United to offer free Starlink connectivity on flights. Satellite rival ViaSat's stock is dropping.

By Steve Gelsi

Some United passengers will have internet and other mobile services at 35,000 feet by 2025

United Airlines Holdings Inc. said Friday it will offer free connectivity on its flights through an agreement with SpaceX's Starlink satellite service.

After the announcement, shares of Starlink's competitor, ViaSat Inc., (VSAT) fell about 12%.

United Airlines' stock (UAL) rose 2.8%.

"Everything you can do on the ground, you'll soon be able to do onboard a United plane at 35,000 feet, just about anywhere in the world," United Airlines Chief Executive Scott Kirby said in a statement.

United said the agreement includes more than 1,000 aircraft, with testing starting in early 2025 and the connectivity on the first passenger flights expected later next year.

Terms of the deal were not disclosed.

William Blair analyst Louie DiPalma reiterated a market perform rating on ViaSat and said Starlink's pact with UAL marks a "surprising development" because "ViaSat's inflight connectivity service has been considered the gold standard in the industry."

The loss of UAL's business could impact ViaSat's $4.5 billion annual revenue by about 1%, he said. DiPalma estimated that the full rollout of Starlink's Wi-Fi service with UAL could take about three years.

While ViaSat will continue to be the market leader for the next five years given the slow-moving nature of the aviation industry, Starlink "is positioned to have the highest aviation market share over the next decade as this landmark deal [with UAL] will likely lead to other wins," DiPalma said.

ViaSat is now the dominant player with airlines, which have installed its internet connection systems to 3,750 commercial aircraft currently flying, plus another 1,460 in backlog, he said.

Starlink has been struggling to gain market share while United, American (AAL), Delta Air Lines, (DAL), Southwest (LUV) and JetBlue Airways (JBLU) have been outfitting new planes with ViaSat Wi-Fi gear, he said.

Also read: IPO spinoff talk swirls around SpaceX's Starlink

-Steve Gelsi

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09-13-24 1123ET

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