Following on from its rival Global Eagle and its problems due to the Covid-19 virus, In-Flight broadband and connectivity supplier Gogo also announced staff cut-backs and salary reductions for senior staffers.
Gogo, which has its services on thousands of aircraft, is laying off 600 staff effective May 4th. The salary reductions will begin at 30 per cent for the CEO, then 20 per cent for the executive leadership team, and feather down from there. In addition, Gogo’s Board of Directors has agreed to reduce their compensation by 30 per cent. Certain types of employees, such as hourly workers, will not have their compensation reduced.
Approximately 60 per cent of Gogo’s revenue comes from its two commercial airline segments. Passenger traffic on commercial airlines using Gogo’s service has declined 95 percent this month compared to the prior year, resulting in a projected 60-70 per cent reduction in sales for the month of April.
The remaining 40 per cent of Gogo’s revenue comes from its business aviation segment which has seen a sharp decrease in flight activity. Additionally, since many business aircraft are flying less frequently, there has been an increase in requests for one-month account suspensions and a dramatic decrease in new plan activations for the month of April.
“The health and safety of our employees and customers is our first and most important priority, but the long-term health of our business is also a critical focus area,” said Oakleigh Thorne, president/CEO of Gogo. “In March, we announced 16 levers that we can employ to dramatically lower our costs in order to ensure our long-term viability, and we believe we are implementing the appropriate measures to accomplish that goal.”
In addition to personnel actions, the Gogo 16-lever plan includes, among other actions, renegotiating terms with suppliers, delaying aircraft equipment installations, deferring purchases of capital equipment, reducing marketing and travel expenses and eliminating non-essential spend.
Gogo also announced that it has applied for an $81 million grant and a $150 million loan under the recently enacted CARES Act. If Gogo receives US government assistance, it will modify the personnel actions announced today to comply with the terms of that assistance.