CHICAGO—Boeing Co. grounded its money-losing, in-flight communications offering known as Connexion, saying it plans to “facilitate an orderly phase out” of the service.
“Over the last six years, we have invested substantial time, resources and technology in Connexion by Boeing,” said Jim McNerney, chairman, president and chief executive officer of Boeing. “Regrettably, the market for this service has not materialized as had been expected.”
Connexion by Boeing launched in May 2004 and allowed passengers with GSM and CDMA roaming-enabled mobile phones to make and receive calls while in flight. In addition to Internet access, Boeing’s offering included four channels of live TV.
In late June, the company acknowledged that it had been reviewing its Connexion business and had been in talks with existing customers as well as potential new business partners. Airline carriers Deutsche Lufthansa AG, Scandinavian Airlines System, Japan Airlines Corp., Korean Air Co., All-Nippon Airways, Singapore Airlines Ltd. and China Airlines Ltd. offered Connexion service, which cost $27 for long-haul flights or $10 per hour.
Boeing said it expects the move to boost its earnings by about 15 cents per share beginning next year. However, the company also pointed out that shutting down the Connexion service will set it back about $320 million during the second half of this year, most of which will hit the books in the third quarter.
Boeing said it will update its financial guidance when it releases third-quarter results on Oct. 25.
