Aug 13, 2026 earnings call — Transformation plan progress and Defense pipeline growth
Q1 revenue was $1.2 billion and Defense adjusted backlog is $10.7 billion.
Revenue $0.8B (est $0.8B) · EPS $0.19 (est $0.17)
Key quotes
"We are committed to deliver the $125 million to $150 million of structural cost reduction by fiscal 2030."
"All in all, over the long term, these opportunities enable international and domain expansion, establish new franchise programs for CAE and represent more than $5 billion of potential pipeline value."
"As of today, customer attrition will be less than 1% of our Civil revenue."
Analyst Q&A 8
Civil margin drivers and ROIC plans
Q (Konark Gupta · Scotiabank): Asked about the Civil margin hit: what were the transitory costs (credit-related and transformation inefficiencies) and how sustainable are they. Also asked what ROIC targets or guideposts the company is aiming for.
A: Management said about 2/3 of the Civil impact is Middle East related: rerouting training increases costs and fuel disruption affects customers, and they view that as temporary. The other 1/3 comes from discrete transformation investments and lower government R&D funding. On ROIC, they have not posted targets publicly; it is mainly an internal cash-on-cash measure and they expect to move toward the high single digits and approach low double digits as transformation benefits arrive.
"2/3 of the impact is Middle East driven, and we're mitigating it, and we view it as temporary." — Matthew Bromberg (CEO)
Defense pipeline mix and Flightscape proceeds
Q (Daryl Young · Stifel): Asked whether the $5 billion pipeline skews to training or product development and how to think about product development risk with new partners like TKMS. Also asked if Flightscape sale proceeds would be used to buy back shares via the NCIB or otherwise.
A: Management said the partnerships (Leonardo, Saab, TKMS) allow them to do NRE once with the OEM and then scale training centers, which reduces per-country development cost and is acceptable despite inherent development risk. The mix will depend on installation but will be more services/training plus product to develop and operate centers. On Flightscape, the strategic review is early with strong buyer interest; proceeds would at minimum fund the transformation and then other capital allocation decisions will be considered later.
"What's special about these arrangements is we will do the NRE once." — Matthew Bromberg (CEO)
Pricing progress with Civil customers
Q (Cameron Doerksen · National Bank): Asked for an update on pricing work: progress raising price quality in contracts and how customers are reacting to possibly paying more at renewals.
A: Management said it is early and airlines are under pressure, so they will be cautious. They are starting with aftermarket products and services (a small portion of Civil) and are building the discipline, vocabulary and tools to price effectively, then will move to product and the commercial training network. The landscape is complex with many contracts and joint ventures, so they are working diligently.
"We're starting with our aftermarket products and services, which is a small portion of our Civil business and putting in the discipline, the vocabulary, the tools to price that effectively." — Matthew Bromberg (CEO)
Civil revenue outlook and pricing impacts
Q (Sheila Kahyaoglu · Jefferies): Asked why guidance is flat-to-down despite a strong start and how to view Civil and business aviation for the rest of the year. Also asked how pricing discussions with airlines are going.
A: Management said single-quarter views can be confusing, but the long-term industry growth trajectory is 4%. They started the year with lighter orders last year so fewer full-flight SIM deliveries, added the unexpected Middle East impact, and seasonality, so they are cautious near term but see a strong long-term market. On pricing, network rationalization is intended to be incrementally beneficial and drive utilization and margin; each customer gets a tailored solution and pricing work is being approached diligently given airline pressures.
"If we step back from it, we still see a long-term growth trajectory of 4%, which we think is a very attractive market, and we are the market leader in there." — Matthew Bromberg (CEO)
Middle East impact and Defense margins
Q (Tim James · TD): Asked if any positives offset the Middle East headwinds so guidance holds, or if the Middle East impact is immaterial. Also asked at a high level how margins differ between Defense product/equipment and training.
A: Management said they expected at least a half year of Middle East impact; training is rerouting across the global network which causes initial incremental costs but mitigations are working and they do not see additional risk for the year, though effects may take another quarter or 2 to subside. On Defense margins, a healthy Defense business should operate in the low teens margin; they are removing lower-margin staffing contracts, will focus on a mix of product and service, and will minimize incremental development costs while building a large service revenue base.
"So a healthy Defense business will operate, as I've said many times before, in that low teens margin, and that's what we're driving." — Matthew Bromberg (CEO)
Customer retention during Civil consolidation
Q (Kristine Liwag · Morgan Stanley): Asked about expected customer retention when they remove capacity, what could cause customers to switch and what alternatives exist. Also asked whether the 99% retention confidence is backed by long-term agreements.
A: Management said when they remove 10% of capacity they expect to retain more than 99% of contracts and that attrition is under 1%, but each airline discussion is handled case by case. Alternatives exist but no other provider has the same global network; conversations are going well. Contracts are a mix of joint ventures, term agreements, master service agreements and long terms, so risks vary and they must earn customer trust daily.
"As I mentioned before, as we take out 10% of our capacity, we're going to retain more than 99% of our contracts." — Matthew Bromberg (CEO)
Bid costs and future partnerships
Q (Krista Friesen · CIBC): Asked how long the higher bid and proposal costs will continue in 2027 and whether the company is still targeting many large partnerships.
A: Management said they expect elevated proposal spend to continue through most of the balance of the year given a very healthy pipeline. They are targeting many other partnerships globally, have a strong position especially in Canada for sovereign training, and are in conversations with many OEMs and countries — they said they are just getting started.
"So I think we're going to continue to see some of that throughout the balance of the year." — Ryan McLeod (CFO)
Shield AI partnership and drone pipeline share
Q (Bank of America, Canada): Asked what the Shield AI work has looked like so far and how it will build as PCA progresses. Also asked what portion of the $5 billion pipeline relates to CCA or drones.
A: Management said Shield AI provides autonomy algorithms that need training in synthetic environments and to work side-by-side with humans; CAE provides the training ecosystem so algorithms and humans operate together, currently tied to the CCA platform and potentially expanding. On the pipeline, they said a very small portion relates to CCA/drones and the $5 billion is driven mostly by Leonardo, the Saab GlobalEye and the TKMS maritime submarine pipeline.
"Shield AI has positioned itself as a very interesting provider of AI or autonomy solutions in the Defense ecosystem, trying to work across a variety of platforms." — Matthew Bromberg (CEO)