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In-flight WiFi demand drives Gogo revenue up 35% [Chicago Tribune :: ](Chicago Tribune (IL) Via Acquire Media NewsEdge) May 12--Gogo Inc., an Itasca-based aircraft Internet and communications service provider,Monday morning reported record quarterly revenue for the three months ending March 31. Revenue was up 35 percent from the same quarter last year at $95.7 million. Gogo stock was up 78 cents, or nearly 7 percent in pre-market trading Monday morning. Analysts had expected Gogo to drop between 24 and 26 cents per share. Gogo beat that expectation with a loss of 20 cents per share. Gogo's stock had a wide range over the past year, peaking at $35.77 and dropping as low as $9.71. Year-to-date, Gogo's stock has fallen 52 percent. Gogo issued its initial public offering in June of last year with a share price of $17. Its stock will open at $11.93 Monday. Last month, AT&T and Honeywell International announced they will team up to provide a competing service to Gogo's in the United States by 2015. The day after the announcement, Gogo shares lost more than a quarter of their value. AT&T plans to use its 4G LTE network and Honeywell will provide hardware to supply broadband service to business and commercial flights, the companies said. Honeywell said it estimates the service would provide the company $1 billion in revenue in the first decade. Gogo uses a similar cellular network currently for 80 percent of its commercial airline clients, which include Delta Air Lines and American Airlines. When it launched its air-to-ground network in 2008, it provided bandwidth of 3 megabits per second for a plane. The in-flight Internet company is in the process of upgrading its clients to 10 megabits per second. So far this year, 500 commercial aircraft have switched over and Gogo CEO Mike Small said 800 commercial planes should have the faster bandwidth speed by the end of the year. Gogo is also working on satellite solutions for Wi-Fi that would accommodate international flights over large bodies of water. Once those systems are launched next year, Gogo will be able to provide 70 megabits per second for a plane. "And then as new satellites get launched, we'll go over 100 megabits per second," Small said in an interview last week. Gogo provides broadband service to about 2,000 commercial jets, more than 70 percent of planes currently flying with in-flight Internet capabilities and about half of all planes in the air in the U.S. It has also installed equipment on more than 2,000 business jets in the U.S., of a total 20,000. Small said he thinks AT&T will have a tough time breaking into the market. Almost all commercial aircraft in the U.S. are under contract, he said. Gogo's contracts are for 10 years, through 2020. "This is our turf, we've been here for 20 years," Small said of Gogo, which started out in 1991 as Aircell. "There are 40,000 planes in the world, roughly 20,000 commercial, 20,000 business jets. That"s our universe, that's a big number for us. (But) 40,000 is a very little number for AT&T or the big companies and with all the specialized knowledge and experience that it takes, we think it's actually going to be a real uphill battle for a big company to do well in this business, particularly when it"s not their bread and butter." The in-flight Internet industry is appealing for several reasons. Airline customers tend to be wealthier and willing to pay for connectivity, Small said. "You also have an upscale demographic on planes, just because they have the ability to buy a ticket, and business travelers. People want access to that audience," Small said. "They see it as a transformative new industry and (as) a tremendous branding opportunity in front of those captive, undistracted upscale travelers." He said he sees a day when nearly all passengers on a plane use Internet. Airline workers will be able to use the network to rebook connecting flights with passengers while they're in the air, identify safety issues and track marketing data in real-time. "You will not be able to run an airline without connectivity in the future to your planes," Small said. [email protected] Follow @EllenJeanHirst Follow @chibreakingbiz ___ (c)2014 the Chicago Tribune Visit the Chicago Tribune at www.chicagotribune.com Distributed by MCT Information Services |