Intelsat, one of the world’s biggest satellite connectivity companies, has bought Gogo in a deal worth $400 million. The announcement this week will see the formation of a valuable partnership, enabling Intelsat to offer a one-stop service to airline customers.
Gogo is sold… to Intelsat
Earlier this week, the news was announced that the Gogo sale had indeed gone through. The buyer? Satellite giant Intelsat, which is itself in bankruptcy protection in the United States.
Nevertheless, Intelsat sees this as a huge positive for its business. The deal, worth $400 million, will see the pairing of one of the world’s leading internet service providers with one of the biggest names in commercial inflight connectivity.
Intelsat’s Chief Executive Officer, Stephen Spengler, said in a statement to Simple Flying,
“Consumer demand for in-flight connectivity is expected to grow at a double-digit rate over the next decade, notwithstanding the impact of COVID-19. The addition of Gogo’s commercial aviation business provides compelling strategic value for our stakeholders and makes strong commercial sense.
“Gogo’s business is a perfect fit with Intelsat’s expansive satellite network and infrastructure due to the breadth of Gogo’s technological solutions, global reach and operational excellence.”
This vertical integration of Intelsat’s network with Gogo’s customer-facing services will allow the internet provider to offer services to airlines directly. Conversely, it will give Gogo assured capacity on the Intelsat network, something that will be of great value going forward as companies vie for a space in the networks.
Intelsat operates a fleet of some 50 satellites, with launches for more scheduled this year.
What’s Intelsat’s plan for Gogo?
The pairing of the high capacity global satellite and ground network of Intelsat with Gogo’s existing customer base and fleet of 3,000 plus equipped aircraft is a match made in heaven. It’s a rare and interesting collaboration that will see both parts of the business benefitting.
Gogo’s robust partnerships with the likes of Air Canada, Virgin Atlantic, and Delta and its proven 2Ku antenna technology will allow Intelsat to solidify its position in the market. Spengler stated,
“A priority growth objective for Intelsat is to extend our reach closer to the millions of customers who use our satellite capabilities to stay connected around the world. The addition of Gogo’s commercial aviation business is a significant step toward this goal. We are growing beyond satellite connectivity to expand into consumer-optimized managed services.”
Despite bankruptcy protection
Of course, all this comes amid the worst crisis the world of aviation and IFEC has ever had to deal with. Intelsat itself entered bankruptcy protection in mid-May, in a bid to ease the burden of a $15 billion debt load. Nevertheless, Spengler sees this as a positive thing, saying,
“We are excited to welcome the talented people of Gogo’s commercial aviation business to the Intelsat family and look forward to pairing their aviation expertise with Intelsat’s owned network capability to unlock new opportunities for growth. Our ability to execute this transaction in the midst of our financial restructuring speaks to the strength of our underlying business, our vision for the future, the commitment of key Intelsat stakeholders and the momentum that we have maintained over the past several months.”
Intelsat’s debtor-in-possession (DIP) lenders have agreed to amend the DIP credit agreement to facilitate the transaction. It is expected to close before the end of Q1 2021, subject to approvals.
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