The partnership announced yesterday between Montreal-based CAE and Swedish defense giant Saab represents more than just another corporate handshake across the Atlantic. It signals a shift in how military training technology is being developed and deployed globally, with Canadian innovation at its center.
CAE, long known for its flight simulators and training systems, has secured an agreement to provide training services and devices for Saab’s growing portfolio of military platforms. While financial terms weren’t disclosed, industry analysts suggest this could generate hundreds of millions in revenue over the next decade as global defense spending continues its upward trajectory.
“This agreement positions CAE’s training solutions at the forefront of some of the most sophisticated defense platforms in the world,” said Marc Parent, CAE’s President and CEO, during the virtual announcement. “It represents not just business growth, but Canadian technology making allied forces more effective and safer.”
The timing couldn’t be more strategic. Defense budgets across NATO countries have been climbing since 2022, with training systems increasingly prioritized as militaries seek to maintain readiness without the enormous costs of live exercises. CAE’s simulation technologies allow military personnel to practice complex scenarios without burning jet fuel or risking equipment damage.
What makes this partnership particularly noteworthy is its global scope. Unlike previous agreements that targeted specific regions, this collaboration covers Saab’s entire range of aircraft, naval, and land systems sold to over 40 countries worldwide. CAE will develop tailored training solutions for each platform, including the Gripen fighter jet program that continues to win contracts across Europe and Asia.
Behind the corporate announcement lies a story about changing defense priorities. Modern military equipment has become so complex that training has evolved from a secondary consideration to a critical component of defense readiness. A fighter pilot today needs to master systems that would have seemed like science fiction a generation ago.
“The days when you could train someone on physical equipment alone are long gone,” explains Dr. Anita Sharma, defense technology analyst at RBC Capital Markets. “The computational demands of modern warfare mean simulation isn’t just cheaper—it’s often the only practical way to train for certain scenarios.”
For the Canadian economy, this agreement offers a glimpse of how high-value manufacturing can thrive even in an era of global competition. CAE employs over 10,000 people globally, with roughly a third based in Canada, primarily in skilled engineering and software development roles.
The company’s journey from its founding in 1947 to becoming a global leader in simulation technology demonstrates how specialized technical knowledge can create durable competitive advantages. While consumer electronics manufacturing has largely shifted to Asia, CAE’s complex simulators—which can cost upwards of $15 million each—remain firmly anchored in North America.
CAE’s stock jumped 3.7% on news of the agreement, reflecting investor confidence that the company’s strategy of focusing on recurring revenue from training services rather than one-time equipment sales continues to pay dividends. This model has helped CAE weather previous downturns in the aviation industry, including the pandemic period when commercial pilot training collapsed.
The Saab deal also represents a subtle shift in Canada’s approach to defense industrial policy. Rather than competing head-on with major weapons manufacturers, Canadian companies like CAE have carved out specialized niches where they can achieve global leadership. Training systems require constant updates as threats evolve, creating long-term customer relationships that extend decades beyond initial equipment purchases.
“What we’re seeing is a smart approach to the defense market,” said Thomas Ferguson, former procurement advisor to the Department of National Defence. “Instead of trying to build fighter jets from scratch, we’re becoming indispensable in making sure pilots can fly them effectively.”
The agreement includes provisions for joint research and development, potentially accelerating CAE’s work in artificial intelligence applications for military training. Modern simulators don’t just recreate the physical experience of operating equipment; they use AI to generate realistic scenarios and adversaries that adapt to the trainee’s actions.
For communities like Saint-Laurent, where CAE maintains significant operations, the agreement reinforces the stability of high-skill manufacturing jobs that have become increasingly rare in North American cities. The average salary at CAE exceeds $85,000, according to industry reports, generating substantial economic ripples throughout Quebec’s economy.
Not everyone views increased defense industry activity positively, of course. Peace advocacy groups have previously raised concerns about Canadian companies becoming more deeply integrated into global military supply chains. CAE has responded by highlighting that training technologies ultimately make conflicts less likely by ensuring preparedness and deterrence.
The company has also emphasized its growing civilian business, which includes training for medical professionals and energy sector workers. These diversification efforts help balance the cyclical nature of defense spending.
As Eastern Europe and Asia-Pacific nations continue to modernize their forces, CAE expects training services to represent an increasing portion of defense procurement budgets. The company estimates that for every dollar spent on major platforms like aircraft or ships, militaries now allocate approximately 30 cents to training systems—up from less than 10 cents two decades ago.
The Saab agreement positions CAE to capture a significant share of this growing market, while reinforcing Canada’s reputation as a source of sophisticated technology rather than raw materials. In a global economy where knowledge-intensive industries command premium prices, CAE’s success offers a blueprint for other Canadian manufacturers seeking to move up the value chain.
For a company founded when flight simulation meant mechanical linkages and analog dials, CAE’s evolution into virtual reality and artificial intelligence showcases Canadian adaptability in a rapidly changing technological landscape. The partnership with Saab suggests that even in the highly competitive defense market, there’s room for specialized excellence—something Montreal has been quietly delivering for decades.
