CAE to lay off 350 employees, mostly in Canada
Flight simulator maker’s revenue drops by a third in Q1.
About 200 of the layoffs will be at the flight simulator maker’s headquarters in Montreal, with the other 150 occurring across its civil training network abroad, a spokeswoman confirmed.
Job cuts at the company, which has 10,000 employees on six continents including 4,700 in Canada, began in late July and will continue through late October.
“We saw the full brunt of the COVID-19 pandemic hit us during the first quarter with sharply lower demand and major disruptions to our global operations,” CEO Marc Parent told investors Wednesday at the company’s annual shareholder meeting which was held virtually.
CAE shut down manufacturing at its main facility near Montreal’s Trudeau airport and more than half of its civil training network across the globe between April and June.
The company delivered only two simulators, while training facility use bottomed out at 20 per cent capacity before rising to about 40 per cent currently, driving down revenue in the civil aviation segment by nearly half in the first quarter of its fiscal year.
“That’s unheard of,” Parent said on a conference call with analysts. “Everything is out of whack in this environment.”
All of its training centres had reopened by July, but many remain at reduced capacity.
In its defence division, fallout from the pandemic caused delivery and order delays as travel restrictions and snarled supply chains affected military customers, CAE said.
The company’s health care unit found that academic institutions and nursing schools, which comprise the bulk of the segment’s clients, came under lockdown protocols that hampered its ability to conclude contracts and deliver on existing orders.
In response, the company announced a $100-million restructuring program – asset relocations, real estate costs and employee termination benefits make up much of the price tag – that it hopes will yield $50 million in annual savings next year.
CAE is maintaining its forecast of negative free cash flow in the first half of its financial year and anticipates it will turn positive in the second half between October and March.
“The pace of recovery is unlikely to be linear or quick, and it will most certainly be dictated by the rate at which travel restrictions and quarantines can safely be lifted and economic activity improves,” Parent said.
“We continue to view the current fiscal year as a tale of two halves, with the first half of the year marked by lower demand and disruptions, and the second half to potentially begin to inflect more positively.”
CAE reported a loss of $110.6 million in the quarter ended June 30, amounting to 42 cents per share compared with a year-earlier profit of $61.5 million or 23 cents per share.
Revenue in what was the first quarter of the company’s 2021 financial year fell to $550.5 million, compared with $825.6 million a year ago.
CAE said its loss before specific items in the quarter was $30.3 million or 11 cents per share compared with a profit of $63.2 million or 24 cents per share last year.
Analysts on average had expected an adjusted loss of six cents per share for the quarter, according to financial markets data firm Refinitiv.