Inflight connectivity provider Gogo is considering a sale, splitting up the company or other exit plans, and has been approached with a “number of inquiries in the past few weeks,” top executives said in a July 13 teleconference.

The news came as the executives unveiled a major overhaul of the Chicago company, called Gogo 2020, including cutting 30% of the workforce over the next two years—including 55 positions this month—and changing its business model, such as no longer subsidizing equipment installation for airline customers.

“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,” Gogo CEO Oakleigh Thorne said. “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.”

Thorne said strategic exit opportunities include splitting the company into segments that serve commercial aviation and business aviation end-markets. He also noted the private equity investor community is interested in driving consolidating in the inflight entertainment and connectivity market. But he declined to discuss these or any outside merger and acquisition pitches the company is considering. “The board has not made a decision … at this time,” he said.

Gogo 2020 comes after the company had to suspend 2018 financial guidance and changed its leadership, with Thorne moving into the CEO office. “One of the issues for this company in the past has been a lack of focus,” Thorne said. Along those lines, the new business plan lists several operational and financial goals, including:

•       Reducing total operating spend in Gogo’s commercial aviation 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 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;

•       Targeting free cash flow break-even for 2020 and targeting “significant” annual pretax growth each year, reaching over $200 million in 2022.

Michael Bruno/Aviation Week michael.bruno@aviationweek.com