CAE Inc. chief executive Matthew Bromberg (R), then-Quebec economy minister Christine Fréchette (C), and federal Industry Minister Mélanie Joly tour a Boeing B777 simulator at CAE, in Montreal on Oct. 3, 2025. The Canadian Press/Christinne Muschi
The Middle East war cost CAE Inc. millions of dollars in its latest quarter, as the company navigates a “reset year” that will see it drastically reduce its global footprint in a bid to lower expenses, said chief executive Matthew Bromberg.
The CEO told analysts Thursday the conflict accounted for two-thirds of a striking drop in adjusted operating income in its civil aviation segment, or more than $11 million.
“The Middle East is causing disruption in fuel prices around the world, and that’s affecting some of our customers,” Bromberg said on a conference call, adding that he views the earnings hit as temporary.
“We’re able to work with a lot of our airlines to reroute their training, to put them in other facilities, but that has a cost as we move their training centres and sometimes instructors to other facilities.”
On the civil side—the larger of CAE’s two main divisions, with defence accounting for 45 percent of segment revenue—adjusted income decreased nearly 14 percent year-over-year to about $106 million in the quarter ended June 30, mainly due to the Iran conflict.
Soaring jet fuel costs caused by the closure of the Strait of Hormuz have pushed fares up and chipped away at travel demand, pushing carriers to shed lucrative—or potentially dangerous—routes and further depressing the need for pilot training.
CAE’s share price has dropped about 14 percent since the start of the year, falling in tandem with flight volumes and training demand.
Bromberg plans to drastically reduce the flight simulator maker’s global footprint by the end of the year as part of a broader transformation plan, a process accelerated by the turmoil in the Persian Gulf.
He said the company will inhabit 1.7 million fewer square feet within a few years, a reduction of 17 percent. Some 500,000 square feet will be shed from the civil segment by the end of June, he said, marking a more rapid retrenchment than previously announced.
As part of the scaleback, the Montreal-based firm will retire one-tenth of its full flight simulators—about 25—relocate a dozen more and close four to six civil aviation training centres to lower costs. One has already shut down, with another set to close its gates before January.
The changes come amid an overhaul launched last fall that aims to bring down rent and labour expenses from a worldwide network and ramp up use of existing facilities.
While he said the company could lose some clients in the process, Bromberg expects to retain nearly all of its customer contracts as training shifts to other CAE sites.
Calin Rovinescu, the former Air Canada CEO who serves as CAE’s executive chairman, announced Thursday he will step back to become “non-executive chairman of the board” on Jan. 1.
“This reflects our confidence in Matt and the rest of the leadership team and their ability to drive CAE’s next chapter of growth and value creation,” said Rovinescu.
Bromberg took over from his predecessor Marc Parent, who had occupied the CEO suite since 2009, precisely one year ago.
On Wednesday evening, CAE reported that first-quarter profits fell 46 percent year-over-year to $31 million while revenue rose seven percent to $1.17 billion.
