Business Context and Reporting Period
This Form 8-K filing by Gogo Inc. (the "Company") reports on a material event occurring on February 18, 2016, with the report filed on February 24, 2016. The filing details a strategic expansion of Gogo's in-flight connectivity infrastructure through a new agreement with New Skies Satellites B.V. ("SES").
Key Financial Metrics and Agreements
This filing describes a contractual agreement rather than a periodic financial report; therefore, specific revenue, profit, cash flow, or margin figures are not provided. Key financial and operational terms of the agreement include:
- Agreement Type: Service Orders for Ku-band satellite capacity under a Master Services Agreement.
- Assets Involved: SES-14 and SES-15 high throughput satellites.
- Contract Term: Ten years from the commencement of service availability.
- Payment Structure: Monthly fees for satellite service capacity.
- Capacity: Several GHz of widebeam and spotbeam capacity contracted.
- Geographic Coverage: North America (including Alaska, Hawaii, Mexico, Canada), Central and South America, the Caribbean, the North Atlantic, and North Africa.
- Launch Schedule: Satellites scheduled to launch in 2017.
Material Changes
The material change reported is the entry into definitive Service Orders with SES. This agreement expands Gogo's capacity for its 2Ku and Ku-band in-flight connectivity systems. Additionally, the agreement includes an option for Gogo to secure capacity on other satellites, specifically SES-12, which would extend coverage to Asia, the Middle East, Russia, and Australia, subject to conditions and availability.
Outlook, Risks, and Management Commentary
Management views this agreement as a step toward enhancing connectivity services, with service availability commencing after the 2017 satellite launches. The filing includes standard forward-looking statements regarding the Company's beliefs and assumptions.
Risks and Contingencies:
- Launch and Performance Risk: There is no assurance that the SES-14 and SES-15 satellites will launch as scheduled or that the service capacity will perform as expected.
- Utilization Risk: The Company cannot assure that it will be able to provide connectivity services to aircraft that fully utilize the contracted satellite capacity.
- Forward-Looking Disclaimer: Actual results may differ materially from projected results due to known and unknown risks. The Company undertakes no obligation to update these statements.
Investor Verification Checklist
- Verify the specific monthly fee amounts and total contract value, which are not disclosed in this 8-K but will be filed as exhibits to the Form 10-Q for the quarter ending March 31, 2016.
- Monitor the launch schedule for SES-14 and SES-15 satellites in 2017 for any delays.
- Review the conditions required to exercise the option for SES-12 capacity in Asia and other regions.
- Assess the Company's capital requirements to fund the monthly fees upon service commencement.