Astronics has been a long-time player in the inflight internet antenna business, though not without challenges. After multiple iterations and efforts, with little success to show for the investment, the company will now exit the market.
The discontinuation of any further development of our satellite antenna product line, which has been focused on large business jets and commercial transport operating with geosynchronous satellite constellations, was the result of having a low market share and recognition that conditions have slowed as customers contemplate emerging low earth orbit constellations. – Astronics CEO Peter Gundermann
Speaking on the company’s Q2 2025 earnings call Wednesday afternoon, CEO Peter Gundermann shared that a couple of the company’s programs will be terminated, as low growth and low margin. This includes the antenna work. “We decided that the investment in developing new antennas specific to either the LEO and/or GEO market would be too risky to justify the required financial investment.”
Gundermann shared the view that Astronics’ inflight connectivity experience and capabilities are “as relevant to LEO networks as they are to GEO and to air-to-ground topologies.” For things like adapter plates and mounting solutions this should hold, though those are generally lower margin portions of the value chain.
Being able to get a solution certified, however, is a big deal. And Astronics took steps to make the company more effective on that front, acquiring Envoy Aerospace. Envoy holds an ODA from the FAA, allowing the organization to self-certify (to FAA standards, of course) new products and implementations. Gundermann sees the ODA as “a competitive differentiator, as we are often involved in aircraft retrofit programs and FAA certification is becoming a more important capability in competitive situations. Having certification authority lessens program and schedule risk for both us and our customers.”
This is not the company’s first setback in the connectivity space. The AeroSat program took off for business aviation in late 2018. That program died less than a year later, along with Intelsat 29E.
The company was also working with Phasor towards bringing that electronically steered, phased array solution for aero to market. That program officially died in early 2020. By late 2020 Astronics was all-in on a commercial antenna program. That program that is now ending.
Production Boost Boosts Profits
Despite this write-down, the company’s commercial aero business appears to be on a solid upward trajectory. The company reported record sales for the segment in Q2 and expects that momentum to continue.
New aircraft production rates remain a key driver, with Astronics components playing a significant role on the 737 MAX, 787, A320 and A350 programs. And while supply chain constraints and other challenges are keeping those numbers down, they’re better than in recent history.
Specific to the 737 MAX program, Gundermann shared that Astronics has been shipping low-to-mid 20s per month to Boeing for the past year or so. That’s now “stepping up to the low 30s.” Moreover, Gundermann says Astronics is “on a glide path to step up again to high 30s and even up to the low 40s, potentially by the end of the year, if Boeing gets permission to go there.” That will depend on the DoT permitting Boeing to increase production, something that has been capped since the Alaska Airlines 737 MAX door plug blowout incident in January 2024.
Containing Tariff Challenges
On tariffs, Astronics says the most recent announcements have provided some clarity on the impact. The company anticipates a $15-20 million hit, pending mitigation efforts it believes can halve that cost. Gundermann was also optimistic about Astronics’ ability to drive incremental pricing to help recover some of those additional costs, though also that’s not a sure thing. “[Raising prices is] what everybody wants to do. The reality is nobody wants to pay tariffs. So how it all settles out? It’s a little bit too early to tell, but looking back at the second quarter, I’m pretty happy with our continued improvement to our aerospace margins.”
A bit later in the call, when asked again about pricing power specifically with Airbus and Boeing, Gundermann noted “I think the whole world has realized that inflation has changed people’s price cost structures and reality needs to set in. So we have been successful; we continue to be successful. And I think more and more, we’re pretty happy with our price levels compared to where we were, say, a year ago.”
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