Global Eagle Entertainment announced its financial results for the first quarter ended March 31, 2019, recording revenues of $167m and a net loss of $37.6m.
The company also announced that it is considering the sale of certain businesses and assets which may include elements of its Maritime, Enterprise, and Government business as well as equity interests in joint ventures.
Global Eagle Connectivity
Its Connectivity segment revenue was up 6.2% year-over-year. Inflight connectivity installations and activations remain on track at Air France, powered by Global Eagle’s Ku-band high-throughput satellite (HTS) network.
This is the first EMEA HTS inflight connectivity network to provide consistent coverage throughout Europe, Russia, the Nordics and Scandinavia, and North Africa, and it claims is capable of delivering speeds up to 500 Mbps to each aircraft cabin.
In the first quarter of 2019, Global Eagle says it was awarded a major new connectivity programme by an existing media and content customer that will leverage its EMEA aviation network.
This program is its largest inflight connectivity award in recent years.
Global Eagle said it continues to implement its patented and patent-pending software-defined network resource management (NRM) technology.
NRM optimizes passenger traffic flow, automates network configuration and increases the efficiency of satellite links.
Its platform is now in live customer service across both airline and cruise ship applications. The platform “optimises the end-user experience, enables freemium business models, boosts traffic flow over legacy wide-beam satellites, and seamlessly fuses satellite links to enable gigabit-class data throughput”.
The company said ended the first quarter of 2019 with 26 737 MAX 8 aircraft in its fleet of connected aircraft. Due to regulatory actions beyond its control and unrelated to passenger connectivity systems, its MAX connected aircraft were grounded as of quarter-end.
Equipment deliveries to support new MAX installations continue and it forecasts at least 40 additional MAX installations to occur during 2019. As the grounding continues, we now expect that its activation schedule for 2019 will be concentrated in the fourth quarter.
It forecasts that MAX programme issues will impact second-quarter and third-quarter service revenue by approximately $3-4 million total, with about half of this impact dropping to the bottom line.
It said it is working with its airline partners and with Boeing to mitigate and reduce this impact, and to be ready when the MAX returns to service.
Connectivity revenue was driven by a continued ramp-up of Southwest and Air France inflight connectivity installations. Gross margin improved to 19.5% during the quarter, a six-per cent point increase versus the fourth quarter of 2018, driven by additional aircraft activations, repriced bandwidth contracts and cost controls.
Josh Marks, CEO of Global Eagle, said: “Our new inflight connectivity win confirms our best-in-class product offering of high-speed connectivity and connectivity-enabled content, and increases our robust pipeline of aircraft.
“Our commercial success in winning new business along with gross margin improvement is a result of our ability to leverage our world-class network and realize benefits from our 2018 investments.
“In addition, our Phase II cost savings initiatives are visible in our first quarter financials and in our significant EBITDA improvement, consistent with our goal of positive free cash flow by year-end.”
“We delivered accelerating top-line growth, gross margin improvement and operating cost reduction in the first quarter,” said Paul Rainey, CFO of Global Eagle.
“Progress on our cost controls is partially visible now and will be increasingly visible in our second and third quarter results. While we have adequate liquidity on hand to support our growth and cost actions, the business and asset divestitures we are considering would allow us to reduce leverage and focus our business.”
Global Eagle also announced that Christian Mezger has been appointed Executive Vice President and Chief Financial Officer, effective May 16, 2019. He succeeds Paul Rainey, who will remain with the company through May 31, 2019 to facilitate the transition.