The final few months of 2019 delivered strong numbers for inflight connectivity provider Gogo. The company saw revenues improve in the business aviation and global segments while the North American market held up pretty well. Things continued looking good into early 2020. But since the beginning of March, similar to airline demand, Gogo saw a “significant decline” in Asia followed by a “more pronounced decline” in recent days.
The first week of march saw in-air sales drop 6.7%. The second week looks to double that gap. As airlines around the globe slash capacity the number of potential wifi buying passengers will continue to drop, further pressuring cash flow for the company. CEO Oakleigh Thorne highlighted cost-cutting measures, including foregoing his 2019 bonus and renegotiating some satellite capacity contracts.
We’ll obviously be negatively impacted as airlines take planes out of service; how badly we’re hit will depend on what happens with load factors, and how long travel is impacted by the virus. We also anticipate that there could be a reduction in installations and equipment revenue as airlines cut back on capital spending.
Examining the revenue numbers and historical trends helps shed some additional light on where Gogo’s exposure is and where the carrier can expect to see the worst pain.
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