— Gross margin improved 4.6 percentage points driven by the activation of additional aircraft on its network, growth in services to cruise markets, and improved management of network costs.
— The company is implementing its previously disclosed phase 3 cost initiatives in the first half of 2020. Phase 3 initiatives will target business process reengineering and procurement initiatives. Phase 3 is expected to generate more than $10 million of additional savings during 2020.
— The company expects the Boeing 737 MAX aircraft in its fleet of connected aircraft to resume normal operations in the second half of 2020. The company’s MAX-connected aircraft remained grounded during the fourth quarter due to regulatory actions.
— Global Eagle continues to forecast that MAX program issues will impact services revenue, including both Connectivity and Media & Content revenue, by about $3 million per quarter, with an Adjusted EBITDA impact of about $2 million per quarter.
— Due to the production halt of the aircraft, the company expects between 10 and 15 fewer aircraft installations per quarter. The impact on equipment revenue is expected to be about $4-5 million per quarter with a gross margin impact of around 20%.
— Due to limited data, the company believes that it is too early to quantify the impact of the Covid-19 outbreak on the travel industry, its operations or its financial performance.