Oxford Aviation

[Landerico Benson]

CAEOxford, part of CAE Inc., is an ab initio flight training network. It provides integrated aviation training and resourcing services. Professional airline pilots have been trained at the Oxford Aviation Academy (OAA) flight school since 1961.

OAA operates 125 training aircraft, 64 flight simulators, and 10 training centers, delivering a portfolio of aviation training courses. OAA's 3 ab initio airline pilot training[1] schools have trained more than 26,000 professional pilots over the past 50 years. OAA's seven training centers offer approved airline pilot, cabin crew[2] and maintenance engineer[3] training on a wide range of aircraft types including Boeing, Airbus, Bombardier, BAE Systems, and Embraer.

The Oxford Aviation Academy includes the former Oxford Aviation Training, a commercial pilot training school based at London Oxford Airport in the United Kingdom; Falcon Field in Arizona, United States; the former SAS Flight Academy; the former GECAT and the former BAE Systems Woodford, United Kingdom Training Centre, all of which are majority owned by STAR Capital Partners of London with a minority stake of less than 20% retained by GE Commercial Aviation Services.

The Airline Pilot Programme First Officer course is a full-time, integrated Civil Aviation Authority / European Union Aviation Safety Agency (CAA/EASA) course leading to the award of a 'Frozen' (becoming unfrozen when the candidate has completed 1,500 hours in a multi-pilot environment) airline transport pilot licence (ATPL).

The Oxford Flying Club was opened by the mayor of Oxford in 1939. However, restrictions placed on civil aviation during the Second World War curtailed its activities, and the airfield operated as RAF Kidlington for the duration of hostilities. The club reopened in 1947, renamed to the Oxford Aeroplane Club. During the 1950s, it gradually increased its fleet and, by 1960, had become a flying school geared to the training of professional pilots.

In 1961, the flying school's parent company, Oxford Aviation, merged with the Pressed Steel Company to become British Executive Air Services Ltd. (BEAS).[4] Dedicated ground school buildings and student residential accommodation were provided on site, and the first fully integrated Commercial Pilot's Licence (CPL) and instrument rating (IR) courses began in May 1962.

In 1963, the BEAS Flying Training Division was renamed Oxford Air Training School. Since then, over twenty thousand trained commercial pilots and aircraft engineers have graduated from the school.[5] The school changed its name to Oxford Aviation Training (OAT) in the 1990s.

On June 19, 2007, OAT's parent company, BBA Aviation, now Signature Aviation, sold OAT to GCAT Flight Academy (formerly General Electric Commercial Aviation Training, part of GE Aviation and SAS Flight Academy, part of Scandinavian Airlines System) for $63 million (32 million). The deal was backed by GCAT Flight Academy's majority shareholder, STAR Capital Partners, an independent venture capital fund.

In early February 2008, GCAT Flight Academy changed its registered name to Oxford Aviation Academy Ltd. OAT's branding and logo adorning the training center at Oxford and Goodyear Airports were replaced, with the new logo bearing the title 'Oxford Aviation Academy'. The insignia on the tailplanes of its Piper PA-28 Warrior and Piper PA-34 Seneca aircraft were also replaced with the new logo design. The new logo also appeared at the 8 locations formerly named GCAT Flight Academy, including those in Scandinavia and Hong Kong that GCAT purchased from SAS Flight Academy and the Woodford Training Centre, purchased from BAE Systems. These changes were a result of both GCAT Flight Academy and Oxford Aviation Training being re-branded as Oxford Aviation Academy.

The undoubted economic and social benefits of aviation are clear, with the growth of the sector being important for all countries, developed and developing. However, these benefits also come with an environmental cost. For aviation to grow sustainably, it is vital that the industry balances the advantages of growth in air travel with the responsibility to pursue climate change action. Aviation: Benefits Beyond Borders also looks at the industry's environmental progress in reducing its ecological impact and the climate targets that the sector is pursuing in the short-, medium-, and long-term.

CAE Oxford Aviation Academy is the largest ab initio flight training network in the world with world-class flight schools in seven locations including Mesa, AZ. Drawing upon over 75 years of pilot training expertise, CAE Oxford Aviation Academy Cadet Pilot Training Programs provide focused ab initio training to aspiring pilots across the globe. The range of programs includes CPL, ATPL and MPL training routes, all of which combine premier ground school courses with high quality flying instruction delivered in accordance with national aviation authority requirements.

Two key methods come to the forefront for addressing the challenge of decarbonizing aviation. Firstly, decarbonizing the fuel itself offers a solution without requiring structural change in how aircraft operate and fly today. Secondly, innovation in the means of propulsion could pave the way for aviation to shift from carbon-based fuels to hydrogen combustion or even entirely non-combustion methods like electricity.

Battery electric propulsion provides higher system efficiencies. Yet, it also poses a multitude of issues for commercial aviation. The primary challenge lies in their relatively low specific energy. In the foreseeable future, this type of propulsion will likely be suitable for light-payload and limited-range aircraft.

Hydrogen-based propulsion can be utilized in aircraft through two distinct methods: firstly, via hydrogen combustion, and secondly, through the use of fuel cells. However, widespread adoption of these aircraft and the development of their necessary infrastructure will inevitably take time. Hydrogen-powered flight is unlikely to serve as the primary means to achieving carbon neutrality by the mid-21st century. This accomplishment is more likely to be attributed to Sustainable Aviation Fuels (SAFs) and further efficiency enhancements.

Given that 80+ per cent of life cycle emissions are released at the combustion phase of the aviation fuel. Lower Carbon Aviation Fuels (LCAFs) encompass a diverse array of innovative technologies and processes aimed at curbing GHG emissions in the production phase of aviation fuel, which translates to GHG emissions reductions comparable in effect to efficiency gains that were only seen in the 1970s when the Boeing 747 was introduced with its HBR turbofan engines.

SAF can be generated through various pathways, with hydrogen expected to play a significant role in eSAF production. Nevertheless, hydrogen is vital in the processing and refining of most SAF pathways, and the expansion of the SAF value chain is anticipated to be intricately connected to the development of decarbonized and renewable hydrogen.

"We are very excited about this acquisition as it enables us to offer our customers more locations and additional training capacity as well as a new service for pilot and maintenance crew sourcing. We have greatly enhanced CAE's industry-leading position with the addition of two of the industry's strongest brands in Ab-Initio aviation training and crew sourcing: Oxford Aviation Academy and Parc Aviation," said Marc Parent, CAE's President and CEO. "Civil aerospace market fundamentals are strong and we are increasing our position at an opportune time. With this acquisition, CAE responds to market demand with an increased footprint and a complete end-to-end solution for commercial aviation."

Oxford Aviation Academy (OAA) had revenues of approximately C$280 million during CAE's fiscal year 2012 and the purchase price represents approximately 9 times OAA's EBITDA during the same period. The acquisition will be accretive to CAE's earnings in fiscal year 2014.

CAE will host a conference call and live webcast (the webcast will be accompanied with slides) to discuss the acquisition today at 13:00 p.m. ET. The call is intended for financial analysts and institutional investors. Participants can listen to the conference by dialling 1-877-586-3392 or + 1-416-981-9024. The webcast will accessible on www.cae.com and www.gowebcasting.com/3346.

CAE is a global leader in modelling, simulation and training for civil aviation and defence. The company employs close to 8,000 people at more than 100 sites and training locations in approximately 30 countries. CAE offers civil aviation, military, and helicopter training services in more than 45 locations worldwide and trains approximately 100,000 crewmembers yearly. In addition, the CAE Oxford Aviation Academy offers training to aspiring pilot cadets in 12 CAE-operated flight schools. CAE's business is diversified, ranging from the sale of simulation products to providing comprehensive services such as training and aviation services, professional services, in-service support and crew sourcing. The company applies simulation expertise and operational experience to help customers enhance safety, improve efficiency, maintain readiness and solve challenging problems. CAE is now leveraging its simulation capabilities in new markets such as healthcare and mining. www.cae.com

Certain statements made in this news release, including, but not limited to, statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any non-recurring or other special items or events that are announced or completed after the date of this news release, including mergers, acquisitions, or other business combinations and divestitures.

You will find more information about the risks and uncertainties associated with our business in the MD&A section of our annual report and annual information form for the year ended March 31, 2011. These documents have been filed with the Canadian securities commissions and are available on our website (www.cae.com), on SEDAR (www.sedar.com) and a free copy is available upon request to CAE. They have also been filed with the U.S. Securities and Exchange Commission under Form 40-F and are available on EDGAR (www.sec.gov). The forward-looking statements contained in this news release represent our expectations as of May 16, 2012 and, accordingly, are subject to change after this date. We do not update or revise forward-looking information even if new information becomes available unless legislation requires us to do so. You should not place undue reliance on forward-looking statements.

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