In-flight connectivity provider Gogo has agreed to sell its commercial aviation business to bankrupt satellite company Intelsat for $400 million in cash.
Gogo provides both air-to-ground and 2Ku-branded satellite-based airborne Wi-Fi services to a number of carriers including Delta Air Lines. Following the transaction, Gogo will provide Intelsat with exclusive access to its air-to-ground services in North America for 10 years.
Intelsat says the deal will combine its next-generation high-throughput satellites with Gogo’s 2Ku antenna to “uniquely position Intelsat to deliver more cost-effective and advanced commercial aviation broadband connectivity services”.
The transaction has been approved by a US bankruptcy court and is expected to close before the end of the first quarter of 2021. Intelsat will fund the acquisition using existing debtor-in-possession financing and cash on hand.
“Consumer demand for in-flight connectivity is expected to grow at a double-digit rate over the next decade, notwithstanding the impact of Covid-19,” states Intelsat chief executive Stephen Spengler. “The addition of Gogo’s commercial aviation business provides compelling strategic value for our stakeholders and makes strong commercial sense.”
Gogo chief executive Oakleigh Thorne says the deal “will create the leading vertically-integrated IFC business in the world, with the additional resources and scale to support continued growth and innovation as demand for commercial air travel recovers”.
Gogo will remain a public company and will use the proceeds of the transaction to improve its net debt position and focus on growing its business aviation operation.