In-flight internet provider Gogo is placing more than 600 workers on unpaid leave, or about 60 percent of its workforce, the company announced on Tuesday. The Illinois-based company says sales of its in-flight internet service are expected to drop as much as 70 percent in April on commercial airlines, as passenger air travel falls to historic lows during the coronavirus pandemic.
Gogo said Tuesday that it has also applied for a $150 million loan and an $81 million grant from the government under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The company said the time and duration of the furloughs will “vary based on workload in individual departments.” Gogo’s CEO is also taking a 30 percent pay cut, with other executives taking a 20 percent cut.
Gogo said that, despite the furloughs, the company is “continuing to move forward” with its plan to roll out a new 5G air-to-ground network in 2021. The company expects the new 5G network to help bolster its network and its position in an increasingly competitive market.
Doing both of those things is crucial, as Gogo — which has still not turned a profit since it went public in 2013 — has admitted in financial filings that its current network has already run into capacity constraints. That network is still heavily dependent on air-to-ground connections, which are susceptible to interruptions and bandwidth issues, resulting in slow internet speeds and frustrated customers. To that end, Gogo has also spent the last few years trying to outfit as many of its customers’ planes as possible with the ability to connect to satellite-based internet networks, which have more bandwidth and can maintain a longer connection.