August 17, 2006
Boeing's in-flight Wi-Fi service is no more.
Airplane maker Boeing is shutting down its in-flight Wi-Fi service, Connexion by Boeing. The company will take a $320 million charge for writing off the shutdown. It's a pre-tax charge of 25 cents per share for the rest of the year, but the closure could lift company earnings by 15 cents a share in 2007.
"Regrettably, the market for this service has not materialized as had been expected," said Boeing chairman and CEO Jim McNerney in a statement. "We believe this decision best balances the long-term interests of all parties with a stake in Connexion by Boeing."
In June, it was reported that Boeing had spent $1 billion on the service over six years, and it had not made any money. The company was going to talk to potential buyers, but said at the time it might simply be shut down.
Connexion had service on several overseas flights with carriers like Singapore Airlines, Japan Airlines, All Nippon Airways, Lufthansa and El Al Israel Airlines. The service never got any buyers in the United States, where the domestic carriers have had their own financial troubles for years.
However, all is not lost for in-flight Internet service over wireless, as a JetBlue subsidiary was the winner of ground-to-air radio spectrum in an FCC auction earlier this year.
Nor do all the overseas airlines expect the service to just stop. The equipment is still in place -- they just need another provider to step in.