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Gogo Inc. tumbled the most in more than three months after American Airlines Group Inc. split an order between the company and ViaSat Inc. for in-flight, satellite based internet service.
The carrier selected ViaSat to provide service on its coming Boeing Co. 737 Max fleet of about 100 jets while choosing Gogo’s new 2Ku service for almost 140 planes. While Gogo will continue to provide ground-based ATG connectivity, American Airlines has an option to remove service from as many 550 aircraft.
About 150 of those planes will be retired and American hasn’t decided which provider it will use to upgrade the remaining 400 to satellite-based service, said Casey Norton, a spokesman for the carrier.
Gogo fell as much as 14 percent to $9.48 in New York, the biggest intraday decline since Feb. 16.
American, the world’s largest airline, is keen to have “multiple suppliers” for broadband Wi-Fi as a way to equip planes as quickly as possible, Norton said.
Speedy internet in the air — to match the bandwidth people are accustomed to on the ground — is quickly becoming a standard amenity for airlines. Passengers want to stream video and music and chat through social media without the frustrating glitches common to constrained, ground-based systems. The race by airlines has increased the rivalry among in-flight Wi-Fi providers.
American’s adoption of the 2Ku technology is important for Gogo, which was at risk of losing the airline as a customer. Gogo has been slow to roll out the new platform as it awaits regulatory certification for various aircraft. Executives at the Chicago-based company have said adoption of its 2Ku system is critical for the company’s success and have expressed confidence that airlines will find it superior to other options.
©2016 Bloomberg L.P.
This article was written by Justin Bachman and Mary Schlangenstein from Bloomberg and was legally licensed through the NewsCred publisher network.