CAE Inc. (CAE) closed up 5% after announcing the US$500M sale of Flightscape to SITA, which represents ~5% of the company’s enterprise value…

… and most of the 8% of non-core revenue under review due to a lack of strategic fit.

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The company thought when we bought Flightscape that there was a synergy in going to market with Flightscape and with our training systems. The reality is they go to market completely differently from the airlines.

Matthew Bromberg (President and CEO) - Morgan Stanley Laguna Conference

As that part of the portfolio gets shopped, the company should see the performance of its civil aviation segment recover…

… though a return to growth could take time, with the backlog down heading into fiscal 2027 and the Middle East conflict having a near-term impact.

As that headwind dissipates, a leaner company should emerge…

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Fiscal 2027 is both an execution year and a reset year. The Transformation Plan, focused on improving our internal cost structure and focus, is necessary improve our performance, to streamline our portfolio, and focus on where we can differentiate and win.

Matthew Bromberg (President and CEO) - Q1’27 remarks

… which could drive the defense re-rate CAE has missed out on if new management can execute on its Transformation Plan.

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