Gogo plans to accelerate installations of its in-flight broadband connectivity setups on airliners and business jets within the month, expanding its customer base and upgrading existing aircraft installations with new capabilities.
The Chicago-headquartered company has announced awards to install its new 2Ku product on 1,600 commercial airlines, more than 51% of its installed base of 3,109 in service for that connected aircraft category. Gogo’s new satellite modem technology, which the company said is capable of delivering more than 16 times of throughput than its existing modem, has entered commercial service. The company has begun shipping its Gogo 4G equipment for use on business aircraft, it said, and its next-generation aircraft-to-ground (ATG) solution is on track to be delivered in 2018.
Gogo executives discussed plans for the company's installation ramp-up after the U.S. Labor Day holiday of Sept. 4 during the briefing on second-quarter performance for financial analysts Aug. 7. They reaffirmed expectations that Gogo will install 2Ku on as many as 550 aircraft (with the low-end expectation at 250) and to increase installations beyond that level in 2018. Gogo has 2Ku service installed on nearly 250 aircraft with nine airlines around the world, its said.
With "all systems a go for an acceleration of 2Ku installs after Labor Day,” President/CEO Michael Small said, “Gogo continues to fire on all cylinders."
The 2Ku installation uses two antennas in the Ku band of 12 to 18 GHz to provide peak antenna speeds of more than 70 Mbps, according to Gogo. One of the antennas serves as the forward link, transmitting data to the aircraft, while the other serves as the return link.
Small said, “We had another excellent quarter with revenue up 17%,” to $172.8 million, compared to the quarter that ended June 30, 2016. The company's net loss increased 10% to $44.2 million from the same period last year, and adjusted earnings dropped 31%, to $9.9 million.
Gogo EVP and COO John Wade said, “One of our most significant operation achievements this year has been to reduce the 2Ku installation side to less than two days,” adding that this resulted “in significant cost savings for us, and even more importantly, enables our airline partners to keep their aircraft in service and generating revenue.”
The company also has streamlined its supplemental type certificate (STC) processes to reduce the cost of bringing new aircraft online and the time between contract awards and initial installations.
“We’ve been working aggressively to ensure we have the STCs in place to complete installations in accordance with the schedule established with our airline partners,” Wade said. “By Labor Day, we expect to have the STCs we need for over 90% of this year’s planned installations,” and by year’s end it expects to have 80% of the STCs needed to install 2Ku on aircraft.
Gogo said commercial airlines in North America had 2,791 aircraft using its products and services as of June 30, compared to 2,596 at the end of 2016's second quarter. Total revenue from those airlines rose 9%, to $101.0 million, over Q2 2016, primarily because of the higher number of aircraft online. Segment profit for commercial airlines in North America fell 13%, to $16.2 million, from the same period last year, mainly due to costs associated with launching 2Ku service and the development of Gogo’s next generation ATG offering.
Regarding commercial airlines outside of North America (what Gogo calls "the rest of the world"), number of aircraft online with its offerings increased by 69, to 318, from second quarter last year. Total quarterly revenue jumped 145%, to $14.1 million, from Q2 2016, driven primarily by higher average revenue per account and the increased number of aircraft online. The loss for this segment of Gogo’s business increased to $31.4 million from $23.3 million in Q2 2016, which the company attributed to launching 2Ku service on several new airlines and advancing programs with aircraft OEMs.