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Gogo Aircell Plans IPO

Thu Jan 05, 2012 4:23 pm

Over the holiday period, Aircell’s Gogo inflight internet service file SEC prospectus document for an initial public stock offering.

While not listed in the filing, analyst have forecast Gogo would seek at a minimum of about $100mil in proceeds from sale of common stock.

The IPO registration makes for some interesting reading and shows the business model for inflight internet is still far from being a financial success.

While GoGo today equips about 85% of internet equipped aircraft at 10-airlines, plus large cadre of business jets and will have some 1,700 airframes under contract by end of 2012 serving a potential pool of 200million passengers annually the company has experienced some pretty massive ongoing losses to date.

2008 – Loss $122.4mil on $36.8mil revenue
2009 – Loss $142.3mil on $60.1mil rev
2010 – Loss $140.1mil on $97.3mil rev

Also shocking, is the pittance in average revenue it garners on a per passenger basis - mere $0.41 (41 cents) in the first 9-mos in 2011, while only earning a few hundred dollars monthly revenue on a per aircraft basis with rest of earnings going to airlines and 3rd parties.

A huge drag on Gogo earnings is cost of equipment, its network, sales/marking plus engineering and design expenses including cost in obtaining FAA STC aircraft certifications for its installations. 2010 operating expenses were some $171.6mil.

Full SEC filing can be found at:

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