Volatus Aerospace - The Drone Game Just Changed… But How?

Data sensitivity is what's important, and Volatus does well over, I think we're close to 1.7 million kilometers of pipeline surveillance that we do every year in terms of linear inspections. We get to do things that are uniquely Canadian, everything from autonomy to Arctic operations as an Arctic nation. There's a lot of things that Canada can bring to the table, and I think that that's more what this is about.

Lyndsay Malchuk, nice to see you again. Thanks for having me.

Well, to understand Volatus, there's a couple of key parts. First of all, we present ourselves as a platform and the breadth of our capability has to do with kind of our roots. We were born as an aerospace company. We executed a roll up strategy that gave us some breadth in terms of capability and geographic footprint. And ultimately, we've established ourselves more as an aerospace platform than a collection of products and capabilities. So we have the ability to design. We're developing, our engineering department is growing continuously. We've got the ability to manufacture, which is new as of 2026. We actually stood the factory up or took the keys to the factory at the end of February. That's really in response to the defence industrial strategy and the increasing defence spending requirements. We also train. We provide training out of Canada, the U.S. and the U.K. and we operate. We're operating across Canada, through the United States and in Europe on a regular basis, flying beyond visual line of sight flights. Matter of fact, we do about 16 flights a day out closer to you in Edmonton with drones flown in and out of the Edmonton airport that are operated from Toronto. So we've got a pretty broad base capability and think of it as two parallel growth engines, meaning our industrial civil market alongside of the emerging defence market, all operating on a single platform. When we scale our capabilities or when we introduce new capabilities in our operating model, it scales across both civil industrial and defence markets.

So I think both of those are two different subjects for us that are operating again in parallel. Our industrial commercial business, as regulations evolve and our technologies, you know, drones are thought of as very small items. And if you witnessed our announcements recently, we announced a new aircraft platform we're bringing to Canada with our partners. That's a 4,000 kilogram platform that's closer to the size of a school bus for wildfire suppression and remote deliveries. These are advanced technologies that fit in our operating world. You know, we operate both piloted aircraft and helicopters, about 28 of those on top of our drone fleet. Well, the reality is where the pilot sits is the only difference between a drone and what we think of as more traditional aircraft. So drones and aircraft are the same thing to us. It's just pilots operate differently or from a different location. And the regulatory environment in them is different, although that's converging as the drones become larger and as regulators become more comfortable with the emerging technologies. So from our standpoint, they really are both emerging in parallel. Now the defence side, obviously there's a massive opportunity in defence. Volatus was not in the business of building our own drones at scale. We were building our own aircraft, aircraft such as the Canary and some of the other projects that we'd worked on on the industrial side. But what's changed is the Canadian government's commitment under the defence industrial strategy and the Build, Partner, Buy framework and ultimately their commitment to start buying Canadian, which is something that, you know, the market is still waiting to see the procurement happen. But at the end of the day, that's the thing that's caused the dramatic refocusing on Canada because there's a much fewer number of well-capitalized competitors in Canada. There's great technologies, but at the end of the day, Canada represents an immediate opportunity for us with the direction of the current government and the current defence industrial strategy.

We do. It's across Canada problems. As a matter of fact, it's becoming a global issue, but it certainly will focus on Canada for a minute. The most recent announcements that we've made around this space were actually inspired heavily by a visit we had with our Minister of Defence, David McGuinty, and General Molstad, the Commander of the Joint Forces Command for Canada. During the tour of our facility in Montreal, the Minister of Defence asked me what autonomous systems could do to help alleviate some of the problems that we're having with our forest industry. And Volatus was already well advanced in that space. The wildfire initiative with the two new aircraft that we're introducing for that, really, while we're presenting it as our wildfire intelligence and rapid response shield, the truth of the matter is, it's really, wildfire is the first use case in a general capability that has to do with dual use technologies that can be deployed for, you know, delivering 1,500 litres of fire suppressant or water to an early strike on fires, or delivering supplies to critical areas in disaster recovery, or some of our Indigenous communities, not even Indigenous communities, just northern Canadian communities, supporting our Canadians up to the north at times where they're difficult. But the key point here is, you know, at one point this summer, we literally had more than 1,000 wildfires burning in the country and less than half of the number of, or aircraft quantities, less than half the number of fires that were burning. So we didn't even have one aircraft for every fire. And that's because it's almost unpredictable, right? We've got increasingly dry conditions. We've got, the fires are bigger, they're more intense. What we've introduced is the ability to use intelligence, starting with satellites and partnerships with satellite companies to get early information on where the danger areas are, introducing persistent surveillance up close using drones and aircraft to be able to actually monitor and identify ignition faster, catch the fires in the early phase. And then the goal is to be able to deploy an autonomous aircraft that can fly day or night because that's a limitation with wildfire because the danger to the pilots and so on. But we can deploy an autonomous aircraft, hopefully with the goal of seeing the fires earlier, analysing, responding more quickly, and reducing the number of fires that are more talented and brave firefighters across country are actually fighting. Our goal is definitely to supplement and make their lives easier. There's no way to replace what they're doing right now. This is an added layer of defence for our provinces and for our nation as a whole.

Absolutely not. Lyndsay Malchuk, I would tell you the government engagement on the wildfire activities right now has been extremely encouraging, both at a federal and a provincial level. Time will tell where that goes. I think the key thing that I'd like to bring up quickly is, you know, the procurement in the defence industrial strategy. I know there's a lot of people that are disappointed, including in our industry, that procurement's not happening faster. But the reality is the Defence Investment Agency is functioning as a unit within another department. And until the legislation passes to make its own standalone ministry, which will happen after Parliament resumes this fall, and they appoint their own minister, there's only so much progress they can make. In the meantime, the Canadian Armed Forces has extraordinary engagement with industry right now, helping industry understand their challenges, while industry is demonstrating to the Canadian Armed Forces what's possible. And that leads into, most recently, we had the Drone Defence Initiative, we call it DDI, which was launched by the Joint Forces Command, General Molstad. And it's extraordinary the speed that it's moving. It was just a few weeks ago they announced the initiative. The application for five workstreams actually closes in the next 48 hours. With that, they're creating supplier arrangements to be able to accelerate procurement. This has all been developed quickly, deployed quickly. Canadian industry, including Volatus, is responding quickly. That's putting the procurement pathways in place. Volatus is participating at every possible defence. I've been personally at two defence events this week. We were in Quebec City, understanding the Arctic and the military capability and challenges in the Arctic. And then we were at Area X.O., out west of Ottawa, where we were actually engaged directly with the Minister of Defence, the Commander of Joint Forces, and the Canadian Armed Forces in general, really reviewing technologies, looking at what the possibilities are. And this is going on on a weekly basis right now. So while the public can't necessarily see the velocity of what's happening, a lot of what they're seeing in Volatus is preparing for what's coming, engaging actively with Canadian Armed Forces, with the government, with the Defence Investment Agency, and ultimately preparing for what comes next. Procurement contracts are coming. They are definitely not here yet. Any procurement that's happening at the moment in the drone industry, and I want to qualify that, specifically around drones, they're not quite there yet, but they're getting there fast.

It's not just Volatus. I want to say that right off the bat. Obviously we're here talking about Volatus, but what they're doing is changing the way they deal with industry. It's affecting, we were, I was at that event, you're talking about Red Cobalt. I was there yesterday.

It was fortunate enough that the CEO of Invest Ottawa and Area X.O. invited us there as VIPs. So I was there with our Vice President of Corporate Affairs and engaged, we were engaged most of the day with most senior defence staff. The Minister of Defence was there, key members of his staff, you know, the armed forces presence and access was extraordinary. It was an invitation event. So it was at a remote location. That's one of the development sites of Invest Ottawa. And it was an extraordinary opportunity to engage directly. What's happening right now is we're building relationships. We're creating solutions to the problems that CAF is helping us understand with technologies that we're helping them understand as an industry. And obviously for Volatus, we're deploying everything we have both to be part of that process, to build the relationships, build the capabilities that the government's going to want and to be there. The example, we've had a team working since the initial announcement of the drone defence initiative on preparing the submission, which actually goes in today for us, which will hopefully qualify Volatus in most, if not all of the work streams, which will give us accelerated access or accelerated privileged position amongst a smaller number of suppliers as the government starts their actual procurement exercises, which we expect to start, you know, the RFPs, the actual RFPs for what the government's looking for are starting to flow. We're expecting that we'll start seeing them in a material way starting in September.