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Gogo updates investors on latest 5G delay

Aircraft maintenance backlog also affecting wireless use

A shortage of replacement engines, parts, and maintenance personnel has grounded many business jets, and that, along with a manufacturing problem that has again delayed arrival of a critical chip needed to activate Gogo’s 5G broadband service, put a dent in Gogo Inc.’s bottom line, the CEO reported on an earnings call, though quarterly revenue was still up 6 percent.

Gogo cited maintenance delays keeping "scores" of aircraft grounded for months as a primary contributor to a downturn in active subscriptions to its wireless service, while a software problem, still being worked out, again delayed the arrival of 5G service. Photo by Chris Rose.

The company released its second-quarter earnings report August 7, highlighting the 6-percent increase in total revenue for the quarter, and an 8-percent increase in service revenue (up to $79.1 million), a record achieved despite coinciding with a record number of service suspensions during the period. CEO Oakleigh Thorne told investors on the earnings call that Gogo’s two-year surge of investments in new technology, including the delayed 5G broadband service and the forthcoming Gogo Galileo global broadband service, are expected to drive significant growth—in 2025.

Meanwhile, the maintenance bottleneck has created headwinds as business jets sit idle waiting for comprehensive maintenance. Thorne said shortages affect “scores of aircraft” awaiting replacement engines and parts. Alarmed by the uptick, Gogo staff called around to inquire how quickly a C-check could be booked. The answer they got was during the second quarter of 2024.

“This perfect storm is leaving aircraft stranded on tarmacs across the country,” Thorne said. “Needless to say, when the aircraft is stuck on the ground the customer usually decides they don’t need to pay for internet.”

Thorne said the company contacted the owners of 197 aircraft that had not flown in at least 45 days and determined that “none had gone to a competitor.”

Thorne said 92 percent of the customers who suspended service have come back online within 210 days, another positive indicator that the effect of the maintenance bottlenecks will be temporary.

A second delay of the key chip at the heart of Gogo’s much-anticipated 5G network is the “most disappointing news of the year,” Thorne said, explaining the root cause of the latest delay was traced to defective software on a common chip installed on the same circuit board as the 5G chip, though not the actual 5G chip. The vendor is still working on a fix.

“While this is very disappointing, one has to understand that 5G chips are difficult to design and build because of the dramatic increases in speed and densification of transistors on the chip surface to enable those speeds,” Thorne said. The company took some risk in its approach to enabling 5G, but the expected rewards include air-to-ground speeds increasing by a factor of up to 10 times, to a mean of 25 megabits per second, and a peak of 75 to 80 Mbps. Gogo offers a “one-box” solution for airborne 5G broadband that reduces installation cost and complexity. New equipment has been designed with form factor matching that of legacy devices, and the company is offering an upgrade incentive for customers who install the required equipment (box and antenna) in 2024, ahead of the 5G network's activation: a free replacement box to swap in when 5G service becomes available.

“We’re excited to bring Gogo 5G to market and believe it’s the perfect product for midsized jets on down that fly North American missions that want great speed at a better value than competitive satellite products,” Thorne said. The Galileo product aims to penetrate the market of 14,000 business jets registered outside of North America, as well as North American aircraft that frequently travel overseas. Customers with Gogo Avance systems installed will need only to replace the fixed antenna with a steerable antenna, and the associated cabling, to be equipped to activate Galileo. “We have a lot of tailwinds that should drive performance in the future,” Thorne said.

Jim Moore
Jim Moore
Managing Editor-Digital Media
Digital Media Managing Editor Jim Moore joined AOPA in 2011 and is an instrument-rated private pilot, as well as a certificated remote pilot, who enjoys competition aerobatics and flying drones.
Topics: Technology, Avionics, Aircraft Modifications

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