Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On
The Company is issuing the following statement regarding the Amendment and related matters:
• The Amendment comes in the course of discussions between Gogo and Delta for the provision of free Wi-fi service to passengers on Delta aircraft. o The current 2Ku Agreement is a "turnkey" contract, and provides Gogo commercial control of Wi-fi offerings on certain aircraft in return for Gogo subsidizing the installation of equipment on those aircraft and paying a royalty to Delta. o In order for Delta to provide free Wi-fi services, Delta must control the commercial relationship with its passengers under an "airline directed" contract, and in turn pay directly for the provision of in-flight connectivity services. • Delta has informed Gogo that since it will be paying for Wi-fi services under the airline directed business model it is a strategic procurement imperative that it diversify its provider base in order to generate competition between providers, and that it intends to split its fleet between Gogo and a competitor. • Delta has also informed Gogo that it does not believe there is currently enough Ku satellite capacity overNorth America to meet its extensive user experience expectations for free Wi-fi service on its desired timeline. • In order to meet Delta's expansive capacity needs, Gogo has been working on a Ka solution to augment its 2Ku solution, and has made significant progress on that offering, which is expected to include a cost-effective overnight conversion from a 2Ku installation to a 2Ka installation. • The 2Ku Agreement covers 575 predominately single-aisle, mainline jets that fly routes inNorth America . Gogo also has contracts with Delta for approximately 694 additional Delta aircraft, consisting of twin aisle jets that fly international routes using Ku satellite capacity and a mix of older mainline aircraft and regional jets flying domestic routes utilizing the Gogo ATG network. • Gogo notes that most commercial airlines have multiple suppliers for in-flight connectivity and that at Gogo airline partners that provide Gogo with customer satisfaction data, the Gogo 2Ku product outperforms all competitive offerings.
Though we do not relish the idea of having a competitor join us at Delta, this amendment gives us time to complete our 2Ka offering and add capacity to our 2Ku network and will enable us to compete effectively for the fleets in question.
We are also very pleased to see Delta's continued focus on providing free Wi-fi despite the impact of COVID-19 and view that as a positive for the in-flight connectivity industry as it will drive demand.
We look forward to continuing to work with Delta to drive its vision.
Cautionary Note Regarding Forward-Looking Statements
Certain disclosures in this report include "forward-looking statements that are
based on management's beliefs and assumptions and on information currently
available to management. Most forward-looking statements contain words that
identify them as forward-looking, such as "anticipates," "believes,"
"continues," "could," "seeks," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "projects," "should," "will," "would" or
similar expressions and the negatives of those terms that relate to future
events. Forward-looking statements involve known and unknown risks, trends and
uncertainties, many of which may be beyond our control, that may cause the
Company's actual results, performance, achievements or future liquidity to be
materially different from any projected results, performance, achievements or
future liquidity expressed or implied by the forward-looking statements. Such
risks, trends and uncertainties include those described under the heading "Risk
Factors" in the Company's Annual Report on Form 10-K filed with the
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description 10.1 Amendment No. 6 to the 2Ku In-Flight Connectivity Services Agreement, dated as ofJune 5, 2020 , by and betweenGogo LLC and Delta Air Lines, Inc.
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