CAE and Bombardier announced on Jan. 26 that they had reached an agreement for CAE's acquisition of Bombardier's Military Aviation Training organization. The sale, for CAN $19.8 million (US $18 million), is expected to be completed by the end of this year.
With the sale, CAE will become the prime contractor responsible for the NATO Flying Training in Canada (NFTC) program. That provides more advanced training for Royal Canadian Air Force pilots, but Denmark, the United Kingdom, Singapore, Italy, Hungary, Austria, Saudi Arabia and the United Arab Emirates have also sent pilots to the program.
CAE will use that Bombardier expertise to pursue international training contracts, said Mike Greenley, vice president and general manager for CAE Defence and Security - Canada.
He identified the Middle East, South America and Southeast Asia as potential markets. "A lot of the countries are looking towards how to set up their flight schools in their countries," Greenley said. "So we can export this capability."
He did not name specific nations the firm would concentrate its marketing efforts on for military flight training.
But Greenley noted that the Bombardier military team has well-developed skills that could be used in the pursuit of such business. "You have a workforce of over 200 people on this program and they've been doing it for 15 years."
If contracts are won, the workforce could be expanded to include more instructors and development personnel, he added.
The acquisition could also be leveraged to provide expertise and support for CAE in the US as it pursues the US Air Force's T-X program. General Dynamics has tapped CAE USA to provide training solutions for its offering for the Air Force's next-generation trainer. CAE USA joined GD and Italy's Alenia Aermacchi in offering the T-100, a variant of Alenia's M-346 trainer.
The Bombardier expertise will be available if needed for that program, Greenley said, "so it does make us a smarter bidder on those types of programs."
The NFTC program operates out of Moose Jaw, Saskatchewan, and Cold Lake, Alberta. It deals with advanced and lead-in fighter training, according to Bombardier and CAE.
Bombardier provides and maintains the aircraft as well as providing flight simulation and ground school instruction. The Canadian Forces provides students, military flying instructors, air traffic controllers and headquarters staff. NATO countries help offset the costs by buying training for their student pilots.
The $2.8 billion NFTC contract expires in 2021 when Canada will look at various options for pilot training. It could extend the contract, open bids on a new but similar flight training program or combine NFTC and another training program, the Contracted Flying Training and Support project (CFTS), military officers have said.
CFTS provides the Canadian Forces with primary flight training, and specialized helicopter and multi-engine, fixed-wing pilot training. That $1.77 billion contract was awarded in 2005 to Kelowna Flightcraft, leading a consortium of Canadian companies known as Allied Wings. CFTS expires in 2027.
Canada's Department of National Defence held initial consultations last year with aerospace firms, but has yet to decide how to proceed on a future flight training program. But the department anticipates issuing a request for proposals to industry sometime in 2018 and awarding a contract a year later. The project is estimated to be worth more than $1.5 billion but no specific figure has been determined, according to the department.
Greenley said whatever decision is taken by the department and the Air Force, CAE will be ready to be involved in bidding.
"We would fully expect to be a key or primary player in all that," he said. "When there's a pilot training program of that magnitude, because it's billions of dollars, we'll be standing front and center for whatever the next-generation pilot training system is in Canada."
For Bombardier, the deal with CAE provides it with cash as it faces ongoing financial difficulties. In January, the company suspended development of a new Learjet model. It has also had problems meeting sales goals on some other commercial aircraft programs. As a result, it plans to cut 1,000 jobs in the US and Mexico.
The deal with CAE would see Bombardier leaving the military training business to concentrate on its core strengths in the production of passenger jets for commercial airlines and business clients, company spokeswoman Isabelle Rondeau said.