When the Federal Aviation Administration a few weeks ago cleared the way for airline passengers to use their electronic devices below 10,000 feet, the stock of Global Eagle Entertainment began to take off.
But shares of the Westlake Village in-flight connectivity and content company soared to new heights last week when its biggest client, Southwest Airlines Co., went live with “gate-to-gate” service. That means fliers now have more time to buy in-flight Wi-Fi, TV shows and movies – the pillars of Global Eagle’s business – as they wait on
The day of the Southwest announcement, Nov. 21, shares of Global Eagle closed at $14.92, up 22 percent for the week. Even before that, the company was one of the biggest gainers on the LABJ Stock Index. (See page 60.)
“Gate to gate has been very big,” said John LaValle, Global Eagle chief executive. “It’s a big advantage for content purchases, if you’re thinking about 25 or 30 minutes. … And if they want to get on Facebook or email, that requires a persistent Internet connection.”
Global Eagle a year ago bought Row 44, which is now a subsidiary. Global Eagle provides Wi-Fi to airplanes with an antenna on the top of the plane and takes a signal from satellites. One of the reasons the company adopted satellite technology instead of cell towers, LaValle said, was to be ready for the recent lifting of the FAA restriction on in-flight electronics. Global Eagle’s biggest competitor, Gogo Inc. of Itasca, Ill., gets its signals from cell towers on the ground.
Global Eagle makes money in various ways. In the Southwest deal, it recoups a fee for every device that connects to the Internet, although LaValle declined to say how much. Revenue from content purchases is split among Global Eagle, the airlines and studios. Content partners include Walt Disney Co., Warner Bros. and NBCUniversal.
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