Shares of Gogo, the in-flight internet provider, tumbled after the company issued a warning regarding rising service suspensions attributed to plane-maintenance bottlenecks.
In morning trading on Monday, the stock plummeted by approximately 17% to $12.82 per share. While the share price has suffered a 13% decline this year, the S&P 500 has seen a gain of 17% in comparison.
During a conference call with analysts, Gogo’s Chief Executive, Oakleigh Thorne, revealed that suspensions in the second quarter had reached a quarterly record and were lasting longer than before. Thorne attributed the increase in suspensions primarily to maintenance and management changes.
According to Thorne, there have been reports indicating a severe shortage of replacement engines, resulting in numerous aircraft being grounded at tarmac terminals without engines.
Despite the current challenges, Thorne expressed confidence that most of the suspended service aircraft would eventually return online instead of switching to a competitor.
The rise in service suspensions, combined with the delayed launch of Gogo’s 5G system due to a chip-design error, prompted the company to revise its full-year sales outlook. The new range for total revenue is expected to be between $410 million and $420 million, as opposed to the previous guidance of $440 million to $455 million.
