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Gogo to sell Commercial Aviation business

August 11, 2020

By Chris Forrester

In-Flight entertainment and connectivity company Gogo is being hurt by the dramatic reduction in passengers on aircraft which is the backbone of its business. It is laying off 143 full-time positions in its Commercial Aviation division, and cutting salaries for all senior staff including the CEO.

Gogo confirmed it is looking to sell its Commercial Aviation (CA) division.

“While Covid-19 has significantly impaired global commercial aviation travel and our results for the second quarter, we are encouraged by the strong recovery in business aviation as well as the beginnings of a recovery in global commercial aviation which has continued into August,” said Oakleigh Thorne, Gogo’s President/CEO. “Going forward, we are focused on maintaining the strength of our franchise and realising the value of CA through a potential sale of the division.”

Gogo has appointed bankers to advise on the sale of the division.

CA, in North America, saw revenues plummet by 72 per cent to $30 million (y-o-y) and not helped by the impact of the virus on North American air travel and to a lesser extent to the full impact of American Airlines switching to the airline-directed model and the deinstallation of Gogo equipment from certain American Airlines aircraft during 2018 and the first half of 2019, said Gogo.

CA over the rest of the world saw revenues fall 67 per cent to just $12 million (y-o-y).

Its Business Aviation (BA) division also suffered but not as much. Total revenue decreased to $54.6 million, down 23 per cent from Q2 2019, driven by declines in both service and equipment revenue caused by the negative impact of Covid-19.

The overall impact saw consolidated revenues of $96 million, a decline of 55 per cent, and hurt by the loss of passengers on both domestic and international air travel.  Gogo said “BA reportable segment profit of $27.2 million with nearly 50 per cent segment profit margin.”

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