Global Eagle Entertainment (GEE) has announced its financial results for the fourth quarter and full year ended December 31, 2017, recording a revenue of $160m in Q4, but a net loss of $134.4m.
For the 2017 fiscal year, GEE recorded revenues of $619m and a net loss of $357.1m, primarily due to “non-cash impairment charges”.
The company also announced that Searchlight Capital Partners has completed the funding of its previously-announced investment in Global Eagle.
Jeff Leddy, GEE’s Executive Chairman, said Global Eagle had an improved finish to the year.
“Revenue and Adjusted EBITDA both grew on a year-over-year basis in the fourth quarter of 2017. The foundation we have built over the past year is beginning to drive measurable improvements in results,” Leddy said.
“Our new world-class leadership team, improved operational execution and continued innovation, along with Searchlight’s investment in our company, position us well for future success.”
Josh Marks, GEE’s Entertainment’s EVP of Connectivity, said Aviation represents about 45% of the company’s total connectivity revenue.
“Our focus has been to strengthen our relationship with our largest customers – Southwest and Norwegian Air Shuttle – while winning new contracts that demonstrate profitable growth,” Marks said.
“Our substantial capacity investment in our high-throughput satellite (HTS) transition is paying off with continued Southwest fleet growth on both 737NG and Boeing 737 MAX aircraft.
“Overall, aviation connectivity revenue grew around 5% last year versus 2016, mostly due to mutually-agreed contract changes with Southwest and Norwegian.”
He said GEE expects double-digit revenue growth in aviation connectivity due to expansion of existing customers and new customers coming online in the second half of the year.
“It’s important to recognise that Southwest is still the world’s largest single fleet with satellite connectivity and there are real operational challenges to providing satellite-based inflight connectivity at this scale and density that we have successfully addressed,” Marks said.
“This sets us up to win other customers who have the same operational profile and large fleet challenges. New bandwidth has certainly improved Southwest’s quality of passenger experience.
“However, we have also used our proprietary technology that materially reduces our bandwidth requirement, avoiding millions of dollars in cost. With HTS coming online, we are rolling out another step change in Southwest performance by midyear.”
Marks said its Norwegian fleet continues to expand with double-digit aircraft installations during the first quarter.
“We’re also building out our European network for our previously-disclosed new European airline. Our commercial programme with that new airline is well under way, and we expect to launch service in the third quarter of this year.
“They will install our new three-axis antenna along with our new Hughes modem that delivers 400 megabits plus per aircraft.
“We’ll use Intelsat’s HTS network as the backbone for this new European customer. With this new customer, plus Norwegian Air Shuttle and LOT Polish, we expect to be the largest provider of satellite-based connectivity to single-aisle aircraft in Europe and we’re designing our network accordingly.”
Marks said GEE is building on its strong foundation in North America and Europe and focused on advancing its leadership position in new emerging markets.
“We are not trying to be all things to all airlines. Our expertise lies in single-aisle fleets that operate within specific geographies where the challenge is scaling the user experience,” he said.
“To serve hundreds of aircraft in a specific region, we integrate capacity from different capacity operators and deploy the best technology for each customer requirement.
“There are many benefits to our approach. First, we drive efficient network utilisation and our network has redundancy; second, revenue potential is higher because single-aisle aircraft operate multiple flights per day and each flight brings hundreds of potential customers; third, take rates are generally higher on short-haul flights; and fourth, live television is popular.
“So our focus is profitable growth in each region we serve, being disciplined about what we pursue.”
Marks also announced an MoU that expands GEE’s relationship with Jet Airways in preparation for connectivity on domestic flights in India.
GEE’s equipment is currently installed on about 70 Jet Airways Boeing 737 aircraft. Wireless entertainment is now active and Marks said its systems are upgradable when inflight connectivity is authorised by the Indian government.
Under the new MoU, Jet Airways expects to add an additional 81 Boeing 737 MAX aircraft to GEE’s relationship for a total of more than 160 aircraft in India when delivered.
“We’ll work together with Jet Airways to deploy inflight connectivity as soon as the regulatory approvals are in place,” Marks said. “This solution leverages our in-flight entertainment capabilities as we’re the leading distributor of Indian language content to bridge Jet Airways to a fully-connected experience.
“The Indian government continues to progress inflight connectivity regulatory approval, and we expect to activate it with Jet later this year,” he said.
“Secondly, we focused on Southeast Asia as a developing inflight connectivity market. And we are pleased to announce that a major Southeast Asian airline has signed a letter of intent with Global Eagle to deploy our connectivity system on their Boeing 737 and Airbus A330 fleet.
“This customer is a long-standing Global Eagle content service partner and our new connectivity programme validates our strategy to integrate solutions and cross sell our media, advertising, e-commerce and connectivity services.
“Once installed, this should cement Global Eagle as the leading high-speed connectivity partner for single-aisle fleets in Asia Pacific,” Marks said.