Gogo Inc files for IPO of up to $100 million

Fri Dec 23, 2011 1:28pm EST

(Reuters) - In-flight internet connectivity provider Gogo Inc, which serves some of the biggest names in the airlines industry, filed with U.S. regulators on Friday to raise up to $100 million in an initial public offering of its common stock.

Gogo, whose customers include Delta Air Lines (DAL.N), US Airways LCC.N, and American Airlines, is the latest firm trying to tap into investor interest in technology IPOs after Groupon Inc's (GRPN.O) strong November debut.

Analysts, however, said it was too early to gauge investor interest in the offering.

Jay Ritter, professor of finance at the University of Florida, said Gogo has a viable business model with a demonstrated ability to earn revenue.

"Lots of fliers will pay to use the Internet while they're in the flight. But I think the market will have a big question about what is the fair value," Ritter said.

Itasca, Illinois-based Gogo said it provides internet connectivity on nine of the ten North American airlines that offer this facility.

Gogo also offers airline passengers on-demand movies and television shows on a pay-per-view basis, and sells equipment and services to aircraft makers like Bombardier Inc (BBDb.TO), General Dynamics Corp's (GD.N) Gulfstream, Cessna, a unit of Textron Inc (TXT.N) and Brazilian planemaker Embraer (EMBR3.SA).

The firm's consolidated revenue rose 89 percent to $113.8 million in the nine months ended September 30 from a year ago, its filing with the U.S. Securities and Exchange Commission showed.

HIGH-DEMAND SITUATION

Gogo's stock performance would depend largely on its pricing and its ability to provide uninterrupted services to customers, IPOfinancial.com President David Menlow said.

"It has to command a tremendous amount of interest from the stand point of staying connected without any limitations for travelers ... To give that kind of wireless connectivity in flights is going to be a high-demand situation," Menlow said.

He added that this could become the preferred platform for all airlines.

Airlines in the country are investing heavily on add-on services to lure more travelers.

In March, Delta Airlines said it plans to invest more than $2 billion through 2013 to upgrade plane seats, refurbish airport facilities and expand in-flight entertainment options.

Morgan Stanley, JP Morgan and UBS Investment Bank will underwrite Gogo's offering.

The filing did not reveal how many shares the company plans to sell or their expected price.

The company expects to list under the symbol 'GOGO' but did not disclose the exchange it intends to list on.

The company plans to use the proceeds from the offering for working capital and other general corporate purposes, it said.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

(Reporting by Eileen Anupa Soreng and Sharanya Hrishikesh in Bangalore; Editing by Maju Samuel)