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By Will Feuer
Shares of Gogo fell after the in-flight internet provider warned of rising service suspensions tied to plane-maintenance bottlenecks.
The stock dropped about 17% to $12.82 a share in morning trading on Monday. So far this year the stock is down 13%, compared with a 17% gain for the S&P 500.
On a conference call with analysts, Chief Executive Oakleigh Thorne said suspensions in the second quarter hit a quarterly record and are lasting longer than in the past. Thorne said the increase in suspensions was mostly driven by maintenance and management changes.
“We’re hearing many reports that there are literally no replacement engines to be had, which is leading to scores of aircraft sitting in tarmac terminals with no engines,” Thorne said.
He said the company is confident that most of the planes where service has been suspended will come back online and not move to a competitor.
The rise in suspensions and the delayed launch of the company’s 5G system due to a chip-design error spurred the company to cut its full-year sales outlook. Total revenue is now seen in the range of $410 million to $420 million, versus prior guidance of $440 million to $455 million.
Write to Will Feuer at [email protected]
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