Global Eagle looks abroad for new aviation business

Satellite connectivity provider Global Eagle Entertainment on April 2 detailed three nearly complete international connectivity deals with airlines in Europe and Asia that have the potential to increase its number of connected aircraft by a third.
SpaceNews.com

            WASHINGTON — Satellite connectivity provider Global Eagle Entertainment on April 2 detailed three nearly complete international connectivity deals with airlines in Europe and Asia that have the potential to increase its number of connected aircraft by a third.
Global Eagle executives said that two of those customers already have its offline inflight entertainment systems installed, making them prime candidates for upselling satellite Wi-Fi.
Having filed late financial documents for 2016 and averted a Nasdaq delisting threat that made prospective customers second-guess signing contracts, executives told investors to expect new revenue as the company capitalizes on network investments made over the past two years.
Europe, India and Southeast Asia
Speaking to investors April 2, Josh Marks, Global Eagle’s new CEO promoted from the company’s connectivity division, said Global Eagle’s satellite network has “nearly tripled” in size following the mid-2016 acquisition of land and maritime connectivity company EMC, and is poised to support new customers, notably international airlines in Europe and Asia.
“Our content relationships provide a foundation to cross sell our connectivity as we do business with more than 220 scheduled airlines,” he said.
Marks said Global Eagle has a memorandum of understanding (MoU) with inflight entertainment customer Jet Airways in India, in anticipation of new Indian regulations allowing connectivity on domestic flights. Jet Airways has Global Eagle equipment installed on around 70 aircraft, which Marks said are upgradable to support connectivity once authorized, and that the MoU adds another 81 aircraft.
Marks said he anticipates India will finalize the new regulations “within the next quarter,” opening up the market there to Global Eagle.
“We will work together with Jet Airways to deploy inflight connectivity as soon as the regulatory approvals are in place,” he said.
Marks said once India stands up its authorization process, Global Eagle and Jet Airways will only need to install antennas and protective radomes. Those installations can take place overnight, he said, when fewer aircraft are in service.
Marks said an airline in Southeast Asia that is also an offline content customer signed a letter of intent to add connectivity on its fleet. He did not disclose the name of the airline, but said the arrangement “validates our strategy to integrate solutions and cross sell our media, advertising, e-commerce and connectivity services.”
A third airline, this one in Europe, is expected to launch service during the third quarter of this year, he said. The European airline will use high-throughput capacity on Intelsat’s EpicNG constellation and modems from Hughes to deliver more than 400 Mbps to planes, he said.
Global Eagle executives said the total number of new planes from the three deals exceeds 300. As of Dec. 31, the company counted 892 aircraft using its inflight connectivity services.
Marks said aviation comprises 45 percent of Global Eagle’s connectivity business, with maritime and land accounting for the rest. He said Global Eagle connects around 1,800 government locations by satellite as well as roughly 2,000 enterprise sites for businesses and organizations.
Financial performance
Global Eagle reported rising revenue and improved EBITDA, or earnings before interest, taxes, depreciation and amortization, for 2017, but a net loss of $357 million on revenue of $619 million. In an April 2 filing to the U.S. Securities and Exchange Commission, Global Eagle blamed the deepening loss on higher full-year interest expenses and fees for auditing and professional services related to its delayed 2016 audit.
Global Eagle also reported $184 million in non-cash impairment charges, citing weaker than expected financial results in maritime and land connectivity because of delayed equipment installs and EMC merger difficulties in the first months of last year.
Contributing to maritime troubles was a negative contract change with a telco partner of Wireless Maritime Services (WMS), a cellular roaming joint venture Global Eagle has with U.S. satellite and mobile network operator AT&T.
“The WMS management team is working to remedy this relationship and offset the revenue and margin impacts with other meaningful growth initiatives,” Marks said.
Jeff Leddy, Global Eagle’s executive chairman, said WMS lost $5 to 6 million in revenue. In its SEC filing, Global Eagle said it recorded an impairment charge of $16.7 million on WMS because of the lost roaming partner and doesn’t expect to recover that revenue “causing us to reduce our financial projections for the WMS business for 2018 and beyond.”
SpaceNews.com

Source: Global Eagle looks abroad for new aviation business