Boeing abandons in-flight Internet service

• Posted: Friday, August 18, 2006
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• Author: pradhana
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• Filed under: Miscellaneous

US aerospace giant Boeing Co. said it was abandoning its Connexion unit providing high-speed Internet service on planes after only a handful of airlines signed up (8/17).

"Over the last six years, we have invested substantial time, resources and technology in Connexion by Boeing," Boeing chief executive Jim McNerney said in a statement Thursday.

"Regrettably, the market for this service has not materialized as had been expected. We believe this decision best balances the long-term interests of all parties with a stake in Connexion by Boeing," he said.

Boeing said in June that it was reviewing the future of the service, which enabled passengers on Connexion-equipped flights to access the Internet over a satellite-based broadband connection.

Only 12 airlines, mostly Asian carriers flying long-haul such as Japan Airlines, Singapore Airlines and Air China, had signed up for the service. In Europe, Lufthansa and Scandinavian Airlines had also subscribed.

The airlines typically charged 30 dollars per flight or 10 dollars for 30 minutes of in-flight Internet access via satellite.

For other carriers including in the United States, cellular networks are seen as cheaper and more promising for a mass market of passengers wanting to go online in the skies. Three US airlines -- American, United and Delta -- were planning to take part in a joint venture with Boeing to promote the service in 2001, but those plans were scuppered by the September 11 attacks.

Boeing said it expected that most of the 560-odd people employed by Connexion would find jobs elsewhere in the aviation group. But some redundancies are possible, company spokesman John Dern said.

Boeing said that in the second half of 2006, it would book a pre-tax charge of up to 320 million dollars, or 26 cents per share, arising from costs related to the termination of Connexion. But it also expected a benefit of about 15 cents per share starting in 2007 as a result of the halt to its investment in Connexion.

Boeing said in July that it expected earnings per share to range between 4.25 and 4.45 dollars in 2007. Wall Street's target tallied by First Call foresees a figure of 4.55 dollars in 2007, excluding exceptional items.

Boeing's share price was up 21 cents (0.27 percent) at 79.04 dollars in mid-morning trade.

Source: Yahoo! News

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