Gogo reported its first quarterly profit in history on record service revenues in Q3 2021. And the company is not slowing down. Executives continue to push the potential for future growth opportunities, both terrestrial and satellite-based, while also still talking down competitive inroads.
Demand for business aviation connectivity is surging and we expect it to continue to surge for the next several years.– Oakleigh Thorne, Chairman and CEO of Gogo
Record service revenue of $66.2 million for the quarter continues to demonstrate the rebound in demand for connectivity in the private jet market. The company reported 6,154 aircraft online and average monthly revenue per plane of $3,264 in the quarter.
Shipments and installations of the AVANCE connectivity platform hardware continue to increase, further driving the improved revenue numbers. AVANCE delivers a broader range of services and they typically come with higher monthly subscription rates. AVANCE also will eventually serve as the prime upgrade path to the Company’s Gogo 5G network, still anticipated for activation in 2022.
The very high margin service revenue also helps drive the next steps in the company’s evolution.
CFO Barry Rowan highlighted the “unprecedented levels of strategic and financial flexibility” afforded Gogo by the revamped balance sheet and restructured debt obligations. And with the 5G development costs covered by existing cashflow, the company is ready to expand two other major considerations: Growing the connectivity platform with additional services and “to begin considering the potential timing of returning capital to shareholders.”
Pushing into LEO
With the Gogo 5G network development well underway and on track for 2022 deployment Gogo is now talking about the next steps of its product roadmap. Rather than staying on the ground, the company is ready to, once again, look at satellite connections for growth.
The current satellite expansion plans differ dramatically from the prior go in two key areas:
- Gogo will still focus only on business/private aircraft, not commercial aviation; and,
- Gogo wants to use Low Earth Orbit (LEO) satellites rather than the GEOs of yore.
While much of the conversation around the benefits of LEO focuses on lower latency and truly global (including polar) coverage, those are unlikely the most significant considerations for the business aviation community. The lower latency will help with video calls, to be sure, but even more significant is the hardware impact for installation on the aircraft.
LEO constellations should be able to derive bandwidth from a smaller, lighter antenna that consumes less power and produces less heat than for comparable performance from a GEO constellation. That’s a huge deal when the aircraft fuselage is smaller and less capable of handling the massive kit typically used for GEO services.
As for who Gogo might partner with in those efforts, don’t expect it to be Starlink. While the two other major LEO constellation players (OneWeb, Telesat) are planning a B2B/wholesaler approach to connectivity, Starlink remains focused on a fully integrated sales channel.
Gogo CEO Oakleigh Thorne believes the small size of the business aviation connectivity market relative to commercial aviation or terrestrial users should see Starlink focused elsewhere.
It is not often that a CEO focuses on how small the market is as a potential advantage, but in this case it makes some sense.
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