Gogo Shares Sink After Airline Cuts Deal With Rival ViaSat
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FORT WORTH (AP) — Shares of Gogo Inc. fell 16 percent Friday on news that American Airlines picked rival ViaSat Inc. to provide Internet access on about 100 new Boeing jets and might drop Gogo on many jets that use it now.
Airline passengers have increasingly come to expect Internet service so that they can read email, browse the web and stream entertainment during flights. That has heightened the competition among broadband providers.
Gogo has relied on air-to-ground technology but is developing faster satellite-based broadband service so that passengers can stream Netflix and YouTube.
Carlsbad, California-based ViaSat said Friday that it will provide satellite-based service on the Boeing 737 Max jets that American expects to begin receiving in September 2017.
Chicago-based Gogo said in a regulatory filing it will provide satellite-based service on nearly 140 American planes and continue providing air-to-ground service on more than 400 others, mostly small regional jets.
But, Gogo added, it expects that American will exercise an option to remove Gogo's equipment on many of its larger, so-called mainline planes over the next several years.
Casey Norton, a spokesman for Fort Worth-based American, the world's largest airline, said faster satellite broadband is crucial on large planes because passengers must share the available bandwidth. He said using both ViaSat and Gogo would help the airline improve on-board Internet access across its fleet more quickly than using one provider.
Norton said American will upgrade many mainline planes to satellite broadband but has not picked a provider.
Gogo shares fell $1.78 to close at $9.29. They have lost 48 percent in 2016. ViaSat shares gained $3.17, or 4.5 percent, to $73.08 and are up 20 percent for the year.
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