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ViaSat makes value-add acquisition with Arconics buy


ViaSat continues its strategic growth through acquisitions. Next up on the list is the purchase of Dublin-based Arconics. Financial terms of the deal were not disclosed though ViaSat does not expect the transaction to impact non-GAAP earnings for fiscal year 2017. The deal will add Arconics’ suite of flight deck, cabin and operations management to the ViaSat connectivity portfolio. Through this acquisition ViaSat gains expertise, aviation-grade software and mobile applications to make flying safer and more efficient for pilots, cabin crews and flight operations teams as well as applications that make entertaining passengers and opening new service and revenue opportunities for airlines possible.

The Arconics suite spans wireless inflight entertainment (IFE), electronic flight bag (EFB), airline document management and cabin management solutions, to communicate and share data with the aircraft and, using available connectivity, to connect with ground systems across any mobile or avionics platform. Airline customers today include Qatar Airways, Cathay Pacific, Ryanair, Aer Lingus, Tigerair Australia, SpiceJet and others. Combining the ViaSat high-bandwidth connectivity infrastructure with the Arconics application suite is a move that ViaSat’s vice president and general manager, commercial mobility business, Don Buchman believes will significantly increase the value proposition for airlines while also introducing cross-selling opportunities for the combined company.

We do think it is going to be connected. It is about having the full suite, but over time the flight deck, the operations, the crew, the aircraft itself – it is all going to be connected and integrated. We see that trend and we do see connectivity playing a central role in unlocking that value. We are really excited about that aspect of the acquisition in particular. It really moves us from the passenger space to the full airline operations & crew space.

Arconics CEO Niall O’Sullivan sees the merger as a natural fit, blending the two companies’ existing long-term partnership into a stronger offering going forward. “We know ViaSat well, having partnered with them on a number of opportunities to deliver our world-class CloudStore wireless IFE product. Together, we believe the complementary nature of the technologies and products of Arconics and ViaSat will enhance the combined company’s ability to deliver exceptional end-to-end experiences across the entire aircraft value-chain,” he says.

Connected Crew

In recent months connectivity providers have made significant moves to increase the value-added services implemented on top of the data pipe they deliver. Weather reporting and real-time electronic flight bag update solutions lead those discussions but adding cabin crew into the mix is gaining momentum. Airlines and vendors hope that making the cabin crew more efficient will lead to better service levels overall and happier customers from there. Buchman believes that building that crew platform – one of the components of the Arconics suite today – will transform the passenger experience: “We’re very excited about the crew. For us to have the crew involved and help them do their jobs more efficiently, when they’re satisfied the passengers are more satisfied. We have this great connectivity service, we’ve got more bandwidth, so what are the applications we can run on it? How does it help the airline as a whole be a better airline? And we see the crew and operations as the next frontier for that.”

Wireless IFE

Streaming entertainment solutions are industry darlings. Airlines without an embedded solution can quickly and cost-effectively add entertainment to their fleet. Buchman suggests that every RFP the company has seen recently includes wireless IFE as part of the bid. ViaSat has used the Arconics product as a partner for those bids but owning and integrating the solution more tightly with the rest of the platform offers the company advantages in its longer-term efforts. “As we expand around the world in some of the areas we don’t have a high capacity Ka option until ViaSat-3. Having a wireless IFE product ahead of that allows us to compete with an airline and get them started on our product line and then grow them in to our connectivity products,” says Buchman.

Future Growth

The Arconics operation will remain in Ireland and continue to grow there, even as the products are integrated into the ViaSat portfolio. The company believes that the talent pool in Ireland, especially for software development, is deep and that building a stronger presence in the area will help with efforts to secure airline partners going forward. And the development efforts will continue to focus on passengers; that segment remains the easiest to justify, according to Buchman, and is one where the industry is “just scratching the surface” of what is possible. But customers are already seeing some benefits today so “cabin crew and then the flight deck and overall operations are the next big areas” ViaSat expects to see evolve through automation and connectivity.

This partnership leaves the company well positioned to make that move.

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