CAE has taken a series of flexible measures to protect its financial position in response to the COVID-19 crisis and mitigate the impact on its employees. The measures include temporarily suspending its common share dividend and share repurchase plan, as well temporarily laying off 2,600 of its 10,500 employees and placing another 900 employees on a reduced work week. CAE has also announced that, in an effort to help save lives, it is developing an easy-to-manufacture ventilator which will provide life support to patients in intensive care.
“CAE continues to support its customers as the training services we provide are considered essential around the world. Our civil aviation operations are most affected by the unprecedented disruption of the global air transportation system. At the same time, our defence and security operations are less impacted because CAE provides mission critical services worldwide," says Marc Parent, CAE's president and CEO. “We entered this crisis from a position of strength with a leading market position, a balanced business with recurring revenue streams and a solid financial position. Taking decisive yet flexible action will help to protect our people and operations over the short-term and gives us the necessary agility to resume long-term growth when global air travel returns. Our employees have always been at the core of CAE's success, we regret the hardship these temporary measures will cause those affected, especially during these difficult times, and we are grateful to all our employees for their contribution and dedication."
To mitigate the number of temporary layoffs, CAE has significantly reduced capital expenditures and R&D investments. The company has also announced cost-containment measures, including salary freezes and salary reductions for staff not affected by reduced work weeks: 50 per cent for the CEO and executive team, 30 per cent for vice presidents, 20 per cent for directors and managers, and 10 per cent for group leaders and employees.
The company is working to access government emergency relief measures and wage subsidy programmes in its main operating jurisdictions and will assess their impact on its mitigation plans. As details of government assistance programmes around the world are finalised, CAE will do everything it can to recall as many employees as possible.
CAE's board of directors has approved the suspension of dividend payments to common shareholders until further notice and will review this position on a quarterly basis. Core to its capital allocation priorities, CAE remains committed to paying dividends over the long-term that are commensurate with the long-term growth of its business and will seek to resume dividend payments as soon as it is appropriate.
The board has also approved the temporary suspension of all share repurchases under its normal course issuer bid programme.
In civil aviation, training is highly regulated, and for pilots to remain active and to continue to hold their certifications, they must train regularly, usually every six to nine months. While training activities related to new pilot training have decreased substantially, many airlines and business jet operators have continued to conduct recurrent training to maintain the certification of their existing pilots. Two-thirds of CAE's more than 50 civil training centres worldwide continue to be operational, however training utilisation is lower than usual as a result of restrictions from border closures and lockdowns that have forced temporary closures and disruptions to operations.