CAE stock hits record high after Boeing recommends flight simulators for 737 Max

MONTREAL — Shares of flight simulator maker CAE Inc. reached record highs Friday after Boeing Co. recommended earlier this week that pilots train in simulators before flying its grounded 737 Max.

Boeing’s announcement Tuesday marked a reversal from the company’s long-held position that only computer-based training — not simulators — was required for pilots to climb back into the cockpit.

CAE chief executive Marc Parent was already betting on pent-up demand for the training platforms, announcing in November the company was building simulators with no confirmed buyer.

CAE is ready to further ramp up production in response to any regulatory changes or training requirements ahead of the 737 Max’s eventual return to service, said spokeswoman Helene Gagnon in an email this week.

CAE stock price ended the day at an all-time closing high of $38.71 on the Toronto Stock Exchange, up 92 cents or 2.43 per cent. The shares have gained 12.6 per cent since Jan. 1.

Authorities around the world banned Boeing’s marquee jet from the skies last March after two crashes in five months, which killed all 346 aboard, including 18 Canadians.

As of December, CAE had delivered 23 of 48 Max flight simulators ordered by airlines, the company said.

Boeing’s recommendation of flight simulator training is based partly on results from company tests that showed pilots had trouble handling emergencies despite being schooled in the plane’s software updates.

Simulator training could weaken the Max’s appeal for some airlines. The recommendation could push back the aircraft’s return — even after regulatory green lights — and necessitate the purchase of multimillion-dollar simulators from companies like CAE to prep pilots.

This report by The Canadian Press was first published Jan. 10, 2020.

Companies in this story: (TSX:CAE)

The Canadian Press