Inflight connectivity might be a highly sought-after commodity by airlines and their passengers, but Gogo, one of its biggest providers, is struggling to turn that demand into dollars. The company recently admitted it is facing “major challenges” in its commercial aviation business, and said it is considering investment opportunities that could potentially involve splitting up and selling its business and commercial aviation divisions. “Gogo has received a number of strategic inquiries from financial and strategic acquirers in the last few weeks, and our board has considered those inquiries and asked management to assess them,” CEO Oakleigh Thorne told analysts in mid-July.

The company says that since its first-quarter 2018 earnings call earlier this year, “a number of parties” have contacted it to suggest various relationships and transactions, “some of which would involve splitting the company” into business aviation and commercial aviation markets. Gogo has not disclosed any further details about these approaches, but Thorne adds: “In sum, strategic discussions across both the IFC [inflight connectivity] and the broader avionics industry appear to be heating up. Competitors are thinking about consolidation, large strategic players are thinking about how to enter the business, and private equity firms are thinking about how to act as consolidators and take advantage of the huge IFC opportunity.”

Gogo’s commercial aviation division has taken a battering following American Airlines’ decision to remove the provider’s air-to-ground (ATG) inflight connectivity system from hundreds of single-aisle aircraft and replace it with ViaSat’s Ka-band satellite-based product. Problems also arose with Gogo’s 2Ku satellite-based IFC service when it was discovered that deicing fluid had leaked under the radomes and affected the antennas on a number of aircraft, resulting in reliability issues at Delta Air Lines — one of Gogo’s biggest 2Ku customers. Thorne says that since the corrective measures were put in place, customer satisfaction scores for 2Ku have increased and installations “continue to show rapid momentum as airlines regain confidence in the product.”

Nevertheless, the deicing issue is expected to cost Gogo in excess of $25 million. It adds to a series of headaches that prompted the company to draw up a new business model, known as Gogo 2020, aimed at addressing the challenges it faces and turning its fortunes around. In addition to considering consolidation opportunities, Gogo says it has reduced the headcount in its commercial aviation division by 5%, or 55 employees, will stop offering subsidies to future airline customers, and will start charging airlines for engineering services that it currently offers for free.

“In conversations with several customers, quality airlines now care enough about connectivity for their passengers that they want the quality IFC players to survive and are willing to consider new business models to make sure they have adequate supply in the future,” says Thorne.