(Reuters) – In-flight Internet provider Gogo Inc, which serves some of the biggest names in the airlines industry, filed with U.S. regulators on Friday to raise up to $100 million in an initial public offering of its common stock.
Gogo, whose customers include Delta Air Lines, US Airways and American Airlines, is the latest firm trying to tap into investor interest in technology IPOs after Groupon’s November debut. Analysts said it was too early to gauge investor interest in the offering.
Jay Ritter, professor of finance at the University of Florida, said Gogo has a viable business model with a demonstrated ability to earn revenue. “Lots of fliers will pay to use the Internet while they’re in the flight. But I think the market will have a big question about what is the fair value,” Ritter said.
Itasca, Illinois,-based Gogo said it provides Internet connectivity to nine of the 10 North American airlines that offer the inflight service. Gogo also delivers airline passengers on-demand movies and television shows for a pay-per-view charge. And it sells equipment and services to aircraft makers such as Bombardier Inc., General Dynamics Corp’s Gulfstream, Textron’s Cessna and Brazilian plane maker Embraer.
The firm’s consolidated revenue rose 89% to $113.8 million in the nine months ended September 30, its S-1 filing with the U.S. Securities and Exchange Commission shows.
Gogo’s stock performance would depend largely on its pricing and its ability to provide uninterrupted services to customers, IPOfinancial.com President David Menlow said. “It has to command a tremendous amount of interest from the stand point of staying connected without any limitations for travelers,” Menlow said. “To give that kind of wireless connectivity in flights is going to be a high-demand situation.”
He added that this could become the preferred platform for all airlines.
Airlines in the country are investing heavily in add-on services to lure more travelers. In March, Delta Airlines said it plans to invest more than $2 billion through 2013 to upgrade plane seats, refurbish airport facilities and expand in-flight entertainment options.
Morgan Stanley, JP Morgan and UBS Investment Bank will underwrite Gogo’s offering. The filing did not reveal how many shares the company plans to sell or their expected price. The company expects to list under the symbol ‘GOGO,’ but did not disclose the exchange it intends to list on.
The company plans to use the proceeds from the offering for working capital and other general corporate purposes, it said.
Ripplewood Holdings owns 38.1% of the company and Oakleigh Thorne owns 33.6%, according to the S-1.