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Monday, November 11, 2013

Gogo Raises 2013 Guidance, Eyes International Expansion

Woodrow Bellamy III

Gogo is raising its 2013 high-end outlook to $325 million and is looking to expand its network to more foreign carriers, following a big third quarter earnings report, the Itasca, Ill.-based in-flight connectivity provider said Monday. 
 
During the third quarter, total revenue increased to $85.4 million, up 48 percent from the same period a year ago, despite a segment loss for North America commercial aviation of $1.6 million, which was still a 62 percent decrease from the third quarter of 2012. Gogo's segment profit for business aviation increased 70 percent to $14.6 million during the same period. 
 
Until the third quarter, Gogo was mostly a domestic in-flight connectivity provider for North American-based commercial airlines and business aviation operators. In October the company signed its first foreign-based carrier contract to provide its Ku-satellite network to the entire domestic fleet of Japan Airlines (JAL) beginning in the summer of 2014. 
 
"We had a great third quarter, evidenced by strong financial results and new technology and product announcements. This, combined with our recently announced partnership with Japan Airlines, further solidifies our leadership position in the global in-flight connectivity industry," said Michael Small, president and CEO of Gogo. 
 
Business aviation has been the best market for Gogo, with its in-flight connectivity network currently installed on more than 6,500 business jets, a number that could be much higher. During an earnings call on Monday, Small indicated the company is targeting another 20,000 business jets in the North American market. 
 
Commercially, Small said major airlines will begin to make connectivity decisions "over the next few years." Currently 200 aircraft are equipped with in-flight broadband connectivity out of an estimated 13,000 non-U.S. commercial aircraft. 
 
Gogo also continued to invest in leasing more satellite capacity for its global satellite network during the third quarter, which will be available to Delta Air Lines, JAL and "future airline partners flying international routes," according to a statement. 
 
"We expect to start generating service revenue from Japan Airlines domestic aircraft and Delta Air Lines international aircraft in 2014," Gogo said. 
 
The fourth quarter has already seen a new product announcement from Gogo as well. Last week, the new Gogo Text and Talk, a smartphone app that allows passengers to send and receive in-flight real-time text messages, was unveiled. The application is an extension of a GSM or CDMA cellular network and enables a smart phone to use the Gogo in-flight Wi-Fi system as a roaming land-based network where they can send and receive text massages. 
 
The in-flight texting service is already operational with several business aviation customers, and Gogo is looking to expand it to both domestic and international airlines. 
 

 

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