Airplane Wi-Fi provider looks at IPO
Gogo aims to raise $100 million in an offering to help it expand operations.
If you accessed Wi-Fi on a flight in North America recently, chances are you used technology from Gogo.The company is the main provider of on-board Wi-Fi in the U.S., and needs more money to expand its business. Gogo has filed paperwork to raise $100 million in an initial public offering, and will trade under the ticker symbol GOGO.
Gogo handles in-flight Internet for nine of the 10 North American airlines that offer the service, including Delta Air (DAL), Alaska Airlines (ALK), US Airways (LCC) and American Airlines, owned by AMR (AMR). It's on a trial basis with United Airlines (UAL).
Those are some pretty major partners. Gogo has equipped about 1,300 commercial planes -- more than about 85% of the Internet-enabled aircraft in North America.
But even though Gogo is the dominant provider here, it's still in a niche business. The company estimates that only 16% of commercial aircraft in North America (and only 6% of commercial aircraft worldwide) have Wi-Fi at this point. So the potential for growth is there.
Airplanes have been somewhat reluctant to equip a plane with Wi-Fi. For one thing, it's fairly expensive -- about $100,000, according to USA Today -- with little return. Fewer than 10% of fliers actually use it, industry experts estimate.
But passenger demand for Wi-Fi will only increase, particularly as more fliers bring iPads and smartphones on board. It's a way to wring another fee out of passengers -- one that people are actually willing to pay for. We may get to the point where some passengers are only choosing flights that have Wi-Fi available.
Gogo is planning to get more airline partners, drive user adoption and expand internationally.
For the first nine months of the year, it has brought in $114 million in revenue -- surpassing the $95 million in received for all of 2010. It barely eked out a profit of $2.4 million for the first nine months of this year, but that's better than the hundreds of millions of dollars in losses it posted for the last three years.
How quickly we take it for granted. I remember those bad old days when you were lucky if a flight had some beat up wrinkled magazines in the pouch in front of you. And when the stylish self confident and well groomed lady casually pushed a high tech cart filled with gastric delights from sky chef down the isle your only worry was if someone else sneezed all over that wrinkled magazine with an uncanny number of advertisements for CIA recruiting efforts on the inner cover.
The last few? I felt lucky to be shoved in a slot reminiscent of a toilet on a submarine. And not trampled to death by a bleating, mooing, farting stampede of blank eyed candidates for a crappy low budget remake of thriller. The only entertainment being contemplations of imploring Helga the she bitch of flight 13 to pry me out of the corner because my foot went to sleep and my leg would not distend properly.
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