In-flight internet company Gogo is selling its commercial aviation business for $400 million, following a series of efforts the company has made to cut costs during the coronavirus pandemic.
Global satellite operator Intelsat S.A. is the buyer, Gogo said in a news release Monday.
“I’ve been preaching publicly for a long time that service providers like Gogo really need to be vertically integrated with satellite providers that they buy capacity from, and that’s what this deal does,” said Gogo President and CEO Oakleigh Thorne.
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He said talks began before the pandemic, and he was pleased to be able “to get it done despite COVID.”
The deal will leave Gogo with its business aviation unit, which serves corporate flights. Most of those employees are based in Broomfield, Colorado. Gogo’s headquarters will also move to Broomfield, Thorne said.
Employees in Gogo’s commercial airline business will become employees of Intelstat, Thorne said. Intelstat plans to keep the commercial airline business in Chicago, and operate it as an independent business unit. There are no job cuts planned.
Gogo employs 888 people, 518 of whom are in the Chicago area. Total employee count is down from more than 1,050 in early August.
During the pandemic, which has hit the airline industry particularly hard, Chicago-based Gogo furloughed 60% of its employees and laid off 14% of its staffers.
The company said in April that about 60% of its revenue comes from commercial airlines, and most of the jobs eliminated in August were in its commercial aviation business.
Passenger traffic on commercial airlines has increased since mid-April, but remained below pre-pandemic levels through July, according to Gogo’s most recent quarterly report. Gogo’s business aviation unit, however, was showing signs of recovery in June and July.
For Intelstat, the deal provides key airline relationships and consumer-facing capabilities, including Gogo’s software platform, according to a news release from the Luxembourg-based company. Gogo serves 21 commercial airlines.
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The deal, which is pending regulatory approvals, is expected to close by the end of March.
Twitter @AllyMarotti