CAE boosts training with bigger stake in SIMCOM and new Flexjet deal
CAE is boosting training after acquiring a bigger stake in SIMCOM. Pictured is CAE's Burgess Hill, UK training facility.
Flight simulator specialist CAE is to boost training services by increasing its stake in the joint venture SIMCOM Aviation Training (SIMCOM). Both companies are also extending their exclusive business aviation training services agreement with Flexjet for a further five years, with 15 years now remaining.
CAE will purchase a majority of SIMCOM shares from Volo Sicuro for $230m to be financed with CAE’s existing credit facility and cash on hand. As part of the transaction, Flexjet, a related party of Volo Sicuro, will retain a minority stake in SIMCOM following the closing, which is expected in the near future.
The acquisition strengthens the company’s position in the business aviation market and reinforces its commitment to providing top-tier training solutions, Andre Prévost, division president, Civil – Business Aviation, CAE told CJI. “CAE is already the managing partner of this joint venture, making us the logical buyer,” he said. “With a proven track record of operating joint ventures like Embraer-CAE Training Services (ECTS), this investment aligns perfectly with our strategy to grow our business aviation network with new training centres, sim deployments and expanded partnerships.”
Customers already have access to SIMCOM and the acquisition positions the business to offer “a seamless experience” to customers by drawing on the strengths of both organisations, he added. Plus, the new training centre in Lake Nona, Florida, was said to be optimally located, in addition to company’s established network, to provide greater flexibility in terms of US simulator deployments.
Highlighting rising demand flight simulator services, Prévost cited CAE’s latest Aviation Talent Forecast, which predicted the need to train 106,000 business aviation pilots by 2032. “By further integrating SIMCOM with CAE, we will have the ability to drive meaningful growth and operational efficiencies while doing our part to meet the demand for pilots,” he told us. “It will strengthen CAE’s footprint and expand the aircraft types on which CAE currently trains. This agreement enabled CAE to expand its long-term exclusive training partnership with Flexjet, strengthening our long-term training pipeline.”
Flexjet CEO Mike Silvestro hailed the success of the fractional provider’s training partnership. “With this agreement, Flexjet’s 1,400-plus pilots will continue to have access to state-of the-art facilities and experience world-class pilot training, enabling us to further enhance our pilots’ quality of life, both on the road, and during a pilot’s recurrent training,” said Silvestro. “As demand for highly experienced, highly skilled pilots continues to rise, best-in-class training is essential to maintaining Flexjet’s unmatched safety standards.”
SIMCOM provides pilot training across multiple business aviation aircraft platforms, using CAE’s suite of training equipment, including CAE 7000XR Series full-flight simulators (FFSs) and CAE 400XR Series flight training devices (FTDs). It offers more than 40 simulators and flight training devices – representing jet, turboprop and piston powered aircraft – at four US training centres, including its latest at Lake Nona, Florida.
Meanwhile, CAE unveiled an innovative way of training pilots using Apple Vision Pro headsets at NBAA-BACE in Las Vegas last month.
The analyst’s view – Jefferies
CAE’s expanded stake in the SIMCOM joint venture, after purchasing the majority of shares from Volo Sicuro for $230m, is expected to be accretive to earnings and free cash flow in the first full year post close, noted Jefferies Research Services on November 5th.
“Assuming an CAE’s average EBITDA multiple of 10X, the incremental stake would add about $23m in EBITDA, implying ~$72MM in sales on our bizav margin estimate of ~32% (3.2X sales multiple),” noted the analyst. “Flexjet (related party to Volo Sicuro) will retain a minority stake in SIMCOM following the close of the deal (portion undisclosed, but likely significant minority).”
Jefferies issued the advice: Hold.
CAE’s Andre Prévost is looking forward to boosting training services.
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