SkyAlyne and PAL Aerospace have reached an agreement for an approximately C$750 million contract covering aircraft modification, training and in-service support for the Royal Canadian Air Force’s Future Aircrew Training program.
PAL Aerospace is a subsidiary of Exchange Income Corporation, while SkyAlyne is a joint venture between CAE and KF Aerospace.
The parties expect to finalize the contract over the next several months.
Under the agreement, PAL Aerospace will modify the Royal Canadian Air Force’s CT-142Q Citadel aircraft, provide Wings Standard training for Air Combat Systems Officers and Airborne Electronic Sensor Operators, and support the fleet throughout the life of the contract.
The agreement represents a significant role for PAL Aerospace in the Future Aircrew Training program, commonly known as FAcT.
The Government of Canada awarded the 25-year FAcT contract to SkyAlyne in May 2024. The program is currently undergoing a multi-year transition before becoming the Royal Canadian Air Force’s sole initial aircrew training system.
FAcT is intended to modernize how Canada trains military pilots and other aircrew members while consolidating several existing training programs under a single framework.
SkyAlyne is responsible for providing aircraft, instructors, simulators, courseware, facilities, maintenance and other services required to prepare the next generation of Royal Canadian Air Force personnel.
PAL Aerospace’s responsibilities will focus on the CT-142Q Citadel and the personnel who use the aircraft for air combat systems and airborne electronic sensor training.
The company will complete the modifications needed to configure the aircraft for its training mission.
Missionization typically involves integrating specialized equipment, communications systems, sensors, workstations and other technologies required for a particular operational or training role.
PAL Aerospace will also provide in-service support for the CT-142Q fleet. These services are expected to include the engineering, maintenance and technical support necessary to keep the aircraft available and operating effectively throughout the program.
The training component will cover Air Combat Systems Officers and Airborne Electronic Sensor Operators.
Air Combat Systems Officers help manage tactical missions, navigation, communications and the use of onboard systems. Their work can include coordinating aircraft activity, evaluating mission information and supporting command decisions during operations.
Airborne Electronic Sensor Operators use aircraft-based sensors and electronic systems to collect, interpret and communicate information.
The roles require a combination of classroom instruction, simulation and practical training aboard specialized aircraft.
PAL Aerospace will deliver Wings Standard training, meaning the instruction required for trainees to earn their Royal Canadian Air Force occupational qualifications.
The company will now work with SkyAlyne to prepare the program’s initial operating capabilities and support the transition from the Royal Canadian Air Force’s current training structure.
Both companies said preserving operational readiness during that transition will remain a priority.
Training programs must continue producing qualified personnel while new aircraft, systems, facilities and course materials are introduced.
PAL Aerospace brings experience in aircraft engineering, modification, mission systems, training and in-service support.
The Canadian-owned aerospace and defense company works with governments, military organizations and commercial customers internationally.
Its operations are focused on intelligence, surveillance and reconnaissance services, aircraft engineering, maintenance and modification, crew resource management training and long-term program support.
The company’s ability to provide several services through one organization gives customers a single point of accountability for complex aerospace programs.
PAL Aerospace said its selection reflects the experience of its technical workforce and its history of supporting mission-critical aviation programs.
SkyAlyne was created in 2018 by CAE and KF Aerospace to compete for the Future Aircrew Training program.
CAE brings experience in flight simulation, training systems and defense technology, while KF Aerospace provides aircraft operations, maintenance, engineering and aviation training capabilities.
The joint venture assembled a wider group of Canadian aerospace and defense suppliers to support the program.
SkyAlyne said PAL Aerospace’s experience in aircraft modification, training and fleet support will be important to delivering a modern and sustainable aircrew training system.
The FAcT program is expected to prepare Royal Canadian Air Force personnel for increasingly complex operating environments.
Modern military aircrews must work with advanced sensors, communication systems, digital mission tools and large volumes of information while coordinating with aircraft and personnel across multiple domains.
Training systems must also evolve as aircraft, missions and threats change.
The program is structured as a long-term partnership intended to provide the Royal Canadian Air Force with updated training capabilities over several decades.
PAL Aerospace’s contract is expected to generate long-term work related to aircraft modifications, instruction, maintenance and technical support.
The agreement also represents a major contract for Exchange Income Corporation’s Aerospace and Aviation segment.
Exchange Income Corporation is a diversified, acquisition-focused company operating across aerospace, aviation and manufacturing.
The corporation typically acquires established businesses with experienced management teams, consistent cash flow and opportunities for organic growth.
PAL Aerospace is one of the company’s principal aerospace and defense businesses.
Exchange Income Corporation plans to provide additional information about the agreement during its second-quarter earnings conference call scheduled for August 12, 2026.
The proposed contract remains subject to final documentation and other customary requirements.
Once finalized, PAL Aerospace will work with SkyAlyne and the Royal Canadian Air Force to complete the transition, prepare the CT-142Q aircraft and establish the training and support infrastructure required for operations.
KEY QUOTES:
“PAL Aerospace is proud to be joining SkyAlyne in delivering this nationally important program for the Royal Canadian Air Force. We are excited to be chosen to make these critical contributions to the success of FAcT and deeply appreciate the trust placed in our team to evolve and provide frontline instruction to the next generation of Canadian Air Combat Systems Officers and Airborne Electronic Sensor Operators. This responsibility reflects the strength of our people, the depth of our experience, and our shared commitment to supporting Canada’s operational readiness.”
Simon Carroll, President of PAL Aerospace
“SkyAlyne is incredibly proud of the all-Canadian team that has come together to deliver the Future Aircrew Training program. We are excited to welcome PAL Aerospace more formally into that team. Their proven expertise in modification, in-service support and training will be an important part of ensuring Canada’s military pilots and aircrew have access to the best possible training solutions, today and for decades to come.”
Kevin Lemke, General Manager of SkyAlyne
