billion.