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Viasat (VSAT) to Power IFC Connectivity in 1000 Delta Air Fleet

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Viasat Inc. (VSAT - Free Report) has secured a prime contract for Ka-band satellite in-flight connectivity (IFC) solutions from Delta Air Lines for an undisclosed amount. The improved IFC services will aim to offer enhanced Internet capabilities with best-in-class in-flight entertainment options to entice customers and will likely contribute to the uptrend in leisure air travel demand.

Per the deal, Delta will use Viasat’s Ka-band IFC solutions in more than 1,000 fleets, including Airbus A330, Airbus 350 and Boeing 767 aircraft. In addition, it will be outfitted in the Airbus 220 and upcoming deliveries of the Boeing 737MAX fleet. The solutions will enable high-quality, high-speed Internet and video streaming services on the personal electronic device of users to make air travel more digitally accessible and seamless.

Viasat’s Ka-band solutions enable business jet customers to enjoy high-speed Internet connectivity from takeoff to touchdown. It empowers aviation clients to reinforce their IFC investments and helps customers stay connected with smooth web browsing and streaming services. Equipped with unrivaled speed and quality, Viasat’s Ka-band service has been specifically designed to meet accretive demand for data backed by next-gen business applications. The Ka-band leverages global bandwidth to provide avant-garde Internet service with best-in-market pricing to boost the competitiveness of the business jet market.

The surging popularity of high-engagement IFC solutions has compelled leading airline companies to scout for new ways to utilize Viasat’s high-capacity satellite solutions to maximize passenger satisfaction. The company’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. With an advanced level of Internet connectivity, Delta will offer customers an opportunity to stream all types of video content and seamlessly access Wi-Fi aboard. In addition, it is likely to sow the seeds for future entertainment enhancements and personalization on customer seatback screens.

Viasat’s Satellite Services business is progressing well, with key metrics including steady growth of ARPU (average revenue per user) and revenues showing impressive growth. ARPU is growing on the back of a solid retail distribution network, accounting for a rising proportion of high-value and high bandwidth subscriber base. Further, the growing adoption of in-flight Wi-Fi services in commercial aircraft like Delta is benefiting the business.

The stock has lost 26.1% over the past year, while the industry has declined 17.2% in the same period. Nevertheless, we are impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.

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