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Flight trainer CAE sees positive signs in China despite coronavirus turmoil

MONTREAL (Reuters) - Training specialist CAE CAE.TO said on Monday it won an order for two flight simulators from a customer in China in the past week, providing hope the aviation market is showing early signs of stabilizing despite the coronavirus pandemic damaging the industry.

Global airlines are turning to governments for aid after suspending share buybacks, cutting back flights, and grounding aircraft, as governments impose travel restrictions to halt the spread of coronavirus.

Montreal-based CAE has temporarily closed three commercial aviation training centers, is laying off 465 manufacturing workers and slashing executive salaries and capital expenditures to contain costs, chief executive Marc Parent said.

“We’re assuming a very tough period ahead,” he said during a call with investors.

CAE stock fell 14.6%, while the broader market fell 5.3%.

But Parent said CAE has not had any canceled orders for simulators and has a backlog of sales he called a “war chest” that should hold for next year.

Parent and other aviation executives say they are seeing fledgling signs of recovery from China, the country where the new coronavirus outbreak began four months ago and has so far infected more than 351,00 people and killed over 15,330, according to a Reuters tally.

“We’ve got two simulator orders from them in the past week plus one from Singapore,” Parent said.

“They’re clearly acting as if this is a temporary issue – although very grave.”

André Allard, president of pilot recruitment agency AeroPersonnel, said one Chinese carrier is actually hiring pilots, while over 400 expatriate pilots recently laid off by other airlines in China are being recalled.

Pilots, once wooed by commercial airlines with $5,000 finder fees and signing bonuses, are now being furloughed or seeing their hours slashed.

U.S. carriers have stopped classes for recently hired pilots, said aviation consultant Kit Darby.

Several carriers have tried to avoid laying off pilots, partly to avoid investing in time and costs to train them ahead of any rebound in traffic and flying.

Canada’s WestJet Airlines initially proposed laying off 691 pilots before reaching a deal through April 30 with its union to avoid layoffs, according to two internal memos seen by Reuters.

CAE expects continuing demand for recurrent training that pilots are required to do to be able to fly planes, Parent said.

Reporting By Allison Lampert. Additional reporting by Stella Qiu in Beijing; Editing by Denny Thomas, Alistair Bell and Grant McCool

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