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ViaSat reports big airline connectivity order and robust government growth

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LONDON — Satellite broadband hardware and services provider ViaSat Inc. on Nov. 8 said it had contracted with a U.S.-based commercial airline to retrofit more than 500 aircraft with ViaSat’s Ka-band airline connectivity system.

In a conference call with investors, ViaSat Chief Executive Mark D. Dankberg declined to disclose the customer’s identity, saying the airline would make an announcement in short order.

ViaSat President Richard A. Baldridge said installations would begin in mid-2017 and would occur over a period of about 18 months.

Southwest Airlines, or someone else?

Speculation was rife in the hours after the announcement about what customer — American Airlines and Southwest Airlines were mentioned as possibilities — had delivered such a sizable endorsement to ViaSat, and which ViaSat competitor — Gogo or Global Eagle Entertainment — might be affected by the decision.

The order will about double the fleet of aircraft using ViaSat’s Exede in the Air WiFi system. The company said that as of Sept. 30, it had 533 aircraft in service using ViaSat’s system. Including the 500-aircraft order from the undisclosed customer, ViaSat said it had booked orders for 650 aircraft since Sept. 30.

Carlsbad, California-based ViaSat’s consumer and commercial airline broadband satellite networks have been perhaps the most dynamic of the company’s businesses. But ViaSat’s sale of broadband mobility hardware and services to the U.S. government has also shown remarkable growth.

Double-digit growth in government revenue, led by broadband mobility

ViaSat’s Government Systems division reported revenue of $323 million for the three months ending Sept. 30, up 10 percent from the same period a year ago. New orders during the period totaled $517 million, up 45 percent.

Dankberg said that hardware for tactical radio links and secure communications networks played a role in the growth but that mobile broadband is the division’s real growth engine.

Consumer subscriber count down, but monthly revenue up

ViaSat’s consumer satellite broadband service in the United States lost 10,000 net subscribers in the three months ending Sept. 30, ending at 686,000, in part because capacity on the company’s ViaSat-1 satellite has filled up in high-demand regions of the United States.

But per-subscriber revenue, at $61.55 per month, was up 9 percent from a year ago, continuing a steady growth over the past year as ViaSat introduced higher-speed subscription plans to consumers ready to pay more for more bandwidth.

In the five years since the launch of the ViaSat-1 satellite, ViaSat said its average monthly subscriber revenue had increased by an average of 7 percent per year.

The ViaSat-2 satellite, much bigger than ViaSat-1 and intended to return the consumer service to growth, is scheduled for launch between late March and April aboard a European Ariane 5 rocket.

After some two months of in-orbit checkout, service is scheduled to start by next summer.

ViaSat’s ViaSat-3 system is intended to provide 1 terabit per second of bandwidth. ViaSat has ordered two ViaSat-3 platforms from Boeing but, in a departure from past practice, is developing the payloads itself.

ViaSat-3: global ambitions, but only 2 satellites for now

The company said a preliminary design review of ViaSat-3 was scheduled to occur with Boeing the week of Nov. 14. The first ViaSat-3 is scheduled for launch in 2019, with the second some six months later.

A third satellite would be needed to provide full global coverage from geostationary orbit. ViaSat’s contract with Boeing includes an option for two more ViaSat-3 platforms. Dankberg said during the conference call that recent events, especially developing in the airline in-flight-connectivity business, suggest that ViaSat-3 will not be late in capturing the huge growth in this market niche.

“The schedule of the ViaSat-3 satellites lines up increasingly well with the fleet expansion plans of a number of leading airlines around the world,” Dankberg said.

But the company had yet to exercise one of the options with Boeing, leaving ViaSat-3 as a two-satellite system for now, covering the Americas, Europe and Africa.

In a Nov. 9 filing with the U.S. Securities and Exchange Commission (SEC), ViaSat said it expects to formalize by March a joint venture agreement with fleet operator Eutelsat of Paris on consumer satellite broadband service in Europe.

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ViaSat reports big airline connectivity order and robust government growth

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