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CAE & Textron Tie Up to Expand Next-Generation Jet Training

CAE Inc. CAE recently signed a Memorandum of Understanding (“MOU”) with Textron Aviation Defense, a unit of Textron TXT, for the expansion of efforts to support defence force preparation, integrate next-generation aircraft and develop advanced capabilities. The collaboration will particularly address the enhancement of next-generation T-6 training ecosystem.

The latest MOU, announced at the Defence and Security Equipment International conference, should further strengthen both CAE and TXT’s position in the military training industry.

Benefits of the Collaboration

Many training challenges currently impact air forces worldwide, such as pilot shortages, the lack of instructor pilots and increasing aircraft operation and maintenance costs. The recent agreement between CAE and Textron Aviation Defense will bring the military aviation industry a step forward toward solving these challenges.

CAE’s defense and security segment operates in a challenging environment with training and preparation for multi-domain operations. It has a portfolio of innovative training solutions, ranging from digital learning environments and mixed reality capabilities to integrated live, virtual and constructive training in a secure networked environment.

On the other hand, Textron’s Beechcraft T-6 is a trainer aircraft delivering basic to advanced military flight training globally. Its world-class training capability, coupled with the experience and leading-edge training expertise of CAE, will empower combat jet training organizations worldwide.

Prospects in Military Training

Per the Mordor Intelligence’s report, the Military Training Aircraft Market size is expected to grow from $4.96 billion in 2023 to $6.38 billion by 2028, at a CAGR of 5.16% during 2023-2028.

Such abounding prospects in the training business should boost both TXT and CAE’s growth. In August 2023, CAE secured a 10-year pilot training agreement with Batik Air and also announced the expansion of its partnership with Embraer to promote pilot training services for the E-Jet E2 family of commercial aircraft. In the same month, the eighth Beechcraft T-6C Texan II aircraft arrived at Sfax Air Base in Tunisia to support Tunisian Air Force pilot.

Such developments, along with the latest tie up between these two companies, should enable it to duly reap the benefits of the growing military training aircraft industry.

Price Performance

In the past year, shares of CAE have rallied 42.5% compared with the industry’s 12.6% increase.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

On the other hand, shares of Textron have gained 21.2% against the industry’s 7.4% decrease in the past year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank & Key Picks

CAE currently has a Zacks Rank #3 (Hold), while Textron carries a Zacks Rank #2 (Buy).

A few top-ranked stocks in the same sector are AAR Corp. AIR and Hexcel Corp. HXL, each carrying a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AIR’s 2023 sales indicates an improvement of 15.4% from that reported in 2022. The stock boasts a four-quarter average earnings surprise of 5.81%.

The Zacks Consensus Estimate for HXL’s 2023 sales indicates an improvement of 14.3% from that reported in 2022. The stock boasts a four-quarter average earnings surprise of 16.14%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Textron Inc. (TXT) : Free Stock Analysis Report

AAR Corp. (AIR) : Free Stock Analysis Report

Hexcel Corporation (HXL) : Free Stock Analysis Report

CAE Inc (CAE) : Free Stock Analysis Report

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Zacks Investment Research