Gogo to transform business model with launch of ‘Gogo 2020’

posted on 13th July 2018 by Omar

Gogo Inc., today announced that it has completed a comprehensive analysis of its business and is implementing an Integrated Business Plan (“IBP”) designed to improve the Company’s operational and financial performance.

The IBP, branded as “Gogo 2020”, transforms Gogo’s business model and is intended to significantly reduce its cost structure, improve quality, drive revenue, streamline business processes and prudently strengthen its balance sheet.

Oakleigh Thorne, President and CEO of Gogo, said, “The initiatives we are executing under our Integrated Business Plan demonstrate our commitment to taking aggressive action to position Gogo for sustainable value creation.

Gogo 2020 represents a new era for Gogo with a significantly reduced cost structure, much lower capital expenditures, and a streamlined and standardized approach to meeting the needs of our customers with improved quality and service.

As we prioritize resources to strengthen the resiliency of our model, we remain focused on accomplishing our objectives without sacrificing our long-term growth opportunities and will continue to evaluate strategic options to drive revenue, monetize assets and realize the significant value of our business.”

The plan includes:

  • Targeting Free Cash Flow break-even for the full year 2020;
  • Targeting significant annual EBITDA growth each year in our plan, reaching over $200 million in 2022;
  • Continuing to build on the significant improvement in 2Ku performance metrics, including availability of over 97% in June, by enhancing product and service quality;
  • Maintain cash capex reduction in 2018 with further material reductions in 2019;
  • Materially reducing upfront equipment subsidies for airline contracts;
  • Reducing total operating spend in Gogo’s Commercial Aviation “CA” business (excluding satellite costs) by nearly 20% by the end of 2020;
  • Reducing total cash burn in 2019 by over $100 million from expected 2018 cash burn and by a further $100 million in 2020;
  • Reviewing multiple options to address our outstanding convertible debt before it becomes current in March of 2019;
  • Renewing focus on third-party payer revenue streams to better monetize existing connected aircraft;
  • Focusing on improving the range of user experiences;
  • Reviewing a range of attractive strategic alternatives, including opportunities suggested by various strategic and financial parties, with the goal of maximizing shareholder value.