To meet this need, on June 6 Via Sat (NASDAQ: VSAT) secured a contract to provide In-Flight Connectivity (IFC) to 100 American Airline’s (NASDAQ: AAL) new Boeing 737 MAX aircrafts. Upon securing the contract, Via Sat — which also provides in-flight Wi-Fi for JetBlue (NASDAQ: JBLU), Virgin America (NYSE: VA) and United — saw its share price surge by about 18% to US$74.01. It was also a help that the month before Via Sat announced record fourth quarter revenues and net profit of US$371.96 million and US$4.45 million, respectively. Furthermore, it managed to secure record awards of US$1.5 billion for fiscal 2016, generating a positive book-to-bill ratio.
The contract made also broke Gogo’s (NASDAQ: GOGO) stronghold on airline’s IFC businesses. Unlike Via Sat — which delivers satellite-based internet connections — Gogo is still using ground-based connectivity systems, that whenever are too many passengers logging in at the same time, the internet connection tends to slowdown. Gogo’s stock price closed down by 57.79% from a year earlier, to US9.18, following the announcement.
On the other side the world in Australia, Qantas (ASX: QAN) also announced on February 22 that it would trial run in-flight internet services to a Boeing 737 this year. The service, also delivered under a deal with Via Sat, is expected to roll out to Qantas’s domestic flights of A330s and B737s from early 2017. After the deal was announced, Qantas shares jumped 35.71% year-on-year from A$2.94 (US$2.16) to A$3.99 (US$2.93).
Over in China, GE Aviation also extended its IFC with China Eastern Airlines (HKSE: 0670) covering data analysis on the carrier’s fleet of around 270 aircraft. Gogo also signed a term sheet with Shareco Technologies to install connectivity on 50 commercial aircraft for Shareco’s airline partners, including Hainan Airlines and Beijing Capital Airlines.
In-flight internet has thus heightened the rivalry among broadband providers. The technology will prompt providers to further improve their connectivity, bringing better coverage and more bandwidth to passengers, whose expectations on how they can use the internet onboard are soaring. #MergentInc #industryreports #aviation #informationtechnology
(Currency exchange rates as of June 3, 2016)