CAE Inc. (CAE): Business Model Canvas [Dec-2025 Updated]

You need a clear picture of how a company with a record adjusted backlog of $20.1 billion CAD actually runs its operation, and honestly, it's more than just selling flight simulators. I've spent two decades dissecting these models, and what stands out here is the sheer scale: over 60% of their annual revenue is recurring, driven by massive Civil and Defense contracts that hit $2,709.3 million CAD and $1,998.6 million CAD respectively in Fiscal Year 2025. This Business Model Canvas cuts through the noise to show you the nine essential pieces that keep this global training and defense giant moving. It's a blueprint for resilient, high-value service delivery, so check out the details below to see the whole structure.

CAE Inc. (CAE) - Canvas Business Model: Key Partnerships

You're mapping out CAE Inc.'s strategic positioning as of late 2025, and the Key Partnerships block is where you see the long-term revenue stability. Honestly, these aren't just handshake deals; they are multi-decade commitments that lock in significant future cash flow.

Strategic Alliances with Major OEMs like Airbus and Boeing

CAE Inc.'s relationship with Original Equipment Manufacturers (OEMs) is crucial for maintaining high-fidelity training relevance. These alliances ensure CAE is training on the latest platforms, which is non-negotiable for defense and civil customers alike. For instance, CAE became a Boeing Authorized Training Provider on June 19, 2023, and was the first to offer Boeing's Competency-Based Training and Assessment curriculum. Also, the longstanding joint venture with Embraer, Embraer-CAE Training Services (ECTS), expanded in August 2023 to cover the E-Jets E2 family, deploying the first E-Jet E2 full-flight simulator in January 2024.

The OEM ecosystem is further cemented by specific airline deals tied to platform training:

• 15-year agreement signed with Akasa Air in March 2024 for Boeing 737MAX pilot training.
• Riyadh Air deepened its partnership with the addition of Airbus A321neo full-flight simulators.
• CAE signed an agreement with Saab on November 20, 2025, for GlobalEye training platforms.

SkyAlyne Joint Venture for the 25-year Canadian FAcT Program

The SkyAlyne joint venture, a partnership between CAE Inc. and KF Aerospace, represents a massive, predictable revenue stream. This entity was awarded the 25-year Future Aircrew Training (FAcT) contract by the Government of Canada on May 28, 2024. This deal is worth a total of C$11.2 billion, including applicable taxes, over its 25-year term. CAE's direct share as a major subcontractor is substantial; they signed a sub-contract from SkyAlyne valued at approximately $1.7 billion over the contract term, as announced on October 1, 2024. To be fair, this contract consolidates three separate RCAF training programs.

The commitment to Canadian industry and social value is also quantified:

Partner/Element	Contract/Commitment Value	Duration/Date
SkyAlyne Total RCAF Contract	C$11.2 billion	25 years (Awarded May 2024)
CAE Sub-contract Value	Approx. $1.7 billion	25 years
Serco FAcT Support Contract	CAN$490 million	25 years
Indigenous Participation Minimum	5% of contract value (excl. aircraft/simulators)	FAcT Program Life

Government of Canada as a Strategic Partner for FFLIT Program

Beyond FAcT, the relationship with the Government of Canada deepens in the fighter domain. On February 12, 2025, CAE Inc. was identified as a strategic partner to the Government of Canada to co-develop the Future Fighter Lead-in Training (FFLIT) program. This positions CAE to train pilots for Canada's advanced fighter jets, securing a foothold in future defense training modernization efforts.

Long-term Training Exclusivity Agreement with Flexjet

In the Civil segment, CAE solidified its position in business aviation through its SIMCOM Aviation Training joint venture. CAE increased its ownership stake in SIMCOM by purchasing a majority of shares from Volo Sicuro for USD $230 million, financed by existing credit facility and cash on hand. As part of this, CAE and SIMCOM extended their exclusive business aviation training services agreement with Flexjet by another five years, leaving a remaining exclusivity period of 15 years. This is a smart move, as CAE's own forecast predicted a need to train 106,000 business aviation pilots by 2032. Flexjet's more than 1,400 pilots benefit directly from this continued access to state-of-the-art facilities.

Technology Partners for Digital Immersion and AI Integration

CAE Inc. is actively partnering to integrate next-generation technology, which is reflected in the broader market trends. The Computer Aided Engineering (CAE) Market, which encompasses simulation, is expected to grow from US$ 11.03 billion in 2024 to US$ 23.44 billion by 2031, largely driven by AI-powered simulation. The global AI market itself is valued at $391 billion as of 2025.

CAE's direct technology integration partnerships include:

• Showcasing an immersive pilot training solution built for Apple Vision Pro (announced October 9, 2024).
• The selection of Flightscape - Powered by CAE by Republic Airways to transform operations (announced October 22, 2024).

The company's overall execution in FY2025, which saw $4.7 billion in revenue and $732.0 million in Adjusted Segment Operating Income, supports the capital deployment into these strategic, long-term partnerships.

Finance: draft 13-week cash view by Friday.

CAE Inc. (CAE) - Canvas Business Model: Key Activities

You're looking at the core engine of CAE Inc.'s value creation, the things they absolutely must do well to keep the business running. Honestly, it's a mix of heavy manufacturing, high-tech service delivery, and complex contract management.

Manufacturing and delivery of Full-Flight Simulators (FFSs)

This is where the physical assets come from. CAE Inc. builds and ships the high-fidelity training hardware that underpins much of their service revenue. For the full fiscal year 2025, the company delivered 61 FFSs to customers. Looking closer at the fourth quarter of FY2025, the Civil segment alone signed contracts that included the sale of 14 FFSs. To be fair, the delivery cadence can fluctuate; for instance, the second quarter of FY2025 saw 18 FFSs delivered by the Civil segment.

Operating a global network of 240 training centers

CAE Inc. maintains a massive footprint to deliver its training services. As of fiscal year-end 2025, the company operated at approximately 240 sites and training locations across over 40 countries, supported by about 13,000 employees. Training center utilization is a key metric here. For the full fiscal year 2025, the Civil training centre utilization rate was 74%. More recently, for the second quarter of fiscal year 2026, that utilization rate settled at 64%.

Here's a quick look at the scale of their training operations:

Metric	Value (FY2025 Annual)	Value (Q2 FY2026)
Total Training Locations	Around 240 sites	Implied by network size
Civil Training Center Utilization	74%	64%
FFSs Delivered (FY2025)	61 units	N/A

Research and development (R&D) in simulation and digital solutions

Innovation is baked into their offering, meaning consistent R&D spending is a must. For the full fiscal year 2025, CAE Inc.'s reported Research and Development Expenses were $123.2 million (in Canadian dollars). Looking at the calendar year 2025, the annual figure was reported as $0.089B. What this estimate hides is the shift in focus; R&D spending for the twelve months ending September 30, 2025, was slightly lower at $0.088B.

Key R&D/Investment Data Points:

• R&D Expense (FY2025 Annual): $123.2 million (CAD)
• R&D Expense (Calendar Year 2025 Estimate): $0.089B
• R&D Expense (Last Twelve Months ending Sep 30, 2025): $0.088B

Execution of long-term, complex defense and civil contracts

Securing the future pipeline through large, multi-year contracts is critical. CAE Inc. ended fiscal year 2025 with a record $20.1 billion adjusted backlog, supported by an adjusted order intake of $7.7 billion for that year. The Defense segment was particularly strong, ending FY2025 with an adjusted backlog of $11.3 billion. As of the second quarter of fiscal year 2026, the backlog stood at $8.5 billion for Civil and $11.2 billion for Defense.

The backlog provides revenue visibility, which is key for capital planning:

Backlog Component	Value at FY2025 Year End	Value at Q2 FY2026 End
Total Adjusted Backlog	$20.1 billion	Implied Total: $19.7 billion
Defense Adjusted Backlog	$11.3 billion	$11.2 billion
Civil Adjusted Backlog	Not explicitly stated separately	$8.5 billion

Enterprise-wide restructuring to drive operational efficiency

CAE Inc. concluded a major enterprise-wide restructuring program in the second quarter of fiscal 2025 to streamline the operating model and optimize cost structure. Following this, the new CEO initiated further strategic restructuring in August 2025. The goal is clear: drive margins up. For the Civil segment, the target is a 20% adjusted segment operating income (aSOI) margin. In the second quarter of fiscal year 2026, the Civil aSOI margin was 16.2%. The Defense segment showed significant efficiency gains, with operating income surging 99% to $46.6 million in that same quarter.

Operational Efficiency Metrics:

• FY2025 Adjusted Segment Operating Income (Consolidated): $732.0 million
• Q2 FY2026 Civil aSOI Margin Target: 20%
• Q2 FY2026 Civil aSOI Margin Achieved: 16.2%
• Q2 FY2026 Defense Operating Income: $46.6 million (a 99% surge)

They are definitely making moves to sharpen the portfolio.

CAE Inc. (CAE) - Canvas Business Model: Key Resources

You're looking at the core assets CAE Inc. relies on to deliver its training and simulation solutions across the globe. These aren't just line items; they are the physical and intellectual foundations of their market position. Honestly, for a company this size, the scale of these resources is what sets the barrier to entry for competitors.

The company's physical footprint and human capital are substantial, supporting its global service delivery. For instance, as of the fiscal year ended March 31, 2025, CAE had a specialized workforce of approximately 13,000 employees across the organization. This team operates within a massive global network.

CAE Inc. maintains a global network of approximately 240 training sites in over 40 countries. This network is the delivery mechanism for their services, training more than 155,000 civil and military pilots each year. Furthermore, their civil aviation training network includes over 340 full-flight simulators.

Intellectual property is clearly a major asset, evidenced by their ongoing commitment to innovation. CAE launched a major five-year Research and Development investment program, Project Resilience, committing C$1 billion in total funding. This investment focuses on developing digitally immersive solutions, including the launch of the CAE Prodigy visual system. To quantify the IP portfolio as of September 30, 2025, CAE had 628 total patent documents (applications and grants) and 373 patent families.

The financial strength derived from customer commitments backs up these physical and intellectual assets. The record adjusted backlog at the end of fiscal year 2025 (ended March 31, 2025) stood at $20.1 billion. This backlog was built on an adjusted order intake of $7.7 billion for that same fiscal year.

Here's a quick look at the primary quantitative Key Resources as reported around the end of FY2025:

Key Resource Category	Metric	Value
Financial Commitment (R&D)	Five-Year R&D Investment Program (Project Resilience)	C$1 billion
Financial Backlog	Total Adjusted Backlog (as of March 31, 2025)	$20.1 billion
Human Capital	Approximate Number of Employees (as of March 31, 2025)	13,000
Physical Network	Number of Training Sites	240
Physical Network	Number of Countries with Training Sites	Over 40
Intellectual Property	Total Patent Documents (Applications and Grants, as of Sep 30, 2025)	628

These resources enable specific operational capabilities you should keep in mind:

• The ability to train over 155,000 civil and military pilots annually.
• Deployment of over 340 civil aviation full-flight simulators.
• The Defense segment backlog reached $11.3 billion at year-end FY2025.
• The Civil segment backlog reached a record $8.8 billion at year-end FY2025.

What this estimate hides is the geographic distribution of the 13,000 employees and the specific mix of proprietary simulation technology versus licensed IP. Finance: draft 13-week cash view by Friday.

CAE Inc. (CAE) - Canvas Business Model: Value Propositions

You're looking at the core reasons why airlines and defense departments pay CAE Inc. for its services, and the numbers from fiscal year 2025 (FY2025) tell a clear story of high-value, long-term commitment.

Guaranteed pilot pipeline and training capacity for airlines is underpinned by the sheer scale of their training network and the industry's structural need. The Civil segment training centre utilization for FY2025 reached 74%, showing high demand for their existing capacity. This capacity supports the projected need to train over 280,000 new pilots over the next decade.

For enhanced mission readiness for global defense forces, the value is locked into the massive, long-term commitments on the books. The Defense and Security segment ended the year with an adjusted backlog of $11.3 billion. This backlog reflects contracts ensuring military units remain mission-ready, a value proposition supported by Defense booking orders of a record $4.0 billion for the full year.

The value of high-fidelity, full-motion flight simulation is quantified by the physical assets delivered. CAE Inc. delivered 61 Full Flight Simulators (FFSs) to customers during FY2025. This hardware is backed by strong forward demand, with 56 FFS sales booked for the year.

The focus on digital flight operations solutions is evident in contract signings. In the fourth quarter of FY2025, Civil signed contracts for long-term training and digital flight services valued at $741.8 million.

The resilient, recurring training revenue model for partners is the financial anchor of the business. Approximately 60% of CAE Inc.'s annual revenue in FY2025 came from these recurring training services, which helps smooth out the revenue cycle that comes with large simulator sales. This stability is reflected in the segment performance, which is key to understanding the overall value proposition.

Here's a quick look at how the two main segments contributed to the total $4.7 billion in FY2025 revenue and the massive backlog:

Metric	Civil Aviation	Defense and Security	Consolidated Total
FY2025 Revenue (CAD)	$2,709.3 million	$1,998.6 million	$4.7 billion
Adjusted Backlog (CAD)	$8.8 billion	$11.3 billion	$20.1 billion

The value proposition is also seen in the long-term commitment from customers, as shown by the segment backlogs. You can see the Civil segment's adjusted backlog grew to a record $8.8 billion by year-end.

The core value drivers supporting these numbers include:

• Mandatory initial and recurrent pilot training requirements.
• Securing long-term training agreements with customers worldwide.
• Delivering high-fidelity simulation technology for complex scenarios.
• Maintaining a robust Defense pipeline with some $7.0 billion of bids pending.

Finance: draft 13-week cash view by Friday.

CAE Inc. (CAE) - Canvas Business Model: Customer Relationships

You're looking at how CAE Inc. locks in its revenue, and honestly, the relationship side of their business model is built on deep, long-term commitments, especially in the Defense sector. This isn't just about selling a simulator; it's about becoming an indispensable operational partner.

Dedicated, high-touch account management for long-term contracts

The recurring revenue stream, which made up roughly 60% of CAE Inc.'s annual revenue in fiscal year 2025, is a direct result of this high-touch approach. You see this commitment reflected in the massive order book. For the full fiscal year 2025, Civil booked orders for a record $3.7 billion, which included comprehensive, long-term training agreements with customers globally. This signals that clients value the ongoing relationship over transactional sales. The Civil adjusted backlog at the end of that year hit a record $8.8 billion, showing the pipeline of future relationship-driven work.

Co-development and consultative approach with defense clients

In Defense & Security, CAE Inc. is actively shifting to teaming up with prime contractors early on, moving away from bidding after a design is selected. This consultative partnership is key for next-generation platforms. For instance, CAE joined the SNC team as the training systems partner for the Next-Gen Survivable Airborne Operations Center (SAOC) aircraft, demonstrating this early involvement. Also, in late 2025, CAE signed an agreement to be the preferred supplier of certain training and simulation equipment for Saab's GlobalEye airborne early warning system, leveraging their expertise in advanced training systems.

Self-service and digital support via the CAE Connect platform

While I don't have specific adoption rates for the CAE Connect platform as of late 2025, the company is clearly embedding digital support across its offerings. This is evident in defense contracts, such as the US Army Fixed-Wing Flight Training Service re-compete, which features self-paced virtual and augmented reality (VR/AR) training assets like the CAE Trax Academy to augment ground-based training. The overall strategy is to use digital immersion to enhance readiness, which is a form of scalable, self-service support layered on top of the core physical training.

Embedded personnel and operational support at customer sites

Placing personnel directly within the customer's operational structure solidifies CAE Inc.'s role as an integrated service provider. This isn't just theoretical; it's happening on the ground. For example, CAE provides maintenance and in-service support for the German Air Force's Eurofighter training devices, with specific responsibility for maintaining visual systems, performed on-site at the four main operating bases in Germany. Similarly, CAE USA provides T-44C aircrew training under a contractor-owned, contractor-operated program, supporting more than 500 students annually.

Long-term, multi-year training service agreements

The duration and value of these agreements are concrete proof of the customer relationship strategy. These contracts span continents and secure revenue visibility for years. Here's a look at some recent and representative long-term commitments:

Customer/Segment	Agreement Type/Scope	Stated Duration/Value
LAN and TAM Airlines (Civil)	Training provider contract	10-year contract
FlexJet and affiliates (Civil)	Exclusive business aviation training services agreement extension	Remaining exclusivity period of 15 years
US Army (Defense)	Fixed-Wing Flight Training Service	Approximate total value of $250 million through 2032
Global Military Customers (Defense)	Training services and simulation products (Q2 order intake)	Valued at more than C$100 million
Civil Aviation (FY2025 Bookings)	Total long-term training and digital flight services contracts	Part of a record $3.7 billion in booked orders

The Civil segment's training centre utilization rate for fiscal year 2025 was 74%, showing that the capacity built is being actively used under these service agreements. Furthermore, CAE announced a series of commercial training and services contracts in Q4 valued at approximately C$245 million, which included a mix of simulator sales and long-term service agreements.

You can see the scale of the Defense commitment through specific task orders, like the IDIQ Kuwait KC130J Task Order 05 awarded to CAE USA INC. starting March 5, 2025, with an obligated amount of $3,836,179.08.

The overall financial health supports this relationship focus; CAE Inc.'s total annual revenue for fiscal 2025 was approximately $4.7 billion CAD, and they achieved a record free cash flow of $813.9 million, which gives them the stability to maintain these multi-year, high-investment customer relationships.

CAE Inc. (CAE) - Canvas Business Model: Channels

You're looking at how CAE Inc. gets its solutions-from high-fidelity simulators to complex defense training services-into the hands of its customers as of late 2025. It's a multi-pronged approach, blending direct sales with a massive global footprint.

Here's a quick snapshot of the scale of CAE Inc.'s operations that feed into these channels, based on fiscal year 2025 results:

Metric	Value (FY2025)	Segment Context
Annual Revenue	$4.7 billion CAD	Consolidated
Civil Revenue	$2,709.3 million CAD	Civil Aviation
Defense Revenue	$1,998.6 million CAD	Defense & Security
Total Employees	Approximately 13,000	Global Workforce
Training Locations	Over 240 sites in over 40 countries	Global Footprint

Direct global sales force for large, complex contracts

The direct sales channel is crucial for securing the large, multi-year deals that underpin the Defense segment and major Civil Aviation contracts. For Defense, the pipeline remains strong, with some $7.2 billion CAD of bids and proposals pending at year-end fiscal 2025. The Defense segment booked orders worth a record $4.0 billion CAD in fiscal 2025, leading to an adjusted backlog of $11.3 billion CAD. This direct engagement secures multi-billion dollar programs, such as the initial approximately $1.7 billion CAD sub-contract mentioned for Canada's Future Aircrew Training Program. To be fair, approximately 70% of CAE Inc.'s total revenues come from services delivered within customers' own countries, which speaks to the localized nature of much of the service delivery, even if the initial contract is won globally.

Worldwide network of CAE-owned and operated training centers

This physical network is the backbone of the Civil segment, which generated $2,709.3 million CAD in revenue in fiscal 2025. CAE Inc. boasts the world's largest civil aviation training network, which includes wholly-owned, joint venture, and authorized centers.

• Annual Civil training centre utilization for FY2025 was 74%.
• In the fourth quarter of FY2025, utilization hit 75%.
• The network trains more than 150,000 pilots annually.
• The network comprises over 240 sites globally.
• One source suggests the civil network includes 70+ training locations housing 340+ full-flight simulators (FFSs).

The delivery of new hardware directly supports this channel; for the full year of fiscal 2025, CAE Inc. delivered 61 FFSs to customers.

Digital platforms for flight services and crew management

This channel is driven by the Flight Operations Solutions arm, established through acquisitions like Sabre's AirCentre portfolio, which cost $392.5 million USD in March 2022. These cloud-based products are sold directly to airlines for operational efficiency gains. The Crew Management solution, for instance, supports over 500 airlines globally and has more than 400,000 users on its Crew Access mobile app alone. These digital tools help optimize crew schedules, forecast resources, and manage disruptions in real-time.

Joint ventures (JVs) to access specific national defense markets

CAE Inc. uses joint ventures as a strategic channel to enter or deepen its presence in specific defense and security markets, often through government-owned, contractor-operated (GOCO) or company-owned, company-operated (COCO) models. For example, CAE established the Helicopter Academy to Train by Simulation of Flying (HATSOFF) in India with Hindustan Aeronautics Limited (HAL). These JVs allow CAE Inc. to deliver turnkey training center solutions to defense forces.

Simulator sales and delivery directly to customer facilities

This is a distinct revenue stream within the Civil segment, involving the direct sale of high-value capital equipment like FFSs to airlines, business jet operators, and other training centers. In fiscal 2025, Civil booked orders for a record $3.7 billion CAD, which included 56 FFS sales. For context, in the second quarter of FY2025, Civil delivered 16 FFSs as part of training solutions contracts valued at $693.3 million CAD. The company also sells other training devices, such as the CAE 400XR and CAE 500XR.

Finance: draft 13-week cash view by Friday.

CAE Inc. (CAE) - Canvas Business Model: Customer Segments

You're looking at the core groups CAE Inc. serves, and honestly, the numbers from Fiscal Year 2025 paint a clear picture of where the focus is. The business is built on two main pillars: Civil Aviation and Defense & Security.

Here is the breakdown of CAE Inc.'s FY2025 revenue contribution by major segment:

Customer Segment Group	FY2025 Revenue (CAD)	Percentage of Total Revenue
Civil Aviation	$2,709.3 million	60%
Defense & Security	$1,998.6 million	35%
Healthcare (Implied Remainder)	Approx. $137.5 million	5%

The total consolidated revenue for CAE Inc. in Fiscal Year 2025 was $4.7 billion CAD.

Commercial Airlines (major global carriers and regional operators)

This group drives the high utilization rates in the Civil segment. You saw Civil training center utilization hit 74% in FY2025. CAE delivered 61 Full-Flight Simulators (FFSs) to customers across the year, showing their manufacturing output meeting demand.

• Civil adjusted backlog stood at a record $8.8 billion at year-end FY2025.
• CAE forecasts a need for 267,000 new commercial aviation pilots globally by 2034.
• The Commercial Pilot License (CPL) segment is projected to hold 60% of the flight training market share in 2025.

Global Defense and Security Forces (NATO, allied nations)

This segment provides counter-cyclical stability, fueled by global defense spending. The adjusted backlog for Defense & Security was a massive $11.3 billion or $11.4 billion at the end of the quarter, depending on the reporting date.

• CAE secured a transformative subcontract under Canada's Future Aircrew Training (FAcT) program valued at $1.7 billion.
• A contract providing simulation and in-air instruction for RCAF and NATO pilots was extended through 2027, valued at $550 million.
• Defense booked orders for $2.3 billion in one quarter of FY2025, resulting in a book-to-sales ratio of 4.56 times for that period.

Business Aviation Operators (e.g., Flexjet, fractional owners)

CAE is actively strengthening its position here, for example, by extending an exclusive training agreement with Flexjet and its affiliates to 15 years. They also purchased a majority stake in SIMCOM for US$230 million.

• CAE forecasts 33,000 new business aviation pilots will be needed by 2034.
• The business jet fleet in service is expected to grow from 23,000 in 2025 to 27,000 by 2034.
• The global business jet market is projected to grow to $55.1 billion by 2034.

Ab initio (entry-level) pilots and flight schools

This group feeds the entire ecosystem, driven by the overall pilot demand forecast. The total need for new pilots across commercial and business aviation is projected to be 300,000 over the next decade (by 2034).

• The global flight training market is estimated to be valued at USD 10.61 billion in 2025.
• Fixed-wing training, crucial for CPL holders, is projected to hold a 70% share of the market in 2025.

Government agencies and public safety organizations

These customers fall primarily under the Defense & Security segment, relying on CAE for mission readiness solutions. The segment's adjusted operating income surged to $33.1 million in one quarter of FY2025, up from $21.3 million in the prior year's comparable quarter.

• The Defense segment's adjusted backlog reached $11.4 billion at the end of Q2 FY2025.
• CAE's role includes preparing RCAF pilots for the transition to Canada's next-generation fighter jets, following their selection as a strategic partner in February 2025.

Finance: draft 13-week cash view by Friday.

CAE Inc. (CAE) - Canvas Business Model: Cost Structure

You're analyzing the core expenses that drive CAE Inc.'s operations, which is key to understanding their profitability and capital deployment strategy. Honestly, for a company this size, the cost structure is dominated by people and the physical assets required for high-fidelity simulation.

Capital expenditures (CAPEX) for new FFS capacity represent a significant outlay, even as the company focuses on services. For the fiscal year ended March 31, 2025 (FY2025), growth and maintenance capital expenditures totaled $356.2 million CAD. This spending is heavily weighted toward organic growth investments in simulator capacity, with approximately three-quarters of it being deployed to CAE Inc.'s global network of aviation training centres, often backed by multiyear customer contracts. This is a clear indicator of reinvestment in the core physical asset base supporting the training revenue stream.

The cost of developing and maintaining the simulation technology itself is substantial, falling under significant R&D and technology development costs. For the full fiscal year 2025, CAE Inc.'s research and development expenses were reported at approximately $89 million CAD. Furthermore, the company is actively focusing its future roadmap on accelerating AI use-cases, which will influence future R&D spending to unlock internal efficiency gains and increase customer proficiencies.

The largest single cost component is undoubtedly personnel and labor costs for 13,000 employees and instructors. As of March 31, 2025, CAE Inc. maintained a global workforce of approximately 13,000 employees across around 240 sites and training locations in over 40 countries. This large human capital base is essential for delivering the high-touch training services that now account for about 60% of annual revenue.

Managing the balance sheet means keeping an eye on debt servicing costs. CAE Inc. finished FY2025 with a net debt position of $3,176.7 million CAD. This resulted in a Net debt-to-adjusted EBITDA of 2.77x at the end of Q4 FY2025, which met their year-end leverage target and was an improvement from 3.36x at the end of the preceding quarter. Management is targeting a further reduction to 2.5x by the end of fiscal year 2026, so finance expense management remains a priority.

For manufacturing and supply chain costs for simulator production, the most direct financial measure is the Cost of Sales. For the full year FY2025, the Cost of Sales amounted to $3,407.8 million CAD, against a Gross Profit of $1,300.1 million CAD. The company has noted that inflationary pressures and supply chain issues have more significantly impacted eight firm fixed-price Legacy Contracts, which had little to no provision for cost escalation. Investments in manufacturing automation equipment and supply chain logistics tools are ongoing efforts to improve efficiency here.

Here's a quick look at the major expense and cost-related financial metrics for FY2025:

Cost Category / Metric	FY2025 Amount (CAD)	Context
Cost of Sales	$3,407.8 million	Direct cost of producing simulators and delivering services.
Selling, General and Administrative Expenses	$565.4 million	Overhead and operational support costs.
Research and Development Expenses	$89 million	Annual R&D spend for the fiscal year.
Growth and Maintenance CAPEX	$356.2 million	Investment in new simulator capacity and maintenance.
Net Debt	$3,176.7 million	Total debt less cash and cash equivalents at year-end.

You should also note the associated overhead and operational costs:

• Selling, General and Administrative Expenses for FY2025 were $565.4 million.
• Executive management transition costs incurred in FY2025 totaled approximately $8.3 million.
• The company is managing royalty obligations related to R&D funding, initially measured using interest rates ranging from 7.5% to 8.5%.
• Finance expense is expected to run at a quarterly rate of approximately $55 million going forward.

What this estimate hides is the exact split between labor, materials, and overhead within the Cost of Sales, but the 13,000 personnel count gives you the scale of the labor cost base.

CAE Inc. (CAE) - Canvas Business Model: Revenue Streams

You're looking at the core money-making engine for CAE Inc. as of their fiscal year 2025 close, and honestly, the numbers show a clear split between services and products, with a strong lean toward the former.

The total annual revenue for CAE Inc. in fiscal year 2025 reached approximately $4.7 billion CAD.

The primary revenue streams are clearly delineated across the two main operating segments, Civil Aviation and Defense and Security. The Civil segment remains the larger contributor to the top line, driven by the highly regulated nature of aviation training.

Revenue Stream Segment	FY2025 Revenue (CAD)
Civil Aviation Training Services	$2,709.3 million
Defense and Security	$1,998.6 million

A critical component of CAE Inc.'s revenue stability comes from its service contracts. You should note that approximately 60% of annual revenue is generated from recurring training services.

This recurring portion is bolstered by long-term training contracts, which provide a predictable revenue base, though sales of capital assets like simulators still form a significant, albeit less stable, part of the mix.

Here are the key drivers contributing to these revenue figures:

• Civil Aviation Training Services revenue of $2,709.3 million CAD (FY2025).
• Defense and Security revenue of $1,998.6 million CAD (FY2025).
• Recurring revenue from long-term training contracts accounts for over 60% of annual revenue.
• Sales of Full-Flight Simulators (FFSs) and training devices, with Civil booking orders for 56 FFSs in the full year.
• Digital solutions and professional services fees, which are embedded within the long-term training and operational support solutions contracts.

For example, during the fourth quarter of fiscal 2025 alone, Civil signed training and operational support solutions contracts valued at $741.8 million, which included the sale of 14 FFSs.

The Defense segment also contributes substantially through product and service contracts with various governments, with annual adjusted order intake reaching a record $4.0 billion for the year.

The focus on recurring revenue is defintely a strategic lever to smooth out the lumpiness associated with large, one-time simulator deliveries.