Boeing to end flight Internet service

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NEW YORK (AP) -- Boeing Co. said yesterday it would end its in-flight Internet service, Connexion, because the market for it hadn't progressed quickly enough.

The Chicago-based aerospace and aircraft maker also said it would take a $320 million charge for shutdown costs.

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

Boeing said on June 26 it was considering selling or shutting down Connexion but held off on a decision until it met with its customers.

Many carriers flying over the Pacific Ocean used the service, including long-haul flights from Tokyo, Singapore and Seoul to Los Angeles, San Francisco, Chicago and New York.

Deutsche Lufthansa AG offered the service on about 50 flights. Scandinavian Airlines System, Japan Airlines Corp., Korean Air Co., All-Nippon Airways, Singapore Airlines Ltd. and China Airlines Ltd. also offered Connexion.

Connexion charged $26.95 for an entire long-haul flight, or $9.95 for an hour. Boeing also offered the service for commercial ships, initially charging $2,800 a vessel.

Boeing planned to make the service available on business jets in conjunction with Rockwell Collins Inc.

The $320 million charge for the shutdown amounts to 26 cents a share before tax for the rest of the year, the majority of which will come in the third quarter. Earlier, Boeing said it could take up to a $350 million charge, or about 31 cents a share.

Boeing said ending the service, which began May 17, 2004, would lift next year's earnings by about 15 cents a share.

Shares of Boeing fell 24 cents to $78.59 on the New York Stock Exchange.

The shutdown would be a disappointment to ViaSat Inc., the exclusive provider of equipment for the Connexion project, according to a research note from Morgan Joseph. Other analysts estimated the project accounted for $10 million in annual revenue for ViaSat.

The Carlsbad, Calif., company had $434 million in revenue in the fiscal year that ended in March.

ViaSat shares rose 1 cent to $26.98 on the Nasdaq Stock Market.