Viasat is still conducting a rigorous review of the anomaly that occurred whilst deploying one of the antennas on its ViaSat-3 Americas satellite, and says it won’t make “premature judgments on what we need to do” until it receives the full data and understands what level of capacity it can glean from the satellite. But the Carlsbad, California-based satellite operator and aero ISP assures that it can handle its backlog of inflight connectivity business “at least for some period of time” without requiring a major mitigation strategy for airlines.
Handling the backlog might see Viasat “end up with slightly different or somewhat different service level agreements for some routes or some portions of some routes” for specific customers, company CEO Mark Dankberg admitted during a conference call yesterday to report Viasat’s FY24 Q1 earnings, which included one month of newly acquired Inmarsat’s financial results.
The approach that we’ve been taking in the aviation business, which has been very successful for us, is to provide very specific service level agreements that are end-to-end for their route system. So, when we take on new customers, we look at their plane fleet, their routes, we look the airports that they’re serving and we show them, ‘here is the service level agreement that we can deliver and here is how we know we can deliver that.’
I think that kind of what is happening is we’re going through all those details again with our customers in light of the ViaSat-3 scenario.
Yes, their initial question is: okay, can you still serve the planes that we have in the routes that we have going forward? And so far, that’s gone quite well because we do have the resources to deal with the customers we have.
Not all the IFC backlog depends on ViaSat-3 Americas — that is especially true now that Viasat’s acquisition of Inmarsat is complete — and Viasat has been able to address prior ViaSat-3 Americas-based delays by transferring bandwidth from fixed applications to its mobility business. Indeed, growth in Viasat’s fixed broadband business is now expected to be delayed given the antenna problem.
Viasat also has “more maneuvering room” using some of the Inmarsat fleet, says Dankberg, later adding that the firm could draw on that fleet “to solve a lot of our problems for us”. Largely left unsaid, however, is the hardware changes required to ensure a Viasat-fitted aircraft can talk to an Inmarsat Global Xpress Ka-band satellite. “There are a couple of nuances” that apply to the equipment on the airplanes, admits the CEO.
In a letter to investors, released in tandem with its earnings, Viasat reveals it also executed bandwidth supply contracts with other Ka-band satellite broadband operators/partners “as a precaution” in the event of delays or other possible complications with its ViaSat-3 Americas satellite.
It is not immediately clear which Ka-band satellite operators Viasat has contracted — or if any of that capacity would be used for mobility verticals, including aviation, should the ViaSat-3 Americas anomaly persist — but a logical possibility would be SES, which operates the high-capacity SES-17 Ka-band satellite.
Dankberg says Viasat doesn’t want to make any statements about what it thinks the capacity of the ViaSat-3 Americas satellite “will or won’t be including going down to zero” without having more facts. And he says any decision regarding a replacement satellite for the bird depends a lot on what the performance of ViaSat-3 Americas ends up being.
Because the review by Viasat and the provider of the affected reflector is ongoing, the company is not able to assess the impairment value for the ViaSat-3 Americas satellite, Viasat notes in its 10Q filing with the SEC. “The ViaSat-3 Americas satellite is insured for approximately $420 million, which is nearly half of the net book value of the ViaSat-3 Americas satellite, including capitalized interest.”
Viasat, which counts American, Delta, JetBlue, Southwest, United and a bevy of international airlines as customers, ended the quarter with 3,230 aircraft in service, inclusive of Inmarsat’s tails, representing an increase of 18% year-over-year compared to the combined commercial aircraft in service of Viasat and Inmarsat as of 30 June 2022.
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Featured image credited to Viasat