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ViaSat Flying High With Latest Deals

Air Force One, 100 new jets for American Airlines and roughly a dozen Canadian military patrol aircraft have something in common — they will all be connected to the world with the help of ViaSat Inc.

In the space of 10 days, the Carlsbad company and its federal customer announced that ViaSat (Nasdaq: VSAT) had berths on all of those aircraft.

It’s good news for the $1.4 billion satellite services and hardware company, which splits its business between military and commercial work. The company hopes to build a lot more business on an ambitious and expensive plan to launch several new high-capacity satellites; the first could go up as soon as December.

The American Airlines win is especially notable — and it may not be the

Richard Baldridge

last. “We hope to see a lot more from American,” company President Rick Baldridge said in an interview June 8. “… I don’t think American is going to stop this evolution to high-quality broadband.”

ViaSat said on June 3 that it will provide satellite Wi-Fi systems on 100 new Boeing 737 MAX aircraft for American. The first of the 737s is scheduled to go into service in September 2017.

ViaSat declined to offer financial terms of the deal. However, Chris Quilty, an analyst with financial services firm Raymond James & Associates Inc., estimated the company will see hardware revenue of $250,000 to $400,000 per aircraft, and monthly service revenue of $5,000 to $6,000 per aircraft.

Quilty called the deal “an important strategic win.”

Much of American’s fleet offers internet to passengers through a service offered by Chicago-based Gogo LLC. Earlier in the year, American filed legal papers to drop its deal with Gogo (Nasdaq: GOGO) because ViaSat could offer better service. Since then, the two companies have settled that dispute. American recently agreed to let Gogo upgrade 134 existing Airbus A319 and A320 jets with Gogo’s next-generation Wi-Fi technology, called 2Ku, according to published reports.

12 to 20 Megabits Per Second

ViaSat’s system offers internet speeds of 12 megabits per second to 20 megabits per second to every passenger in an airliner’s cabin, according to a company spokeswoman. In a recent interview, ViaSat’s Baldridge said 2Ku is “not even close” to what ViaSat can offer.

A Gogo securities filing from June 3 says American has a new internet agreement with Gogo, but that American may pull Gogo service from 550 of its aircraft at the airline’s option.

ViaSat’s other airline customers include JetBlue, United and Virgin America. In February, ViaSat inked a deal to provide in-flight internet service on Qantas Airways by 2017. Financial terms were not disclosed.

Separately, ViaSat announced on June 6 that Singapore-based ZettaJet will offer ViaSat in-flight internet service on its Bombardier Global ultra-long-range business aircraft.

Military Minded

ViaSat also recently received a federal contract award that could be worth up to $73.2 million over two years to provide in-flight internet service to senior U.S. government leaders. The deal includes service to the U.S. Air Force’s VC-25A aircraft, the special model of Boeing 747 that carries the president of the United States. (The aircraft is designated Air Force One only when the president is aboard.) The deal covers a variety of other aircraft that carry high-level military leaders and members of the president’s cabinet.

Under the deal, ViaSat will provide satellite communications on the Ka and Ku bands — two frequency bands roughly akin to television channels. ViaSat was the only company to submit a proposal for the firm-fixed-price contract awarded by the Defense Information Technology Contracting Organization at Scott Air Force Base, Ill.

ViaSat also recently scored a military hardware win.

Chris Quilty

During a late May trade show in Ottawa, Canada, the Carlsbad company announced that it started delivering Small Tactical Terminal software-defined radios to that country’s armed services. Deliveries began in March and financial details were not disclosed.

Ken Peterman, an executive in ViaSat’s government systems business, called it “a monumental award” for the company, as it was the first award for such terminals from Canada. In addition, it’s the first time such terminals have gone on Canada’s CP-140 Aurora aircraft.

The Royal Canadian Air Force uses the Aurora — which is similar to a Lockheed P-3 — for various tasks, including patrol of the wide open spaces on the Pacific, Arctic and Atlantic oceans. The radios operate on the Link 16 network, also used by Canada’s CF-18 Hornet aircraft, the country’s frigate warships and its fixed and mobile ground stations. The Link 16 system also means that the Auroras can trade information with aircraft, ships and other assets from the United States and NATO countries.

General Dynamics Mission Systems – Canada is prime contractor on the deal while ViaSat is a subcontractor.

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