Gogo, the in-flight Internet provider, has found a buyer for its commercial aviation business,media reported. Intelsat, the world’s second-largest satellite revenue operator, has agreed to buy Gogo’s Wi-Fi business for $400 million in cash. This seems unlikely, mainly because Intelsat filed for bankruptcy protection in May. Intelsat said bankruptcy was seen as a way for the company to start paying off nearly $15bn of debt while allowing itself to participate in the Federal Communications Commission’s spectrum clean-up programme.
For now, the FCC is cleaning up the C-band (4-8 GHz) to make room for 5G users. Intelsat, which is involved in the program, made nearly $5 billion by selling its current radio-wave licenses. It is understood that the company has about 50 satellites, as well as a satellite called Galaxy-30, which is scheduled to be launched this summer on an Ariane 5 rocket.
Intelsat said it had obtained approval from the U.S. Bankruptcy Court in Richmond, Virginia, to complete the acquisition, which is expected to be completed by the end of the first quarter of 2021.
The two companies said their commercial aviation operations would remain independent and based in Chicago. “This transaction will create a stronger, more focused Gogo with the sole strategic mission of serving the commercial aviation market with the world’s best in-flight connectivity and entertainment products,” Oakleigh Thorne, President and CEO of Gogo, said in a statement. “
The deal represents a huge shift for Gogo, which pioneered in-flight networking. But like other aviation industries, Gogo is struggling because of the continuing epidemic of the new crown virus.
Chicago-based Gogo provides air connectivity to major airlines such as Delta Air Lines, United Airlines and Alaska. The company lost $86 million on revenue of $96 million in the second quarter of 2020. In addition, its daily visits to the North American market fell 91 per cent, from 125,000 before the outbreak to just 11,000 in April, although the company said daily visits had rebounded to about 40,000 as of August.
But to cut costs, the company laid off about 600 employees in April, slashed executive pay and laid off another 143 in July, most of them in the company’s commercial aviation division. Gogo has yet to receive about $230 million in funding, despite applying for the government’s new Crown Virus Assistance, Relief and Economic Security Act.
Over the past few years, Gogo has been developing satellite-based technology to ease the load on its tight air-to-ground network while helping to keep up with its vertically integrated competitors. In addition, the company is developing a 5G network, which is expected to be launched in 2021.