The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our unaudited condensed consolidated interim financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise indicates or requires, the terms "we," "our," "us," "Gogo," and the "Company," as used in this report, refer to Gogo Inc. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated or where it is clear that the terms refer only to Gogo Inc. exclusive of its subsidiaries.

On December 1, 2020, we completed the previously announced sale of our commercial aviation ("CA") business to a subsidiary of Intelsat Jackson Holdings S.A. ("Intelsat") for a purchase price of $400 million in cash, subject to certain adjustments (the "Transaction"). As a result, all periods presented in our unaudited condensed consolidated financial statements and other portions of this Quarterly Report on Form 10-Q have been conformed to present the CA business as discontinued operations.

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under "Risk Factors" in the 2020 10-K and in Item 1A and "Special Note Regarding Forward-Looking Statements" in this report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Our fiscal year ends December 31 and, unless otherwise noted, references to "years" or "fiscal" are for fiscal years ended December 31. See "- Results of Operations."

Company Overview

Gogo is the world's largest provider of broadband connectivity services for the business aviation market. Our mission is to provide ground-like connectivity to every passenger on every flight around the globe, enabling superior passenger experiences and efficient flight operations. To accomplish our mission, we design, build and operate dedicated air-to-ground ("ATG") networks, engineer, install and maintain in-flight systems of proprietary hardware and software, and deliver customizable connectivity and wireless entertainment services and global support capabilities to our aviation partners. Our services include satellite-based voice and data services made available through strategic partnerships with satellite providers.

Our chief operating decision maker evaluates performance and business results for our operations, and makes resource and operating decisions, on a consolidated basis. As such, we do not present segment information in this Quarterly Report on Form 10-Q.

Impact of COVID-19 Pandemic

The COVID-19 pandemic caused a significant decline in international and domestic business aviation travel, which materially and adversely affected our business in 2020. Beginning in March 2020, our business saw a sharp decrease in flight activity, as well as an increase in requests for account suspensions and decreases in new plan activations. Though we continue to see strong signs of recovery from the lows we experienced in mid-April 2020, we expect COVID-19 to continue to negatively impact our business and we are unable to predict how long or with what degree of severity that impact will continue. The impact of the pandemic has varied across different parts of our customer base - for example corporate flight departments, charter operators and commercial aircraft (under the ATG Network Sharing Agreement) - and we expect the pace of recovery to vary by customer type.

Factors and Trends Affecting Our Results of Operations

We believe that our operating and business performance is driven by various factors that affect the business aviation industry, including trends affecting the travel industry and trends affecting the customer bases that we target, as well as factors that affect wireless Internet service providers and general macroeconomic factors. Key factors that may affect our future performance include:



    •   costs associated with the implementation of, and our ability to implement,
        on a timely basis, our technology roadmap, including upgrades to and
        installation of the ATG technologies we currently offer, Gogo 5G, and any
        other next generation or other new technology;


    •   our ability to manage issues and related costs that may arise in
        connection with the implementation of our technology roadmap, including
        technological issues and related remediation efforts and failures or
        delays on the part of antenna and other equipment developers and
        providers, some of which are single source;


    •   our ability to license additional spectrum and make other improvements to
        our network and operations as technology and user expectations change;


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    •   the number of aircraft in service in our markets, including consolidations
        or changes in fleet size by one or more of our large-fleet customers;


    •   the economic environment and other trends that affect both business and
        leisure aviation travel, including the impact of COVID-19 on restrictions
        on and demand for air travel, as well as disruptions to supply chains and
        installations;


    •   the extent of our customers' adoption of our products and services, which
        is affected by, among other things, willingness to pay for the services
        that we provide, the quality and reliability of our products and services,
        changes in technology and competition from current competitors and new
        market entrants;


    •   our ability to engage suppliers of equipment components and network
        services on a timely basis and on commercially reasonable terms;


    •   changes in laws, regulations and interpretations affecting
        telecommunications services, including those affecting our ability to
        maintain our licenses for ATG spectrum in the United States, obtain
        sufficient rights to use additional ATG spectrum and/or other sources of
        broadband connectivity to deliver our services, expand our service
        offerings and manage our network; and


    •   changes in laws, regulations and policies affecting our business or the
        business of our customers and suppliers, including changes that impact the
        design of our equipment and our ability to obtain required certifications
        for our equipment.


Recent Developments

2021 Credit Agreement - On April 30, 2021, Gogo Inc. and Gogo Intermediate Holdings LLC (the "Borrower"), a direct wholly owned subsidiary of Gogo Inc., entered into a credit agreement (the "2021 Credit Agreement") among Gogo, the Borrower, the lenders and issuing banks party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (the "Administrative Agent"), which provides for (i) a term loan credit facility (the "Term Loan Facility") in an aggregate principal amount of $725 million, issued with a discount of 0.5%, and (ii) a revolving credit facility (the "Revolving Facility" and together with the Term Loan Facility, the "Facilities") of up to $100 million, which includes a letter of credit sub-facility. The Term Loan Facility amortizes in quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the Term Loan Facility on April 30, 2028. There are no amortization payments under the Revolving Facility, and all borrowings under the Revolving Facility mature on April 30, 2026. The Term Loan Facility bears annual interest at a floating rate measured by reference to, at the Borrower's option, either (i) an adjusted London inter-bank offered rate (subject to a floor of 0.75%) plus an applicable margin of 3.75% or (ii) an alternate base rate plus an applicable margin of 2.75%. Loans outstanding under the Revolving Facility bear annual interest at a floating rate measured by reference to, at the Borrower's option, either (i) an adjusted London inter-bank offered rate (subject to a floor of 0.00%) plus an applicable margin ranging from 3.25% to 3.75% per annum depending on the Borrower's senior secured first lien net leverage ratio or (ii) an alternate base rate plus an applicable margin ranging from 2.25% to 2.75% per annum depending on the Borrower's senior secured first lien net leverage ratio. Additionally, unused commitments under the Revolving Facility are subject to a fee ranging from 0.25% to 0.50% per annum depending on the Borrower's senior secured first lien net leverage ratio. The proceeds of the Term Loan Facility were used, together with cash on hand, (i) to redeem in full and pay the outstanding principal amount of the senior secured notes due 2024 (the "2024 Notes") together with accrued and unpaid interest and redemption premiums and to pay fees associated with the termination of the ABL Credit Agreement (collectively, the "Refinancing"), and (ii) to pay fees and expenses incurred in connection with the Refinancing and the Facilities (the "Transaction Costs"). The Revolving Facility will be available for working capital and general corporate purposes of the Company and its subsidiaries.

Redemption - On April 1, 2021, Gogo Intermediate Holdings LLC and Gogo Finance Co. Inc. (together, the "Issuers") elected to call for redemption in full the $975 million aggregate principal amount outstanding of the 2024 Notes. The redemption was conditioned, among other things, upon the incurrence of indebtedness, pursuant to a new senior secured term loan and/or credit facility or from one or more other sources, in an amount satisfactory to the Issuers. On April 30, 2021, the Issuers irrevocably deposited, or caused to be irrevocably deposited, with U.S. Bank National Association, the trustee for the 2024 Notes (the "Trustee"), solely for the benefit of the holders of the 2024 Notes, cash in an amount sufficient to pay principal, premium and accrued interest on the 2024 Notes to, but not including, the date of redemption and all other sums payable under the indenture governing the 2024 Notes. The Trustee executed and delivered an acknowledgement of satisfaction, discharge and release, dated as of April 30, 2021, among other documents, with respect to the satisfaction and discharge of the indenture governing the 2024 Notes.

Convertible Note Exchanges - On March 17, 2021, we entered into separate, privately negotiated exchange agreements (the "March 2021 Exchange Agreements") with certain holders of our 6% Convertible Senior Notes due 2022 (the "2022 Convertible Notes"). Pursuant to the March 2021 Exchange Agreements, such holders exchanged a total of $28,235,000 aggregate principal amount of 2022 Convertible Notes for 5,121,811 shares of our common stock on March 24, 2021. On April 1, 2021, we entered into a privately negotiated exchange agreement (the "GTCR Exchange Agreement") with an affiliate of funds managed by GTCR LLC ("GTCR"). Pursuant to the GTCR Exchange Agreement, GTCR exchanged $105,726,000 aggregate principal amount of 2022 Convertible Notes for 19,064,529 shares of our common stock on April 9, 2021. In addition, pursuant to the terms of the GTCR



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Exchange Agreement, on April 9, 2021, we entered into a registration rights agreement with Silver (Equity) Holdings, LP and Silver (XII) Holdings, LLC (together, the "GTCR Affiliates"), pursuant to which the GTCR Affiliates and their permitted transferees (the "GTCR Holders") have been afforded customary demand and piggyback registration rights with respect to the shares of common stock held by the GTCR Affiliates as of the closing of April 9, 2021. The demand rights of the GTCR Holders under the registration rights agreement are exercisable after the one year anniversary of the date of the Exchange Agreement.

Key Business Metrics

Our management regularly reviews financial and operating metrics, including the following key operating metrics, to evaluate the performance of our business and our success in executing our business plan, make decisions regarding resource allocation and corporate strategies, and evaluate forward-looking projections.





                                    Business Aviation
                                                            For the Three Months
                                                              Ended March 31,
                                                        2021                    2020
Aircraft online (at period end)
ATG                                                         5,892                   5,713
Satellite                                                   4,614                   4,939
Average monthly connectivity service revenue
per aircraft online
ATG                                              $          3,085       $           3,143
Satellite                                                     239                     223
Units Sold
ATG                                                           135                     125
Satellite                                                      80                      56
Average equipment revenue per unit sold (in
thousands)
ATG                                              $             78       $              77
Satellite                                                      46                      60




    •   ATG aircraft online. We define ATG aircraft online as the total number of
        business aircraft for which we provide ATG services as of the last day of
        each period presented. This number excludes aircraft receiving ATG service
        as part of the ATG Network Sharing Agreement with Intelsat.




    •   Satellite aircraft online. We define satellite aircraft online as the
        total number of business aircraft for which we provide satellite services
        as of the last day of each period presented.


    •   Average monthly connectivity service revenue per ATG aircraft online. We
        define average monthly connectivity service revenue per ATG aircraft
        online as the aggregate ATG connectivity service revenue for the period
        divided by the number of months in the period, divided by the number of
        ATG aircraft online during the period (expressed as an average of the
        month end figures for each month in such period). Revenue share earned
        from the ATG Network Sharing Agreement with Intelsat is excluded from this
        calculation.


    •   Average monthly service revenue per satellite aircraft online. We define
        average monthly service revenue per satellite aircraft online as the
        aggregate satellite service revenue for the period divided by the number
        of months in the period, divided by the number of satellite aircraft
        online during the period (expressed as an average of the month end figures
        for each month in such period).


    •   Units sold. We define units sold as the number of ATG or satellite units
        for which we recognized revenue during the period.


    •   Average equipment revenue per ATG unit sold. We define average equipment
        revenue per ATG unit sold as the aggregate equipment revenue from all ATG
        units sold during the period, divided by the number of ATG units sold.


    •   Average equipment revenue per satellite unit sold. We define average
        equipment revenue per satellite unit sold as the aggregate equipment
        revenue earned from all satellite units sold during the period, divided by
        the number of satellite units sold.


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Key Components of Consolidated Statements of Operations

There have been no material changes to our key components of unaudited condensed consolidated statements of operations as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") in our 2020 10-K.

Off-Balance Sheet Arrangements

We do not have any obligations that meet the definition of an off-balance sheet arrangement.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related exposures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. In some instances, we could reasonably use different accounting estimates, and in some instances results could differ significantly from our estimates. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the assumptions and estimates associated with revenue recognition, long-lived assets, indefinite-lived assets and stock-based compensation have the greatest potential impact on our unaudited condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in MD&A in our 2020 10-K.

Recent Accounting Pronouncements

See Note 3, "Recent Accounting Pronouncements," to our unaudited condensed consolidated financial statements for additional information.

Results of Operations

The following table sets forth, for the periods presented, certain data from our unaudited condensed consolidated statements of operations. The information contained in the table below should be read in conjunction with our unaudited condensed consolidated financial statements and related notes.





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