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CAE Secures a $250M Contract to Aid MQ-9B SkyGuardian RPAS
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CAE Inc.’s (CAE - Free Report) Defense & Security business segment recently secured a contract worth $250 million for supporting Canada’s MQ-9B SkyGuardian Remotely Piloted Aircraft Systems (RPAS). The award has been provided by General Atomics Aeronautical Systems, Inc., the manufacturer of MQ-9B SkyGuardian.
This contract win comes as part of the Royal Canadian Air Force’s modernization efforts to upgrade its mission critical capabilities, thereby bolstering its intelligence, reconnaissance and surveillance operations.
Details of the Deal
Under the terms of the agreement, CAE will provide aircrew and maintenance technician training, supporting training devices and courseware as per the government of Canada’s RPAS requirements. CAE will also offer comprehensive maintenance and support solutions like broader In-Service Support (ISS) capabilities, which include aircraft maintenance, IT and cybersecurity at the RPAS operating sites, and publications management.
Per the details of the contract, CAE will supply the Royal Canadia Air Force with experienced maintenance technicians for the RPAS.
Canada’s Defense Policy & CAE
With increasing geopolitical tensions worldwide and nations strengthening their defense systems in recent times, there remains soaring demand for next-generation unmanned aerial vehicles (UAVs) like SkyGuardian. In December 2023, the government of Canada announced that it will invest $2.49 billion to acquire a RPAS capability. It will do so through a direct commercial sale contract with General Atomics Aeronautical Systems.
The MQ-9B SkyGuardian RPAS, with the first delivery expected in 2028, is expected to provide Canadian commanders with an overview of operational situations, using near real-time information. It is also projected to enable Canada to fulfill its North American Aerospace Defense and NATO missions while increasing interoperability with the U.S. and NATO forces.
So, as Canada aims at strengthening its defense procurement through such acquisitions, CAE’s capabilities in providing digitally immersive training and mission support solutions across multi-domain operations are expected to usher in solid order flows for the company, like the latest one.
Notably, CAE’s long-standing partnership with General Atomics Aeronautical Systems enables it to provide best-in-class training technologies, systems and services to boost the mission readiness of the Canadian Armed Force's RPAS crew.
Will Soaring UAV Demand Help CAE?
Initially UAVs were developed mostly for counterinsurgency needs. However, the new generation UAVs like MQ-9B SkyGuardian are transforming the future of military warfare and offering remarkable advantages. Evidently, UAVs can provide real-time information on targets’ positions, terrain, and enemy movements to commanders on the ground, while keeping the operator safe. Compared to traditional military jets, UAVs are cheaper, faster and easier to deploy.
Such advantages must have been boosting the demand for UAVS, which, in turn, must have led the Markets and Markets firm to project a CAGR of 9.9% for the global UAV market during 2024-2029. This market growth projection should be beneficial for CAE, which is an industry-leading training systems integrator for RPAs.
Notably, the company offers generic training solutions with its Unmanned Aerial System (UAS) Mission Trainer and high-fidelity platform-specific simulators such as the CAE Predator Mission Trainer. It also designs and delivers comprehensive training centers; provides a complete suite of training systems from self-paced and classroom training to full-mission simulators; and offers training services, including live-flying instruction and in-service support.
Peer Opportunities
Apart from CAE, other defense contractors which have substantial presence in the global UAV market and can be expected to gain significantly from this market’s growth are mentioned below:
Teledyne (TDY - Free Report) : Its FLIR business unit designs high-performance UAVs for military as well as industrial operations. FLIR drones like Black Hornet 3, Black Hornet VRS and SkyRanger R70 are currently used by more than 20 militaries and customers in over 30 countries.
Teledyne boasts a (three-to-five years) long-term earnings growth rate of 7.3%. Its shares have risen 2.8% in the past month.
Northrop Grumman (NOC - Free Report) : It is a renowned manufacturer of autonomous aerial vehicles. NOC’s MQ-4C Triton uncrewed aircraft system can fly at an altitude of more than 50,000 feet, significantly higher than a commercial aviation or medium-altitude, long-endurance (MALE) aircraft. Its product portfolio also includes other UAVs like Global Hawk, Bat, Fire Scout and X-47B UCAS.
Northrop boasts a long-term earnings growth rate of 8.7%. Its shares have risen 3.6% in the past year.
Lockheed Martin (LMT - Free Report) : It has been delivering advanced autonomous systems to the U.S. military and allies for decades. LMT’s Stalker is an operationally proven small, silent, Group 2 UAS that provides unprecedented long-endurance imaging capability in a variety of contested environments. It is also used by Special Forces around the world.
Lockheed boasts a long-term earnings growth rate of 4.1%. Its shares have risen 4.7% in the past year.
Price Performance
Shares of CAE have lost 10.1% in the past year against the industry’s 37.8% growth.
Image: Bigstock
CAE Secures a $250M Contract to Aid MQ-9B SkyGuardian RPAS
CAE Inc.’s (CAE - Free Report) Defense & Security business segment recently secured a contract worth $250 million for supporting Canada’s MQ-9B SkyGuardian Remotely Piloted Aircraft Systems (RPAS). The award has been provided by General Atomics Aeronautical Systems, Inc., the manufacturer of MQ-9B SkyGuardian.
This contract win comes as part of the Royal Canadian Air Force’s modernization efforts to upgrade its mission critical capabilities, thereby bolstering its intelligence, reconnaissance and surveillance operations.
Details of the Deal
Under the terms of the agreement, CAE will provide aircrew and maintenance technician training, supporting training devices and courseware as per the government of Canada’s RPAS requirements. CAE will also offer comprehensive maintenance and support solutions like broader In-Service Support (ISS) capabilities, which include aircraft maintenance, IT and cybersecurity at the RPAS operating sites, and publications management.
Per the details of the contract, CAE will supply the Royal Canadia Air Force with experienced maintenance technicians for the RPAS.
Canada’s Defense Policy & CAE
With increasing geopolitical tensions worldwide and nations strengthening their defense systems in recent times, there remains soaring demand for next-generation unmanned aerial vehicles (UAVs) like SkyGuardian. In December 2023, the government of Canada announced that it will invest $2.49 billion to acquire a RPAS capability. It will do so through a direct commercial sale contract with General Atomics Aeronautical Systems.
The MQ-9B SkyGuardian RPAS, with the first delivery expected in 2028, is expected to provide Canadian commanders with an overview of operational situations, using near real-time information. It is also projected to enable Canada to fulfill its North American Aerospace Defense and NATO missions while increasing interoperability with the U.S. and NATO forces.
So, as Canada aims at strengthening its defense procurement through such acquisitions, CAE’s capabilities in providing digitally immersive training and mission support solutions across multi-domain operations are expected to usher in solid order flows for the company, like the latest one.
Notably, CAE’s long-standing partnership with General Atomics Aeronautical Systems enables it to provide best-in-class training technologies, systems and services to boost the mission readiness of the Canadian Armed Force's RPAS crew.
Will Soaring UAV Demand Help CAE?
Initially UAVs were developed mostly for counterinsurgency needs. However, the new generation UAVs like MQ-9B SkyGuardian are transforming the future of military warfare and offering remarkable advantages. Evidently, UAVs can provide real-time information on targets’ positions, terrain, and enemy movements to commanders on the ground, while keeping the operator safe. Compared to traditional military jets, UAVs are cheaper, faster and easier to deploy.
Such advantages must have been boosting the demand for UAVS, which, in turn, must have led the Markets and Markets firm to project a CAGR of 9.9% for the global UAV market during 2024-2029. This market growth projection should be beneficial for CAE, which is an industry-leading training systems integrator for RPAs.
Notably, the company offers generic training solutions with its Unmanned Aerial System (UAS) Mission Trainer and high-fidelity platform-specific simulators such as the CAE Predator Mission Trainer. It also designs and delivers comprehensive training centers; provides a complete suite of training systems from self-paced and classroom training to full-mission simulators; and offers training services, including live-flying instruction and in-service support.
Peer Opportunities
Apart from CAE, other defense contractors which have substantial presence in the global UAV market and can be expected to gain significantly from this market’s growth are mentioned below:
Teledyne (TDY - Free Report) : Its FLIR business unit designs high-performance UAVs for military as well as industrial operations. FLIR drones like Black Hornet 3, Black Hornet VRS and SkyRanger R70 are currently used by more than 20 militaries and customers in over 30 countries.
Teledyne boasts a (three-to-five years) long-term earnings growth rate of 7.3%. Its shares have risen 2.8% in the past month.
Northrop Grumman (NOC - Free Report) : It is a renowned manufacturer of autonomous aerial vehicles. NOC’s MQ-4C Triton uncrewed aircraft system can fly at an altitude of more than 50,000 feet, significantly higher than a commercial aviation or medium-altitude, long-endurance (MALE) aircraft. Its product portfolio also includes other UAVs like Global Hawk, Bat, Fire Scout and X-47B UCAS.
Northrop boasts a long-term earnings growth rate of 8.7%. Its shares have risen 3.6% in the past year.
Lockheed Martin (LMT - Free Report) : It has been delivering advanced autonomous systems to the U.S. military and allies for decades. LMT’s Stalker is an operationally proven small, silent, Group 2 UAS that provides unprecedented long-endurance imaging capability in a variety of contested environments. It is also used by Special Forces around the world.
Lockheed boasts a long-term earnings growth rate of 4.1%. Its shares have risen 4.7% in the past year.
Price Performance
Shares of CAE have lost 10.1% in the past year against the industry’s 37.8% growth.
Image Source: Zacks Investment Research
Zacks Rank
CAE currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.