Airborne connectivity provider Gogo announced today it will furlough 60 percent of its workforce—600 people—and cut pay for most of its other employees because of the impact of the Covid-19 pandemic. The furloughs will affect workers in all three of Gogo’s segments, including airline and business aviation.
“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 Gogo president and CEO Oakleigh Thorne. “In March, we announced 16 levers that we can employ to dramatically lower our costs to ensure our long-term viability, and we believe we are implementing the appropriate measures to accomplish that goal.”
Sixty percent of Gogo’s revenue comes from its two airline segments, projections of which call for a 60 to 70 percent reduction in April sales. Its business aviation segment, representing the remaining 40 percent of Gogo’s revenue, has also been affected by a sharp downturn in flying and an increase in requests by business aircraft operators for one-month account suspensions.
In addition to the furloughs, Thorne will take a 30 percent pay cut while his executive leadership team will see their pay trimmed by 20 percent. The percentage of pay cuts will be “feathered” for remaining employees according to their positions. Gogo's board also has agreed to reduce its compensation by 30 percent.
“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,” Thorne added. The Chicago-based company also announced it has applied for an $81 million grant and a $150 million loan under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Should Gogo receive assistance through the act, it said it would modify the job actions announced today to comply with the terms of that financial assistance.
“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,” Thorne explained.
