Strategy in action
As the services portion of our Defence & Security business continues to grow, so will our recurring revenue. Becoming the training partner on a military platform generally translates into a long-term relationship. At CAE, we are well-positioned on both legacy and next-generation transport, maritime patrol, trainer, fighter, unmanned aerial system (UAS) and helicopter platforms.
Customer intimacy is a determining factor in winning defence and security contracts. Through our global presence and multi-domestic strategy, we have developed strong customer and partner relationships in this sector.
We see our future growth in the annual $9.5 billion defence and security training systems integration (TSI) market. We currently serve only 8% of this larger live-virtual-constructive (LVC) training market compared to 19% of the $2 billion defence and security virtual air training simulator market. Our growth will largely come from expanding our LVC services in the TSI market.
Defence forces are increasingly using simulation-based training to cost-effectively train their personnel. This training helps the military reduce both fuel and equipment lifecycle costs. The TSI market is also growing and, along with it, the number of our live-virtual-constructive (LVC) training contracts.
In fiscal 2016, we became the training systems integrator for the NATO Flying Training in Canada (NFTC) program. We are providing the Royal Canadian Air Force with a turnkey solution that includes facilities, simulators, maintenance, instruction and support for live flying training.
The growth in our defence training services adds revenue stability. Our increased efforts as a training systems integrator strengthen our potential for superior returns.
Our culture of innovation is making us increasingly integral to the way the military trains around the world. The U.S. Air Force (USAF) uses the KC-135 tanker for aerial refuelling of its planes. Every year, we train 3,700 KC-135 aircrew and boom operators for the USAF. By developing innovations to improve the simulator’s fidelity, we moved more training tasks to the simulator, increasing both the simulator’s utilization and yield.
Today the USAF rehearses nine out of 10 missions in its aircrew training devices. In fiscal 2016, we were awarded contracts to support the USAF with its Mobility Air Force Distributed Mission Operations (MAF DMO) program. This will allow the USAF to conduct more LVC training using the KC-135 tanker aircrew training devices.