UPDATED: USPTO dismisses Gogo’s patent challenge of SmartSky

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As SmartSky Networks pursues further protection of its intellectual protection (IP) in the US courts, the company has announced the resolution of one such action.

According to a statement, SmartSky ‘has summarily defeated industry incumbent Gogo’s challenge brought before the US Patent & Trademark Office (USPTO) nearly six months ago, proving SmartSky’s longstanding position that its ‘947 patent, which covers some of the most essential features of a 5G air-to-ground (ATG) network, like beamforming and seamless cell tower handoffs, was and shall remain valid.’

“Gogo has been proven unequivocally wrong in its challenge. We continue to believe they will have great difficulty commercialising their future 5G network without infringing on SmartSky’s expansive intellectual property portfolio,” said SmartSky Chairman and CEO Haynes Griffin. “Gogo has said many times in the past that our IP didn’t matter and wasn’t valid. The fact that Gogo bothered to challenge this patent clearly indicates that our IP does in fact matter. Moreover, the fact that the USPTO ruled in SmartSky’s favour based only on a subset of SmartSky’s opening arguments reinforces the strength of this patent since it was likely targeted due to a combination of its relevance and Gogo’s perception of their own likelihood of success. Furthermore, this ruling reaffirms the strength of SmartSky’s entire portfolio. Now everyone can know that Gogo’s assertions have been thoroughly debunked.”

“We understand that the importance of our portfolio may dictate further challenges, and we remain poised to defend both the portfolio and the intellectual property it protects,” added SmartSky President Ryan Stone.

In April 2020, Gogo challenged one (No. 9,312,947) of SmartSky’s now more than 180 patents supporting its in-deployment, next generation ATG network with 5G technologies. SmartSky had three months to respond, which it did, and the USPTO then had three months to determine whether Gogo’s challenge was worth further review.

“The market leader tried to undercut SmartSky, but justice has been served and the little guy has won this battle,” Stone said. “We are an innovation driven company and have developed key enabling technologies to transform connectivity in aviation. The USPTO ruling rightfully affirms the intellectual property protection SmartSky has earned on just one of the many patents we’ve developed critical to advancing in-flight connectivity.”

In response, Gogo issued the following comment:

“We disagree with the PTO’s decision not to review the 947 patent,” said Sergio Aguirre, president of Gogo Business Aviation. “To be clear, Gogo reiterates our strong belief that we are not infringing any valid patent held by SmartSky. Furthermore, neither the PTO’s decision nor SmartSky’s patent portfolio in any way impairs our ability to continue to successfully expand, to launch Gogo 5G or to enhance our position in the business aviation market. Today, our systems are flying on more than 5,550 business jets, including more than 1,000 AVANCE L5 systems and nearly 450 L3 systems providing connectivity to business aircraft of all types and sizes.”

Aguirre continued, “We are committed to continuing to set the standard for in-flight connectivity in business aviation as we progress toward the launch of Gogo 5G and further enhance the scale and profitability of our Business Aviation segment.”

Gogo to sell its commercial aviation business to Intelsat for US$400 million

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The Gogo Board of Directors has approved the transaction. Intelsat expects to finance the transaction utilising cash on hand and borrowings under its US$1 billion debtor-in-possession credit facility and has obtained support from key economic stakeholders, as well as approval from the US Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to complete the acquisition. The transaction, which is expected to close before the end of the first quarter 2021, remains subject to customary closing conditions and certain regulatory approvals.

“Following a competitive strategic review process, we’re confident this transaction unlocks the full value of the CA business for shareholders,” said Oakleigh Thorne, Gogo’s President and CEO. “Combining CA, the leading inflight connectivity provider, with Intelsat, the world’s largest global satellite operator, 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.”

“With shared values and a clear commitment to working with the CA team to grow the business, we are confident Intelsat is the right partner. I am extremely grateful for the CA team’s efforts – particularly over the past few months. Today’s announcement is a testament to the strength of the business they have built,” Thorne said.

Gogo, which will remain a public company, will use the proceeds from the transaction to improve its net debt position and continue to invest in growth opportunities such as Gogo 5G. With greater financial flexibility, including a lower cost of capital over time, the new Gogo will be better positioned to enhance the scale and profitability of its Business Aviation (BA) segment, which is uniquely well-positioned in an attractive and underpenetrated market. 

“This transaction creates a stronger and more focused Gogo, with the singular strategic imperative of serving the business aviation market with the best inflight connectivity and entertainment products in the world,” Thorne said. “The BA market continues its sharp recovery and strong demand growth trajectory, and our BA segment is exceptionally well-positioned to drive long-term value creation in that industry.”

As part of the transaction, Gogo will enter into a ten-year network services agreement under which Intelsat will have exclusive access to Gogo ATG services for the CA market in North America, subject to minimum revenue guarantees of $177.5 million.

Intelsat intends to operate the CA business as an independent business unit, led by current CA President John Wade. The CA business will remain based in Chicago.

BDT & Company served as primary financial advisor to Gogo, J.P. Morgan and Morgan Stanley & Co. LLC served as financial co-advisors, and Debevoise & Plimpton LLP served as legal advisor.

Gogo HQ - external skysline

Gogo mulling sale of commercial aviation division as revenues bottom out

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Gogo HQ - external skysline

Gogo has announced its financial results for the quarter ended 30 June 2020 with contrasting fortunes for its commercial and business aviation segments.

Speaking to analysts, Oakleigh Thorne, Gogo’s President and CEO said that green shoots were starting to emerge. “We’re seeing a really solid bounce back in our business aviation division, and a slower recovery, but a recovery nonetheless in our commercial aviation business.”

Overall, the company reported a net loss of US$86.0 million, with consolidated revenues down 55% from the same time last year, as air travel demand collapsed around the world.
In pre-COVID times, Gogo was averaging 37 million passengers a month on Gogo equipped aircraft. That fell to 1.9 million (95% reduction) in April. It has since climbed to 7.1 million in June.

Its North American Commercial Aviation market is showing signs of a recovery. Pre-COVID, Gogo was averaging 125,000 sessions a day, which then collapsed 91% to 11,000 sessions a day in April. It started coming back with 15,000 a day in May and is now all the way up to 40,000 a day for 32% of pre-COVID levels in August. Pre-COVID, North American sales averaged just under $1 million per day. So far for August this is now returning more than $300,000 a day.

The quarter ended with 2,455 aircraft online, generating 1,800 active sales per day (73% of its North American fleet). Thorne believes that North American airlines will retire about 230 older Gogo installed fleet over the coming year.

Pre-COVID, its Rest of World (RoW)fleet was running at 11 million passengers per month before collapsing to 480,000 or 95% in the month of April. RoW aircraft online actually grew in the quarter, [up 9] to 842, and up 151 from prior year. Due to retirements and bankruptcies, Gogo expects roughly 100 of its current RoW fleet to be installed over the next year, with 105 of its backlog at risk due to bankruptcies.

Thorne reaffirmed that Gogo was still actively discussing the sale of its Commercial Aviation business, with several parties expressing interest during the quarter. “We are really proud of the commercial aviation team and the tremendous capabilities they’ve built, and think it will have a bright future as part of a larger, more fully integrated entity.”

More jobs go at Gogo as COVID-19 continues to bite

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Gogo has announced the loss of a further 143 fulltime positions as it continues to be hit by the effects of COVID-19 on the demand for commercial aviation connectivity services.

Most of the job losses, the total of which represent approximately 14% of the Gogo’s overall workforce will come from its Commercial Aviation business and take effect on 14 August.

“As the pandemic continues to impact commercial airline travel, we are taking additional actions as part of our comprehensive 16-lever strategy to reduce costs. Based on our current expectations of the scope and timing of a recovery in the industry and our Commercial Aviation business, reducing our workforce has become a necessary step. We do not take this action lightly, but we believe it is critical in our efforts to preserve our financial flexibility, while maintaining the quality of our service and relationships with our customers,” said Oakleigh Thorne, Gogo’s President and CEO.

In keeping with the previously announced 16-lever plan to reduce costs, Gogo will continue to pursue non-personnel cost-savings levers, including renegotiating terms with suppliers, delaying aircraft equipment installations, deferring purchases of capital equipment, reducing marketing and travel expenses, and eliminating non-essential spend.

American Airlines rolls out new in-flight Wi-Fi portal

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American Airlines has begun the phased launch of a new in-flight Wi-Fi portal that provides a unified entertainment and connectivity experience.

The portal simplifies the sign-on process across the airline’s domestic network.

Customers can use their AAdvantage credentials and stored credit card information to purchase flight passes for internet access on aircraft equipped with Gogo and Viasat internet services. If customers don’t have an AAdvantage account and prefer not to sign up for one, they can continue to purchase individual flight passes as a guest.

Passengers can continue using their Gogo Wi-Fi subscription on Gogo and Viasat flights.

American also plans to introduce the American Airlines Wi-Fi Subscription Plan. More details on this transition will be shared in the future.

Gogo loses IFC exclusivity agreement with Delta

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Delta is to amend its 2Ku In-Flight Connectivity Services Agreement with Gogo.

The Amendment provides for the early expiration of the 2Ku Agreement on a fleet-by-fleet  staggered schedule beginning in November of 2020 with Delta’s A321neos and running through July of 2022, concluding with A350-900 and A330-900 aircraft.

According to a statement by Oakleigh Thorne, Gogo President and CEO: “Though we do not relish the idea of having a competitor join us at Delta, this amendment gives us time to complete our 2Ka offering and add capacity to our 2Ku network and will enable us to compete effectively for the fleets in question.

“We are also very pleased to see Delta’s continued focus on providing free Wi-fi despite the impact of COVID-19 and view that as a positive for the in-flight connectivity industry as it will drive demand.

“We look forward to continuing to work with Delta to drive its vision.

Fleet Type                      Fleet Expiration Date

A321neo                                     11/1/2020
A321-200                                   2/31/2020
737-900ER                                12/31/2020
A220-300                                  12/31/2020
757-200                                      3/1/2021
737-800                                      4/1/2021
A320-200                                   4/1/2021
A319-100                                    4/1/2021
757-300                                      10/1/2021
A220-100                                   10/1/2021
737-700                                      10/1/2021
A330-900                                   7/1/2022
A350-900                                   7/1/2022

A Gogo 2Ku installation takes place on an aircraft

Gogo sees room for optimism despite recent losses

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A Gogo 2Ku installation takes place on an aircraft

Gogo’s losses have continued with the announcement of a net loss of US$84.8 million driven largely by the impact COVID-19, for First Quarter 2020.

Its business segments enjoyed mixed financial fortunes.

According to Oakleigh Thorne, Gogo’s President and CEO, “We saw significant impact on our business aviation flights with April average flights per day down 78% versus prior year and a decrease of 90% from prior year at the low point on April 12th.

“Because of the dramatic reduction in flights, many aircraft owners, parked their aircraft in the mid March-April timeframe. And approximately 30% of our 5,700 ATG accounts took some action to reduce their spending with Gogo, including 940 account suspensions and more than 750 service plan downgrades.”

Total revenue for business aviation increased to $70.9 million, up 1% from Q1 2019, driven by 8% service revenue growth offset by a decline in equipment revenue.

Service revenue increased to $57.7 million, up 8% from Q1 2019, driven by a 7% increase in ATG units online and a more than 2% increase in average monthly service revenue per ATG unit online.

Equipment revenue decreased to $13.2 million, down 24% from Q1 2019, due to lower ATG and satellite unit shipments.

In April, Gogo’s commercial aviation segment’s flight counts were down 73% versus prior year. Because there were very few passengers on those planes, session counts were down 91% and sales were down 66%. “The reason sales are not down as much as sessions because we have subscription plans and monthly revenue guarantees from some airlines,” Thorne said.

In North America, total revenue for commercial aviation decreased to $80.1 million, down 17% from Q1 2019, while for the rest of the world (RoW) revenue increased to $33.4 million, up 1% from Q1 2019.

Service revenues in both markets decreased, but was felt more sharply in North America with the full impact of American Airlines switching to the airline-directed model, the deinstallation of Gogo equipment from certain American Airlines aircraft during 2018 and the first half of 2019, and the recognition of product development-related revenue from one of our airline partners in the first quarter of 2019.

Equipment revenues in both markets also increased due primarily to more installations under the airline-directed model.

Across both markets, aircraft online increased to 3,313 as of 31 March 2020, due to an increase in 2Ku and ATG aircraft partially offset by the previously planned removal of older mainline ATG aircraft from airlines’ operating fleets.

“We started the year well ahead of plan, but Commercial Aviation demand fell sharply in March due to COVID-19 and has deteriorated further in Q2,” said Thorne. “There has also been a slowdown in new activations and an increase in account suspensions in our Business Aviation segment, which we expect will negatively impact BA revenue in Q2.”

“The Gogo team responded quickly to COVID-19 with actions to reduce costs, maintain our strong global franchise and ensure our long-term financial viability,” Thorne said. “I think we are well positioned to get through this crisis and am extremely proud of the efforts and sacrifices of our Gogo team in these difficult times.”

In a Q1 2020 earnings conference call, Thorne stated that “Only now in May do we see some green shoots with a big increase in BA [Business aviation] flights per day, and encouraging increases in CA [Commercial aviation] passenger traffic and daily sales.”

“In BA the green shoots are more pronounced, with average daily flights last week up more than 200% from the low point in mid-April and up a little more than 60% over the April average. We’re also starting to see suspended accounts reactivated with 218 reactivations as of last Friday or 23% reactivation rates. We see these reactivations really accelerating and accelerated a lot late last week, and we expect that to continue.”

Looking ahead, Thorne confirmed that Gogo was in talks with its satellite partners to reduce costs as it reduced capacity to satisfy demand

“Generally, they’ve been very cooperative as they value our future business once the pandemic has passed,” said Thorne who added that the company was close to completing documentation on terms with more than half of its satellite partners and are very close to reaching terms with most of the rest. “We’ll obviously favour partners in the future who help us today,” he pointedly said.

In addition, Gogo is delaying installations for the rest of the year as well as delaying purchases, which has required extensive negotiations with suppliers where it had pre-existing orders.

Gogo challenges validity of SmartSky patent

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Gogo Business Aviation has submitted a petition to the US Patent and Trademark Office requesting a re-examination of US Patent No. 9312947 (“the ‘947 patent”) granted to SmartSky Networks, LLC, to determine the validity of the patent’s claims.

“We strongly believe that the ‘947 patent granted to SmartSky is not valid,” said Sergio Aguirre, president Gogo Business Aviation. “We have submitted evidence of published materials clearly showing that well before SmartSky asserts to have invented the concepts in the ‘947 patent, others had conceived of the claimed subject matter. Further, we believe there are many of SmartSky’s patents that are not valid. This is only one of many patents we could have challenged in a patent review.”

SmartSky plans to roll out its air-to-ground network later this year. The network takes advantage of patented spectrum reuse, advanced beamforming technologies and 60 MHz of spectrum for significantly enhanced connectivity.

US Patent No. 9312947 was originally filled in April 2013, and granted in April 2016. It relates to the terrestrial based high-speed data communications mesh network.

Phenom 300E interior

Phenom 300E receives certification boost

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Phenom 300E interior

The Phenom 300E from Embraer has been granted Type Certificate by ANAC (National Civil Aviation Agency of Brazil), EASA (European Union Aviation Safety Agency) and the FAA (Federal Aviation Administration). The new Phenom 300E is the most enhanced version of the Phenom 300 series, which was the most delivered business jet series in the 2010s.

The new Phenom 300E has avionics upgrades and enhancements that lower cabin noise levels.

“The triple-certification by ANAC, EASA and the FAA reaffirms the position of the Phenom 300 series as the best light jet ever made, offering the ultimate experience in business aviation,” said Michael Amalfitano, President & CEO, Embraer Executive Jets. “Phenom 300E owners can be assured of the jet’s performance, with our ongoing commitment to unparalleled technology, safety and comfort.”

In the cockpit, pilot and co-pilot seat tracking has been increased almost 40%, providing additional legroom. The cockpit enables single-pilot operation and offers the advanced Prodigy Touch Flight Deck, based on the acclaimed Garmin 3000 avionics suite. The avionics enhance situational awareness with clear information about speed, altitude, fuel, engine performance and other flight parameters. Additionally, the Phenom 300E offers 4G connectivity via Gogo AVANCE L5.

Passengers can enjoy the best cabin altitude in the category (6,600 ft at FL450) along with a generously-sized baggage compartment. Along with Embraer’s iconic airstair and oversized windows, the 17-ft-2-in-long Oval Lite cabin features new enhancements that reduce cabin noise, plus the already significant head room and aisle space for truly exceptional in-flight comfort. First created for the Praetor 600, the optional Bossa Nova Edition interior is now available in the Phenom 300E.

The cabin design also includes a cutting-edge “backbone of technology” with adjustable lighting, touchscreen monitors and patented flush gaspers. Multiple zones of personalisation and the nice HD by Lufthansa Technik, an advanced cabin control system that offers portable device integration and wireless audio/video streaming, further add to the sophisticated interior.