In-flight connectivity provider,
) signed a technical services agreement with the aerospace
The Boeing Co.
) in view of the prospect of installing Gogo in-flight
connectivity technology in Boeing's aircraft. Shares of Gogo
rallied more than 10% during the early trading hours yesterday on
the news to end at a modest $19.56.
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With this agreement, Boeing will initiate evaluating Gogo's suite
of technology solutions on Boeing commercial aircraft. Gogo
expects to wrap up its line-fit evaluations for its 9.8 Mbps
ATG-4 in-flight Web access technology in 2015, and for its
satellite offerings in 2016.
The industry leader of in-flight Wi-Fi, Gogo has developed an
extensive business through agreements with airlines to retrofit
in-service aircraft with in-flight Wi-Fi connectivity and
wireless in-flight entertainment (IFE) technology. This in-flight
Internet provider already holds contracts with Aeromexico,
American Airlines, Air Canada, AirTran Airways, Alaska Airlines,
Delta Air Lines, Japan Airlines, United Airlines, US Airways and
Recently, it announced plans to kit out the entire North American
fleet of Air Canada with Wi-Fi connection. The agreement also
covers future type-testing of Gogo satellite solutions for Wi-Fi
on international flights. The trials are expected to take place
Gogo also announced a partnership with Japan Airlines (JAL) to
provide Gogo Vision service on the latter's domestic fleet. The
new offering will allow JAL passengers to have free access to
both Japanese as well as JAL's original content, including anime,
sports and music.
With rapidly increasing air travel and fierce competition in the
space, air carriers are providing sophisticated entertainment
options to passengers on board. In-flight connectivity is
becoming common thereby boosting the business of the likes of
Apart from in-flight Wi-Fi where Gogo already has a dominant
position, it is all set to launch texting and calling programs as
well as on-demand entertainment systems. Again, the company is
transitioning from its air-to-ground network to a satellite
connectivity system that will boost Internet speed six times
However, we are cautious of Gogo's high debt burden. Its
long-term debt escalated to $235.6 million as of Dec 31, 2013,
from $131.5 million in the year-ago period.
Gogo currently holds a Zacks Rank #3 (Hold). Stocks that have
been performing well and are worth considering in the space
Meru Networks, Inc.
), both carrying a Zacks Rank #2 (Buy).