In-flight internet provider GoGo Business Aviation is once again delaying the launch of its 5G network for the United States and Canada.
The service was originally scheduled to be rolled out in the fourth quarter of 2022, but was pushed back to mid-2023 due to backlogs in computer chip testing. Gogo now expects the chip’s design flaws to push its release further back to mid-2024.
The design error involves a non-5G component of the chip that was designed by a third-party subcontractor of Gogo’s 5G solution provider. The company expects the project to stay within budget, but warned investors that delays could reduce 2023 revenue by $7 million, about 1.5% of this year’s expected revenue. Approximately $13 million in operating and capital costs will be deferred from 2023 to 2024.
Gogo plans to provide more details about the delay and its impact during its second quarter earnings call on August 7th.
“While we are disappointed in this delay, we are confident that Gogo 5G offers better performance and better value than competing air-to-ground and GEO. [geostationary earth orbit] satellite solution,” said Sergio Aguirre, president and chief operating officer of Gogo.
Gogo’s air-to-ground 5G network is expected to deliver an average of 25 megabits per second (Mbps), with peak speeds in the 75-80 Mbps range. Built specifically for business aviation after the company sold its commercial aviation business to Intelsat for $400 million in 2020, the system combines high throughput and low latency to support video conferencing, cloud computing, social media and more. Enables services with large amounts of data.
The company’s top dealers in 2022 were Bombardier, Duncan Aviation, Gulfstream Aerospace, Textron Aviation and West Star Aviation.
Gogo’s core product is Avance. It is a platform solution that integrates in-flight technology from multiple providers into one integrated system to provide in-flight entertainment and connectivity (IFEC) to passengers. The system’s architecture also allows Gogo to quickly add new networks, deploy new services over the air, and provide in-flight remote support.
Avance has two options for customers. Avance L3 connects aircraft to the company’s lowest-latency service, the Gogo Biz 3G network. A more comprehensive option, Avance L5 offers Gogo Biz 4G service and will deliver 5G once Gogo’s network is up and running.
In March 2022, the Avance system completed 1 million business aviation flights. Gogo also continues to expand its coverage area, completing his 5G network of 150 locations in the United States in October and expanding into Canada in April.
Another important milestone for Gogo was the FAA’s approval of the Supplemental Type Certification Plan and approval of the 5G antenna component manufacturer, allowing it to begin deliveries to customers. Now, buyers can purchase the antenna and harness needed to take advantage of Gogo’s 5G network. All that’s left is the tip.
In parallel, the company is partnering with satellite network provider OneWeb to develop a Low Earth Orbit (LEO) global broadband network. The network, designed to connect aircraft of all sizes around the world, is expected to come online in late 2024. To support this, Gogo added to his May his Galileo product line, a more powerful system with his two antennas that allows aircraft to connect more easily. .
Even before news of the postponement broke, it was already a mixed year for Gogo. In the first quarter, he reported revenue of $98.6 million, an increase of 6% compared to the first quarter of 2022, and a record service revenue. The total number of aircraft online reached his 7,046 aircraft, an increase of 28% year-on-year, while Avance’s shipments were down 43% quarter-on-quarter to his 223 aircraft.
The company’s adjusted earnings before taxes, depreciation, and amortization (EBITDA) totaled $39.7 million in the first quarter, down 7% on an annual basis. However, the company managed to pay down $100 million in debt and reported cash on hand of $20 million, an increase of $8.8 million from the same period last year.
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