CAE, Héroux-Devtek and Montreal’s Aerospace Cluster: Simulators, Landing Gear and the F-35

Montreal’s aerospace cluster is Canada’s most successful example of a region turning a handful of anchor companies into a self-sustaining industrial ecosystem, and 2025 and 2026 tested whether that ecosystem can withstand ownership changes, trade friction and a defence-spending boom at the same time. The cluster employs more than 40,000 people in some 200 firms across Longueuil, Mirabel, Saint-Laurent and Dorval, exports most of what it makes, and sits on a mix of civil, business and defence programmes that rarely all rise or fall together. This article examines CAE’s results and strategic reset, the Héroux-Devtek take-private, the roles of Pratt & Whitney Canada, Bell Textron and the Airbus A220, and the political debate over Canada’s F-35 purchase. It is part of the Canadian Company Stories hub.

Why is Montreal one of the world’s three aerospace capitals?

Because it is one of the few places where an aircraft can be designed, powered, equipped, assembled, certified and its pilots trained within a 50-kilometre radius. The cluster grew from Canadair and Pratt & Whitney Canada in the mid-20th century, added Bombardier’s business and regional jets, Bell’s commercial helicopters at Mirabel, CAE’s simulators and a dense tier of suppliers, and benefited from federal and Quebec industrial policy that treated aerospace as strategic.

The organising body, Aéro Montréal, counts more than 200 companies and over 40,000 direct jobs, with exports accounting for roughly 80 per cent of output. Quebec’s aerospace sales run in the tens of billions of Canadian dollars a year, and the province supplies most of Canada’s aerospace workforce. The anchor companies cover different cycles: Pratt & Whitney Canada and Bell depend on business, regional and helicopter demand; CAE on airline training and defence budgets; Airbus’s A220 on single-aisle airline orders; and Héroux-Devtek on both Boeing’s commercial schedule and military programmes.

Bombardier’s exit from commercial aircraft, chronicled in the Kurums article on Bombardier’s business-jet comeback, was the cluster’s great test of the 2010s; the A220 line that Airbus took over in 2018 is now its largest commercial programme. The 2020s test is different: ownership and trade. Two of the cluster’s listed champions, Héroux-Devtek and, earlier, CAE’s healthcare business, have gone to US private equity, and the US tariff regime of 2025 raised the question of whether aircraft and parts would be caught.

The cluster’s largest employer is now a US company. Pratt & Whitney Canada, a division of RTX, has about 6,000 employees in Canada, most of them in Longueuil and Mirabel, out of roughly 10,000 worldwide, and some 60,000 engines in service with 12,300 operators. Its PT6 turboprop, PW100 regional turboprop and PW800 business-jet turbofan families are designed and largely built in Quebec.

What does CAE do and how did fiscal 2026 go?

CAE builds flight simulators and runs the world’s largest pilot-training network, and fiscal 2026, the year to 31 March 2026, was one of consolidation rather than growth. Revenue rose 4 per cent to C$4.914 billion. Civil Aviation contributed C$2.742 billion, up 1 per cent, with adjusted segment operating income of C$510.5 million and an 18.6 per cent margin. Defense and Security contributed C$2.172 billion, up 9 per cent, at a 9.2 per cent margin, or C$200.2 million.

Consolidated adjusted segment operating income fell to C$710.7 million from C$732.0 million as Civil margins came under pressure, and net income attributable to shareholders dropped to C$313.1 million from C$405.3 million. Adjusted EPS was C$1.20, essentially flat. Free cash flow of C$473.8 million was also flat but converted 123 per cent of net income into cash. Net debt stood at C$2.68 billion, or 2.29 times adjusted EBITDA.

The order book tells the story of a cyclical pause. Adjusted order intake fell 35 per cent to C$5.03 billion, with Civil down 29 per cent and Defense down 40 per cent after an exceptional fiscal 2025, and the adjusted backlog slipped 4 per cent to C$19.26 billion, split C$8.44 billion Civil and C$10.82 billion Defense. CAE delivered 52 full-flight simulators in the year against 61 the year before, and booked 42 simulator sales against 56. Its training network operated 371 full-flight simulators worldwide.

The first quarter of fiscal 2027, reported on 12 August 2026, showed the pattern continuing: revenue up 6.8 per cent to C$1.173 billion, adjusted segment operating income down to C$156.6 million at a 13.3 per cent margin, Civil margin compressed to 16.5 per cent on higher costs and Middle East disruption to joint ventures, Defense margin edging up to 9.5 per cent. Order intake recovered 14.9 per cent to C$1.29 billion, driven by Civil training contracts worth C$838 million, and the backlog held at C$19.19 billion.

What is Matthew Bromberg changing at CAE?

He is cutting cost, rationalising the training network and redefining the numbers investors watch. Bromberg, a former Pratt & Whitney and Northrop Grumman executive, took over from founder-era chief executive Marc Parent in 2025, with former Air Canada chief Calin Rovinescu as executive chairman. His first full-year outlook, issued in May 2026, promised low-single-digit revenue growth in fiscal 2027, flat to slightly lower Civil revenue, mid-single-digit Defense growth, an adjusted segment operating income margin of 14.6 to 15.1 per cent and adjusted EPS of C$1.21 to C$1.28.

The transformation programme is expected to cost C$200 to 250 million in total, of which C$84 million was incurred in fiscal 2026, and to deliver C$125 to 150 million of run-rate savings by fiscal 2030. The long-term targets are adjusted segment operating income of C$950 million to C$1 billion by fiscal 2030, mid-single-digit organic revenue growth and leverage of about 2.5 times. Four to six civil training centres are being closed, and the Flightscape flight-data business is under strategic review.

Bromberg also changed the accounting lens. From fiscal 2027 CAE excludes amortisation of acquired intangibles from adjusted operating income and adjusted EPS, which restates fiscal 2026 adjusted segment operating income to C$796.6 million and adjusted EPS to C$1.41. The change aligns CAE with US defence peers and flatters the headline margin, which investors should remember when comparing years.

Capital allocation has shifted toward buybacks. In the June 2026 quarter CAE repurchased and cancelled 1.1 million shares for C$39 million at an average C$35.26, and the normal course issuer bid continues. The company has not reinstated a dividend since suspending it in 2020, preferring to bring leverage down first.

Why did Platinum Equity take Héroux-Devtek private?

Because the landing-gear maker was too small to be properly valued on the Toronto Stock Exchange and too well positioned in defence to be left alone. Héroux-Devtek, founded in Longueuil in 1942 as Héroux Machine Parts, built the landing gear for the Apollo 11 lunar module in 1969, listed in 1986, merged with Devtek in 2000, sold its aerostructures business to Precision Castparts in 2012 and in 2013 won the contract to supply complete landing gear for Boeing’s 777 and 777X. By the mid-2020s it had 18 facilities in Canada, the United States, the United Kingdom and Spain, around 2,000 employees and annual revenue of roughly C$600 million, with a growing share from military programmes including the F-35, Boeing’s F/A-18 and Lockheed’s C-130.

Platinum Equity, the Los Angeles buyout firm, agreed in mid-2024 to acquire the company in an all-cash deal that Canadian press valued at about C$1.35 billion including debt, and completed it on 12 February 2025. The Caisse de dépôt et placement du Québec and the Fonds de solidarité FTQ invested in the debt financing, a structure that gave Quebec institutions a seat in the capital without blocking the sale. Platinum co-president Louis Samson said the headquarters would stay in Longueuil, that the Saint-Hubert R&D centre would receive investment, and that the firm had already built a pipeline of acquisitions for the company to pursue. Chief executive Martin Brassard, in the role since 2019, stayed on.

The deal passed Investment Canada Act review, which was politically sensitive because Héroux-Devtek is a Canadian defence supplier and because the sale came just before the trade dispute with the United States. The local-investor structure, the headquarters commitment and the fact that most of the company’s revenue comes from US customers anyway appear to have satisfied Ottawa. For comparison with how other Quebec champions have handled foreign ownership, the Kurums profile of Power Corporation and the Desmarais family is instructive.

How do Pratt & Whitney Canada, Bell and Airbus anchor Mirabel?

They give the cluster three separate product cycles under one airport perimeter. Mirabel, the airport north of Montreal that failed as a passenger hub in the 1980s and 1990s, has become the cluster’s industrial heart: Airbus Canada assembles the A220 there, Bell Textron Canada has built commercial helicopters there since the mid-1980s, and Pratt & Whitney Canada operates an engine test and assembly site alongside its Longueuil headquarters.

The A220 is the largest programme. Airbus holds 75 per cent of the partnership and Investissement Québec 25 per cent after Bombardier sold its stake for US$591 million in February 2020. Airbus invested a further US$900 million and Quebec US$300 million in 2022, and in July 2024 the date at which Airbus may buy out Quebec’s share was pushed to 2035, a change framed as keeping two-thirds of A220 production jobs in Quebec. By September 2026 the programme had 1,107 orders and 550 deliveries, with AirAsia’s May 2026 order for 150 A220-300s the largest single commitment. The target rate is 14 aircraft a month, ten from Mirabel and four from the Mobile, Alabama line, which matters for tariffs because Mobile-built aircraft for US customers avoid any duty on Canadian-assembled airframes.

Bell Textron Canada assembles the 407, 412, 429 and 505 commercial helicopters at Mirabel, delivered its 5,000th aircraft in 2017 and builds components for the 525. Its order book tracks the energy, utility and emergency-services markets rather than airlines, which smooths the cluster’s cycle. Pratt & Whitney Canada’s engines, meanwhile, power everything from the Beechcraft King Air to the Gulfstream G500, giving Longueuil exposure to the business-aviation boom that has also lifted Bombardier.

Where does the F-35 debate leave Montreal’s defence suppliers?

In limbo, with work in hand but uncertain about the next tranche. Canada selected the F-35A in March 2022 for a fleet of 88 aircraft, and in January 2023 signed for the first 16 with about C$7 billion of approved spending, including training and infrastructure. The programme’s industrial participation model has already brought Canadian firms hundreds of contracts: by 2013 Canadian suppliers had won US$490 million of F-35 work with far more projected, and Héroux-Devtek, Magellan Aerospace and CAE are among the Quebec and Ontario companies with programme content.

In March 2025, as the trade dispute escalated, Prime Minister Carney ordered a review of whether Canada should take all 88 F-35s or split the fleet with a European alternative such as Saab’s Gripen, which Saab offered to assemble in Canada. The debate pits sovereignty and industrial-benefit arguments against interoperability with NORAD and the fact that the first 16 aircraft are contractually committed. Through 2026 the government has kept the review open while confirming the initial deliveries, and defence officials have pointed to the cost and schedule risk of running two fighter fleets.

For CAE the F-35 is less important than the broader defence-spending surge. Its Defense and Security segment grew 9 per cent in fiscal 2026, and management explicitly lists NATO allies’ higher budgets and the Canadian government’s commitment to reach the alliance’s spending target as assumptions behind its outlook. CAE trains pilots for the Royal Canadian Air Force under the Future Aircrew Training programme and supplies simulators for the F-35, Gripen and nearly every other Western fighter, so it is relatively indifferent to which jet Canada picks. Héroux-Devtek, with F-35 landing-gear components, has a more direct stake, as do dozens of smaller Quebec machine shops.

How do US tariffs affect Canadian aerospace?

Less than they affect autos and steel, because civil aircraft and most aerospace parts have been exempt from the 2025 measures so far. The 1979 WTO Agreement on Trade in Civil Aircraft, to which the United States and Canada are parties, provides for duty-free trade in civil aircraft and parts, and USMCA-compliant aerospace goods were excluded from the IEEPA tariffs on Canada. The Section 232 auto and steel tariffs do not cover aircraft, though raw aluminium and steel used in Canadian aerospace production carry the 50 per cent metals duty if imported from the US and re-exported, a cost that flows through supply chains.

The A220 shows the hedge in action. Airbus can assemble aircraft for US airlines in Mobile and for the rest of the world in Mirabel, allocating final assembly to avoid any future duty, as it did during the 2017 Boeing trade complaint that prompted the partnership in the first place. Pratt & Whitney Canada and Bell, as subsidiaries of US groups, can move value between plants if required. The companies with least flexibility are the smaller Quebec machine shops and composites specialists, which is why Aéro Montréal has lobbied both governments to keep aerospace out of the tariff war.

The larger trade risk is indirect. If the CUSMA annual reviews that began after the United States declined renewal in July 2026 bring new US-content rules, the mixed Canadian-US supply chain for engines and landing gear would face compliance costs it has never had to bear. The Kurums analysis of the 2026 CUSMA review sets out the scenarios.

What can founders and investors learn from Montreal’s aerospace cluster?

The first lesson is that clusters are built on anchors that can survive each other’s cycles. Montreal’s strength is not any single company but the fact that engines, helicopters, airliners, simulators and landing gear answer to different customers; when Bombardier’s commercial programme failed, CAE, Pratt & Whitney Canada and the A220 kept the supplier base alive. Founders in any industrial region should ask which customers’ cycles are uncorrelated with their own.

The second is that ownership structures can be engineered to keep a champion local. The Héroux-Devtek deal paired a US buyer with CDPQ and FTQ debt, a headquarters commitment and an R&D pledge, a template that Quebec has used repeatedly since the Bombardier-Airbus transaction. Investors in Canadian mid-caps should expect that pattern, not a bidding war, when a strategic asset comes up for sale.

The third is that management changes should be read through the accounting changes that accompany them. CAE’s new leadership restated adjusted metrics to exclude acquired-intangible amortisation at the same time as it launched a transformation programme; the restated numbers make the fiscal 2030 targets look more achievable. Neither is improper, but the two should be assessed together. Readers tracking Canada’s other defence-linked industrial stories can turn to the Algoma and Stelco steel article, where naval shipbuilding has become a lifeline for an Ontario mill.

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