April 28, 2020
Inflight internet company Gogo is the latest aviation business to shrink its workforce as a result of the COVID-19 pandemic.
The company recently announced it will furlough approximately 60% of its workers and reduce compensation of its remaining employees. More than 600 employees will be furloughed. Salary reductions will begin at 30% for the CEO and 20% for the executive leadership team, with all other salaried employees seeing smaller decreases.
Gogo’s business aviation segment makes up 40% of its revenue. With business flying down substantially, Gogo reported an increase in requests for account suspensions and a significant decrease in new plan activations in April.
Gogo’s commercial airline segment, which accounts for 60% of its revenue, is projected to see a 60-70% reduction in sales for the month of April.
The company is implementing a 16-part plan to decrease costs, including a hiring freeze, renegotiating supplier contracts, deferring purchases of capital equipment and other measures.
“We established best- and worst-case scenarios and action plans against the 16 levers, based on market conditions against those scenarios,” said Oakleigh Thorne, Gogo president and CEO. “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.”
The company has also applied for relief funds in the forms of grants and loans under the recently enacted Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act. Gogo said it will “modify” personnel actions to comply with applicable terms of various CARES Act provisions, including those that require companies to maintain their payrolls as a condition of receiving relief funds.
“The impact of COVID-19 on air travel, and a challenging economy in general, mean we have to make tough decisions, including implementing these essential cost reductions,” said Thorne. “I am proud of our Gogo employees, who have risen to the challenge to ensure that our business continues to operate smoothly and effectively during this difficult time.”