Q&A With New CAE Chair Calin Rovinescu

Calin Rovinescu became CAE’s chair of the board and a corporate director on Feb. 14. He served as president and CEO of Air Canada from 2009-21. Executive Editor Lee Ann Shay spoke with him about growth areas and the search for CEO Marc Parent’s successor.

AW&ST: What attracted you to CAE and this role? 

I’ve known CAE virtually since I came into the airline industry, and I have a tremendous amount of respect for what this company has become. Air Canada has been dealing with CAE since the 1990s in a very strong relationship. We purchased all of our full-flight simulators from CAE when we first moved into the Airbus product, the A320 and the A330, then Boeings, 767, 777, 787, and then the A220, which was the Bombardier C series.  Every single simulator that Air Canada owned was manufactured by CAE. We established a deeper relationship by forming a co-located training center in Toronto, where CAE manages the Air Canada simulator under a long-term contract. So this has been a company that I’ve known very well, and it has really emerged as one of Canada’s leading global champions for aerospace. I was very excited to do this at this stage of my own evolution. I have a lot of respect for CEO Marc Parent, whom I’ve known for many years. And quite frankly, I was not aware how much it has expanded on the defense side. That has been extremely eye-opening for me and really impressive to see what CAE has developed globally.

Speaking of the defense, are you happy with the balance between civil and defense and the geographical mix? 

I think there are great opportunities on both sides. The civil side is about 70 locations and 130 different aircraft platforms. On the defense and security side, there are 145 different sites and 70 different platforms. This covers a very large Canadian footprint, a very large U.S. footprint and many of the Allied forces that collaborate with the United States and Canada, so it’s an extremely large footprint. The two sides of the business can balance each other. Now there’s a lot of pressure among the Allied countries to get to at least 2% of GDP in terms of their defense spend, with some countries heading toward 5%, so we do see opportunities there.

How about on business aviation? What is your outlook for that segment? 

Business aviation is somewhat isolated from the general geopolitical dynamics and even some of the inflationary items. Business aviation has had several banner years, and it is an extremely resilient market segment. The stock market has recently been impacted, so we’ll see if the business aviation market changes, but we don’t see it in the short to medium term.

What are the biggest areas of growth that you expect? 

On the defense side, the overall increase in defense budgets will make it such that governments around the world will have to figure out how they prepare themselves to defend when the time matters. CAE has an important facility in Italy, which is used as a base for some of the other European Allies. I see that as being a key driver of growth as governments continue to ramp up their defense capabilities. Secondly, I think this applies to both defense and civil: There is a greater reliance on simulated training because it’s extremely expensive for governments and for private operators to own massive fleets of aircraft to be used for training. As simulators and simulation techniques become more available, there will be a balance between greater simulation time in relation to active time on an aircraft. Thirdly, technology. There are some technological evolutions, including 3D imaging. Apple offers Vision Pro, which is an extremely capable device that can be added to training capabilities. When you look at the technological evolutions that are coming, that’s quite exciting on the defense side. An entire defense tech industry is emerging, including exciting uses of artificial intelligence (AI).

How much of an impact is AI having in the various segments in technology development?

We started life as a technology company. CAE was quite innovative at the beginning when simulation—whether it was full-flight simulators or flight-training devices— was being developed to facilitate training on primarily commercial airliners and private aviation. That universe migrated to one of training, so it went from a technology company to a technology and services company. Now you’re adding new capabilities, such as AI and defense tech solutions, the next evolutions that combine services technology and, in some cases, even software as a service. Combining those three core competencies makes it an increasingly attractive entity from a customer and investor perspective. CAE’s secret sauce, what has made it successful, is putting the customer at the center of what it’s doing and building technological evolutions, including in some cases, AI, as is needed by the customer. Especially on the defense side, these tend to be more bespoke applications. On the civil side, they tend to be more generic and can be applied across the board.

In which areas do you predict CAE will invest? 

CAE is a public company, so I’ll be more measured here in my comments. One of my big areas of focus will be capital allocation. I think we will spend capital with the customer focus in mind. That doesn’t mean that there won’t be any more acquisitions. The company has made a lot of acquisitions over the last several years, some more successful than others, but the focus now will be to stay in our lane and do things that we’re good at. Investments that add technological capabilities and distinguish CAE from its competitors will be an area of focus, more than adding breadth and scale, for the sake of scale.

It is no secret that there is a shortage of pilots, technicians and trainers. Is CAE having trouble hiring instructors? 

CAE operates with full-time and part-time trainers. I asked various teams with whom I’ve met that exact same question but was given fairly high-level assurance that they have had great success in recruiting. They recruit from military and civil aviation, and we started to operate an ab initio flight-training school on the civil side. There’s no question that organizations like CAE, working perhaps with regulators and others, will have to participate actively in the creation of more pilot positions and roles as we face this pilot shortage that we’ve been talking about for the last 10-15 years. I think someone like a CAE that is really an independent driver of training can assist in that process enormously. We train 135,000 pilots annually—including ab initio and recurrent training.

Does CAE have just one ab initio school? 

There are five: in Phoenix, Malaga [Spain], Montpellier [France], Gondia [India] and Melbourne [Australia].

How much maintenance training does CAE provide? Is this an area you would like to grow given the high demand? 

CAE primarily provides pilot training, but there is a component in both civil and defense that includes maintenance. There are opportunities for this, but at this stage, my preference is to stay within our lanes and continue focusing on pilots. We’re not trying to be all things to all people. A lot of companies lose their way by trying to do too many things. And we are really good at what we do.

Marc Parent is scheduled to leave CAE in August. How is the new CEO search going? When do you expect to make an announcement? 

We haven’t put out any target dates for announcements, but I can say the search is progressing. When I came on board, it sort of changed the dynamic, because there were three other new board members at the same time. So the search did take a bit of a pause, but it is well under control. As we get closer to a decision, we’ll announce it publicly.

How will the U.S. tariff war affect simulators? 

The tariff conversation changes almost by the day. There is an exemption for goods that are manufactured under the U.S.-Mexico-Canada Agreement (USMCA), which is the new NAFTA [North American Free Trade Agreement\. A lot of what CAE manufactures is under the USMCA. Some aspects need further analysis based on these rules and exemptions. It continues to be somewhat of a moving target.