CAE suspends its dividend following the provision of 2,600; lower wages

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MONTREAL – CAE Inc. is temporarily laying off about a quarter of its staff, cutting wages and suspending their dividend and share buyback plan in response to the COVID-19 pandemic.

About 2,600 of the 10,500 employees of the flight simulator manufacturer will be laid off and another 900 will be placed on a short workweek, the company said on Monday.

About 1,525 layoffs have occurred in Canada – mostly in Montreal – as well as half of the reductions in the work week, a spokesperson said.

CAE also announced a freeze on wages and pay cuts for staff not affected by the reduction in work weeks. Chief Executive Officer Mark Parent and his management team will receive a 50% salary reduction for three months, while the Vice-Presidents will receive a 30% reduction.

Directors and managers will benefit from a 20% reduction and group leaders and employees will benefit from a 10% reduction in salary.

Meanwhile, CAE has designed a prototype ventilator to provide vital support to critical care patients and is working on sourcing the components to begin production once it is approved by Health Canada.

The company is now sourcing components to assemble the lifesaving devices – essential for some COVID-19 patients – at its facilities near Montreal Airport.

“Once this prototype has been approved by public health officials, we plan to manufacture thousands of units at our plant in Montreal and at other sites in the coming months,” said CEO Mark Parent in a statement.

“We plan to recall 150 people as soon as possible specifically for the fans,” spokeswoman Pascale Alpha added in a telephone interview.

Analyst Benoit Poirier of Desjardins Securities said the company’s balance sheet was “under pressure” as orders and deliveries of flight simulators began to drop amid the shock in the airline world, “but we are confident that CAE can weather the crisis. ”

About two-thirds of the company’s more than 50 training centers based in Montreal remain open.

This proportion should remain unchanged, “given that civilian training is a highly regulated industry and that pilots must be certified every six to nine months,” said Steve Arthur, analyst at RBC Dominion Securities.

“Of course, with border closings, government-mandated closings and the departure of many airline pilots, we expect significantly lower usage rates in the short-term in centers that are still operational,” said he said in a research note.



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