CAE to lay off 350 people worldwide

MONTREAL — Flight simulator maker CAE has announced its largest job cuts in six years as it moves to improve manufacturing efficiency despite strengthening financial results.

The company is planning to cut 350 people from its global workforce over the coming year, mostly in Montreal where it has its head office and largest production facility.

The job cuts — representing about four per cent of CAE’s 8,200 employees — will cost about $25 million, mainly for severance, but save $15 million to $20 million a year, it said.

Nearly $6 million in charges were recorded in the first quarter of its fiscal year, which began April 1.

Chief executive Marc Parent described the layoffs a necessary “proactive” move to maintain the company’s position as the industry’s global leader.

“What we’re doing here is not taking our success for granted,” he said Wednesday following the Montreal-based company’s annual meeting.

CAE’s new 7000XR Series simulator requires less engineering and fewer manufacturing jobs to design and build than older models.

The job cuts, including about 280 of 3,200 positions in Montreal, are the largest since CAE shed 700 jobs in 2009. In 2012, the company cut 300 positions, mainly in Germany, as it adjusted to the impact of military budget cuts in Europe.

Over the past three years, CAE has reduced its global workforce by almost 400 positions or 4.6 per cent. However, the 8,257 employees at year-end was higher than the 7,000 it had in 2010.

Parent said the number of layoffs this time is based on projections for orders over the next year and could change if it wins more contracts, adding that they have nothing to do with any slowdown by key customer Bombardier or any other airplane manufacturer.

“Our markets have never been better but it’s time to do these things when you’re in a position of strength, where you can invest in technology that allows you to maintain the competitive edge that you have and this is what we are doing now,” he told reporters.

About 100 of the affected positions are unionized. Unifor said it was upset with the layoffs but is prepared to negotiate ways to reduce the number of layoffs, including through early retirements.

During the first quarter, CAE’s profit increased seven per cent, rising to $44.5 million from $41.6 million. Excluding restructuring costs, net income would have been $50.6 million, up from $43.8 million.

Overall revenue grew nearly six per cent to $557 million, due to increases in its civil aviation and health technology businesses.

CAE primarily makes simulators and other equipment used to train commercial airline pilots as well as military personnel around the world. However, it sees growth potential in its training business as travel demand in emerging countries and the replacement of retiring flight crew is expected to create a demand for 27,000 new pilots annually for the next 20 years.

The company also announced that its dividend will rise by seven per cent to 7.5 cents quarterly, beginning in September.

© 2015 The Canadian Press