In Flight Entertainment (IFE) business Gogo says it has a near-$1 billion of contracts waiting to be fulfilled, and which stretch over the next 10 years. The contracts cover installations into existing aircraft or new planes as they leave the factory, and service revenues. Other work ongoing is the installation of new de-icing transmission radomes which better cope with freezing winter weather on aircraft.
Chicago-based Gogo’s CEO Oakleigh Thorne told analysts that it had installed its equipment onto 111 aircraft during Q2 (to June 30th) although it had also 76 de-installs (with 71 from American Airlines aircraft and where the airline had switched to rival ViaSat equipment).
The company is introducing its latest ‘L5’ version and targeting medium to large jet markets. It has shipped 460 L5 units, of which 256 have been activated and another 400 units are on order. The L5 units deliver a three-fold increase in the amount of data handled.
Gogo’s commercial aviation division for North America enjoyed a 19 per cent increase in revenues from 2809 aircraft. As to the rest of the world it is now serving 459 aircraft (up from 318 y-o-y).
Its clients include Air France (777 fleet), British Airways A380s, Cathay Pacific’s 777s, KLM’s A330 aircraft amongst others.
And it seems passengers are understanding the in-flight options available to them. For example, North American passenger take-up reached 13 per cent in Q2 (a 67 per cent growth and up from 7.8 per cent a year ago, although excluding American Airlines data). Thorne said the take-up rate had grown because of lower-cost fees and airline-sponsored free messaging promotions.
The IFE sector, which as well as Gogo included Global Eagle, Panasonic Aviation, Thales and others, is seen as being ripe for consolidation. Thorne addressed the situation, saying: “Strategic conversations in our industry are heating up, competitors are thinking about consolidation, our strategic players are thinking about how to enter the business, and private equity firms are thinking about how to act as consolidators and take advantage of the huge IFC opportunities. It’s probably no surprise that the Gogo’s received a number of strategic inquiries from financial and strategic players in the last few months. And then, as we said on our last call, our board has considered those inquires and ask management to assess them. We don’t have an update to provide on those matters today rather than to say management is assessing various opportunities as requested by our board.”