Home' Asian Aviation : AAV May 2010 Contents 38 AsianAviation | MAY 2010
Training & Simulation
Simulator makers such as CAE,
Rockwell Collins and Thales
have not escaped the effects
of the global financial crisis,
with falling revenue, orders
and cancellations re ecting the
plunge in air travel demand that a icted the
In February, reporting its nancial results
for its fiscal third quarter ended on 31
December, Canadian manufacturer CAE said
it had seen a 15 percent year-on-year drop in
revenue in its Training & Ser vices/Civil
(TS/C) division and a plunge of 39 percent
for civil Simulation Products/ Civil (SP/C).
"Revenue in the TS/C segment decreased
... due to so er market conditions in North
America and Europe and the negative impact
from the appreciation of the Canadian dollar,"
the company said. "Revenue in the SP/C
segment [fell] ... as a result of fewer orders
this year and the reversal of revenue on the
cancellation of an FFS [Full-Flight Simulator]
order for which production was already in
Operating income for the TS/C business
fell to C$17.4 million (US$16.7 million)
from C$20.4 million a year earlier, although
the gure rose slightly from the scal second
quarter result of C$15.9 million.
"Compared to last quarter, increased
revenue from seasonally higher utilization was
o set by additional foreign exchange pressure,
and lower ab-initio ight training through our
ight schools, mainly caused by adverse weather
conditions in Europe," the company said. "Since last
year we deployed 11 additional Revenue Simulator
Equivalent Units (RSEUs) to our network."
Operating income for SP/C fell 50 percent to
C$11.4 million on revenue of C$72.6 million. CAE
said the operating income drop was "commensurate
with lower volume and challenging market
e Asian market was the source of a signi cant
portion of the company's business.
"In our civil segments we secured training and
services contracts with an expected value of C$86.0
million and we were awarded C$63.1 million in
contracts, including six FFSs from customers in
Asia and New Zealand including : Mount Cook
Airlines; COMAC (two ARJ21 Chinese regional
jet FFSs); Malaysian Airlines System; and Shanghai
Eastern Flight Training Company," CAE said. "Year-
to -date we have announced 14 FFS orders and
one cancellation from a prior year. We see market
opportunities and deals in progress in the remaining
two months of the scal year to support our order
target of 20 FFSs."
Rival French simulator maker ales also felt the
pinch. e ales Group -- which provides a broad
range of product and ser vices in the aerospace, defence
and security sectors -- reported a full-year loss of 128
million euros (US$162 million) for 2009, compared
with a year-earlier pro t of 650 million euros.
e Group's order intake fell 2 percent to 13.9
billion euros, even as revenue increased 2
percent to 12.9 billion euros.
"In a persistently depressed global
economic environment, our revenue growth
and robust order intake are testimony to
the solid foundations of our customer base,
primarily governments and infrastructure
operators," said Luc Vigneron, Thales'
chairman and chief executive officer.
"However, our results have been a ected
by signi cant di culties on a number of
contracts and by the crisis in the air transport
Revenue for the company's civil and
military Aerospace business fell 7 percent
to 2.64 million euros. Overall, Thales'
Aerospace & Space division reported
earnings before interest and tax (EBIT) of
-389 million euros -- a loss that reversed the
previous year's pro t of 127 million euros.
US-based Rockwell Collins, which
operates a Simulation and Training division
as part of its Ser vice & Support arm, in
April reported a 10 percent drop in group
net income, to US$148 million, for its scal
second quarter ended on 31 March. Group
sales were little changed at US$1.14 billion.
According to CAE, with airlines reducing
capacity as travel demand fell over the past
year, leading to a "moderate decrease" in the
global active eet of commercial aircra ,
which CAE said is "one of the key drivers for
our training business".
"As well, we have seen a high proportion of existing
business jets put up for sale, which compete with the
supply of new aircra ," the simulator maker said.
" is has also meant fewer ight cycles and ight
crews and consequently less demand for training."
Demand for recurrent training , to support the
global in-ser vice eet of about 42,000 aircra , was
more stable, but still a ected by the overall reduction
in capacity. However, there are signs that things could
"More recently, we have seen demand for air travel
and air cargo show signs that market conditions may
be stabilizing," CAE said. "We expect demand for
air transportation to resume its long-term growth
trajectory as conditions improve. Despite recent
Simulator makers feel the pinch
The world's suppliers of simulators and training services have suffered along with the airlines during the
global recession. But Canada's CAE sees many reasons for optimism, writes Andrzej Jeziorski.
CAE is counting on new aircraft models such as the
Boeing 787 to stimulate demand for new simulators.
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