27 April 2020:Gogo, a leading global provider of broadband connectivity products and services for aviation have announced furloughs of about 60 per cent of its workforce and reduced compensation for other employees in the wake of COVID-19 crisis.
These furloughs will be directly impacting more than 600 employees across their three business segments. The salary reductions will be as follows - Board of Directors - 30 per cent, CEO - 30 perc ent, executive leadership team - 20 per cent . Hourly workers will receive full pay.
About 60 per cent of Gogo's revenue comes from its two commercial airline segments while the remaining 40 per cent comes from business aviation. Passenger traffic using Gogo service have reduced by 95 per cent resulting in a 60-70 per cent sales loss for April. Also a sharp decline in the flight activity of business aircraft there might lead to one-month account suspension.
"The health and safety of our employees and customers is our first and most important priority, but the long-term health of our business is also a critical focus area," said Oakleigh Thorne, president and CEO of Gogo. "In March, we announced 16 levers that we can employ to dramatically lower our costs in order to ensure our long-term viability, and we believe we are implementing the appropriate measures to accomplish that goal."
In addition to personnel actions, the Gogo 16-lever plan includes, among other actions, renegotiating terms with suppliers, delaying aircraft equipment installations, deferring purchases of capital equipment, reducing marketing and travel expenses and eliminating non-essential spend.
"We established best- and worst-case scenarios and action plans against the 16 levers based on market conditions against those scenarios," Thorne said. "Based on where the market is today, we believe these personnel actions are necessary, and if conditions worsen, we have additional levers to pull if needed."
They have applied for a USD 81 million grant and USD 150 million loan under the CARES Act. If the government assistance is received then some of the above amendments will be modified to comply with the terms of the assistance.