Global Eagle will benefit from Boeing’s MAX return
April 21, 2020
By Chris Forrester
Following news of its financial plight, Global Eagle has now issued further financial guidance for the rest of this calendar year saying that a key development will be the return to operations of Boeing’s troubled 737 MAX aircraft in mid-year with Global Eagle technology fitted for Southwest Airlines, Poland’s LOT and flydubai taking delivery of MAX aircraft.
Additional aircraft commitments from Turkish Airlines and Air France “will fuel In-Flight communications margin recovery” stated Global Eagle.
The company reminded market analysts that as the lockdown from Coronavirus ends “We will exit Covid-19 with strong backlog across the business, [with] Boeing MAX online and transformation activities completed”.
Those “transformations” include the renegotiation of satellite bandwidth contracts but also discussions with Hollywood studios for lower media and content fees.
Global Eagle is also undertaking a strategic review of its Maritime, Energy and Government (MEG) division and may sell all or part of the division. A similar review is taking place on its Cellular roaming business.
Josh Marks, CEO, told analysts that the travel industry had never seen concurrent challenges like what we see now with Coronavirus on top of the Boeing 737 MAX grounding. “Last year, we mitigated the impact of the MAX, which reduced our service revenue. And now we are building on our cost control experience from last year to shift capacity in our network and conserve cash.”
“While we expect Coronavirus to impact our cruise revenue through the summer, MEG’s long-term potential remains compelling. As we respond to Coronavirus, we can shift capacity between airlines, cruises, yachts, relief organisations, government agencies and even military operations,” he added.
As at December 31st 2019 Global Eagle had 1028 aircraft carrying its equipment. Average revenue per aircraft during 2019 was steady at approximately $120,000 per year per aircraft. At year-end, Global Eagle had 60 cruise ships with only connectivity, 56 cruise ships with both connectivity and television services and 176 ships with only television services.