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Global Eagle Soars on Southwest Airlines Contract Extension
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Global Eagle Entertainment Inc. andSouthwest Airlines Co. (LUV - Free Report) recently entered into a new contract per which the use of Global Eagle’s connectivity system and services has been extended from 2020 to 2025 on Southwest’s aircrafts. Following the announcement Global Eagle shares gained around 20% in the after-hour trading session on Dec 13, per media reports. The deal is expected to give a much needed boost to the company as it has been underperforming the broader Zacks categorized Internet Content industry over the past six months. The company’s stock has lost 12.08% compared with the industry’s gain of 13.17% in the same period.
Deal Details
Global Eagle has been providing connectivity to Southwest’s aircrafts over the past six years. The extended contract will see Global Eagles’ installations on Boeing 737NG and 737 MAX aircrafts up to 2018 at least. There will also be a transition to monthly recurring charge, effective from third quarter of 2017. This transition will include both Wi-Fi and television services provided by the company. Additional services under the changed revenue model will include engineering services, hardware and advertising. The deal includes a full-term provision of live television and incorporation of the company’s next generation portal platform. Notably, Global Eagle’s Southwest fleet is the world’s largest satellite Wi-Fi equipped fleet.
In-flight services and entertainment have become an integral part for airlines.As competition increases in the market, airlines and their service providers are ramping up services to attract customers. Some other companies which provide connectivity and entertainment services to airlines include Gogo Inc. (GOGO - Free Report) and Rockwell Collins .
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Global Eagle Soars on Southwest Airlines Contract Extension
Global Eagle Entertainment Inc. andSouthwest Airlines Co. (LUV - Free Report) recently entered into a new contract per which the use of Global Eagle’s connectivity system and services has been extended from 2020 to 2025 on Southwest’s aircrafts. Following the announcement Global Eagle shares gained around 20% in the after-hour trading session on Dec 13, per media reports. The deal is expected to give a much needed boost to the company as it has been underperforming the broader Zacks categorized Internet Content industry over the past six months. The company’s stock has lost 12.08% compared with the industry’s gain of 13.17% in the same period.
Deal Details
Global Eagle has been providing connectivity to Southwest’s aircrafts over the past six years. The extended contract will see Global Eagles’ installations on Boeing 737NG and 737 MAX aircrafts up to 2018 at least. There will also be a transition to monthly recurring charge, effective from third quarter of 2017. This transition will include both Wi-Fi and television services provided by the company. Additional services under the changed revenue model will include engineering services, hardware and advertising. The deal includes a full-term provision of live television and incorporation of the company’s next generation portal platform. Notably, Global Eagle’s Southwest fleet is the world’s largest satellite Wi-Fi equipped fleet.
The deal is expected to boost Global Eagle’s results in the future alongside limiting downside risks for the company. Global Eagle carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In-flight services and entertainment have become an integral part for airlines.As competition increases in the market, airlines and their service providers are ramping up services to attract customers. Some other companies which provide connectivity and entertainment services to airlines include Gogo Inc. (GOGO - Free Report) and Rockwell Collins .
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>